North American Wind Industry Set For 55 GW Capacity Between 2015 And 2024
MAKE Consulting has released its North America Wind Power Outlook 2015 for the region’s wind industry, and is predicting that more than 55 GW of wind power capacity will be commissioned between 2015 and 2024.
However, MAKE also predicts that “policy-driven growth in the near term will subside,” making the levelized cost of electricity (LCOE) and economic drivers “increasingly important.” In fact, MAKE Consulting has a pretty dim view of the next few years, saying that “the expired federal [Production Tax Credit] underpins 13.4 GW of growth in 2015 and 2016,” but that this will proceed “policy uncertainty and a 77% downturn YoY in 2017.”
While not a revelatory prediction, it does underline just how important political certainty is for the renewable energy industry to remain healthy.
Bloomberg New Energy Finance released a white paper last week which mirrored some of the commentary provided by MAKE. Specifically, Bloomberg predicted that 2015 will be a record year for coal-fired plant retirements, with 23 GW set to be shut down this year, representing 7% of the country’s current coal capacity. MAKE Consulting pointed to coal plant retirements as one of the “moderate sources of demand in later years of the outlook,” alongside “demand from state renewable electricity standards (RES)” and “the EPA’s Clean Power Plan.”
Nevertheless, a 55 GW growth in cumulative capacity is not a small increase. A report published last week by the Global Wind Energy Council (GWEC) showed that North America’s cumulative wind energy capacity in 2014 was 78.1 GW, and was expected to grow to 122.1 GW by 2019. But the GWEC figures show North American wind industry growth staying relatively steady.
Specifically, MAKE predicts that Canada will commission nearly 4 GW between 2015 and 2017, but that this level of growth will not be maintained, accounting for only 47% of the entire 10-year outlook.
MAKE provided 3 scenarios for each market — bull, base, and bear — and note that they “diverge in each market and reveal significant potential upsides and downsides from key drivers and barriers.”
For example, MAKE’s US bull-case forecast predicts “that a potential PTC phase-out would bolster roughly 13 GW of upside through 2020” and also predicts “nearly 10 GW of additional demand for wind is possible from expanded [state renewable electricity standards] targets through 2024.”
The reverse scenario, however, “incorporate opposition to RES in the US and unmet targets in Canada as well as subdued natural gas prices and electricity demand for the region.” In short, the bear-case “reduce the 10-year wind power outlook by 41% in the US and 33% in Canada.”
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Trying to predict growth on the basis of unknown support is difficult. Wind is doubling every 5 years. This is less than doubling in 10 years. Given winds only competitor is gas, that’s hard to believe. Right now, new solar and wind capacity is greater than gas. We’re it not for huge outlays in Florida, due to a political climate denier regime, those statistics might be otherwise. It works both ways. Resistance in states like Florida and Ohio can collapse. ALEC is meeting headwinds in Kansas. States with large wind potential are yielding to economic forces for wind.
Nat Gas prices are trending low right now. Nat gas is used in heating and electricity. That makes it volatile in winter months. Wind is a steady hedge against nat gas volatility. Wind is still getting cheaper. The next generation of taller turbines is going to tip the scales further. IMO, even natural gas will not be able to compete with the new generation of wind turbines without subsidy.
Here is the natural gas report. Rig count is dropping with oil rig count, but production remains steady.
http://www.eia.gov/naturalgas/weekly/
The very short productive life of fracked gas wells – most of the output comes in the first two years – means that a near-term drop in US gas production is a racing certainty. A price recovery is therefore very likely too.
Yes. People are looking at the daily output of oil and gas, desperately looking for production to drop. Rig count has dropped in half and production is still rising, both gas and oil. But it will drop. Marcellus gas is better decoupled from oil, kind of split. There are wet and dry wells, I hear. Some produce only gas. Most produce both. So gas output should fall first. There is a backlog of capped wells. The oil oversupply is going to last more than a few months. More like a year or two. The oil reservoirs are completely full. More than in the last several decades.
…..even natural gas will not be able to compete with the new generation of wind turbines without subsidy…
It will make the argument more valid to demand a halt to government support for FF once the RE industry stops doing so. I would win 90% or more of my co-workers over once their FF stand looks like a Liberal government hand out.
In Pennsylvania FF subsidies are reaching billions and record levels. Meanwhile the state budget is tanking. Duh.
