1

WIND AND WATER POWER TECHNOLOGIES OFFICE

2014 Wind Technologies Market Report: Summary

Ryan Wiser & Mark BolingerLawrence Berkeley National Laboratory

August 2015

2

2014 Wind Technologies Market ReportPurpose, Scope, and Data:

• Publicly available annual report summarizing key trends in the U.S. wind power market, with a focus on 2014

• Scope primarily includes wind turbines over 100 kW in size

• Separate DOE-funded annual reports on distributed and offshore wind

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

Report Authors:

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

• Contributions from others at Berkeley Lab, Exeter Associates, NREL

Funded by: U.S. DOE Wind & Water Power Technologies Office

Available at: http://energy.gov/eere/wind

3

Report Contents

• Installation trends

• Industry trends

• Technology trends

• Performance trends

• Cost trends

• Wind power price trends

• Policy & market drivers

• Future outlook

4

Key Findings• Annual wind capacity additions rebounded in 2014, with

significant additional new builds anticipated for 2015 and 2016• Wind has been a significant source of new electric generation

capacity additions in the U.S. in recent years• Supply chain has been under duress, but domestic manufacturing

content for nacelle assembly, blades, and towers is strong• Turbine scaling is boosting expected wind project performance,

while the installed cost of wind projects is on the decline • Wind power sales prices have reached all-time lows, enabling

economic competitiveness despite low natural gas prices• Growth after 2016 remains uncertain, dictated in part by future

natural gas prices and policy decisions, though recent declines in the price of wind energy boost future growth prospects

5

Installation Trends

6

• $8.3 billion invested in wind power project additions in 2014• Wind build well off annual additions from 2007 through 2012• Cumulative wind capacity up nearly 8%, bringing total to 65.9 GW

Wind Power Additions Rebounded in 2014, with 4,854 MW of New Capacity Added

7

Wind Power Represented 24% of Electric-Generating Capacity Additions in 2014

From 2007-2014, wind comprised 33% of capacity additions nation-wide, and a much higher proportion in some regions

Interior

GreatLakes

West

Southeast

Northeast

0%

10%

20%

30%

40%

50%

0

20

40

60

80

100

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Tota

l Ann

ual C

apaci

ty A

dditi

ons

(GW

)

Wind Solar Other RenewableGas Coal Other Non-Renewable

Win

d C

apaci

ty A

dditi

ons

(% o

f T

ota

l Annual C

ap

aci

ty A

dditi

on

s)

Wind (% of Total, right axis)

54% 49%

27% 26%

2%

33%

0%

20%

40%

60%

80%

100%

Interior Great Lakes Northeast West Southeast U.S. Total

Per

cent

age

of G

ener

atio

n C

apac

ity A

dditi

ons

(200

7-2

014)

Wind Solar Other Renewable Gas Coal Other Non-Renewable

8

• Global wind additions reached a new high in 2014• U.S. remains a distant second to China in cumulative capacity• U.S. led the world in wind energy production in 2014

The U.S. Placed 3rd in Annual Wind Power Capacity Additions in 2014

Annual Capacity (2014, MW)

Cumulative Capacity (end of 2014, MW)

China 23,300 China 114,760 Germany 5,119 United States 65,877 United States 4,854 Germany 39,223 Brazil 2,783 India 22,904 India 2,315 Spain 22,665 Canada 1,871 United Kingdom 12,413 United Kingdom 1,467 Canada 9,684 Sweden 1,050 France 9,170 France 1,042 Italy 8,556 Turkey 804 Brazil 6,652 Rest of World 6,625 Rest of World 60,208 TOTAL 51,230 TOTAL 372,112 Source: Navigant; AWEA project database for U.S. capacity

9

U.S. 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 2014

10

Geographic Spread of Wind Projects in the United States Is Reasonably Broad

Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2014

11

Texas Installed the Most Capacity in 2014; 9 States Exceed 12% Wind Energy

• Texas has more than twice as much wind capacity as any other state

• 23 states had >500 MW of capacity at end of 2014 (16 > 1 GW, 10 > 2 GW)

• 2 states have >25% of total in-state generation from wind (9 states > 12%)

