WIND AND WATER POWER PROGRAM Wind Energy Cost, Performance and Pricing Trends: Past & Future 2013 National Ryan Wiser Summit on RPS Lawrence Berkeley National Laboratory November 6, 2013 1 1 Energy Efficiency & Renewable Energy Program Name or Ancillary Text eere.energy.gov eere.energy.gov
WIND AND WATER POWER PROGRAM Wind Power Additions Hit a New Record in 2012, in Part Driven By the Then-Planned Expiration of Federal Tax Incentives 14 70 13 65 Annual U.S. Capacity (left scale) 12 60 Cumulative U.S. Capacity (right scale) 11 55 Cumulative Capacity (GW) 10 50 Annual Capacity (GW) 9 45 8 40 7 35 6 30 5 25 4 20 3 15 2 10 1 5 0 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 • 13.1 GW of wind added in 2012, more than 90% higher than 2011 • $25 billion invested in wind power project additions • Cumulative wind power capacity up by 28%, bringing total to 60 GW 2
WIND AND WATER POWER PROGRAM Wind Power Was the Largest Source of U.S. Generating Capacity Additions in 2012 100 50% Total Annual Capacity Additions (GW) (% of Total Annual Capacity Additions) 80 40% Wind Capacity Additions 60 30% 40 20% 20 10% 0 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Wind Other Renewable Gas Coal Other Non-Renewable Wind (% of Total) • Wind was, for the first time, the largest resource added in terms of gross capacity, despite persistently low natural gas prices 3
WIND AND WATER POWER PROGRAM • Past deployment substantially impacted by wind technology improvement, and impacts on: Cost trends Performance trends Pricing trends • Future deployment may be impacted to an even greater degree, given policy uncertainty at Federal and State levels • Presentation focused on past and near-term trends, limited to land-based wind 4
WIND AND WATER POWER PROGRAM Past Trends: Cost 5
WIND AND WATER POWER PROGRAM Wind Turbine Prices Remain Well Below the Levels Seen Several Years Ago 2,200 U.S. Orders <5 MW 2,000 U.S. Orders from 5 - 100 MW Turbine Transaction Price (2012$/kW) 1,800 U.S. Orders >100 MW 1,600 Vestas Global Average 1,400 Polynomial Trend Line for Orders 1,200 1,000 Recently reported 800 global 600 average prices 400 Figure depicts reported transaction prices from 102 U.S. wind turbine orders totaling 27 GW 200 0 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Announcement Date Escalation in turbine prices from 2003 through 2008: rising commodity prices; increased labor costs; improved manufacturer profitability; turbine up-scaling 6
WIND AND WATER POWER PROGRAM Reported Installed Project Costs Continue to Trend Lower 6,000 Installed Project Cost (2012 $/kW) Individual Project Cost (689 projects totaling 49,414 MW) 5,000 Capacity-Weighted Average Project Cost 2012 average: 4,000 $1,940/kW, 3,000 down $200/kW 2,000 from 2011; down $300/kW 1,000 from peak 0 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Commercial Operation Date Whereas turbine prices peaked in 2008/2009, project-level installed costs peaked in 2009/2010, reflecting the normal passage of time between when a turbine supply agreement is signed and when those turbines are actually installed 7
WIND AND WATER POWER PROGRAM Some Regional Differences in Average Wind Power Project Costs Are Apparent 4,500 Sample includes projects built in 2012 4,000 Installed Project Cost (2012 $/kW) 3,500 3,000 2,500 2,000 1,500 1,000 Capacity-Weighted Average Project Cost Individual Project Cost 500 Capacity-Weighted Average Cost, Total U.S. 0 Interior Northeast Great Lakes West Southeast 42 projects 29 projects 21 projects 25 projects 1 project 3,827 MW 1,101 MW 1,529 MW 2,938 MW 19 MW Different permitting/development costs may play a role at both ends of spectrum: it’s easier/cheaper to build in the US interior and harder/more expensive along the coasts 8
WIND AND WATER POWER PROGRAM Past Trends: Performance 9
WIND AND WATER POWER PROGRAM Regional Variations in Capacity Factor Reflect the Strength of the Wind Resource 60% Generation-Weighted Average (by region) Generation-Weighted Average (total U.S.) 50% Individual Project (by region) 2012 Capacity Factor 40% 30% 20% 10% Sample includes 110 projects built in 2010 or 2011 and totaling 10.6 GW 0% Southeast Northeast West Great Lakes Interior 4 projects 6 projects 37 projects 15 projects 48 projects 308 MW 289 MW 2,452 MW 2,077 MW 5,430 MW 10
