2018 wind technologies market report: summary - energy.gov wind... · u.s. department of energy...

1U.S. DEPARTMENT OF ENERGY OFFICE OF ENERGY EFFICIENCY & RENEWABLE ENERGY

2018 Wind Technologies Market Report: Summary Ryan Wiser & Mark Bolinger, Lawrence Berkeley National Laboratory

August 2019


2018 Wind Technologies Market Report

Purpose, Scope, and Data:– Publicly available annual report summarizing key trends in the

U.S. wind power market, with a focus on 2018– Scope focuses on land-based wind turbines over 100 kW – Separate DOE-funded reports on distributed and offshore wind– Data sources include EIA, FERC, SEC, AWEA, etc. (see full report)

Report Authors:– Primary authors: Ryan Wiser and Mark Bolinger, Berkeley Lab– Contributions from others at Berkeley Lab, Exeter Associates,

National Renewable Energy Laboratory

Funded by: U.S. DOE Wind Energy Technologies OfficeAvailable at: http://energy.gov/windreport


Report Contents

• Installation trends

• Industry trends

• Technology trends

• Performance trends

• Cost trends

• Wind power price trends

• Policy and market drivers

• Future outlook


Key Findings

• Wind capacity additions continued at a robust pace in 2018, with significant additional new builds anticipated in near-term in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain is diverse and multifaceted, with strong domestic content for nacelle assembly, towers, and blades

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices and levelized cost of energy are at all-time lows, enabling economic competitiveness (with the PTC) despite low gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth


Installation Trends


Wind Power Additions Continued at a Robust Pace in 2018, with 7,588 MW of New Capacity, Bringing the Total to 96,433 MW

• $11 billion invested in wind power project additions in 2018• Over 80% of new 2018 capacity located in Interior region• Partial repowering trend: 1,312 MW of existing wind plants

retrofitted in 2018

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2018

Southeast (annual, left scale)

Northeast (annual, left scale)

Great Lakes (annual, left scale)

West (annual, left scale)

Interior (annual, left scale)

Total U.S. (cumulative, right scale)

Cum

ulat

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Capa

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(GW

)

Ann

ual C

apac

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(GW

)


Wind Power Represented 21% of Electric-Generating Capacity Additions in 2018, Behind Solar and Natural Gas

Over the last decade, wind has comprised 28% of total capacity additions nationwide, and a much

higher proportion in some regions of the country

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Wind Solar Other Renewable Gas Coal Other Non-Renewable

Win

d Ca

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as S

hare

of T

otal

Wind % of Total (right axis)

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Interior Great Lakes West Northeast Southeast U.S. Total

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Wind Solar Other Renewable Gas Coal Other Non-Renewable


Globally, the U.S. Ranked 2nd in Annual Wind Power Capacity Additions in 2018, and in Cumulative Wind Power Capacity

• U.S. remains a distant second to China in annual and cumulative capacity• Global wind additions in 2018 were below the 53,500 MW added in 2017 and

the record level of 63,800 MW added in 2015

Annual Capacity (2018, MW)

Cumulative Capacity (end of 2018, MW)

China 23,000 China 211,392 United States 7,588 United States 96,433 Germany 3,371 Germany 59,312 India 2,191 India 35,129 Brazil 1,939 Spain 23,531 United Kingdom 1,901 United Kingdom 20,964 France 1,565 France 15,309 Mexico 929 Brazil 14,707 Sweden 720 Canada 12,816 Canada 566 Italy 9,959 Rest of World 7,545 Rest of World 91,518 TOTAL 51,315 TOTAL 591,069


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018

The United States is Lagging Other Countries in Wind Energy as a Percentage of Electricity Consumption

Note: Figure only includes the countries with the most installed wind power capacity at the end of 2018


The Geographic Spread of Wind Power Projects Across the United States Is Broad, with the Exception of the Southeast

Note: Numbers within states represent cumulative installed wind capacity and, in brackets, annual additions in 2018


Texas Installed the Most Wind Power Capacity in 2018; 14 States Exceed 10% Wind Energy as Percentage of In-State Generation

2018 Wind Penetration by ISO: SPP: 23.9%; ERCOT: 18.6%; MISO: 7.3%; CAISO: 7.3%; ISO-NE: 2.8%; PJM: 2.7%; NYISO: 2.5%

Installed Capacity (MW) 2018 Wind Generation as a Percentage of:

