ryan wiser & mark bolinger, lawrence berkeley national laboratory · 2020-01-06 · the record...

1U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY

2017 Wind Technologies Market Report: Summary Ryan Wiser & Mark Bolinger, Lawrence Berkeley National Laboratory

August 2018


2017 Wind Technologies Market Report

Purpose, Scope, and Data:

– Publicly available annual report summarizing key trends in the U.S. wind power market, with a focus on 2017

– Scope focuses on land-based wind turbines over 100 kW

– Separate DOE-funded reports on distributed and offshore wind

– Data sources include EIA, FERC, SEC, AWEA, etc. (see full report)

Report Authors:

– Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab

– Contributions from others at Berkeley Lab, Exeter Associates, National Renewable Energy Laboratory

Funded by: U.S. DOE Wind Energy Technologies Office

Available at: http://energy.gov/windreport


Report Contents

• Installation trends

• Industry trends

• Technology trends

• Performance trends

• Cost trends

• Wind power price trends

• Policy & market drivers

• Future outlook


Key Findings

• Wind capacity additions continued at a rapid pace in 2017, with significant additional new builds anticipated over next three years in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain is diverse and multifaceted, with strong domestic content for nacelle assembly, towers, and blades

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices are at all-time lows, enabling economic competitiveness (with the PTC) despite low natural gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth


Installation Trends


Wind Power Additions Continued at a Rapid Pace in 2017, with 7,017 MW of New Capacity, Bringing the Total to 88,973 MW

• $11 billion invested in wind power project additions in 2017

• Over 80% of new 2017 capacity located in the Interior region

• Partial repowering trend: 2,131 MW of existing plants retrofitted w/ longer blades

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Southeast (annual, left scale)

Northeast (annual, left scale)

Great Lakes (annual, left scale)

West (annual, left scale)

Interior (annual, left scale)

Total US (cumulative, right scale)

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Wind Power Represented 25% of Electric-Generating Capacity Additions in 2017, Behind Solar and Natural Gas

Over the last decade, wind has comprised 30% of capacity additions nationwide, and a much higher proportion in some regions

55%44%

19% 18%

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Interior Great Lakes Northeast West Southeast U.S. Total

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Wind Solar Other Renewable Gas Coal Other Non-Renewable

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Wind (% of Total, right axis)


Globally, the U.S. Placed 2nd in Annual Wind Power Capacity Additions in 2017, and in Cumulative Wind Power Capacity

• U.S. also remains a distant second to China in cumulative capacity

• Global wind additions in 2017 were below the 54,600 MW added in 2016 and the record level of 63,000 MW added in 2015

Annual Capacity(2017, MW)

Cumulative Capacity(end of 2017, MW)

China 19,660 China 188,392

United States 7,017 United States 88,973

Germany 6,581 Germany 56,132

United Kingdom 4,270 India 32,848

India 4,148 Spain 23,170

Brazil 2,022 United Kingdom 18,872

France 1,694 France 13,759

Turkey 766 Brazil 12,763

South Africa 618 Canada 12,239

Finland 535 Italy 9,479

Rest of World 5,182 Rest of World 82,391

TOTAL 52,492 TOTAL 539,019


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Approximate Cumulative Wind Penetration, end of 2017

Approximate Cumulative Wind Penetration, end of 2016

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The United States is Lagging Other Countries in Wind as a Percentage of Electricity Consumption

Note: Figure only includes the countries with the most installed wind power capacity at the end of 2017


The Geographic Spread of Wind Power Projects Across the United States Is Broad, with the Exception of the Southeast

Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2017


Texas Installed the Most Wind Power Capacity in 2017; 14 States Exceed 10% Wind Energy, 4 States Exceed 30%

• 2017 Wind Penetration by ISO: SPP: 23.2%; ERCOT: 17.4%; MISO: 7.7%; CAISO: 6.0%; NYISO: 2.7%; PJM: 2.7%; ISO-NE: 2.6%

Installed Capacity (MW) 2017 Wind Generation as a Percentage of:

