Annual Report on U.S. Wind Power Installation, Cost, and - PowerPoint PPT Presentation

Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends: 2007 Ryan Wiser and Mark Bolinger Lawrence Berkeley National Laboratory - Report Summary - May 2008 1

Presentation Overview • Introduction to 2007 edition of U.S. wind market data report • Wind installation trends • Wind industry trends • Evolution of wind pricing • Installed wind project costs • Wind turbine transaction prices • Wind project performance • O&M cost trends • Integration/transmission/policy • Coming up in 2008 2

2007 Annual Market Data Report Purpose, Scope, and Data: • With a focus on 2007, summarize trends in the U.S. wind power market, including information on wind installations, industry developments, power sales prices, project costs, performance, O&M costs, policy trends • Scope primarily includes wind turbines and projects over 50 kW in size • Data sources include AWEA, EIA, FERC, SEC, etc. (see full report) Report Authors: • Primary Authors: R. Wiser and M. Bolinger, Berkeley Lab • Contributions from others at Berkeley Lab, AWEA, NREL, DOE, Exeter Associates, George Washington University Available at: http://www1.eere.energy.gov/windandhydro/ 3

U.S. Wind Power Capacity Up 46% in 2007 6,000 18,000 Annual US Capacity (left scale) Cumulative Capacity (MW) 5,000 15,000 Annual Capacity (MW) Cumulative US Capacity (right scale) 4,000 12,000 3,000 9,000 2,000 6,000 1,000 3,000 0 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 Source: AWEA Record year for new U.S. wind capacity: • 5,329 MW of wind added ( more than double previous record) • Roughly $9 billion in investment 4

Wind Power Contributed 35% of All New Generating Capacity in the US in 2007 100% 100 • Wind was the Total Annual Capacity Additions (GW) Percent of Annual Capacity Additions 2 nd -largest 80% 80 resource added for the 3 rd - 60% 60 straight year 40% 40 • Up from 19% in 2006, 12% in 20% 20 2005, and <4% in 2000-2004 0% 0 2000 2001 2002 2003 2004 2005 2006 2007 Wind Other Renewable Gas (CCGT) Gas (non-CCGT) Coal Other non-Renewable Total Capacity Additions (right axis) Source: EIA, Ventyx, AWEA, IREC, Berkeley Lab 5

U.S. Led the World in 2007 Wind Capacity Additions; Second in Cumulative Capacity 6

U.S. Share of Global Wind Capacity: 27% of 2007 Additions, 18% of Cumulative 100% 100 US % of Worldwide Annual Growth 90% 90 Cumulative Non-US Capacity (right scale) Cumulative Capacity (GW) 80% 80 Cumulative US Capacity (right scale) 70% US Proportion of Annual Growth (left scale) 70 60% 60 50% 50 40% 40 30% 30 20% 20 10% 10 0% 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 Source: Earth Policy Institute, BTM Consult, AWEA 7

U.S Lagging Other Countries in Wind As a Percentage of Electricity Consumption 22% as % of Electricity Consumption 20% Projected Wind Generation 18% Approximate Wind Penetration, end of 2007 16% Approximate Wind Penetration, end of 2006 14% 12% 10% 8% 6% 4% 2% 0% Denmark Spain Portugal Ireland Germany Greece Netherlands Austria India UK Italy Sweden U.S. France Australia Canada Norway China Japan Brazil TOTAL Source: Berkeley Lab estimates based on data from BTM Consult and elsewhere Note: Figure only includes the 20 countries with the most installed wind capacity at the end of 2007 8

Geographic Spread of Wind Projects in the United States Is Reasonably Broad 9

Texas Easily Exceeded Other States in Annual Capacity Growth • 16 states had >100 MW of wind capacity at the end of 2007 (9 had >500 MW) • TX widened its lead over CA in cumulative wind capacity • Neither TX nor CA was in the top tier of states for wind as a % of in-state generation • 6 states have in-state wind generation that exceeds 4% of total in-state generation: MN, IA, CO, SD, OR, NM 10

Wind Now >10% of Some Utilities’ Sales See full report for the many assumptions used to generate the data in this table 11

>225 GW of Wind in Interconnection Queues 250 Entered Queue in 2007 Nameplate Capacity (GW) 200 Total in Queue at end of 2007 150 100 50 0 Wind Natural Gas Coal Nuclear Solar Other Source: Exeter Associates review of interconnection queues • MISO (66 GW), ERCOT (41 GW), and PJM (35 GW) make up 2/3 of total • Twice as much wind as next largest resource (natural gas) in queues • Not all of this capacity will be built…. 12