Annual (2018) Cumulative (end of 2018) In-State Generation In-State Sales Texas 2,359 Texas 24,895 Kansas 36.4% North Dakota 53.5% Iowa 1,120 Iowa 8,421 Iowa 33.7% Kansas 47.1% Colorado 600 Oklahoma 8,072 Oklahoma 31.7% Oklahoma 43.4% Oklahoma 576 California 5,840 North Dakota 25.8% Iowa 43.2% Nebraska 558 Kansas 5,653 South Dakota 24.4% New Mexico 25.6% Kansas 543 Illinois 4,861 Maine 21.0% Wyoming 24.9% Illinois 529 Minnesota 3,778 New Mexico 18.7% South Dakota 21.7% California 330 Colorado 3,703 Minnesota 17.9% Maine 21.0% Indiana 200 Oregon 3,213 Colorado 17.3% Texas 18.6% New York 158 North Dakota 3,155 Texas 15.9% Colorado 17.5% North Dakota 148 Washington 3,076 Vermont 15.8% Minnesota 17.0% Ohio 113 Indiana 2,317 Idaho 14.7% Nebraska 16.9% Montana 105 New York 1,987 Nebraska 14.1% Oregon 15.0% Minnesota 90 Nebraska 1,972 Oregon 11.0% Montana 14.9% New Mexico 51 Michigan 1,904 Wyoming 9.0% Idaho 10.8% Michigan 44 New Mexico 1,732 Montana 7.9% Illinois 9.1% South Dakota 41 Wyoming 1,488 Illinois 6.8% Washington 8.2% Rhode Island 21 Pennsylvania 1,369 California 6.5% Vermont 7.1% Massachusetts 2 South Dakota 1,019 Washington 6.3% Hawaii 5.8% Alaska 1 Idaho 973 Indiana 5.0% Indiana 5.6% Rest of U.S. 0 Rest of U.S. 7,005 Rest of U.S. 1.1% Rest of U.S. 1.5%

TOTAL 7,588 TOTAL 96,433 TOTAL 6.5% TOTAL 7.3%


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Solar Wind Gas Storage Nuclear Coal Other

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Entered queues in the year shown

Entered queues in an earlier year

Hatched portion indicates the amount paired with storage (2018 only)

A Record Level of Wind Power Capacity Entered Transmission Interconnection Queues in 2018; Solar and Storage Also Growing

Note: Not all of this capacity will be built

• Hybrid plants with storage represent 20% of solar in queue in 2018, but just 2% of wind in queue is proposed to include storage

• AWEA reports 39 GW of capacity under construction or in advanced development at end of 1Q2019


Larger Amounts of Wind Power Capacity Planned for Southwest Power Pool, Mountain & Midwest Regions; Major Growth in PJM

Note: Not all of this capacity will be built

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Nam

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Entered queues in an earlier year

Hatched portion indicates the amount paired with storage


Industry Trends


GE and Vestas Captured 78% of the U.S. Market in 2018

• Globally, Vestas, Goldwind, Siemens Gamesa, and GE were the top suppliers of wind turbines in 2018

• Chinese suppliers occupied 8 of the top 15 spots in the global ranking, based primarily on sales within their domestic market

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Turb

ine

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U.S

. Mar

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Other

REpower

Clipper

Suzlon

Mitsubishi

Goldwind

Acciona

Nordex (Acciona)

Gamesa

Siemens (Gamesa)

GE Wind

Vestas

# of

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s Se

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% o

f Yea

rly M

arke

t

# of OEMs (right scale)


The Domestic Supply Chain for Wind Equipment is Diverse

Note: map not intended to be exhaustive

• Some manufacturers increased the size of their U.S. workforce in 2018 and/or expanded existing facilities, but expectations for significant additional supply-chain expansion have become less optimistic

• Continued near-term expected growth, but strong competitive pressures and expected reduced demand as PTC is phased out

• Two new manufacturing facilities announced with expected online dates in 2019; four facilities stopped serving industry

• Many manufacturers remain; three of the largest OEMs serving U.S. market all have at least one facility

• Wind-related jobs reached a new all-time high, at 114,000


Domestic Manufacturing Capability for Nacelle Assembly, Towers, & Blades Reasonably Well Balanced Against Historical Demand

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Capa

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)

Past Projected

Annual installed wind power capacity

Nacelle assembly manufacturing capacity

Tower capacityBlades capacity


Turbine OEM Profitability Has Generally Declined in Most Recent Years, Following Several Years of Recovery Since Low in 2012

