JUHL... APRIL 7, 2011, 1:11 P.M. ET . UPDATE: US Wind Industry Growth To Accelerate In 2011 .
By Naureen S. Malik
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--U.S. wind-generating capacity rose 15% last year in tough economic conditions, and new development started off this year at an even stronger pace, the American Wind Energy Association said Thursday.
Last year, the construction of new turbines increased wind power generation by 5,116 megawatts to 40,181 megawatts, enough to power 10 million U.S. homes, the industry group said in its annual market report for 2010.
"Wind prices are very affordable right now" and a competitive source of power given the drop in prices over the past two years, Elizabeth Salerno, AWEA's chief economist, said during a press conference Thursday. "We would expect utilities to be locking in 20-30 year contracts" because wind power doesn't carry the same price volatility as power generated from fossil fuels, she said.
Iberdrola Renovables SA (IBR.MC), Horizon Wind Energy LLC, MidAmerican Energy Co., and E.On AG (EOAN.XE) represented the top wind developers last year. Independent power producers continued to be the biggest investors in wind power but utilities have been increasing their investments over the past couple years. Wind projects raised $11.1 billion in debt and tax equity financing last year.
New wind power construction grew last year, but it was dramatically lower than the average growth rate of 39% during the prior five years. The recovery in power demand and prices, which fell sharply during the recession, remains weak because of persistently high unemployment rates. Uncertainty over whether key federal tax incentives would be extended also kept investors on the sidelines for much of the year, a problem that plagued other renewable development as well.
The extension of cash grants in December, in lieu of tax credits, is aiding a recovery now. Recently, President Barack Obama renewed his support for renewable energy development to reduce emissions and spur job growth.
"We remain on track to produce 20% of America's electricity by 2030 with wind, as laid out by the Department of Energy during the Bush administration," Salerno said.
California also increased its renewable portfolio standard last month, requiring that 33% of the state's electricity be generated by wind, solar, geothermal and other renewables by 2020. California's requirement now exceeds the federal mandate and could spur development of wind power in the state.
Nationwide, there were 5,600 megawatts of wind power under construction at the start of 2011, more than double the amount seen at the start of 2010, AWEA's report said.
MidAmerican, the Iowa utility owned by Warren Buffett's Berkshire Hathaway (BRKA), is the single largest utility owner of wind energy, according to AWEA. Xcel Energy, though, has the most wind power in its portfolio in terms of generation owned and contracted from third parties.
In addition, 14 new manufacturers serving the wind industry, including Vestas Wind Systems (VWS) and Siemens AG (SI), opened facilities in the U.S. last year. Wind energy now accounts for 20,000 manufacturing jobs in 42 states. Various wind turbine makers have launched bigger turbines in recent years, but General Electric's (GE) 1.5-1.6 megawatt turbines continue to be the market leader in the U.S., according to AWEA.
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