Do you have a link to something showing actual breakdown of subsidies? Would be interesting to know how exactly subsidies are targeted — the question of levels of subsidies is a common argument between advocates and opponents of RE, but data is less commonly provided. With RE it is bit easier to see subsidies with guaranteed pricing vs market rates, investment tax credits and such. But for FF methods are typically different.
I’ll copy over some stuff that i have –
”
According to Taxpayers for Common Sense, coal has been directly subsidized to the tune of more than $72 billion.
The coal industry benefits from the ability to expense exploration and development costs, deduct the costs of investment in mines (depletion allowance), and treat royalties as capital gains. It also receives targeted production tax credits along with assorted clean coal subsidies.
Coal, which accounts for 39.5% of U.S. rail tonnage, benefits disproportionately from railroad subsidies as well.
Coal and natural gas both receive below cost mineral leasing on public lands, Section 199 deductions for mining/drilling activity, and the unique tax benefits that accrue from master limited partnerships (MLPs)—a type of business structure limited exclusively to enterprises that derive 90% of their revenue from natural resource development. None of these apply to renewable energy.
Recent research shows that just by factoring in the MLP structure and the depletion allowance, natural gas receives a tax benefit that is $2/MW-hour greater than the one provided to wind energy via the PTC.”
http://www.windpowerengineering.com/featured/business-news-projects/independent-mind-asks-opposition-ptc/
That’s only subsidies. It does not include external costs.
Natural gas –
“Natural gas, for example, benefits greatly from two unique tax advantages: the “percentage depletion allowance” and a government-subsidized financing structure known as the “Master Limited Partnership” (MLP). Based on publicly available data, the tax advantages enjoyed by natural gas from both the Depletion Allowance and the MLP can be teased out and converted into an “implicit” PTC. Converting energy subsidies into comparable units allows for an intellectually honest discussion.
According to our analysis at Conservatives for Responsible Stewardship, these two subsidies alone provide natural gas with a tax credit equivalent of almost $19 per megawatt hour (MWh) over a 25-year period, which is about $2 per MWh more than what wind energy receives from the PTC.[1]”
http://www.conservativestewards.org/fales-depletion-allowance-implicit-ptc-conversion-methodology/
And a potpourri –
Over the first 15 years of these energy sources’ subsidies, oil and gas received 5 times what renewables got (in 2010 dollars) and nuclear energy got 10 times as much. (Most of the renewable subsidies went to corn farms for ethanol, not wind, solar and other renewable electricity technologies.)
Between 1918 and 2009 oil and gas received average annual subsidies of $4.86 billion. (92 x $4.86 billion = $447 billion)
Between 1947 and 1999 nuclear received average annual subsidies of $3.50 billion. (53 x $3.50 billion = $185.6 billion)
Between 1980 and 2009 biofuel received average annual subsidies of $1.08 billion. (29 x $1.08 billion = $31 billion)
Between 1994 and 2009 wind and solar received average annual subsidies of $0.37 billion. (15 x $0.37 = $5.6 billion)
http://www.dblinvestors.com/documents/What-Would-Jefferson-Do-Final-Version.pdf
Since the 2009 cutoff above wind and solar have been receiving subsidies in larger amounts. This is because many subsides are now based on new production. (If any new nuclear had come on line it would also received PTC subsidies.)
Out of curiosity I made a rough stab at calculating the amount wind and solar have received since 2009.
Based on EIA production numbers from the beginning of 2010 through 2013 solar produced 16,625,000,000 kWh. During the same period wind produced 762,483,520,000 kWh.
Ignoring the fact that some wind/solar farms chose the 30% ITC rather than the $0.025/kWh PTC and doing the math as if all wind and solar chose the PTC, wind and solar subsidies would have received subsidies (had their taxes lowered) by $19.5 billion.
Between 1994 and 2009 renewables received subsidies of $5.6 billion. Adding in the 2010 to 2013 (roughly calculated) subsidies the total comes to $25.1 billion.
Between 1947 and 1999 nuclear received subsidies equaling $185.6 billion.
Wind and solar received 11% as much as nuclear when we carry the numbers to the end of 2013. Of course there are subsidies for nuclear which are not included in the $185.6 billion.
Here’s another interesting statistic.
In 2013 nuclear produced 19.4% of all US electricity. Wind and solar produced 4.33%.