WIND AND WATER POWER PROGRAM Average Hub Height and Rotor Diameter Have Increased Dramatically: Would Expect Capacity Factor Increases to Follow 100 2.0 90 1.8 80 1.6 70 1.4 Meters 60 1.2 MW 50 1.0 40 0.8 30 0.6 Average Nameplate Capacity (right scale) 20 0.4 Average Rotor Diameter (left scale) 10 0.2 Average Tower Height (left scale) 0 0.0 1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012 Commercial Operation Year • Two periods of rapid scaling: 1998-2006 and 2009-present • 2007-2008 mostly stagnant, as OEMs focused on meeting demand 11
WIND AND WATER POWER PROGRAM As Dominant Turbine OEM in the US, GE Provides a Useful Example of the Evolution of Turbine Design 4.85 m 2 / k W 4.85 m 2 /kW 3.30 2.60 3.10 m 2 /kW m 2 /kW m 2 /kW 2002 2010 2012- (standard) 2012- (lower wind speed) 12
WIND AND WATER POWER PROGRAM However, Trends in Sample-Wide Capacity Factors Were Impacted by Curtailment and Inter-Year Wind Resource Variability… 40% 1.20 Sample-Wide Capacity Factor 35% 1.05 Long-Term Wind Resource Index 30% 0.90 25% 0.75 20% 0.60 15% 0.45 Capacity Factor Based on Estimated Generation (if no curtailment in subset of regions) 10% 0.30 Capacity Factor Based on Actual Generation (with curtailment) 5% 0.15 Wind Resource Index (right scale) 0% 0.00 Year: 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 # Projects: 10 30 73 84 106 129 153 196 240 339 452 516 446 # MW: 591 943 2,682 3,128 4,500 5,142 7,967 9,951 14,926 23,617 33,381 38,561 42,844 The wind resource index is compiled from NextEra Energy Resources reports. The pre-2007 portion of the index is adjusted to approximate the conversion from wind speed to generation (this adjustment is unnecessary starting in 2007). 13
WIND AND WATER POWER PROGRAM And… Despite Turbine Scaling that Should Boost Capacity Factors, Project Build-Out in Lower-Quality Wind Resource Areas Has Pushed the Other Way 100 425 Index of Wind Resource Quality at 80m (1998-99=100) 95 395 Specific Power (W/m^2 ) 90 365 85 335 80 305 Average 80m Wind Resource Quality Among Built Projects (left scale) Average Specific Power Among Built Projects (right scale) 75 275 1998-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012 14 Commercial Operation Date
WIND AND WATER POWER PROGRAM Past Trends: Wind Power Price 15
WIND AND WATER POWER PROGRAM Sample of Wind Power Prices • Berkeley Lab collects data on historical wind power sales prices, and long-term PPA prices • PPA sample includes 302 contracts from projects built from 1998-2012, totaling 24,626 MW (42% of all wind capacity added in that period, and 70% of all capacity added that is sold under bundled PPAs) • Prices reflect the bundled price of electricity and RECs as sold by the project owner under a power purchase agreement – Dataset excludes merchant plants and projects that sell renewable energy certificates (RECs) separately – Prices reflect receipt of state and federal incentives (e.g., the PTC or Treasury grant), as well as various local policy and market influences; as a result, prices do not reflect wind energy generation costs 16
WIND AND WATER POWER PROGRAM Wind PPA Prices Generally Have Been Falling Since 2009 and Now Rival Previous Lows Set a Decade Ago (this despite the trend to lower-quality wind resource sites) Interior (14,802 MW, 173 contracts) $120 West (6,835 MW, 68 contracts) Levelized PPA Price (2012 $/MWh) Great Lakes (2,356 MW, 33 contracts) $100 Northeast (855 MW, 20 contracts) 150 MW Southeast (268 MW, 6 contracts) $80 $60 $40 $20 75 MW $0 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 PPA Execution Date 17
WIND AND WATER POWER PROGRAM A Smoother Look at the Time Trend Shows Steep Recent Decline in Pricing; Especially Low Pricing in Interior Region $100 Average Levelized PPA Price (Real 2012 $/MWh) $90 $80 $70 $60 $50 $40 $30 Nationwide Interior Great Lakes West $20 Northeast $10 $0 PPA Year: 1996-99 2000-01 2002-03 2004-05 2006 2007 2008 2009 2010 2011 2012 Contracts: 10 17 24 30 30 26 39 47 40 34 8 MW: 553 1,249 1,382 2,190 2,311 1,781 3,465 3,982 3,999 3,533 630 18
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