Wind project development activity has quickly responded to the growing demand for renewable energy in the U.S., with EER estimating a total U.S. wind project pipeline in excess of 125 gigawatts of projects at various stages of development. With more than $65 billion forecasted to be invested in additional wind capacity between 2007 and 2015, the U.S. is projected to rank first in the world in cumulative installed wind capacity with approximately 19% of global wind market share by the end of 2015, according to EER's just-released study.
Greater certainty in the energy policy fundamentals has underpinned wind growth potential. The U.S. market has become a core demand hub for global wind players across the value chain, with both aggressive foreign wind development players as well as numerous global wind turbine vendors investing significant sums to secure a long-term market position.
The U.S. wind market is expected to reach record levels in both 2007 and 2008 with 7,650 megawatts of new wind projected over the two-year period. However, beginning in 2009, annual wind additions are expected to dip as the direct result of transmission bottlenecks. New transmission build-out post-2011 will help drive the market toward a new plateau of growth, with the market expected to reach as much as 5 gigawatts per year by 2015.
By the end of 2015, several key states will have provided the greatest contributions to the overall wind portfolio, with Texas accounting for 23% of total megawatt growth, and California, Minnesota, New York, Colorado and Washington combined forecasted to account for approximately 30% of total market growth, according to EER.
Competitive Shifts Mark Wind Power Ownership
Rapid consolidation over the past two years has quickly changed the composition of the U.S. market solidifying around a group of 10 to 15 big-name IPP players. Since 2005, industry consolidation in the wind market has reached an all-time high, with domestic power generation companies vying with aggressive foreign entrants for U.S. wind company acquisition opportunities.
The next five years will continue to witness shifts in the competitive market environment as a second round of consolidation is expected as IPPs begin to acquire one another for scale, according to EER. U.S. market players can expect increasing erosion of market share as new European entrants such as Iberdrola and EDP challenge long-standing U.S. wind IPPs such as FPL.
At the same time, spurred by recent volatility in fossil fuel prices as well as by state RPS mandates, utility wind procurement has reached an all-time high, with several companies seeking to extract greater value by exploring wind project ownership and development.
In addition to state RPS demand, many utilities such as Xcel Energy and MidAmerican are finding that wind provides a cost-saving hedge against natural gas fuel price volatility, offering a further incentive for the large-scale deployment of new wind plant.
Soaring Demand Spurs US Investment in Manufacturing, Transmission
As the US wind market has exploded since 2005, vendor competition in the wind industry has also intensified, with numerous foreign wind turbine manufacturers making significant investments to build order books with key U.S. customers and to establish a greater manufacturing presence.
Turbine manufacturing investment has grown markedly in the past two years, with aggressive new entrants now vying with market veterans GE and Vestas for big-name contracts. Numerous turbine vendors have established manufacturing or turbine assembly facilities in the U.S. since 2005, increasing supply availability to developers but also putting pressure on each vendor to secure its component supply chain as vendor execution on existing contracts becomes crucial.
Investments in new transmission capacity will also play a central role in determining the timing and geographic focus of new wind opportunities, especially as existing grid infrastructure begins to become saturated in several key wind regions and states, according to EER.
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