US: Policy upgrades in the US buttress a booming outlook through 2019, though long-term pitfalls linger

MAKE’s latest wind power outlook for North America forecasts unprecedented long-term policy certainty in the US and increasingly climate-conscious, low-carbon energy directives in key Canadian provinces will enable nearly 75GW of total wind power growth in the region from 2016 to 2025.

The production tax credit (PTC) in the US, extended in December 2015 as a multi-year phase-out, will support a total of 44.4GW of wind power additions from 2016 to 2021. However, as the value of the PTC phases down after 2018, several drivers must align to sustain wind power growth in the US. At the sub-regional level, Texas will lead wind power growth from 2016 to 2018, followed by the Plains and the Midwest.

Turbine technology advancement and balance of plant (BOP) cost reductions will continue to drive down the levelized cost of electricity (LCOE) of wind power and offset a portion of the lost PTC value from 2019. This will allow wind power to maintain a substantial share of new power generation demand, despite attractive costs for natural gas power and rising competition from solar PV. The long term market outlook for solar PV is bolstered by the long-term extension of the investment tax credit (ITC), enabling solar power installations to outpace wind from 2016 to 2025.

The commercial and industrial (C&I) segment will increase its installed wind capacity in the US by more than 50% YoY in 2016. As more corporations follow the trend to establish renewable energy targets, MAKE expects C&I demand to drive nearly one-quarter of the total US wind power outlook during the next decade.

The Clean Power Plan (CPP) is the largest source of uncertainty in the US outlook. Legal challenges remain a concern, especially following the recent Supreme Court decision to grant a stay for CPP implementation. Nevertheless, MAKE forecasts demand from the CPP to drive about 12% of the 10-year growth in wind capacity.

In Canada, energy policies, particularly at the provincial level, remain the most influential wind market drivers, although LCOE and electricity exports become increasingly significant in the latter half of the outlook. Election outcomes in 2015 and subsequent energy policy updates were largely favourable, but upgrades in certain provinces are partially offset by downgrades in others.

Ontario and Quebec have the largest near-term project pipelines and comprise two-thirds of Canada’s wind power outlook from 2016 to 2018. However, a substantial portion of long-term growth in Quebec hinges on increasing electricity exports to the Northeast US. From 2018, wind installations enabled by coal retirements in Alberta and Saskatchewan represent a growing share of Canada’s total wind power forecast.