Annual (2017) Cumulative (end of 2017) In-State Generation In-State Load

Texas 2,305 Texas 22,599 Iowa 36.9% North Dakota 58.3%

Oklahoma 851 Oklahoma 7,495 Kansas 36.0% Kansas 47.1%

Kansas 659 Iowa 7,308 Oklahoma 31.9% Iowa 43.0%

New Mexico 570 California 5,555 South Dakota 30.1% Oklahoma 40.9%

Iowa 397 Kansas 5,110 North Dakota 26.8% Wyoming 26.3%

Illinois 306 Illinois 4,332 Maine 19.9% South Dakota 25.7%

Missouri 300 Minnesota 3,699 Minnesota 18.2% New Mexico 19.7%

North Dakota 249 Oregon 3,213 Colorado 17.6% Maine 19.5%

Michigan 249 Colorado 3,106 Idaho 15.4% Colorado 17.5%

Indiana 220 Washington 3,075 Texas 14.8% Nebraska 17.4%

North Carolina 208 North Dakota 2,996 Nebraska 14.6% Texas 17.3%

Minnesota 200 Indiana 2,117 New Mexico 13.5% Minnesota 16.7%

Nebraska 99 Michigan 1,860 Vermont 13.4% Montana 14.8%

Wisconsin 98 New York 1,829 Oregon 11.1% Oregon 13.5%

Colorado 75 New Mexico 1,682 Wyoming 9.4% Idaho 10.4%

Ohio 72 Wyoming 1,489 Montana 7.6% Illinois 8.3%

Oregon 50 Nebraska 1,415 California 6.8% Washington 8.3%

California 50 Pennsylvania 1,369 Hawaii 6.5% Hawaii 6.9%

Vermont 30 South Dakota 977 Washington 6.5% California 5.5%

Maine 23 Idaho 973 Illinois 6.2% Vermont 5.2%

Rest of U.S. 7 Rest of U.S. 6,774 Rest of U.S. 1.1% Rest of U.S. 1.2%

TOTAL 7,017 TOTAL 88,973 TOTAL 6.3% TOTAL 6.9%


A Record Level of Wind Power Capacity Entered Transmission Interconnection Queues in 2017; Solar and Storage Also Growing

Note: Not all of this capacity will be built

• AWEA reports 33 GW of capacity under construction or in advanced development at end of 1Q2018

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Larger Amounts of Wind Power Capacity Planned for Southwest Power Pool, Midwest, Texas, and Mountain Regions

Note: Not all of this capacity will be built

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Industry Trends


Vestas, GE and Siemens-Gamesa Captured 88% of the U.S. Market in 2017

• Globally, Vestas, Siemens Gamesa, Goldwind and GE were the top suppliers of wind turbines for land-based applications

• Chinese suppliers occupied 4 of the top 10 spots in the global ranking, based primarily on sales within their domestic market

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# of OEMs (right scale)


The Domestic Supply Chain for Wind Equipment is Diverse

Note: map not intended to be exhaustive

• Some manufacturers increased the size of their U.S. workforce in 2017 and/or expanded existing facilities, but expectations for significant long-term supply-chain expansion has become less optimistic

• Continued near-term expected growth, but strong competitive pressures and expected reduced demand as PTC is phased out

• At least three domestic manufacturing facility closures in 2017; one opening

• Many manufacturers remain; three largest OEMs serving U.S. market all have at least one U.S. facility

• Wind-related jobs reached a new all-time high, at 105,500


Domestic Manufacturing Capability for Nacelle Assembly, Towers, & Blades Reasonably Well Balanced Against Historical Demand

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Annual installed wind power capacityForecasted annual installed wind capacity (avg, min, max)Nacelle assembly manufacturing capacityTower manufacturing capacityBlade manufacturing capacity

Past Projected


Turbine OEM Profitability Has Generally Been Strong in Recent Years, Compared to Near Breakeven from 2011 through 2013

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Gamesa Vestas Nordex Goldwind

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Solid line with circle markers = EBITDADashed line with square markers = EBIT


Imports of Wind Equipment into the United States Are Sizable; Exports Remained Low in 2017

Notes: Figure only includes tracked trade categories; misses other wind-related imports; see full report for the assumptions used to generate this figure

• U.S. is net importer of wind equipment

• Exports of wind-powered generating sets = $60 million in 2017

• No ability to track other wind-specific exports, but total ‘tower and lattice mast’ exports equaled $39 million


Tracked Wind Equipment Imports in 2017: 50% from Asia, 36% from Europe, 14% from the Americas

Note: Tracked wind-specific equipment includes: wind-powered generating sets, towers, hubs and blades, wind generators and parts


Source Markets for Imports Have Varied Over Time, and By Type of Wind Equipment

• Majority of imports of wind-powered generating sets historically from home countries of OEMs, dominated by Europe

• Decline in imports of towers from Asia over time, in part due to tariff measures

• Majority of imports of blades & hubs from China

• Globally diverse sourcing strategy for generators & parts, but with drop from China & growth from Mexico