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Gamesa/SGRE2008-2018

Vestas2008-2018

Nordex2008-2018

Goldwind2008-2018

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Solid line with circle markers = EBITDADashed line with square markers = EBIT


U.S. Is a Net Importer: Imports of Wind Equipment into the United States Are Sizable; Exports Remained Low in 2018

Notes: Figure only includes tracked trade categories; misses other wind-related imports; see full report for the assumptions used to generate this figure

• Exports of wind-powered generating sets = $13 million in 2018• No ability to track other wind-specific exports, but total ‘tower and lattice mast’

exports equaled $29 million

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Impo

rts

and

Expo

rts

(Bill

ion

2018

$US) Other wind-related equipment (estimated, 2006−2011)

Wind generators (2012−2018)Wind blades and hubs (2012−2018)Towers (estimated, 2006−2010)Wind-powered generating sets & nacelles (estimated, 2014−2018)

U.S. Imports:

Exports: Wind-powered generating sets


Tracked Wind Equipment Imports in 2018: 44% from Asia, 35% from Europe, 20% from the Americas

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


Source Markets for Imports Have Varied Over Time, and By Type of Wind Equipment

• Majority of imports of wind-powered generating sets historically from home countries of OEMs, dominated by Europe

• Decline in imports of towers from Asia over time, in part due to tariffs, but rebound in 2018

• Majority of imports of blades & hubs from Asia (especially) China

• Mexico becoming a dominant supplier of generators and parts

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Expo

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Wind-Powered Generating Sets

Germany

Spain

'121.0

'130.3

'140.5

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'180.9

Blades & Hubs

Canada

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China

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Spain

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Towers

'120.5

'130.2

'140.4

'150.4

'160.4

'170.3

'180.3

Mexico

SerbiaSpain

China

Vietnam

Generators & Parts

Annual Imports(billion 2018$)


Domestic Manufacturing Content is Strong for Nacelle Assembly, Towers, and Blades, but not Equipment Internal to the Nacelle

Domestic Content for 2018 Turbine Installations in the United States:

• Imports occur in untracked trade categories, including many nacelle internals; nacelle internals generally have domestic content of < 20%

Towers Blades & Hubs Nacelle Assembly

75–90% 50–70% > 85%


The Project Finance Environment Remained Strong in 2018

• Sponsors raised $6-7 billion of tax equity in 2018• Tax reform legislation contained a number of provisions with implications for

wind finance, but in general those implications have been modest

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Independent Power Producers Own the Majority of Wind Assets Built in 2018

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Independent Power Producer (IPP)% o

f Cum

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alle

d Ca

paci

ty

Other: 4 MW (0.1%)POU: 2 MW (0.0%)

IPP:6,073 MW (80.0%)

IOU:1,509 MW

(19.9%)

2018 Capacity byOwner Category


Long-Term Sales to Utilities Remained Most Common Off-Take, but Direct Retail Sales and Merchant Were Significant

• 24% of added wind capacity in 2018 are from direct retail sales; 49% of total wind capacity contracted through PPAs in 2018 involve non-utility buyers

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Merchant/Quasi-Merchant On-Site Direct Retail Power Marketer Undisclosed POU IOU

IOU:2,616 MW

(34%)

Retail:1,794 MW

(24%)

Merchant:1,776 MW

(23%)

Power Marketer212 MW (3%)

POU:923 MW

(12%)

Undisclosed252 MW (3%)

Onsite: 17 MW (0%)

2018 Capacity byOff-Take Category


Technology Trends


Turbine Capacity, Rotor Diameter, and Hub Height Have All Increased Significantly Over the Long Term, and in 2018

0102030405060708090100110120130

0.00.20.40.60.81.01.21.41.61.82.02.22.42.6

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Commercial Operation Year

Average Nameplate Capacity (left scale)Average Rotor Diameter (right scale)Average Hub Height (right scale)

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Growth in Rotor Diameter and Nameplate Capacity Have Outpaced Growth in Hub Height over the Last Two Decades

Nameplate Capacity

Hub Height

Rotor Diameter

0.00.20.40.60.81.01.21.41.61.82.02.22.42.6

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≥ 3.0 MW2.5−3.0 MW2.0−2.5 MW1.5−2.0 MW1.0−1.5 MW<1.0 MWAverage

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≥100 m90−100 m80−90 m70−80 m<70 mAverage

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≥120 m110−120 m100−110 m90−100 m80−90 m70−80 m<70 mAverage