Installed Capacity (MW) Percentage of In-State Generation

Annual (2014) Cumulative (end of 2014) Actual (2014)* Texas 1,811 Texas 14,098 Iowa 28.5% Oklahoma 648 California 5,917 South Dakota 25.3% Iowa 511 Iowa 5,688 Kansas 21.7% Michigan 368 Oklahoma 3,782 Idaho 18.3% Nebraska 277 Illinois 3,568 North Dakota 17.6% Washington 267 Oregon 3,153 Oklahoma 16.9% Colorado 261 Washington 3,075 Minnesota 15.9% North Dakota 205 Minnesota 3,035 Colorado 13.6% Indiana 201 Kansas 2,967 Oregon 12.7% California 107 Colorado 2,593 Texas 9.0% Minnesota 48 North Dakota 1,886 Wyoming 8.9% Maryland 40 New York 1,748 Maine 8.3% New Mexico 35 Indiana 1,745 New Mexico 7.0% New York 26 Michigan 1,531 California 7.0% Montana 20 Wyoming 1,410 Nebraska 6.9% South Dakota 20 Pennsylvania 1,340 Montana 6.5% Maine 9 Idaho 973 Washington 6.3% Ohio 0.9 New Mexico 812 Hawaii 5.9% Massachusetts 0.6 Nebraska 812 Illinois 5.0% South Dakota 803 Vermont 4.4% Rest of U.S. 0 Rest of U.S. 4,941 Rest of U.S. 0.9%

TOTAL 4,854 TOTAL 65,877 TOTAL 4.4% * Based on 2014 wind and total generation by state from EIA’s Electric Power Monthly.

12

No Commercial Offshore Wind Turbines Commissioned; 1 Project in Construction and 18 in Various Stages of Development

• 30 MW Block Island project (RI) started construction in 2015

• BOEM has granted 5 competitive leases; DOE funding 3 pilot deployments

• Legal and political headwind for high-profile projects:• Cape Wind (MA) power purchase

agreements cancelled by utilities• Fishermen’s Atlantic City (NJ)

rejected by state PUC• Dominion (VA) announced delay due

to cost

• Pressing challenges include cost, lack of PPAs and policy incentives, regulatory complexity

13

Interconnection Queues Demonstrate that a Substantial Amount of Wind Is Under Consideration

Wind represented 30% of capacity in sampled 35 queues

But… absolute amount of wind (and coal & nuclear) in sampled queues has declined in recent years whereas natural gas and solar capacity has increased

Not all of this capacity will be built….

• AWEA reports 13.6 GW of capacity under construction after 1Q2015

14

Larger Amounts of Wind Planned for Texas, Midwest, Southwest Power Pool, PJM, and Northwest

Not all of this capacity will be built….

15

Industry Trends

16

GE, Siemens, and Vestas Captured 98% of the U.S. Market in 2014

• Recent dominance of the three-largest turbine suppliers in the U.S. market• Globally, Vestas remained the top supplier, followed by Siemens and GE • Chinese suppliers occupied 8 of the top 15 spots in the global ranking,

based almost entirely on sales within their domestic market

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Tu

rbin

e O

EM

US

Mar

ket S

har

e b

y M

W

Other

Suzlon

Acciona

Clipper

Nordex

Mitsubishi

REpower

Gamesa

Vestas

Siemens

GE Wind

17

Manufacturing Supply Chain Continued to Adjust to Swings in Domestic Demand

Note: map not intended to be exhaustive

Realignment Continued…• Uncertain medium-term demand and

growing global competition led to 12 domestic manufacturing facility closures in 2014; only 1 new facility opened

• Nonetheless, many supply chain manufacturers remain

• Over last decade, manufacturers have localized and expanded U.S. presence

• “Big 3” OEMs all still have at least one domestic facility

• Wind related jobs increased from 50,500 in 2013 to 73,000 in 2014

18

Domestic Manufacturing Capability for Nacelle Assembly, Towers, and Blades Is Reasonably Well Balanced Against Demand Forecasts for 2015 and 2016

19

Turbine OEM Profitability Has Generally Rebounded Over the Last Two Years

20

Imports of Wind Equipment Are Sizable; Exports Continue to Grow Slowly

• 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 a net importer of wind equipment

Exports of wind-powered generating sets increased modestly in 2014 to $488 billion; no ability to track other wind-specific exports, but total tower exports equalled $116 million

0

1

2

3

4

5

6

7

20062457 MW

20075253 MW

20088362 MW

200910005 MW

20105216 MW

20116820 MW

201213131 MW

20131087 MW

20144854 MW

Bil

lio

n 2

01

4$

US

Other wind-related equipment (est.)