Domestic Manufacturing Content is Strong for Nacelle Assembly, Towers, and Blades, but not Equipment Internal to the Nacelle

Domestic Content for 2017 Turbine Installations in the United States:

• Imports occur in untracked trade categories, including many nacelle internals; nacelle internals generally have domestic content of < 20%

Towers Blades & Hubs Nacelle Assembly

70–90% 50–70% > 85%


The Project Finance Environment Remained Strong in 2017

• Sponsors raised $6 billion of tax equity and $2.5 billion of debt in 2017

• Tax reform legislation contained a number of provisions with implications for wind finance, but general consensus that the overall impact will be benign

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Independent Power Producers Own the Majority of Wind Assets Built in 2017

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IPP:6,400 MW (91%)

IOU:615 MW

(9%)

2017 Capacity byOwner Category

• Utility ownership should increase in the coming years as many utilities have recently announced plans to build and own new wind assets.


Long-Term Sales to Utilities Remained Most Common Off-Take, but Direct Retail Sales and Merchant Were Significant

• 24% of added wind capacity in 2017 are from direct retail sales; 40% of total wind capacity contracted through PPAs in 2017 involve non-utility buyers

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IOU:1,896 MW

(27%)

Retail:1,692 MW

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Merchant:1,406 MW

(20%)

Power Marketer401 MW (6%)

POU:1,242 MW

(18%)

Undisclosed373 MW (5%)


Technology Trends


Turbine Capacity, Rotor Diameter, and Hub Height Have All Increased Significantly Over the Long Term, and in 2017

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Average Nameplate Capacity (left scale)

Average Rotor Diameter (right scale)

Average Hub Height (right scale)

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Hub Height

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≥ 3.0 MW2.5−3.0 MW2.0−2.5 MW1.5−2.0 MW1.0−1.5 MW<1.0 MWAverage

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≥120 m110−120 m100−110 m90−100 m80−90 m70−80 m<70 mAverage


Turbines Originally Designed for Lower Wind Speed Sites Have Rapidly Gained Market Share

Specific Power

IEC Class

Specific Power by Selected IEC Class

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≥180−200 W/m2≥200−250 W/m2≥250−300 W/m2≥300−350 W/m2≥350−400 W/m2≥400−700 W/m2Average

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EC

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Class 3Class 2/3Class 2Class 1/2Class 1

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IEC Class 2IEC Class 2/3IEC Class 3Avg. Specific Power (all turbines)

• Specific power: turbine nameplate capacity divided by swept rotor area; lower specific power leads to higher capacity factors, as shown later

• IEC Class 1/2/3 represent turbines designed originally for high, medium, and low wind speed, respectively


Wind Turbines Were Deployed in Somewhat Lower Wind-Speed Sites in 2017 in Comparison to the Previous Three Years

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999

=10

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Average 80m Wind Resource Quality (left scale)Average 80m Wind Resource Quality for Future ProjectsAverage Wind Speed at 80m (past and future projects, right scale)


Low Specific Power Turbines Are Deployed in Low & High Wind Speeds; Taller Towers Predominate in Great Lakes & Northeast

By Region

By Wind Resource Quality

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Estimated Wind Resource Quality at 80 Meters

Specific Power

≥250 W/m2

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≥180-<200 W/m2

IEC Class

Class 2, 1/2 and 1Class 2/3

Class 3

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≥100 m

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ea

st

Wes

t

Inte

rio

r

Gre

atLa

ke

s

No

rth

ea

st

Wes

t

Inte

rio

r

Gre

atLa

ke

s

No

rth

ea

st

Specific Power

≥250 W/m2

200-<250 W/m2

≥180-<200 W/m2

IEC Class

Class 2, 1/2 and 1Class 2/3

Class 3

Per

cen

t o

f T

urb

ines

In

stal

led

Wit

hin

Ea

ch R

eg

ion

fro

m 2

015

−20

17

Hub Height

<90 m90-<100 m

≥100 m


Wind Power Projects Planned for the Near Future Are Poised to Continue the Trend of Ever-Taller Turbines

0%

5%

10%

15%

20%

25%

30%

35%

0

100

200

300

400

500

600

7002

00

2−0

3

20

04

−05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

(par

tial

)

% o

f FA

A A

pp

lica

tio

ns

> 5

00

Fee

t

Tu

rbin

e Ti

p H

eig

ht

(fe

et)

Application Year

Median Tip Height (with 25th and 75th percentiles)

% of FAA applications >500 ft (right axis)


A Large Number of Projects Continued to Employ Multiple Turbine Configurations from a Single Turbine Supplier