Turbines Originally Designed for Lower Wind Speed Sites Dominate the Market

Specific Power

IEC Class

Specific Power by Selected IEC Class

• Specific power: turbine nameplate capacity divided by swept rotor area; lower specific power leads to higher capacity factors, as shown later

• IEC Class 1/2/3 represent turbines designed originally for high, medium, and low wind speed, respectively

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≥180−200 W/m2≥200−250 W/m2≥250−300 W/m2≥300−350 W/m2≥350−400 W/m2≥400−700 W/m2Average

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s(%

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ear)


Class 3Class 2/3Class 2Class 1/2Class 1

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IEC Class 2IEC Class 2/3IEC Class 3Avg. Specific Power (all turbines)


Wind Turbines Continued to be Deployed in Somewhat Lower Wind-Speed Sites in 2018

6.6 6.8 7.0 7.2 7.4 7.6 7.8 8.0 8.2 8.4 8.6 8.8

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0m (m

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Average 80m Wind Resource Quality (left scale)Average 80m Wind Resource Quality for Future ProjectsAverage Wind Speed at 80m (past and future projects, right scale)


Low Specific Power Turbines Are Deployed in Low & High Wind Speeds; Taller Towers More Common in Great Lakes & Northeast

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Estimated Wind Resource Quality at 80 Meters

Specific Power≥250 W/m2

200−<250 W/m2

≥180-<200 W/m2

IEC ClassClass 2, 1/2 and 1Class 2/3Class 3

Perc

ent o

f Tur

bine

s Ins

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d With

inEa

ch R

esou

rce C

lass

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8

Hub Height<90 m90−<100m≥100 m


Wind Power Projects Planned for the Near Future Are Poised to Continue the Trend of Ever-Taller Turbines

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% o

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App

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Application Year

Median Tip Height (with 25th and 75th percentiles) % of Applications >500 ft (right axis)

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FAA Application Total Height (feet)

WestInteriorSoutheastGreat LakesNortheast

Total turbine heights proposed in FAA applications, over time

Histogram of cumulative FAA applications through May

2019 greater than 500 feet


A Large Number of Projects Continued to Employ Multiple Turbine Configurations from a Single Turbine Supplier

Note: Turbine configuration = unique combination of hub height, rotor diameter, and/or capacities

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10%

15%

20%

25%

30%

35%

40%

2010 (n=56)

2011 (n=72)

2012 (n=123)

2013 (n=11)

2014 (n=38)

2015 (n=56)

2016 (n=56)

2017 (n=44)

2018 (n=49)

% o

f All

Proj

ects

(≥6

turb

ines

) Usin

g M

ultip

le

Turb

ine

Conf

igur

atio

ns F

rom

a S

ingl

e O

EM

Commerical Operation Year (n = all projects with ≥6 turbines)

GE WindVestasSiemens GamesaOther OEMs


Through 2018, 23 Projects Have Been Partially Repowered, most of which Feature Larger Rotors and Lower Specific Power


Performance Trends


Capacity Factors Have Increased Significantly Over Time, by Online Date (i.e., Commercial Online Date, COD)

0%

10%

20%

30%

40%

50%

60%

'98-990.9

'00-010.9

'02-031.7

'04-052.3

20061.6

20075.2

20087.7

20099.7

20104.7

20115.9

201213.6

20131.0

20145.1

20158.3

20168.2

20177.0

Generation-Weighted Average Individual Project

Capa

city

Fac

tor i

n 20

18 (b

y pr

ojec

t CO

D)


Fleet-Wide Average Capacity Factors Have Gradually Increased, Reaching 35% for the First Time in 2018

0%

5%

10%

15%

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35%

40%

20000.6

20010.9

20022.7

20033.1

20044.5

20055.1

20068.0

20079.9

200814.9

200923.6

201033.3

201138.5

201244.7

201358.2

201459.4

201564.3

201672.7

201778.6

201886.2

Year:# of GW:

Aver

age

Capa

city

Fac

tor i

n Ca

lend

ar Y

ear


The Interior Region Features the Highest Capacity Factors, in Part Reflecting the Strength of the Wind Resource

0%5%

10%15%20%25%30%35%40%45%50%55%

Northeast723 MW

Southeast381 MW

Great Lakes2,353 MW

West762 MW

Interior24,406 MW

Weighted Average (by region) Weighted Average (total U.S.) Individual Project (by region)