Wind generators (2012-2014)

Wind blades and hubs (2012-2014)

Towers (estimated through 2010)

Wind-powered generating sets

US Imports:Exports of Wind-Powered Generating Sets

21

Tracked Wind Equipment Imports in 2014: 42% Asia, 39% Europe, 20% Americas

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

22

Source Markets for Imports Vary Over Time, and By Type of Wind Equipment• Majority of imports of wind-powered

generating sets from home countries of OEMs, dominated by Europe and Asia

• Majority of imports of towers from Asia, but decline in recent years after tariff measures largely stopped imports from China and Vietnam

• Majority of imports of blades & hubs from Brazil and China in recent years

• Globally diverse sourcing strategy for generators & parts, dominated by Asian and European countries

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 0.58B

2006 1.42B

2007 2.72B

2008 2.75B

2009 2.52B

2010 1.33B

2011 1.3B

2012 1.01B

2013 0.02B

2014 0.25B

Impo

rt C

ontin

ent (

% o

f ann

ual i

mpo

rts)

Annual Imports

Wind-powered Generating Sets

China

Denmark

Spain

2012 0.92B

2013 0.28B

2014 0.49B

Wind Blades & Hubs

Germany

Spain

Denmark

China

Brazil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2011 0.46B

2012 0.85B

2013 0.1B

2014 0.25B

Wind Towers

Spain

Canada

Mexico

Indonesia

South Korea

2012 0.47B

2013 0.2B

2014 0.33B

Wind Generators & Parts

Denmark

Serbia

Spain

Japan

Vietnam

23

Domestic Manufacturing Content Is Strong for Nacelle Assembly, Towers, and Blades, but U.S. Is Highly Reliant on Imports for Equipment Internal to the Nacelle

Imports occur in untracked trade categories, including many nacelle internals

Overall estimated domestic content: ~40% in 2012 for wind turbine equipment; ~60% if considering total projects costs, including balance-of-plant

Generators Towers Blades & Hubs Wind-Powered Generating Sets < 15% 70-80% 45-65% > 90% of nacelle assembly

Domestic Content for 2013 – 2014 Turbine Installations in the U.S.

24

The Project Finance Environment Remained Strong in 2014

• Project sponsors raised $5.8 billion of tax equity (largest single-year amount on record) and $2.7 billion of debt in 2014

• Tax equity yields held steady, while debt interest rates trended lower

0%

2%

4%

6%

8%

10%

12%

Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Tax Equity Yield (after-tax)

15-Year Debt Interest Rate (after-tax)

15-Year Debt Interest Rate (pre-tax)

25

Utility Ownership of Wind Rebounded Somewhat in 2014; IPPs Still Dominate

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Other

Publicly Owned Utility (POU)

Investor-Owned Utility (IOU)

Independent Power Producer (IPP)% o

f C

um

ula

tive

Inst

alle

d C

apac

ity

Other:1 MW (0%)

IPP: 3,572 MW (74%)

IOU:1,281 MW

(26%)

2014 Capacity byOwner Type

26

Long-Term Contracted Sales to Utilities Remained the Most Common Off-Take Arrangement, but Merchant Projects Continued to Expand, at Least in Texas

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

19

98

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

On-Site

Power Marketer

Merchant/Quasi-Merchant

POU

IOU% o

f C

um

ula

tive

In

sta

lle

d C

ap

ac

ity

Merchant:1,613 MW

(33%)

On-Site:23 MW (0.5%)

IOU:2,497 MW

(51%)

POU:720 MW

(15%)

2014 Capacity byOff-Take Category

• Recently announced wind purchases of ~2 GW from technology companies and business giants to hospitals, universities, and government agencies

27

Technology Trends

28

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

29

Growth in Rotor Diameter Has Outpaced Growth in Nameplate Capacity and Hub Height in Recent Years

Nameplate Capacity

Hub Height

Rotor Diameter

30

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

Specific Power

IEC Class

Specific Power by IEC Class 2 & 3

31

Turbines Originally Designed for Lower Wind Speeds Are Now Regularly Used in Lower and Higher Wind Speed Sites, Whereas Taller Towers Predominate in the Great Lakes and Northeast