Note: Turbine configuration = unique combination of hub height, rotor diameter, and/or capacities

0%

5%

10%

15%

20%

25%

30%

2010 (n=56)

2011 (n=72)

2012 (n=123)

2013 (n=11)

2014 (n=38)

2015 (n=56)

2016 (n=56)

2017 (n=45)

% o

f A

ll P

roje

cts

(≥6

tu

rbin

es)

Usi

ng

Mu

ltip

le

Turb

ine

Co

nfi

gura

tio

ns

Fro

m a

Sin

gle

OEM

Commerical Operation Year (n = all projects with ≥6 turbines)

GE Wind

Vestas

Siemens Gamesa

Other OEMs


Turbines that Were Partially Repowered in 2017 Now Have Significantly Larger Rotors and Lower Specific Power

• Average specific power declined from 335 W/m2 to 252 W/m2 for the 2,131 MW of turbines partially repowered in 2017

77.9 77.9 78.2

90.4

1.62 1.63

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0

0

10

20

30

40

50

60

70

80

90

100

Original Repowered Original Repowered Original Repowered

Hub Height Rotor Diameter Capacity

Ave

rage

Nam

epla

te C

apa

city

(M

W)

Ave

rage

Hu

b H

eigh

t &

Ro

tor

Dia

met

er (

met

ers)

Turbine Specifications

right axis →← left axis


Performance Trends


Sample-Wide Capacity Factors Have Gradually Increased, but Are Impacted by Curtailment & Inter-Year Resource Variability

80%

85%

90%

95%

100%

105%

110%

115%

120%

0%

5%

10%

15%

20%

25%

30%

35%

40%

20000.6

20010.9

20022.7

20033.1

20044.5

20055.1

20068.0

200710.0

200814.9

200923.6

201033.3

201138.5

201244.6

201358.2

201459.4

201564.3

201672.6

201779.6

Capacity Factor Based on Estimated Generation (if no curtailment)

Capacity Factor Based on Actual Generation (with curtailment)

Capacity Factor Normalized for Inter-Annual Variability (if no curtailment)

Index of Inter-Annual Variability in Wind Generation (right scale)

Year:# of GW:

Ave

rage

Cap

acit

y Fa

cto

r in

Cal

en

dar

Yea

r

Ind

ex o

f In

ter-

An

nu

alV

aria

bili

ty in

Win

d G

en

era

tio

n


Wind Curtailment Varies by Region; Was Highest in MISO in 2017, but Highest-Ever in ERCOT in 2009

• In areas where curtailment has been particularly problematic in the past—principally in Texas—steps taken to address the issue have born fruit

0%

5%

10%

15%

20%

25%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2014-17SPP

2007-17ERCOT

2009-17MISO

2015-17CAISO

2012-17NYISO

2014-17ISO-NE

2012-17PJM

2007-17Total

Win

d P

en

etr

atio

n (

as a

% o

f lo

ad)

Wind Curtailment (left axis)

Wind Penetration (right axis)

Win

d C

urt

ailm

ent


Capacity Factors Have Increased Significantly Over Time, by Online Date (i.e., Commercial Online Date, COD)

0%

10%

20%

30%

40%

50%

60%

'98-990.9

'00-011.8

'02-032.0

'04-052.3

20061.6

20075.3

20087.9

20099.3

20104.7

20115.8

201213.5

20131.0

20145.0

20158.0

20168.2

Generation-Weighted Average

Individual Project

Cap

acit

y Fa

cto

r in

20

17

(b

y p

roje

ct C

OD

)

COD:# of GW:


Trends Explained by Competing Influences of Lower Specific Power, Higher Hub Heights, Varying Quality Wind Resource Sites

70

80

90

100

110

120

130

140

150

160

170

180

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%19

98

-99

200

0-0

1

200

2-0

3

200

4-0

5

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Ave

rage

Cap

acit

y Fa

cto

r in

20

17

Commercial Operation Date

Weighted-Average Capacity Factor in 2017 (left scale)

Index of the Inverse of Built Specific Power (right scale)

Index of Built Turbine Hub Height (right scale)

Index of Built Wind Resource Quality at 80m (right scale)

Ind

exo

f C

apac

ity

Fact

or

Infl

uen

ces

(19

98

-99

=10

0)


Controlling for Wind Resource Quality and Specific Power Demonstrates Impact of Turbine Evolution

• Turbine design changes are driving capacity factors higher for projects located in given wind resource regimes

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Lower15.5 GW

Medium17.2 GW

Higher22.3 GW

Highest21.8 GW

Estimated Wind Resource Quality at Site

Specific Power ≥ 400 (2.9 GW)

