The Free Market Shall Lead The Way
Throughout the past several years, the U.S. wind industry has undergone a stunning metamorphosis from fringe technology to real player on the grid. In the past five years alone, wind capacity in the U.S. grew from 25,000 MW to over 80,000 MW in 2016, vaulting wind energy past hydropower as the nation’s most abundant renewable energy resource by capacity. Given that only 10 years ago, 16,000 MW was installed in the U.S. and with merely 2,000 MW installed in 2000, the scale-up of the wind industry is nothing short of remarkable and perhaps unprecedented. This growth has not been driven by government mandate; ironically, perhaps, it has been driven by the free market and by demand. Our industry’s growth has been derived from customers who are constantly seeking cost-efficient answers to power generation and utilities seeking a solution to volatility in fossil fuel markets. More and more utilities are choosing wind solutions for power generation at a staggering pace.
According to a report released by the International Energy Agency, investment in global renewable energy capacity totaled $297 billion in 2016 – solidly the largest share of global energy investment, with $13.8 billion of that investment going to wind energy. It was also the first time that investment in renewables outpaced fossil fuel investment. In fact, renewable energy and power grids accounted for about 80% of all investment in electricity, according to the report.
While investment in renewables fell by 3% last year, capacity rose by 50%, with output expected to rise by 35% thanks to falling prices and improvements in technology and deployment. Efficiency, technological improvements and superior service are all major drivers of wind’s surge. As turbines become bigger and produce more power with fewer materials and production cost, costs are driven down even further. And that’s a fairly important point, given wind will continue to face stiff competition from coal and gas after the production tax credit (PTC) expires.
Although some in the industry fear that an expiring PTC will harm wind’s continued expansion, I am encouraged by the explosion of investment by utilities and banks that have recognized wind’s perhaps insurmountable cost advantages. Given the sheer volume of investment and the kinds of investors becoming involved – many of them relatively new to wind and renewables in general – signs point to continued strength of wind even after the sunset of the PTC.
Most importantly, the growth of the wind industry has been good news for our planet, as CO2 emissions from the electric power sector declined by nearly 5% in 2016, thanks to a significant drop in deployment of coal power generation and increased generation from natural gas and renewable sources. Overall, data provided by the U.S. Energy Information Administration indicates about a 5% decline in the carbon intensity of the power sector, matching a 5% decline the year prior. Overall, since 2005, electric utilities have reduced carbon emissions by an astounding 25%. Coinciding with that fact is that our population has grown in that time, which usually results in increased power usage and carbon emissions, which means we’re also using power more efficiently. We haven’t seen this kind of decline in decades.
Our growth is also good news for the economy. There are more than 100,000 Americans now manufacturing turbines, building and maintaining projects, and supplying parts and services. According to the American Wind Energy Association and Navigant Consulting, that number is expected to balloon to nearly 250,000 over the next four years, with almost $100 million in ancillary economic activity. In fact, according to the U.S. Bureau of Labor Statistics, the fastest-growing job in the U.S. is wind technician.
How can wind continue this momentum to keep costs down?
If wind is to continue to compete with coal and gas in a post-PTC world, we must not only work to expand research and development programs to include larger and more powerful turbines, but also expand through improvements on established control systems that improve availability and minimize faults.
Energy markets have taken notice of wind’s revolution, as have special interests. There are already efforts under way to cut into wind’s progress, and policies are being considered to provide subsidies to coal in Ohio, Wyoming and Pennsylvania. At the end of the day, we still have the upper hand, but we need to keep getting smarter and improving on what is already a natural cost advantage over our competitors. Expanded efforts in innovation and efficiencies will continue to drive that cost down and help wind compete for decades to come.
Colin Mahoney is founder and president of Mahoney Communications Group, a strategic communications firm focused on renewable energy. He can be reached at email@example.com.