- “A new phase in the development of wind energy as a mainstream power source for America.”
- Higher profitability, advances in tech & IT are fueling wind
- Experts predict that wind will see an increase in customers & decreased capital costs for future projects
Chris Brown, president of the U.S. and Canadian sales and service division for Vestas, the world’s largest wind turbine manufacturer, predicts that despite the federal Production Tax Credit (PTC) subsidy for wind power wrapping up in 2019, prospects for the industry’s continued growth across North America remain strong. In the “post-PTC environment,” Brown said, wind project developers will confront—and must effectively create—a new equation for calculating the cost and value of wind energy production in the absence of government support.
Wind Power Profitability Exceeds Fossil Fuel
What many in the industry perhaps don’t grasp, he said, is that regulatory changes highlight an enormous potential for new growth within a sector where the cost of producing wind power has dropped 70% over the past ten years. Advances in technology and data management, coupled with wind’s profitability exceeding that of fossil fuels, has meant the industry no longer needs a government leg up to compete and win. And this, it seems, is the key point: the wind market has capitalized on its own decade-long success, becoming more profitable—and ever more affordable—as developments in technology and efficiency keep it ahead of more traditional market models in oil & gas.
Brown is predicting two big impacts as wind tax credits wrap up at year’s end: a much larger customer base for wind power and a further decrease in the cost of capital for wind projects. The effect of these impacts is opening what he calls “a new phase in the development of wind energy as a mainstream power source for America.” Adding to this new phase will be modular efficiency and customization in how we build wind turbines (with reduced maintenance costs as a result) allowing manufacturers to pass on savings to customers through Power Purchase Agreements and levelized cost of energy (LCOE).
Weaning off of Wind Tax Credits
Challenges remain for the growing wind sector as it weans itself off federal tax subsidies. Increasing transmission and grid connectivity—as well as community and marketplace acceptance—in less wind-developed regions of the United States there are examples of uphill climbs that must be faced in the absence of subsidies. Which also means a need to further improve power output forecasts by using more sophisticated monitoring and analytics, such as drone-based inspections. However, it should be noted that Brown is confident the PTC’s removal will whet institutional investors’ appetite for wind projects, while creating a broader and more diverse base of capital to grow the industry.
What We’re Reading: “US Wind Market Will See More Investors and Cheaper Capital Without the PTC” as published on Greentech Media