U.S. Wind Power Accounted for 6% of Generation Capacity in 2012

www.bloomberg.com
18 Jan 2013

US wind power accounted for 6% of the nation's total electricity generation capacity after developers rushed to finish projects before expiration of a subsidy, Bloomberg New Energy Finance said.

The threat that the US Production Tax Credit would lapse on Dec. 31 prompted developers to complete as many projects as they could last month, the London-based research group said. A record 13.2 GWs of turbines were installed last year including 5.5 GWs in December, the most ever for a single month. Total wind capacity is about 60 GWs.

"It's clear that the economics, aided by the Production Tax Credit, drove wind growth in 2012," said Amy Grace, lead analyst on wind in North America for New Energy Finance. "Capacity was built without any near-term state mandated demand. This means that in most areas, utilities are buying wind power because they want to, not because they have to."

The credit has been extended for a year to cover wind farms that start construction in 2013. Previously it only covered projects that started working by the expiration date. Uncertainty about whether the credit would be extended meant developers and investors haven't built up a backlog of projects for 2013.

Asset financing for US wind farms dropped to $4.3 billion in the second-half from $9.6 billion in the first six months of last year. This has hurt component makers such as Vestas Wind Systems (VWS) AS, Gamesa Corp Tecnologica SA (GAM) and Clipper Marine Windpower Ltd., which is owned by Paltinum Equity LLC.

Share Drops
Vestas Wind Systems declined as much as 41% in the past year and Gamesa Corp by 39%.

Equipment prices for wind have dropped by more than 21% since 2010, and the performance of turbines has risen. This has resulted in a 21% decrease in the overall cost of electricity from wind for a typical US project since 2010, New Energy Finance said.

Last year's numbers are especially "striking" given the current price of natural gas which sank below $2 per million British thermal unit in April, the lowest in a decade. At this price, natural gas plants present "stiff" competition for wind projects, the research company owned by Bloomberg LP said.