Capa

city

Fac

tor i

n 20

18

Sample includes projects built from 2014-2017

Only projects built from 2014-2017

Projects built from 1998-2017


Time Trends Explained by Competing Influences of Lower Specific Power, Higher Hub Heights, Varying Quality Wind Resource Sites

70

80

90

100

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170

180

0%

5%

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15%

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25%

30%

35%

40%

45%

50%

55%19

98-9

9

2000

-01

2002

-03

2004

-05

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Aver

age

Capa

city

Fac

tor i

n 20

18

Commercial Operation Date

Weighted-Average Capacity Factor in 2018 (left scale) Index of the Inverse of Built Specific Power (right scale) Index of Built Turbine Hub Height (right scale) Index of Built Wind Resource Quality at 80m (right scale)

Inde

xof

Cap

acity

Fac

tor I

nflu

ence

s (19

98-9

9=10

0)


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

• 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%

Lower16.8 GW

Medium18.9 GW

Higher25.6 GW

Highest24.7 GW

Estimated Wind Resource Quality at Site

Specific Power ≥ 400 (2.9 GW)Specific Power range of 350–400 (6.1 GW)Specific Power range of 300–350 (35.6 GW)Specific Power range of 250–300 (21.7 GW) Specific Power < 250 (19.6 GW)

Aver

age

Capa

city

Fac

tor i

n 20

18

Presenter

Presentation Notes

revisions


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

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

1998-99

2000-01

2002-03

2004-05

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Commercial Operation Date

Highest Wind Resource Quality

Higher Wind Resource Quality

Medium Wind Resource Quality

Lower Wind Resource Quality

Aver

age

Capa

city

Fac

tor i

n 20

18

Presenter

Presentation Notes

revisions


First Wave of Partial Repowering Demonstrates Higher Capacity Factors from Lower Specific Power

0%

1%

2%

3%

4%

5%

6%

7%

0 20 40 60 80 100 120Reduction in Specific Power (W/m2)

Perc

enta

ge Po

int I

ncre

ase i

n Ca

pacit

y Fac

tor

• Graphic includes 9 projects totaling 2.2 GW that partially repowered their turbines in 2017, and shows the increase in capacity factor in 2018 (relative to the 4-year average from 2013-2016) as a function of the reduction in average specific power

Presenter

Presentation Notes

revisions


Wind Curtailment Varies by Region; Was Highest in MISO in 2017, but Highest-Ever in ERCOT in 2009

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

0%

5%

10%

15%

20%

25%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2014-18SPP

2007-18ERCOT

2009-18MISO

2015-18CAISO

2012-18NYISO

2014-18ISO-NE

2012-18PJM

2007-18Total

Win

d Pe

netr

atio

n (a

s a

% o

f loa

d)

Wind Curtailment (left axis)

Wind Penetration (right axis)

Win

d Cu

rtai

lmen

t


Yearly Variations in Average Wind Speed Also Impact Project Performance, but 2018 Was a Reasonably Normal Wind Year

0.7

0.8

0.9

1.0

1.1

1.2

1.319

99

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

WestInteriorGreat LakesNortheastSoutheastNational

Aver

age

Annu

alW

ind

Reso

urce

Indi

ces

(Lon

g-Te

rm A

vera

ge =

1.0

)


Change in Performance as Projects Age Also Impacts Overall Trends; Performance Degradation Shown After Year 10

40%

50%

60%

70%

80%

90%

100%

110%

120%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

79.5 79.8 71.5 63.3 58.1 57.1 43.5 37.7 32.4 23.2 14.6 8.8 8.0 5.1 4.2 2.9 1.7 0.8 0.8

Median (with 10th/90th percentile error bars) Capacity-Weighted Average

Inde

xed

Capa

city

Fac

tor (

Year

2=1

00%

)

Sample includes projects with COD from 1998 to 2017

Years post-COD:Sample GW:

Presenter

Presentation Notes

revisions


Cost Trends


Wind Turbine Prices Remained Well Below the Levels Seen a Decade Ago

• Recent turbine orders in the range of $700-900/kW


Lower Turbine Prices Have Driven Reductions in Total Installed Project Costs

• 2018 projects had average cost of $1,470/kW, down ~$1000/kW since 2009-2010• Limited sample of under-construction projects suggest somewhat lower costs in 2019

0

1,000

2,000

3,000

4,000

5,000

6,000

7,00019

8219

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1120

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18

Inst

alle

d Pr

ojec

t Cos

t (20

18 $

/kW

)

