In August 2018 the U.S. Department of Energy (DOE) issued its 2017 Wind Technologies Market Report (https://www.energy.gov/eere/wind/downloads/2017-wind-technologies-market-report). The report tracks trends in installation, technology performance, cost, and price of wind power. Overall, the DOE report shows strong current growth and predicts this would continue into the next decade.
In 2009, power purchase agreements (PPAs) for wind power peaked at a price of $70/MWh. However, improvements in technology and implementation have lowered the price to about $20/MWh in 2017. The “wind belt” of the Great Plains has a lower average PPA price than the rest of the country. It follows that most wind power projects and the lowest prices would occur there, having the nation’s highest and most consistent wind speeds. DOE believes the PPA price will not drop significantly in the foreseeable future.
As a whole, U.S. wholesale electricity prices have declined in the last decade due, in part, to the overall decline in natural gas prices. Therefore, the wholesale energy market value of wind has followed along this major market indicator and declined similarly. Another factor influencing the cost of wind power is the decline in turbine prices as demand for wind grows and manufacturers devote more effort to production.
Due both to incentives from federal, state, and some utility players and to the decline in the price of wind energy, the wind power market in the U.S. has grown. The federal Production Tax Credit (PTC) has been cited by developers as a large motivator. Security is important, and investors and developers know that the PTC will be in place at least through 2021, encouraging wind farm development. There is concern that PTC will be phased out at that time, but many factors, including politics, will come into play as we get to 2021.
Even if the PTC is phased out, the wind market is likely to continue in the U.S. due to market forces, such as the low prices of PPAs. As there is economic growth and population shifts within the country, power is needed. Wind farms are certainly competitive cost-wise with building a new traditional gas or oil-fired power plant. In addition, wind may vary in the short-term, but if placed right it should provide a hedge against any future uncertainties about availability and price of natural gas.
CCES has the expertise to provide technical background to determine whether your building or company can benefit from generating your own power from renewable sources, like wind or solar. Contact us today at 914-584-6720 or at karell@CCESworld.com.