Wednesday, January 9, 2013

Wind PTC Extension Means The Equivalent Of 6 Nuclear Plants Will Be Built In 2013-2014

Now that the wind PTC has been extended in a manner that allows projects that begin construction in 2013 to qualify, how much new wind capacity will be built in 2013 and 2014?  

Estimates of the amount of new wind that will become operational in 2013 are uncertain but are typically in the range of 3,000 to 5,000 megawatts.  That would be a sharp drop from the 2012 record of 12,000.

But the wind PTC extension will also boost significantly the number of wind farms that begin construction in 2013 but become operational in 2014. Moreover, wholesale power prices will likely increase a bit, given that spot natural gas prices in 2013 and 2014 are likely to be about 30% higher than they were in 2012.
Based on the PTC extension, firming power prices, and the last 4 years of wind development, I would expect around 15,000 megawatts of new wind generation to be built during the next two years.  The wind industry just built 12,000 megawatts in one year and can build 8,000 megawatts per year easily.  It has increased national wind generation capacity from about 25,000 megawatts in 2008 to 58,000 megawatts now. For the last 4-years it has averaged 8,000 megawatts per year.  

An estimate of 15,000 megawatts over the next two years is not aggressive, when compared to recent development. It reflects that the delay in extending the PTC negatively impacts the amount of new wind capacity that will become operational in 2013.

And 15,000 megawatts more of wind will produce an amount of electricity equivalent to about 6 nuclear units the size of Three Mile Island or enough power to supply 4.5 million homes.  It is a big deal.

The wind PTC extension also means it is highly likely that the United States will have over 70,000 megawatts of wind generation by the end of 2014, an extraordinary number.  By that point, wind generation will provide nearly 5% of America's electricity and 10% and more of the electricity generated in many states.


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