Commercial Operation Date

Interior (54.8 GW) West (12.5 GW) Great Lakes (9.3 GW) Northeast (4.7 GW) Southeast (1.1 GW) Capacity-Weighted Average


Economies of Scale Are Apparent, Especially when Moving from Small- to Medium-Sized Projects

Project Size

Turbine Size

0

1,000

2,000

3,000

4,000

5,000

≤5 MW33 MW

5-20 MW0 MW

20-50 MW161 MW

50-100 MW220 MW

100-200 MW2,235 MW

>200 MW3,026 MW

Inst

alle

d Pr

ojec

t Cos

t (20

18 $

/kW

)

Capacity-Weighted Average Project Cost Individual Project Cost

Project size:# of MW:

Sample includes projects built in 2018

0

1,000

2,000

3,000

4,000

5,000

≥1.5 & <2 MW33 MW

≥2 & <2.5 MW2,813 MW

≥2.5 & <3 MW1,843 MW

≥3 & <3.5 MW987 MW

Inst

alle

d Pr

ojec

t Cos

t (20

18 $

/kW

) Capacity-Weighted Average Project Cost

Individual Project Cost

Turbine size:# of MW:



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

0

1,000

2,000

3,000

4,000

5,000

Interior4,559 MW

Great Lakes881 MW

West135 MW

Northeast101 MW

Inst

alle

d Pr

ojec

t Cos

t (20

18 $

/kW

)

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



Most Projects—and All of the Low-Cost Projects—Are Located in the Interior; Other Regions Have Higher Costs

Note: Only includes 2018 projects

0

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8

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Num

ber o

f Pro

ject

s

Installed Cost ≥ (2018 $/kW)

Northeast

Great Lakes

West

Interior

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Num

ber o

f MW

Installed Cost ≥ (2018 $/kW)

Northeast

Great Lakes

West

Interior


O&M Costs Vary By Project Age and Commercial Operations Date

Note: Sample is limited; few projects in sample have complete records of O&M costs from 2000-18; O&M costs reported here DO NOT include all operating costs

• Capacity-weighted average 2000-2018 O&M costs for projects built in the 1980s equal $72/kW-year, dropping to $60/kW-year for projects built in the 1990s, to $29/kW-year for projects built in the 2000s and since 2010


O&M Costs Are Lower for More-Recent Projects, and Increase with Age for the Older Projects

Note: Sample size is limited

• O&M reported in figure does not include all operating costs: recent work by Berkeley Lab suggests all-in operating costs for the most recent wind projects in the United States of ~$40/kW-yr


Wind Power Price Trends


Sample of Wind Power Sales Prices

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

• PPA sample includes 448 contracts totaling 42,018 MW from projects built from 1998 to the present, or planned for installation in 2019 or beyond

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

certificates (RECs) separately, and direct retail sales

– 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


Wind PPA Prices Are at Historical Lows

$0

$20

$40

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$100

$12019

9619

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PPA Execution Date

Interior (27.7 GW) West (7.4 GW) Great Lakes (4.8 GW) Northeast (1.6 GW) Southeast (0.5 GW)

Leve

lized

PPA

Pric

e (2

018

$/M

Wh)

50 MW

300 MW


A Smoother Look at the Time Trend Shows a Steep Decline in Pricing Since 2009; Prices Below $20/MWh in Interior Region

$0

$20

$40

$60

$80

$100

96-990.6

00-011.2

02-031.4

04-052.2

20062.4

20071.8

20083.5

20094.0

20104.9

20114.6

20121.1

20135.4

20142.2

20153.3

20161.8

20171.5

20180.1

Nationwide All Other Regions Interior

PPA Year:GW:

Aver

age

Leve

lized

PPA

Pric

e (2

018

$/M

Wh)


Recent Wind PPAs Are Priced in the Mid-Teens in Some Cases

$0

$10

$20

$30

$40

$50

$60

$70

$80

2014 2015 2016 2017 2018

PPA Execution Date

Interior (11.6 GW) West (0.5 GW) Great Lakes (1.7 GW) Northeast (0.6 GW) Southeast (0.2 GW)

Leve

lized

PPA

Pric

e (2

018

$/M

Wh) 80 MW

300 MW

Black line shows nationwide average


Despite Recent Low PPA Prices, Wind Faces Competition from Solar and Natural Gas

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019Gas Projection Year and PPA Execution Date

Utility-Scale Solar (252 PPAs totaling 15.7 GW)