Interest in Offshore Wind Continues in the U.S., but No Such Projects Are Yet Online • All wind projects installed in the Proposed Offshore State U.S. to date are land-based Wind Capacity Massachusetts 783 MW • Some interest exists in offshore wind in several parts of the U.S. Delaware 450 MW New Jersey 350 MW • Several projects were put at risk in 2007 due to concerns about New York 160 MW high and uncertain costs Texas 150 MW • Projects presented in table to Ohio 20 MW right are in various stages of Georgia 10 MW development TOTAL 1,923 MW 13

GE Remained the Dominant Turbine Vendor 2007 2006 2005 Vestas Siemens Mitsubishi Vestas Siemens 18% 23% 7% 29% 16% Vestas 19% Suzlon 4% Mitsubishi Mitsubishi 5% 8% Gamesa GE Wind GE Wind 11% Suzlon Suzlon GE Wind 60% 47% 4% 1% 44% Clipper Gamesa Gamesa 1% 2% 2% Other Other Nordex Clipper 0.1% 0.1% 0.05% 0.1% Source: AWEA project database • Although the three largest vendors lost U.S. market share in 2007… • …all vendors saw U.S. installations of their turbines grow in 2007 14

Soaring Demand Spurs Expansion of U.S. Wind Turbine Manufacturing Note: Map is not intended to be exhaustive 15

Average Turbine Size Continued to Grow 1.8 1.65 MW 1.60 MW Average Turbine Size (MW) 1.6 1.42 MW 1.4 1.21 MW 1.2 1.0 0.88 MW 0.71 MW 0.8 0.6 0.4 0.2 0.0 1998-99 2000-01 2002-03 2004-05 2006 2007 1,425 turbines 1,987 turbines 1,757 turbines 1,960 turbines 1,532 turbines 3,230 turbines 1,018 MW 1,758 MW 2,125 MW 2,776 MW 2,454 MW 5,329 MW Source: AWEA project database 40% of turbines installed in 2007 were larger than 1.5 MW, up from 34% in 2006 and 24% in 2004/2005 16

Average Project Size Approached 120 MW 140 Nameplate Capacity (MW) 120 Average project size, by COD (excludes projects < 2 MW) 100 80 60 40 20 0 1998-99 2000-01 2002-03 2004-05 2006 2007 29 projects 27 projects 46 projects 44 projects 35 projects 45 projects Source: Berkeley Lab analysis of AWEA project database Average project size has doubled since 2004-2005, and tripled since 1998-1999 17

Developer Consolidation Continued at a Torrid Pace • Acquisition and investment activity continued strong trend that began in 2005 2007: 11 deals = 37 GW of wind development pipeline 2006: 12 deals = 34 GW 2005: 8 deals = 12 GW 2002-04: 4 deals = 4 GW • A number of large, foreign companies have entered the U.S. wind development business in recent years 18

Comfort With and Use of Innovative Financing Structures Increased • IRS Revenue Procedure 2007-65 provides “safe harbor” guidelines for wind projects using “institutional investor flip” structure – More than a dozen institutional tax investors active in 2007 – Some tax investors becoming comfortable with project-level debt • 2007 also saw a first-of-its-kind tax equity structure geared towards municipal utilities and cooperatives (White Creek) • But…growing dependence on 3 rd -party tax investors has left the U.S. wind sector vulnerable to the global credit crisis – Institutional tax investors lately have fewer profits to shelter – Demand for affordable housing tax credits drying up, driving yields sharply higher – will this spillover into wind? 19

IPP Project Ownership Remained Dominant 18 2007 Capacity by Cumulative Installed Capacity (GW) Owner Type Community 16 Publicly Owned Utility (POU) 14 Investor-Owned Utility (IOU) IPP: 4,414 MW 12 Independent Power Producer (IPP) (83%) 10 8 6 IOU: 4 598 MW (11%) 2 0 Community: POU: 50 MW (1%) 268 MW (5%) 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Source: Berkeley Lab estimates based on AWEA project database • Utility ownership (both IOU and POU) gained some ground • Community wind lost market share 20

Contracted Sales to Utilities Remained the Most Common Off-Take Arrangement 18 Cumulative Installed Capacity (GW) 2007 Capacity by On-Site 16 Off-Take Category Merchant/Quasi-Merchant 14 Power Marketer 12 IOU: Publicly Owned Utility (POU) 2,558 MW 10 Investor-Owned Utility (IOU) (48%) 8 6 POU: 4 919 MW 2 (17%) 0 Marketer: Merchant: 1,052 MW 799 MW 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 (20%) (15%) Source: Berkeley Lab estimates based on AWEA project database • But sales to power marketers are becoming more prevalent • So are “merchant” plants – primarily in TX and NY 21