US wind industry nears 100GW milestone

Production tax credits for the US wind industry are set to expire at the end of the year, but research predicts this is unlikely to stop new projects from being built.

The total amount of wind energy capacity being developed in the US reached a record high in the second quarter of 2019 as the clock ticks on a federal tax credit aiding the sector.

Nearly 42GW of wind capacity is in advanced development or under construction, including 3.2GW of offshore wind, according to trade organisation the American Wind Energy Association. “The total pipeline increased 7 percent over the first quarter and 10 percent year-over-year as developers continue to find offtake for PTC [production tax credit]-qualifying projects,” AWEA stated in its US Wind Industry Second Quarter 2019 Market Report.

More than 63 percent of capacity being built started development within the last two years, ahead of the potential expiration of the federal production tax credit which has helped attract interest and investment in the sector.

The window is closing for both onshore and offshore wind projects to qualify for the tax credits, which expire at the end of 2019. Wind projects must start construction before the end of the year to qualify.

Installation of new wind power capacity also set a record in the second quarter with the addition of 736MW, while the industry has commissioned 1,577MW in the first half of the year, a 53 percent increase compared to the first half of 2018, AWEA said in its report.

“We’re going to continue to see strong demand for wind production, and that will naturally translate to development pipelines continuing to grow,” John Hensley, AWEA’s vice-president for research and analytics, told Infrastructure Investor. “Given that strong demand and relentless cuts in cost, we’re going to see additional wind development going forward.”

Even though developers are rushing to qualify projects, Hensley said the US wind market wouldn’t be immediately dampened should the tax credits expire.

“Just because the PTC expires and goes away doesn’t mean the industry stops cutting costs, improving technology and improving the industry to be cost-competitive,” Hensley explained.

It seems lawmakers are poised to renew the tax credits before the end of the year. Two bills have been introduced in the US Senate, one specifically targeting the nascent offshore wind sector, that would extend federal tax credits for wind energy development.

The proposals have bipartisan support, from Democrats wanting to fight climate change and Republicans in states with high wind energy capacity. Of the 42GW of wind capacity being developed, 22 percent of projects are located in Texas, while Iowa is second in bringing new wind projects into operation this year.