Utility-Scale Wind (310 PPAs totaling 32.4 GW)

Leve

lized

PPA

and

Gas

Pri

ce (2

018

$/M

Wh) Levelized 20-year EIA gas price projections

(converted at 7.5 MMBtu/MWh)


Recent Wind Prices Are Competitive with the Expected Future Cost of Burning Fuel in Natural Gas Plants

• Price comparisons shown are far from perfect—see full report for caveats

0

10

20

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40

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7020

1920

2020

2120

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4120

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50

2018

$/M

Wh

Generation-weighted average wind PPA price among 34 PPAs signed in 2016–2018Median wind PPA price (and 10th/90th percentiles) among 34 PPAs signed in 2016–2018

Range of AEO19 natural gas fuel cost projectionsAEO19 reference case natural gas fuel cost projection


The Economic Competitiveness of Wind Power Is Affected by Its Grid-System Value (Energy & Capacity) in Wholesale Markets

• Wholesale market value considers hourly local wholesale energy price and hourly wind output, along with capacity value where available

• Wholesale market value has declined over last decade, but increased in last couple years• Recent wind PPAs are comparable to grid-system market value, with a number of recent

PPAs coming in at a discount relative to wholesale market value estimates

0

20

40

60

80

100

120

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

ISO-NE

CAISO

PJM

NYISO

MISO

SPP

ERCOT

Win

d W

hole

sale

Mar

ket V

alue

and

PPA

Price

s (2

018

$/M

Wh)

Average Levelized Wind PPA Price with 10th/90th Percentiles (by year of PPA execution)


The Wholesale Market Value of Wind Energy in 2018 Varied by Region: Lowest in ERCOT, Highest in ISO-NE

energy value

capacity value

0

5

10

15

20

25

30

35

40

45

ISO-NE CAISO PJM NYISO MISO SPP ERCOT

Win

d W

hole

sale

Mar

ket

Val

ue in

201

8 (2

018

$/M

Wh)


The Wholesale Market Value of Wind Energy in 2018 Varied by Region: Lowest in ERCOT, Highest in ISO-NE

• Market value estimates in 2018 at project level span a wide range, from a low of $7/MWh to a high of $72/MWh, with a median value of $22/MWh


Renewable Energy Certificate (REC) Prices in RPS Compliance Markets Remained Low in 2018

• 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

2016

2017

2018

2019

PJM

DC DEIL MDNJ OHPA

$0

$20

$40

$60

$80

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

New England

CT MAME NHRI

2018

$/M

Wh

$0

$2

$4

$6

$8

$10

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Texas & Voluntary Market

TXVol. (nat'l)Vol. (west)


The Levelized Cost of Wind Energy Is at an All-Time Low: Nationwide Average of $38/MWh for Projects Built in 2018

• Estimates reflect variations in installed cost, capacity factors, operational costs, cost of financing, and project life; include accelerated depreciation but exclude PTC

$0

$20

$40

$60

$80

$100

$120

$140

98-990.9

00-011.7

02-031.9

04-052.0

20061.8

20073.6

20086.3

20099.6

20105.1

20116.3

20129.5

20130.9

20145.1

20158.2

20168.2

20175.3

20185.7

Nationwide (82.1 GW) Interior (55.1 GW) Great Lakes (9.4 GW) West (12.0 GW) Northeast (4.6 GW) Southeast (1.1 GW)

COD Year:GW:

Aver

age

LCO

E (2

018

$/M

Wh)


Policy and Market Drivers


The Federal Production Tax Credit (PTC) Remains One of the Core Motivators for Wind Power Deployment

• 5-year extension of PTC in 2015, plus guidance allowing 4 years for project completion after the start of construction

• PTC phase-out, with progressive reduction in the value of the credit for projects starting construction after 2016

• PTC phases out in 20%-per-year increments for projects starting construction in 2017 (80% PTC value), 2018 (60%), 2019 (40%)

Legislation Date Enacted

Start of PTC Window

End of PTC Window

Effective PTC Planning Window

(considering lapses and early extensions)

Energy Policy Act of 1992 10/24/1992 1/1/1994 6/30/1999 80 months >5-month lapse before expired PTC was extended

Ticket to Work and Work Incentives Improvement Act of 1999

12/19/1999 7/1/1999 12/31/2001 24 months

>2-month lapse before expired PTC was extended Job Creation and Worker Assistance Act 3/9/2002 1/1/2002 12/31/2003 22 months

