With the extension of the federal wind energy production tax credit in September, capacity installations in 2005 look likely to beat all previous records, the American Wind Energy Association (AWEA) said today in its quarterly U.S. market outlook.
The previous high for new wind power capacity installations in one year was 1,696 megawatts (MW) in 2001. Most industry participants agree that 2005 will be a better year, with some predicting installations to exceed 2,500 MW.
Conditions are right for next year to be a record-breaking year, said AWEA Executive Director Randall Swisher. "We will see what the U.S. industry can do at a full-speed run for the next fourteen months. As natural gas prices continue to demonstrate volatility, and coal prices are increasing as well, wind power looks more attractive as a way to diversify a utility's supply portfolio."
The slow-down in installations in 2004 that resulted from the expiration of the production tax credit (PTC) means that many projects that have been in the development pipeline are now ready to move forward quickly. Wind power project developers and wind turbine and component manufacturers are now racing to lock up supply contracts for the coming year.
At the same time, rising and volatile natural gas prices make wind energy attractive in terms of the long-term stable energy price that the technology can offer. Once a plant is built, it requires no fuel and produces no harmful emissions. According to the Energy Information Administration, in the best wind resource areas such as the plains states and the upper Midwest, wind energy is the lowest-cost new electricity resource (with the PTC in place) when natural gas prices rise above about $3.50 per thousand cubic feet. On the New York Mercantile Exchange, natural gas prices topped $7 per thousand cubic feet in October, and most experts expect it to continue in the range of $5 for the foreseeable future.
If installed wind power capacity were to consistently expand at a rate of 18% per year, AWEA said, six percent of the nation's electricity could be generated by wind power by the year 2020, resulting in over $100 billion of investment, in addition to saving millions of cubic feet of natural gas.
AWEA, formed in 1974, is the national trade association of the U.S.wind energy industry. The associations membership includes turbine manufacturers, wind project developers, utilities, academicians, and interested individuals.
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