LBNL Report Number
The U.S. wind power industry experienced a trying year in 2010, with a significant reduction in new builds compared to both 2008 and 2009. The delayed impact of the global financial crisis, relatively low natural gas and wholesale electricity prices, and slumping overall demand for energy countered the ongoing availability of existing federal and state incentives for wind energy deployment. The fact that these same drivers did not impact capacity additions in 2009 can be explained, in part, by the "inertia" in capital-intensive infrastructure investments: 2009 capacity additions were largely determined by decisions made prior to the economy-wide financial crisis that was at its peak in late 2008 and early 2009, whereas decisions on 2010 capacity additions were often made at the height of the financial crisis. Cumulative wind power capacity still grew by a healthy 15% in 2010, however, and most expectations are for moderately higher wind power capacity additions in 2011 than witnessed in 2010, though those additions are also expected to remain below the 2009 high.
With federal incentives for wind energy in place through 2012, an improved project finance environment, and lower wind turbine and wind power pricing, modest growth in annual wind power capacity additions appears likely for 2011 relative to 2010. Additions are expected to remain well below the 2009 high, however, due in part to relatively low wholesale electricity prices and limited need for new electric capacity additions, and in part to existing state-level RPS programs that, in aggregate, are not sizable enough to support continued wind power capacity additions at 2008 and 2009 levels. Most projections show further growth in 2012, as the cost of wind energy continues to decline as a result of lower wind turbine pricing, and as wind project developers rush to capture federal incentives currently slated to expire at the end of that year. Forecasts for 2013, meanwhile, span a particularly wide range, depending in part on assumptions about the possible extension of federal incentives beyond 2012, but in general are weighed down by current policy uncertainty as well as the expected limited need for new electric capacity additions.