By Region By Wind Resource Quality

32

Performance Trends

33

Sample-Wide Capacity Factors Have Increased, but Impacted by Curtailment and Inter-Year Wind Resource Variability

Note: The wind resource index is compiled from NextEra Energy Resources reports

0.00

0.15

0.30

0.45

0.60

0.75

0.90

1.05

1.20

0%

5%

10%

15%

20%

25%

30%

35%

40%

200010

591

200130

943

200273

2,682

200384

3,128

2004106

4,500

2005129

5,142

2006153

7,967

2007196

9,951

2008240

14,926

2009339

23,617

2010452

33,381

2011516

38,562

2012602

44,751

2013748

58,299

2014597

58,685

Long-Term W

ind Resource IndexSa

mpl

e-W

ide

Capa

city

Fac

tor

Capacity Factor Based on Estimated Generation (if no curtailment in subset of regions) Capacity Factor Based on Actual Generation (with curtailment) Wind Resource Index (right scale)

# MW:# Projects:

Year:

34

Wind Curtailment Has Generally Declined in Recent Years; Higher in MISO and New England than in Other Regions

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

Except for BPA, data represent both forced and economic curtailment

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

ERCOT MISO BPA NYISO PJM ISO-NE SPP TOTALSAMPLED

Win

d Cu

rtai

lmen

t as P

erce

ntag

e of

Po

tenti

al W

ind

Gen

erati

on

2007 2008 2009 2010 2011 2012 2013 2014

Notes to figure:• BPA's 2014 curtailment estimate was unavailable at the time of publication. A portion

of BPA’s curtailment from 2010-13 is estimated assuming that each curtailment event lasts for half of the maximum possible hour for each event.

• SPP’s 2014 curtailment estimate is for March through December only.• PJM's 2012 curtailment estimate is for June through December only.

35

Even Controlling for These Factors, Average Capacity Factors for Projects Built After 2005 Have Been Stagnant, Averaging 32% to 35% Nationwide

0%

10%

20%

30%

40%

50%

60%

1998-9925

921

2000-0127

1,760

2002-0338

1,988

2004-0528

3,652

200620

1,708

200737

5,282

200879

8,498

200996

9,578

201048

4,733

201168

5,917

2012117

13,533

20138

969

Weighted Average (by project vintage) Individual Project (by project vintage)

2014

Cap

acit

y Fa

ctor

(by

proj

ect

vint

age)

Sample includes 591 projects totaling 58.5 GW

Vintage:# projects:

# MW:

36

Trends Explained by Competing Influence of Lower Specific Power and Build-Out of Lower Quality Wind Resource Sites

All else equal:• Drop in average specific power will boost capacity factors• Building projects in lower wind resource sites will reduce capacity factors

Reversal of build-out in lower wind speed sites in 2013 and 2014: likely to show up in capacity factor data next year

37

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

Notwithstanding build-out of lower-quality wind resource sites, 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%

Lower174 projects, 12.5 GW

Medium107 projects, 13.8 GW

Higher138 projects, 17.0 GW

Highest149 projects, 14.9 GW

Estimated Wind Resource Quality at Site

Specific Power ≥ 400 (33 projects, 3.0 GW) Specific Power range of 300-400 (391 projects, 41.3 GW) Specific Power range of 220-300 (127 projects, 11.6 GW) Specific Power < 220 (17 projects, 2.2 GW)

Sample includes 568 projects totaling 58.2 GW with a commercial operation date of 1998-2013

Wei

ghte

d-A

vg. R

ealiz

ed C

apac

ity F

acto

r in

2014

38

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

Notwithstanding build-out of lower-quality wind resource sites, 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%

1998-992000-012002-032004-05 2006 2007 2008 2009 2010 2011 2012 2013Project Vintage

Highest Wind Resource Quality Higher Wind Resource Quality Medium Wind Resource Quality Lower Wind Resource Quality

Wei

ghte

d-Av

g. R

ealiz

ed C

apac

ity F

acto

r in

2014

39

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

0%

10%

20%

30%

40%

50%

60%

West32 projects3,938 MW

Northeast15 projects1,147 MW

Great Lakes18 projects2,109 MW

Interior59 projects7,253 MW

Weighted Average (by region)

Weighted Average (total U.S.)