Specific Power range of 350–400 (6.9 GW)



Specific Power < 250 (14.1 GW)

Ave

rage

Cap

acit

y Fa

cto

r in

20

17


Controlling for Wind Resource Quality and Commercial Operation Date Also Illustrates Impact of Turbine Evolution

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016


Highest Wind Resource Quality

Higher Wind Resource Quality

Medium Wind Resource Quality

Lower Wind Resource Quality

Ave

rage

Cap

acit

y Fa

cto

r in

20

17


Change in Performance as Projects Age Also Impacts Overall Trends; Performance Degradation Shown After Year Nine

50%

60%

70%

80%

90%

100%

110%

120%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

70.8 70.8 62.6 57.8 56.6 42.9 37.3 32.3 22.4 14.7 9.4 6.7 4.6 4.2 2.7 2.3 0.6 0.6

Median (with 10th/90th percentile error bars)

Capacity-Weighted Average

Ind

exe

dC

apac

ity

Fact

or

(Yea

r 2

=10

0%

)

Sample includes projects with COD from 1998 to 2016

Years post-COD:

Sample GW:


0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

West12.6 GW

Northeast4.5 GW

Great Lakes8.6 GW

Interior50.2 GW

Region

Specific Power ≥ 400 (3.0 GW)




Specific Power < 250 (14.1 GW)

Ave

rage

Cap

acit

y Fa

cto

r in

201

7Regional averages

Note: Limited sample size in some regions

Regional Variations in Capacity Factors Reflect the Strength of the Wind Resource and Adoption of New Turbine Technology

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

Southeast133 MW

Northeast629 MW

West308 MW

Great Lakes709 MW

Interior14,412 MW

Weighted Average (by region)

Weighted Average (total U.S.)

Individual Project (by region)

Cap

acit

y Fa

cto

r in

20

17

Sample includes projects built in 2015 or 2016


Cost Trends


Wind Turbine Prices Remained Well Below the Levels Seen a Decade Ago

• Recent turbine orders in the range of $750-950/kW

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2,200

2,400

2,600Ja

n-9

7

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

Announcement Date

U.S. Orders <5 MWU.S. Orders 5 - 100 MWU.S. Orders >100 MWVestas Global AverageSGRE Global AverageBNEF Global IndexMAKE U.S. Index

Tu

rbin

e T

ran

sact

ion

Pri

ce (

20

17

$/k

W)


Lower Turbine Prices Have Driven Reductions in Reported Installed Project Costs

• 2017 projects had an average cost of $1,610/kW, down $795/kW since 2009-2010

• Limited sample of under-construction projects suggest somewhat lower costs in 2018

0

1,000

2,000

3,000

4,000

5,000

6,0001

982

19

831

984

19

851

986

19

871

988

19

891

990

19

911

992

19

931

994

19

951

996

19

971

998

19

992

000

20

012

002

20

032

004

20

052

006

20

072

008

20

092

010

20

112

012

20

132

014

20

152

016

20

17

Inst

alle

d P

roje

ct C

ost

(2

01

7 $

/kW

)


Interior (49.7 GW)

West (12.4 GW)

Great Lakes (8.3 GW)

Northeast (4.5 GW)

Southeast (1.1 GW)

Capacity-Weighted Average


Economies of Scale Are Apparent, Especially when Moving from Small- to Medium-Sized Projects

Project Size

Turbine Size

Note: Includes 2016 and 2017 projects

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

≤5 MW21 MW

5-20 MW15 MW

20-50 MW201 MW

50-100 MW1,401 MW

100-200 MW4,557 MW

>200 MW6,215 MW

Inst

alle

d P

roje

ct C

ost

(2

01

7 $

/kW

)

Capacity-Weighted Average Project Cost

Individual Project Cost

Project size:# of MW:


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

≥1 & <2 MW1,142 MW

≥2 & <3 MW9,344 MW

≥3 MW1,923 MW

Inst

alle

d P

roje

ct C

ost

(2

01

7 $

/kW

) Capacity-Weighted Average Project Cost

Individual Project Cost

Turbine size:# of MW:



Regional Differences in Average Wind Power Project Costs Are Apparent, but Sample Size Is Limited


0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Interior10,487 MW

Great Lakes1,081 MW

Southeast311 MW

West66 MW

Northeast466 MW

Inst

alle

d P

roje

ct C

ost

(2

01

7 $

/kW

)

Capacity-Weighted Average Project Cost Individual Project Cost Capacity-Weighted Average Cost, Total U.S.