>9-month lapse before expired PTC was extended The Working Families Tax Relief Act 10/4/2004 1/1/2004 12/31/2005 15 months

Energy Policy Act of 2005 8/8/2005 1/1/2006 12/31/2007 29 months Tax Relief and Healthcare Act of 2006 12/20/2006 1/1/2008 12/31/2008 24 months

Emergency Economic Stabilization Act of 2008 10/3/2008 1/1/2009 12/31/2009 15 months

The American Recovery and Reinvestment Act of 2009 2/17/2009 1/1/2010 12/31/2012 46 months

2-day lapse before expired PTC was extended American Taxpayer Relief Act of 2012 1/2/2013 1/1/2013 Start construction

by 12/31/2013 12 months (in which to start

construction) >11-month lapse before expired PTC was extended

Tax Increase Prevention Act of 2014 12/19/2014 1/1/2014 Start construction

by 12/31/2014 2 weeks (in which to start

construction) >11-month lapse before expired PTC was extended

Consolidated Appropriations Act of 2016 12/18/2015 1/1/2015

Start construction by 12/31/2016

12 months to start construction and receive 100% PTC value








State Policies Help Direct the Location and Amount of Wind Development, but Wind Growth is Outpacing State Targets

• 29 states and D.C. have mandatory RPS programs, which can support ~5 GW/yr of renewable energy additions on average through 2030 (less for wind specifically)

WI: 10% by 2015

NV: 50% by 2030

TX: 5,880 MW by 2015

PA: 18% by 2021NJ: 54.1% by 2031

CT: 44% by 2030

MA: 41.1% by 2030 +1%/yr

ME: 40% by 2017

NM: 80% by 2040 (IOUs)80% by 2050 (co-ops)

CA: 60% by 2030

MN: 26.5% by 2025Xcel: 31.5% by 2020

IA: 105 MW by 1999

MD: 25% by 2020

RI: 38.5% by 2035

HI: 100% by 2045

AZ: 15% by 2025

NY: 50% by 2030

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

MT: 15% by 2015

DE: 25% by 2026

DC: 100% by 2032

WA: 15% by 2020NH: 25.2% by 2025

OR: 50% by 2040 (large IOUs)5-25% by 2025 (other utilities)

NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops and munis)

IL: 25% by 2026

VT: 75% by 2032

MO: 15% by 2021

OH: 12.5% by 2026

MI: 15% by 2021


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.

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

Transmission Barriers Remain

0

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2000

3000

4000

5000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Com

plet

ed T

rans

miss

ion

(mile

s/ye

ar)

≥500 kV345 kV≤ 230 kV


Future Outlook


Sizable Wind Additions Anticipated for 2019–2020 Given Federal Tax Incentives; Downturn and Greater Uncertainty Beyond 2020

0

3

6

9

12

1519

9819

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0020

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Ann

ual C

apac

ity (G

W)

Historical Wind Power Capacity Additions Forecasts (bar = average)

Analyst projections


Future Outlook, Beyond Current PTC Cycle, is Uncertain

Current Low Prices for Wind, Future Technological Advancement, and Direct Retail Sales May Support Higher Growth in Future, but Headwinds Include:• Phase-out of federal tax incentives

• Continued low natural gas and wholesale electricity prices

• Potential decline in market value as wind penetration increases

• Modest electricity demand growth

• Limited near-term demand from state RPS policies

• Limited transmission infrastructure in some areas

• Growing competition from solar in some regions


Conclusions

• Wind capacity additions continued at a robust pace in 2018, with significant additional new builds anticipated in near-term in part due to PTC

• Wind has been a significant source of new electric generation capacity additions in the U.S. in recent years

• Supply chain is diverse and multifaceted, with strong domestic content for nacelle assembly, towers, and blades

• Turbine scaling is significantly boosting wind project performance, while the installed cost of wind projects has declined

• Wind power sales prices and levelized cost of energy are at all-time lows, enabling economic competitiveness (with the PTC) despite low gas prices

• Growth beyond current PTC cycle remains uncertain: could be blunted by declining federal tax support, expectations for low natural gas prices and solar costs, and modest electricity demand growth


For More Information

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

– windreport.lbl.gov

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

510-486-5474, [email protected]– Mark Bolinger, Lawrence Berkeley National Laboratory

603-795-4937, [email protected]

Berkeley Lab’s contributions to this report were funded by the Wind Energy 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.

2018 wind technologies market report: summary - energy.gov wind... · u.s. department of energy...

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