Individual Project (by region)

2014

Cap

acity

Fac

tor

Sample includes 124 projects built in 2012-13 and totaling 14.4 GW

40

Cost Trends

41

Wind Turbine Prices Remained Well Below the Levels Seen Several Years Ago

Recent turbine orders reportedly in the range of $850-1,250/kW

42

Lower Turbine Prices Drive Reductions in Reported Installed Project Costs

• 2014 projects had an average cost of $1,710/kW, down $580/kW since 2009 and 2010 (up slightly from small sample of 2013 projects)

• Limited sample of under-construction projects slated for completion in 2015 suggest no material change in costs

0

1,000

2,000

3,000

4,000

5,000

6,000

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Inst

alle

d Pr

ojec

t Cos

t (20

14 $

/kW

)

Commercial Operation Date

Individual Project Cost (743 projects totaling 54,014 MW)

Capacity-Weighted Average Project Cost

43

Economies of Scale Evident, Especially at Lower End of Project & Turbine Size Range

Project Size

Turbine Size

0

500

1,000

1,500

2,000

2,500

3,000

3,500

≤5 MW9 MW

6 projects

5-20 MW87 MW

6 projects

20-50 MW88 MW

2 projects

50-100 MW312 MW

4 projects

100-200 MW1,713 MW11 projects

>200 MW1,680 MW7 projects

Inst

alle

d Pr

ojec

t Cos

t (20

14 $

/kW

)

Capacity-Weighted Average Project Cost

Individual Project CostSample includes projects built in 2014

Project size:# MW:

# projects:

0

500

1,000

1,500

2,000

2,500

3,000

3,500

>0.1 & <1 MW1 MW

2 projects

≥1 & <2 MW2,237 MW22 projects

≥2 & <3 MW1,445 MW11 projects

≥3 MW205 MW1 project

Inst

alle

d Pr

ojec

t Cos

t (20

14 $

/kW

)

Capacity-Weighted Average Project Cost

Individual Project Cost

Sample includes projects built in 2014

Turbine size:# MW:

# projects:

44

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

Different permitting/development costs may play a role at both ends of spectrum: it’s easier/cheaper to build in the US interior and harder/more expensive along the coasts

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Interior22 projects2,961 MW

West5 projects274 MW

Northeast2 projects

95 MW

Great Lakes6 projects519 MW

Southeast1 project40 MW

Inst

alle

d Pr

ojec

t Co

st (2

014

$/kW

)

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

Sample includes projects built in 2014

45

Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date

Capacity-weighted average 2000-14 O&M costs for projects built in the 1980s equal $34/MWh, dropping to $24/MWh for projects built in 1990s, to $10/MWh for projects built in the 2000s, and to $9/MWh for projects built since 2010Note: Sample is limited, and consists of 147 wind projects totaling 10,350 MW; few projects in sample have complete records of O&M costs from 2000-14; O&M costs reported here DO NOT include all operating costs

0

10

20

30

40

50

60

70

80

90

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Commercial Operation Date

Projects with no 2014 O&M data

Projects with 2014 O&M data

Aver

age

Annu

al O

&M

Cos

t 200

0-2

014

(201

4 $/

MW

h)

46

Operations and Maintenance Costs Varied By Project Age and Commercial Operations Date

Note: Sample size is limited

O&M reported in figure does not include all operating costs: Statements from public companies with large U.S. wind asset bases report total operating costs in 2014 for projects built in the 2000s of ~$21-25/MWh

0

5

10

15

20

25

30

35

40

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

2005-2008

2009-2013

Commercial Operation Date:

n=18

Med

ian

Ann

ual O

&M

Cos

t (20

14 $

/MW

h)

n=23

n=25

n=9

n=9

n=6

n=4

n=31

n=25

n=23

n=25

n=13

n=25

n=2

n=6

n=25

n=11

n=29

n=29

n=17

n=6

n=5

n=5

n=5

n=4

n=4

n=5

n=6

n=21

47

Wind Power Price Trends

48

Sample of Wind Power Prices

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

• PPA sample includes 363 contracts totaling 32,641 MW from projects built from 1998-2014, or planned for installation in 2015 or 2016

• Prices reflect the bundled price of electricity and RECs as sold by the project owner under a power purchase agreement– Dataset excludes merchant plants and projects that sell renewable

energy certificates (RECs) separately

– 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

49

Wind PPA Prices Have Reached All-Time Lows, Dominated by Interior Region

$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

PPA Execution Date

Interior (20,611 MW, 212 contracts) West (7,124 MW, 72 contracts) Great Lakes (3,620 MW, 48 contracts) Northeast (1,018 MW, 25 contracts) Southeast (268 MW, 6 contracts)