Most Projects—and All of the Low-Cost Projects—Are Located in the Interior; Other Regions Have Higher Costs


0

2

4

6

8

10

12

14

16

18

12

00

15

00

18

00

21

00

24

00

27

00

30

00

33

00

36

00

39

00

42

00

Nu

mb

er o

f P

roje

cts

Installed Cost ≥ (2017 $/kW)

Southeast

Northeast

Great Lakes

West

Interior

0

400

800

1200

1600

2000

2400

2800

3200

3600

1200

1500

1800

2100

2400

2700

3000

3300

3600

3900

4200

Nu

mb

er o

f M

W

Installed Cost ≥ (2017 $/kW)

Southeast

Northeast

Great Lakes

West

Interior


O&M Costs Vary By Project Age and Commercial Operations Date

Note: Sample is limited; few projects in sample have complete records of O&M costs from 2000-17; O&M costs reported here DO NOT include all operating costs

• Capacity-weighted average 2000-2017 O&M costs for projects built in the 1980s equal $70/kW-year, dropping to $58/kW-year for projects built in the 1990s, to $28/kW-year for projects built in the 2000s and since 2010

0

10

20

30

40

50

60

70

80

90

100

110

120

130

140

150

1601

98

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

199

0

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

200

0

200

1

200

2

200

3

200

4

200

5

200

6

200

7

200

8

200

9

201

0

201

1

201

2

201

3

201

4

201

5

201

6


Projects with no 2017 O&M data

Projects with 2017 O&M data

Ave

rag

e A

nn

ua

l O

&M

Co

st

20

00

-20

17

(2

01

7 $

/kW

-yr)


O&M Costs Are Lower for More-Recent Projects, and Increase with Age for the Older Projects

Note: Sample size is limited

• O&M reported in figure does not include all operating costs: statements from one public company with a large U.S. wind portfolio reports total operating costs in 2017 for projects built in the 2000s of ~$53/kW-year

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

75

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Project Age (Number of Years Since Commercial Operation Date)

1998-2004

2005-2010

2011-2016

Commercial Operation Date:n

=1

8

Me

dia

n A

nn

ua

l O&

M C

ost

(2

01

7 $

/kW

-ye

ar)

n=

37

n=

39

n=

9

n=

16

n=

6

n=

4

n=

31

n=

39

n=

23

n=

39

n=

16

n=

39

n=

25

n=

34

n=

39

n=

39

n=

33

n=

28

n=

23

n=

6

n=

7

n=

8

n=

8

n=

6

n=

5

n=

5

n=

6

n=

21

n=

11

n=

6

n=

4

n=

2


Wind Power Price Trends


Sample of Wind Power Sales Prices

• Berkeley Lab collects data on historical wind power sales prices, and long-term PPA prices

• PPA sample includes 435 contracts totaling 40,360 MW from projects built from 1998 to 2017, or planned for installation in 2018 or beyond

• Prices reflect the bundled price of electricity and RECs as sold by the project owner under a PPA

– Dataset excludes merchant plants, projects that sell renewable energy certificates (RECs) separately, and direct retail sales

– Prices reflect receipt of state and federal incentives (e.g., the PTC or Treasury grant), as well as various local policy and market influences; as a result, prices do not reflect wind energy generation costs


Wind PPA Prices Remain Very Low, and Are Competitive with the Levelized Fuel Cost of a Gas Plant

$0

$20

$40

$60

$80

$100

$120

Jan

-96

Jan

-97

Jan

-98

Jan

-99

Jan

-00

Jan

-01

Jan

-02

Jan

-03

Jan

-04

Jan

-05

Jan

-06

Jan

-07

Jan

-08

Jan

-09

Jan

-10

Jan

-11

Jan

-12

Jan

-13

Jan

-14

Jan

-15

Jan

-16

Jan

-17

Jan

-18

PPA Execution Date

Interior (26.5 GW)

West (7.5 GW)


Northeast (1.5 GW)

Southeast (0.5 GW)

Leve

lize

d P

PA

Pri

ce (

20

17

$/M

Wh

)

25 MW

150 MW

50 MW

200 MW

Levelized 20-year EIA gas price projections (converted at 7.5 MMBtu/MWh)


A Smoother Look at the Time Trend Shows a Steep Decline in Pricing Since 2009; Prices Below $20/MWh in Interior Region

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

96-990.6

00-011.2

02-031.4

04-052.2

20062.4

20071.8

20083.5

20094.0

20104.9

20114.8

20121.2

20135.4

20142.0

20152.6

20161.6

20170.8

Nationwide Interior Great Lakes West Northeast

PPA Year:GW:

