This is an excerpt from EERE Network News, a weekly electronic newsletter.

August 11, 2010

2009 a Year of Growth, Challenge for U.S. Wind Power: Report

Photo of tall wind turbines in a field.

U.S. wind energy capacity expanded again in 2009, although China added the most globally.
Credit: Todd Spink

The U.S. wind power industry had a record-setting year in 2009, adding 10 gigawatts of new capacity and securing $21 billion in investments, a new DOE report shows. The cumulative wind power capacity grew 40% despite the economic turmoil throughout the year, according to the "2009 Wind Technologies Market Report," which was released on August 4. The analysis, from DOE's Lawrence Berkeley National Laboratory (LBNL), showed that for the fifth consecutive year, wind was second only to natural gas in adding new electrical capacity to the U.S. grid. Still, a sharp drop in wholesale electricity prices (due in part to lower natural gas prices) pressured the wind energy industry bottom line in 2009 and indicated challenges on the horizon.

Gains in wind power capacity figured prominently in the DOE report's key findings. Utility-scale wind power grew at a pace 20% higher in 2009 than in the previous record year of 2008, driven in part by support from the American Recovery and Reinvestment Act and the carryover of projects planned for completion in 2008. Wind power supplied 39% of all new U.S. electrical generating capacity, which was down from the 44% in the previous year but remained the second-largest new resource for the grid behind natural gas. The United States held the lead in total global wind power capacity but was passed in total annual additions in 2009 by China, which reached the top spot by recording 36% of the world's market share in 2009 while the U.S. recorded roughly 26%. Domestically, Texas added 2,292 megawatts (MW) of wind power, easily outpacing the next highest states—Indiana with 905 MW and Iowa with 879 MW—as well as the 26 other states that brought new large-scale wind turbines online last year.

Conditions in the 2009 wind power market suggested some future uncertainties, according to the LBNL report. For example, the LBNL authors noted that going forward, natural gas prices may not rebound to earlier levels as the economy recovers, putting the near-term comparative economic position of wind energy at some risk. Further, the installed cost of wind power projects continued to rise. Among a large sample of wind power projects installed in 2009, reported installed costs had a capacity-weighted average of $2,120 per kilowatt, which marked a 9% average increase from the weighted-average cost of $1,950 per kilowatt for projects installed in 2008. The report concludes that while there are expectations that those costs will eventually decline, the costs may remain high, on average, as developers work through the dwindling backlog of turbines purchased at peak prices in early 2008. Although the DOE report showed strong wind power growth in 2009, a mid-year update from the American Wind Energy Association (AWEA), released on July 27, found that wind industry growth slowed in the first half of 2010. See the 2009 Wind Technologies Market Report (PDF 3 MB) and the AWEA Q2 report (PDF 541 KB). Download Adobe Reader.