Leve

lized

PPA

Pric

e (2

014

$/M

Wh)

75 MW

150 MW 50 MW

50

A Smoother Look at the Time Trend Shows Steep Decline in Pricing Since 2009; Especially Low Pricing in Interior Region

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

1996-9910

553

2000-0117

1,249

2002-0324

1,382

2004-0530

2,190

200630

2,311

200726

1,781

200839

3,465

200949

4,048

201048

4,642

201142

4,572

201214

985

201326

3,674

201413

1,768

Ave

rage

Lev

eliz

ed P

PA P

rice

(Rea

l 201

4 $/

MW

h)

Nationwide Interior

Great Lakes West

Northeast

PPA Year:Contracts:

MW:

51

Relative Competitiveness of Wind Power Improved in 2014: Comparison to Wholesale Electricity Prices

• Wholesale price range reflects flat block of power across 23 pricing nodes across the U.S.• Price comparison shown here is far from perfect – see full report for caveats

0

10

20

30

40

50

60

70

80

90

100

20039

570

200413

547

200517

1,643

200630

2,311

200726

1,781

200839

3,465

200949

4,048

201048

4,642

201142

4,572

201214

985

201326

3,674

201413

1,768

2014

$/M

Wh

Nationwide Wholesale Power Price Range (by calendar year) Generation-Weighted Average Levelized Wind PPA Price (by year of PPA execution)

Wind project sample includes projects with PPAs signed from 2003-2014

PPA year:Contracts:

MW:

52

Comparison Between Wholesale Prices and Wind PPA Prices Varies by Region

Notes: Wind PPAs included are those signed from 2012-2014. Within a region there are a range of wholesale prices because multiple price hubs exist in each area; price comparison shown here is far from perfect – see full report for caveats

Wind PPA prices most competitive with wholesale prices in the Interior region

0

10

20

30

40

50

60

70

80

90

100

Interior37 projects5,275 MW

Great Lakes10 projects

755 MW

Northeast1 project69 MW

West5 projects329 MW

Total US53 projects6,427 MW

Average 2014 Wholesale Power Price Range

Individual Project Levelized Wind PPA Price

Generation-Weighted Average Levelized Wind PPA Price

Wind project sample includes projects with PPAs signed in 2012-2014

2014

$/M

Wh

53

Recent Wind Prices Are Hard to Beat: Competitive with Expected Future Cost of Burning Fuel in Natural Gas Plants

Price comparison shown here is far from perfect – see full report for caveats

0

10

20

30

40

50

60

70

80

90

100

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

Range of AEO15 gas price projections AEO15 reference case gas price projection Wind 2012 PPA execution (985 MW, 14 contracts) Wind 2013 PPA execution (3,674 MW, 26 contracts) Wind 2014 PPA execution (1,768 MW, 13 contracts)

2014

$/M

Wh

54

Renewable Energy Certificate (REC) Prices Remain High in Northeast, While Rising Modestly among Mid-Atlantic States

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

$0

$10

$20

$30

$40

2010

2011

2012

2013

2014

2015

Mid-Atlantic Tier I, Texas, & Voluntary Mkt

DC DE IL (wind)MD NJ OH (I-S)OH (O-S) PA TXVol. (natn'l) Vol. (west)

$0

$20

$40

$60

$80

2010

2011

2012

2013

2014

2015

New England Class I

CT MA ME NH RI

2014

$/M

Wh

55

Policy and Market Drivers

56

Availability of Federal Incentives for Wind Projects Built in the Near Term Has Is Leading to a Resurgent Domestic Market, but a Possible Policy Cliff Awaits

• Near-term availability of the PTC/ITC for those projects that reached the “under construction” milestone by the end of 2014 will enable solid growth in 2015 and 2016; uncertain prospects after that

• Prospective impacts of more-stringent EPA environmental regulations, including those related to power-sector carbon emissions, may create new markets for wind energy

57

State Policies Help Direct the Location and Amount of Wind Development, but Current Policies Cannot Support Continued Growth at Recent Levels

• 29 states and D.C. have mandatory RPS programs

• State RPS’ can support ~4-5 GW/yr of renewable energy additions on average through 2025 (less for wind specifically)