Nuclear has received 7.4x as much subsidy over time and yet is producing only 4.5x as much electricity. We are currently getting 1.6x more electricity per dollar subsidy with wind and solar.
I thought the subsidy for royalties is that fossil fuel companies claim these are taxes instead, lowering their tax burden since taxes are deductible while royalties are not.
Thank you!
There are tons of links. I like this one by DBL investors.
“The first 15 years, the report says, are critical to developing new technologies. It finds that oil and gas subsidies, including tax breaks and government spending, were about five times as much as aid to renewables during their first 15 years of development; nuclear received 10 times as much support.”
http://cen.acs.org/articles/89/i51/Long-History-US-Energy-Subsidies.html
Here is another source I like.
http://climatecrocks.com/2012/06/28/fossil-fuel-subsidies-dwarf-those-for-renewables/
If that doesn’t wow them, theres lots more, and the information in those points to deeper roots.
Oil has specific tax breaks to that industry alone.
Master Limited Partnerships are so tailored to oil, that other industries likely cannot receive as much benefit from them.
The oil industry deceptively claims every industry can benefit.
http://www.motherjones.com/politics/2014/04/oil-subsidies-energy-timeline
http://priceofoil.org
Thank you!
You are welcome.
Found this list of the various ways oil is (has been) supported buried in my notes….
How Taxpayers Subsidize Oil, OIL INDUSTRY
Current Annual Numbers: (in 2010 dollars)
1. Federal stimulus funds — $3.4 billion 2009, http://dld.bz/…
2. Domestic manufacturing tax deduction — $1.73 billion annual,http://www.americanprogress.or…
3. Exempt from passive investments — $1.8 million annual,http://www.americanprogress.or…
4. Percentage depletion allowance — $1 million annual,http://www.americanprogress.or…
5. Deduction for tertiary injectants — $6.7 million annual,http://www.americanprogress.or…
6. Accelerated depreciation on equipment — $4 billion annual, http://dld.bz/…
7. Worldwide U.S. government subsidies through favorable lending — $1.3 billion annual, http://dld.bz/…
8. Credit for production of nonconventional fuels — $2 billion annual,http://dld.bz/…
9. Oil and gas exploration and development expensing — $1 billion annual,http://dld.bz/…
10. Foreign tax credit — $2.2 billion annual, http://dld.bz/…
11. Oil and gas excess percentage over cost depletion — $771.4 million annual,http://dld.bz/…
12. Credit for enhanced oil recovery costs — $224.3 million annual, http://dld.bz/…
13. Exclusion of alternative fuels from fuel excise tax — $49 million annual,http://dld.bz/…
14. Exception from passive loss limitations for oil and gas — $27.1 million annual, http://dld.bz/…
15. Expensing liquid fuel refineries — $23.4 million annual, http://dld.bz/…
16. Sulfur regulatory compliance incentives for small diesel refiners — $15.6 million annual, http://dld.bz/…
17. Credit for clean fuel vehicles and refueling property — $2 million annual,http://dld.bz/…
18. Highway trust fund — $71.4 million annual, http://dld.bz/…
19. Low income home energy assistant program — $914.3 million annual,http://dld.bz/…
20. Strategic petroleum reserve — $882.9 million annual, http://dld.bz/…
21. Northeast home heating oil reserve — $7.1 million annual, http://dld.bz/…
22. Commuter benefits exclusion from income — $3.9 billion annual, http://dld.bz/…
23. Public liability in BP Gulf spill — at least economic damages capped at $75 million — $2.425 billion annual, http://dld.bz/…
= $25 billion
http://www.greentechmedia.com/articles/read/ev-advocate-goes-the-extra-mile-to-talk-electric-cars-with-president-obama
Heres the article on FF subsidies in Pennsyslvania.
http://www.prnewswire.com/news-releases/report-fossil-fuel-subsidies-in-pa-reach-staggering-level-300064031.html
Its a conservative government hand out to the FF industry. And its sinking the state.
Mr. Hill, you need to do better at proofreading. Your title should read
“North American Wind Industry Set For 55 GW Capacity GROWTH Between 2015 And 2024”
Note I have added the word GROWTH. As written, the title contradicts the text as well as being grammatically ambiguous.
I would also like to point out that the projected 55GW growth projected for NA over 10 years is dwarfed by the projected 140GW growth projected for Asia in just 5 years.
We need to do better.