Ave

rage

Le

veliz

ed P

PA

Pri

ce (

20

17

$/M

Wh

)


The Relative Competitiveness of Wind Power Has Been Affected by Declines in the Wholesale Market Value of Wind Energy

• Wholesale market value considers hourly local wholesale energy price and regional hourly wind output profile; additional capacity value ~$3/MWh available in some regions

• Price comparisons shown are far from perfect—see full report for caveats


The Wholesale Energy Market Value of Wind Energy in 2017 Varied by Region: Lowest in SPP, Highest in CAISO


0

5

10

15

20

25

30

CAISO ISO-NE PJM MISO NYISO ERCOT WECC SERC SPP

Win

d W

ho

lesa

le E

ne

rgy

Mar

ket

Va

lue

in

2017

, b

y R

egio

n (

2017

$/M

Wh

)


Recent Wind Prices Are Competitive with the Expected Future Cost of Burning Fuel in Natural Gas Plants


0

10

20

30

40

50

60

70

80

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

2043

2044

2045

2046

2047

2048

2049

2050

20

17

$/M

Wh

Generation-weighted average wind PPA price among 46 PPAs signed in 2015–2017

Median wind PPA price (and 10th/90th percentiles) among 46 PPAs signed in 2015–2017

Range of AEO18 natural gas fuel cost projectionsAEO18 reference case natural gas fuel cost projection


Renewable Energy Certificate (REC) Prices in Key RPS Markets Fell Significantly in 2017, Reflecting Growing Supplies

• REC prices vary by: market type (compliance vs. voluntary); geographic region; specific design of state RPS policies

$0

$10

$20

$30

$40

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

PJM

DC DE

IL MD

NJ OH

PA

$0

$20

$40

$60

$80

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

New England

CT MAME NHRI

2017

$/M

Wh

$0

$2

$4

$6

$8

$10

201

0

201

1

201

2

201

3

201

4

201

5

201

6

201

7

201

8

Texas & Voluntary Market

TXVol. (nat'l)Vol. (west)


The Levelized Cost of Wind Energy Is at an All-Time Low

• Estimates reflect variations in installed cost, capacity factors, operational costs, and cost of financing; include accelerated depreciation but exclude PTC

$0

$20

$40

$60

$80

$100

$120

$140

98-990.9

00-011.7

02-031.9

04-052.0

20061.8

20073.6

20086.3

20099.6

20105.1

20116.3

20129.5

20130.9

20145.1

20158.2

20167.1

20175.3

Nationwide (75.4 GW)

Interior (49.6 GW)


West (11.8 GW)

Northeast (4.5 GW)

Southeast (1.1 GW)

COD Year:GW:

Ave

rage

LC

OE

(20

17

$/M

Wh

)


Policy and Market Drivers


The Federal Production Tax Credit (PTC) Remains One of the Core Motivators for Wind Power Deployment

• 5-year extension of PTC in 2015, plus guidance allowing 4 years for project completion after the start of construction

• PTC phase-out, with progressive reduction in the value of the credit for projects starting construction after 2016

• PTC phases out in 20%-per-year increments for projects starting construction in 2017 (80% PTC value), 2018 (60%), 2019 (40%)

Legislation Date

Enacted Start of

PTC WindowEnd of

PTC Window

Effective PTCPlanning Window

(considering lapses and early extensions)

Energy Policy Act of 1992 10/24/1992 1/1/1994 6/30/1999 80 months

>5-month lapse before expired PTC was extended

Ticket to Work and Work Incentives Improvement Act of 1999

12/19/1999 7/1/1999 12/31/2001 24 months


Job Creation and Worker Assistance Act

3/9/2002 1/1/2002 12/31/2003 22 months


The Working Families Tax Relief Act

10/4/2004 1/1/2004 12/31/2005 15 months

Energy Policy Act of 2005 8/8/2005 1/1/2006 12/31/2007 29 months

Tax Relief and Healthcare Act of 2006

12/20/2006 1/1/2008 12/31/2008 24 months

Emergency Economic Stabilization Act of 2008

10/3/2008 1/1/2009 12/31/2009 15 months

The American Recovery andReinvestment Act of 2009

2/17/2009 1/1/2010 12/31/2012 46 months

2-day lapse before expired PTC was extended

American Taxpayer Relief Act of 2012

1/2/2013 1/1/2013 Start constructionby 12/31/2013

12 months (in which to start construction)