Source: Berkeley Lab

NV: 25% by 2025

TX: 5,880 MW by 2015

ME: 40% by 2017NH: 24.8% by 2025VT: 75% by 2032MA: 11.1% by 2009 +1%/yrRI: 16% by 2019CT: 23% by 2020DE: 25% by 2025NJ: 22.5% by 2020DC: 20% by 2020MD: 20% by 2022NC: 12.5% by 2021 (IOUs), 10% by 2018 (co-ops and munis)

AZ: 15% by 2025 NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

CA: 33% by 2020

MN: 26.5% by 2025Xcel: 31.5% by 2020WI: 10% by 2015

IA: 105 MW by 1999IL: 25% by 2025MO: 15% by 2021

HI: 100% by 2045

NY: 30% by 2015PA: 8.5% by 2020MI: 10% by 2015OH: 12.5% by 2026

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

MT: 15% by 2015WA: 15% by 2020OR: 25% by 2025 (large utilities)5-10% by 2025 (smaller utilities)

58

Solid Progress on Overcoming Transmission Barriers Continued• Over 2,000 circuit miles of new transmission built in 2014; lower than 2013

but consistent with 2009-2012

• 22,000 additional circuit miles proposed by March 2017, with half having a high probability of completion

• AWEA has identified 18 near-term transmission projects that – if all were completed – could carry 55-60 GW of additional wind power capacity

• FERC continued to implement Order 1000, requiring public utility transmission providers to improve planning processes and determine a cost allocation methodology for new transmission investments

59

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. There has been some recent literature questioning the methods used to estimate wind integration costs and the ability to disentangle those costs explicitly, while also highlighting the fact that other generating options also impose integration challenges and costs.

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

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

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

Inte

grat

ion

Cos

t ($/

MW

h)

Wind Penetration (Capacity Basis)

APS (2007)

Avista (2007)

BPA (2009) [a]

BPA (2011) [a]

BPA (2013)

CA RPS (2006) [b]

ERCOT (2012)

EWITS (2010)

Idaho Power (2007)

Idaho Power (2012)

MN-MISO (2006) [c]

Nebraska (2010)

NorthWestern (2012)

Pacificorp (2005)

Pacificorp (2007)

PacifiCorp (2010)

PacifiCorp (2012)

PacifCorp (2014)

Portland GE (2011)

Portland GE (2013)

Puget Sound Energy (2007)

SPP-SERC (2011)

We Energies (2003)

Xcel-MNDOC (2004)

Xcel-PSCo (2006)

Xcel-PSCo (2008)

Xcel-PSCo (2011) [d]

Xcel-UWIG (2003)

60

Future Outlook

61

Sizable Wind Additions Anticipated for 2015 & 2016; Downturn and Increased Uncertainty in 2017 and Beyond

Wind additions in 2014 and anticipated additions from 2017-2020 fall below the deployment trajectory analyzed in DOE’s Wind Vision report

62

Current Low Prices for Wind, Future Technological Advancement and New EPA Regulations May Support Higher Growth in Future, but Headwinds Include…• Lack of clarity about fate of federal tax incentives

• Continued low natural gas and wholesale electricity prices

• Modest electricity demand growth

• Limited near-term demand from state RPS policies

• Inadequate transmission infrastructure in some areas

• Growing competition from solar in some regions

63

Conclusions• Annual wind capacity additions rebounded in 2014, with

significant additional new builds anticipated for 2015 and 2016• Wind has been a significant source of new electric generation

capacity additions in the U.S. in recent years• Supply chain has been under duress, but domestic manufacturing

content for nacelle assembly, blades, and towers is strong• Turbine scaling is boosting expected wind project performance,

while the installed cost of wind projects is on the decline • Wind power sales prices have reached all-time lows, enabling

economic competitiveness despite low natural gas prices• Growth after 2016 remains uncertain, dictated in part by future

natural gas prices and policy decisions, though recent declines in the price of wind energy boost future growth prospects

64

For More Information...

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

• http://energy.gov/eere/wind

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

510-486-5474, RHWiser@lbl.gov• Mark Bolinger, Lawrence Berkeley National Laboratory

603-795-4937, MABolinger@lbl.gov

Berkeley Lab’s contributions to this report were funded by the Wind & Water Power 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.