2010 U.S. Wind Constrained by Financial Market, IHS Says

Following a record-breaking year of capacity additions in 2009 — with 9.8 GW of wind projects installed — the U.S. wind market finds itself confronting a growth constrained 2010 and a near-term market landscape wrought with increased competition, according to a new market study, U.S. Wind Power Markets and Strategies: 2010-2025 (for purchase) from IHS Emerging Energy Research.

However, with the proliferation of favorable state and federal policies, the U.S. wind industry is on track to add more than 165 GW of new capacity through 2025, resulting in a total installed base of 200 GW, according to the study’s projections.

The study forecasts anywhere from 6.3- 7.1 GW of wind could be installed in 2010, 40-60 percent lower than 2009 installations.

IHS Senior Analyst Matthew Kaplan, one of the study’s authors, said: “2010 marks the first time since 2004 that the U.S. wind industry will not surpass the previous year’s growth level. Despite unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult near-term market landscape especially in light of continued energy policy uncertainty. However, the U.S. wind market is poised to emerge from this near-term uncertainty with a clearer path toward strong future growth.”

The U.S. wind industry will represent U.S. $330 billion in investments between 2010 and 2025, with more than 90 percent stemming from onshore wind, according to the study’s projections. The Midwest, Great Plains and Rocky Mountain states will act as major wind export hubs to areas with large appetites for renewables, including California, the Mid-Atlantic and the South. Offshore is expected to account for only 5 percent of total U.S. wind build in 2025.

“The unprecedented decline in power demand and electricity and natural gas prices has had a profound effect on utility willingness to ink power purchase agreements,” says Kaplan. Despite large build years in 2009, leading independent power producers EDP Horizon and NextEra Energy Resources have slashed wind build expectations exemplifying near-term challenges.

On the supply front, the sudden drop in turbine demand and a heightened level of competition has created a seller’s market for the foreseeable future. “Turbine manufacturers and their suppliers will increasingly look to differentiate themselves based on cost, product, services and track record,” says Kaplan. The U.S. supply chain continues to expand domestically, supported by strong prospects for future wind growth. The surge in U.S. wind installations over the past three years has encouraged established European players and new entrants from Asia to enter the U.S. market, ensuring a steady supply of turbines to the U.S. market for the foreseeable future.

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