Tax Increase Prevention Act of 2014

12/19/2014 1/1/2014 Start constructionby 12/31/2014

2 weeks (in which to start construction)


Consolidated Appropriations Act of 2016

12/18/2015 1/1/2015

Start constructionby 12/31/2016

12 months to start construction and receive 100% PTC value








State Policies Help Direct the Location and Amount of Wind Development, but Wind Growth is Outpacing State Targets

• 29 states and D.C. have mandatory RPS programs, which can support ~4.5 GW/yrof renewable energy additions on average through 2030 (less for wind specifically)

WI: 10% by 2015

NV: 25% by 2025

TX: 5,880 MW by 2015

PA: 8.5% by 2020

NJ: 50% by 2030

CT: 23% by 2020

MA: 11.1% by 2009 +1%/yr

ME: 40% by 2017

NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

CA: 50% by 2030

MN: 26.5% by 2025Xcel: 31.5% by 2020

IA: 105 MW by 1999

MD: 25% by 2020

RI: 38.5% by 2035

HI: 100% by 2045

AZ: 15% by 2025

NY: 50% by 2030

CO: 30% by 2020 (IOUs)20% by 2020 (co-ops)10% by 2020 (munis)

MT: 15% by 2015

DE: 25% by 2025

DC: 50% by 2032

WA: 15% by 2020

NH: 24.8% by 2025

OR: 50% by 2040 (large IOUs)5-25% by 2025 (other utilities)

NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops and munis)

IL: 25% by 2025

VT: 75% by 2032

MO: 15% by 2021

OH: 12.5% by 2026

MI: 15% by 2021


System Operators Are Implementing Methods to Accommodate Increased Penetrations of Wind

Notes: Because methods vary and a consistent set of operational impacts has not been included in each study, results from the different analyses of integration costs are not fully comparable.

Integrating wind energy into power systems is manageable, but not free of additional costs

Transmission Barriers Remain $0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

0% 10% 20% 30% 40% 50% 60% 70%

Inte

grat

ion

Cost

($/M

Wh)

Wind Penetration (Capacity Basis)

WECC (Non-CA)

California ISO

ERCOT

Eastern Interconnection

Midcontinent ISO

Southwest Power Pool

0

500

1000

1500

2000

2500

3000

3500

4000

4500

5000

2009 2010 2011 2012 2013 2014 2015 2016 2017

Co

mp

lete

d T

ran

smis

sio

n (

mile

s/ye

ar)

≥500 kV

345 kV

≤ 230 kV


Future Outlook


Sizable Wind Additions Anticipated for 2018–2020 Given Federal Tax Incentives; Downturn and Uncertainty Beyond 2020

• Wind additions through 2020 consistent with deployment trajectory analyzed in DOE’s Wind Vision report; not so after 2020

0

2

4

6

8

10

12

141

99

8

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

20

18

20

19

20

20

20

21

20

22

20

23

20

24

20

25

BNEF (2018d)

MAKE (2018)

Navigant (2018)

IHS (2018)

An

nu

al C

ap

aci

ty (

GW

)

Historical Wind Power Capacity Additions Forecasts (bar = average)


Future Outlook, Beyond Current PTC Cycle, is Uncertain

Current Low Prices for Wind, Future Technological Advancement, and Direct Retail Sales May Support Higher Growth in Future, but Headwinds Include:

• Phase-out of federal tax incentives

• Continued low natural gas and wholesale electricity prices

• Potential decline in market value as wind penetration increases

• Modest electricity demand growth

• Limited near-term demand from state RPS policies

• Limited transmission infrastructure in some areas

• Growing competition from solar in some regions


Conclusions

• Wind capacity additions continued at a rapid pace in 2017, with significant additional new builds anticipated over next three years in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain is diverse and multifaceted, with strong domestic content for nacelle assembly, towers, and blades

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices are at all-time lows, enabling economic competitiveness (with the PTC) despite low natural gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth


For More Information

See full report for additional findings, a discussion of the sources of data used, etc.:

– windreport.lbl.gov

To contact the primary authors:– Ryan Wiser, Lawrence Berkeley National Laboratory

510-486-5474, [email protected]

– Mark Bolinger, Lawrence Berkeley National Laboratory 603-795-4937, [email protected]

Berkeley Lab’s contributions to this report were funded by the Wind Energy Technologies Office, Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy under Contract No. DE-AC02-05CH11231. The authors are solely responsible for any omissions or errors contained herein.

ryan wiser & mark bolinger, lawrence berkeley national laboratory · 2020-01-06 · the record...

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