Wind power costs and prices driven to new lows in US

Wind power costs and prices driven to new lows in US

2019-08-14T12:18:15+00:00August 14th, 2019|Wind Energy|

Wind power is enjoying a prime period in the United States, with record low technology costs spurring strong investment, as local production of components helps projects avoid the worst impacts of Trump’s trade war with China that has hit the solar market hard.

The Wind Technologies Market Report commissioned by the US Department of Energy, has detailed how the combined installed wind capacity in the US surged towards 100,000MW in 2018, generating US$11 billion worth of investment in new projects.

The report was prepared by researchers from the Lawrence Berkeley National Laboratory, who were encouraged by the record low prices achieved by wind projects and the competitiveness of wind power with established electricity sources in the US market.

“Wind energy prices ­– ­particularly in the central United States, and supported by federal tax incentives – are at all-time lows, with utilities and corporate buyers selecting wind as a low-cost option,” senior scientist at Berkeley Lab Ryan Wiser said.

Solar energy projects, which have been heavily reliant on panels procured from dominant Chinese manufacturers, have been caught in the Trump Administration’s trade war with China, copping tariffs as high as 30% on panels imported into the US.

The DoE report found that wind projects were generally able to achieve high proportions of local content in turbine assemblies, including up to 90% of nacelles and towers, and up to 70% of blades and hubs being manufactured within the US.

US based GE commands the largest market share in the US wind market at 40%, followed by Danish company Vestas. With the market less reliant on Chinese suppliers, this has allowed wind projects to avoid the import tariffs imposed on components through Trump’s trade war.

Overall, the wind sector supports the employment of more than 114,000 people in the United States.

The continued and dramatic cost reductions are still being achieved in the American wind energy sector, through an embrace of bigger and taller wind turbine designs, which have on average doubled in height over the last 20 years and seen blade lengths grow by more than 50 per cent.The DoE estimates that the cost of installed wind power has fallen to an average of US$1,470 per kW, driven by a 40 per cent reduction in costs since 2010.

In the United States, new wind farms represented 21% of all new capacity additions in the electricity market, and now supplies around 6.5% of the US electricity supply.

However, mirroring the Australian situation, there are a number of US states that are leading the adoption of wind energy and have substantially higher levels of wind energy penetration. Kansas, Iowa and Oklahoma, have wind energy penetrations above 30%, showing that conservative politics is not necessarily incompatible with strong adoption of renewables.

Texas also led the states with the highest new wind capacity additions, with an additional 2,359MW of wind power installed in 2018. Wind power represented the third fasted growing source of electricity generation in the US, behind solar and gas.

On a levelised cost basis, wind power is still reaching record lows in the United States, with the average price of new power purchase agreements dropping below 2 cents per kWh for the second year in a row.

Netting off the benefits of the federal tax credit and other tax incentives would see prices increase by around 1.5 cents per kWh, which reflects the national average unsubsidised cost of $36 per MWh calculated by the DoE.


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