Tax break drives US wind energy market

first_imgIn the past, however, inconsistent PTC policies discouraged investments in local manufacturing. The result has been a shortage of wind turbines and components, at a time when the market is exploding. The shortages have forced some developers to postpone and even to cancel projects. TAGSH-Quebec By chloecox – RELATED ARTICLESMORE FROM AUTHOR “Some wind IPPs have discovered that by taking the financial risk and locking in turbine supply early, even before projects in their own pipelines may be ready, they can leverage these turbines to participate in late stage projects from other developers,” says Chua. According to EER, new wind power plant installations in North America are expected to surpass 4000 MW in 2006, and may grow by nearly 6000 MW per year by 2010 if the US government continues with favourable regulatory policies. Within the US today, over half of wind power capacity is found in the three states of California, Texas, and Minnesota. Moving forward, these states are expected to continue to play a significant role in the industry. Texas, having doubled its RPS, will overtake California to become the most active state market in the US. Despite record installations in the US in 2005, and huge growth in 2006, the nearly $4bn market has been constrained by turbine and component supplies. While the growth is unprecedented, wind turbine shortages have forced many wind IPPs and developers to table projects. Others have taken advantage. In 2006, new installations in North America will grow by over 50 per cent, according to a new study by Emerging Energy Research (EER), a Cambridge, Massachusetts-based research and advisory company. No posts to display Twitter For wind turbine suppliers, control of the supply chain is becoming especially critical, according to the study. Turbine shortages result from pinch points in the supply chain, including gearboxes, castings, and blades. Close relationships with key suppliers in these areas are important for ensuring that a wind turbine vendor is able to maximize production. “2004 was a brutal year for US wind power, but with a more stable policy finally in place, a wind turbine supply shortage has limited growth and has inevitably brought higher prices,” says EER Research Director Godfrey Chua. “The US market faces significant risk of a slowdown again in 2008, as the current PTC is effective only until the end of 2007.” Linkedin In Canada, provincial level renewable energy RFPs have emerged as the key drivers behind the growth of the wind power industry, according to EER’s study. Between 2004 and 2006, provincial governments and utilities will have issued RFPs for 6000 MW of renewable energy, with the lion’s share expected to be awarded to wind projects. According to EER’s study, all wind turbine vendors active in North America sold out available capacity in 2005. “With few exceptions, traditional US turbine vendors are no longer able to guarantee delivery before the end of 2007,” says Chua. “The door is wide open for new entrants willing to take the risk.” Gamesa, Suzlon, and Clipper are all building manufacturing facilities in the US, according to the study. Linkedin Twitter Wind power capacity in the US has the potential to grow from just 6700 MW in 2004 to over 28 000 MW by 2010, according to EER’s study. In Canada, wind power capacity is expected to grow from nearly 450 MW in 2004 to over 6200 MW by 2010. “The North American wind power market is operating at an entirely new level,” says Chua. Both the US and Canada experienced record installations of wind power plant in 2005, but an even bigger boost is expected in 2006. In the US the growth has been spurred on by the extension of the production tax credit (PTC). The fastest growth rates, however, will occur in new states implementing an RPS, such as New York and Colorado, as well as those learning to exploit tremendous untapped wind resources, such as the Dakotas, Illinois, and other Midwest, and Pacific Northwest states. These regions will see their share of total US wind power capacity increase over the forecast period. A sharp increase in US wind power installations follows the extension of the PTC, first at the end of 2004 and further extended to 2007 through the passage of the Energy Policy Act of 2005. This three-year horizon is breaking the boom and bust cycle that has plagued the US wind industry. Fuelling wind power demand have been state renewable energy initiatives as well as the spiking costs of natural gas, a power generation mainstay. These and other findings are found in EER’s just-released study, US/Canada Wind Power Markets and Strategies 2005-2010. Among the most significant efforts to date in Canada are two RFPs from Hydro-Québec totalling 3000 MW of wind power, to be delivered between December 2006 and December 2013. In addition, Ontario has launched three renewable energy RFPs, totalling 1500 MW, with over 1300 MW of wind power contracts awarded to date. The Canadian national government has extended the wind power production incentive (WPPI) programme to April 2010, resulting in some 3000 MW of projects that are now planned for construction. “Turbine supply leverage will further define the North American wind industry for years to come,” says Chua. “In the near term, it is less about who will sell more, and more about who will sell out first. This is exacerbated by the PTC, since projects must be built by the end of 2007 or, otherwise, face losing the all-important tax credit.” Vietnam: scaling back coal-fired plans toward gas, renewables Tax break drives US wind energy market 1.12.2006 Previous articleE.ON Rhurgas details launch of world’s first commercial satellite positioning systemNext articleAEP starts process to construct second IGCC plant chloecox CoalGasRenewablesWind Facebook Venture Global LNG adds Zachry to EPC team for Gulf export terminal construction Mississippi Power cutting stakes in coal-fired, gas-fired stations to reduce excess MW, emissions Facebooklast_img

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