2017 North America Wind Power Outlook

Developers in the US will install approximately 59GW of wind capacity from 2017 through 2026. In an initial four-year boom period through 2020, the full-value PTC drives a nearly 40GW market – representing over two-thirds of the total 10-year forecast and the largest four-year wind installation total in US market history – largely underpinned by demand from utilities under state renewable energy mandates as well as commercial and industrial offtakers with internal emissions or renewable energy procurement targets.

During the same time, asset owners will also embark on the most extensive repowering campaign thus far in the US. Under a novel “80-20” repowering method, nearly 1GW of existing turbine nacelle and blade units will be replaced with new components while smaller components will be replaced in another 6GW of existing turbines with the aim of extending operational lifespans and requalifying for the PTC. 

MAKE estimates upwards of 55GW of realistic project volume qualified for the full-value PTC before the end of 2016. Developers struggling with financing, grid congestion and a dearth of shovel-ready projects will take full advantage of the four-year installation window. As a result, installation volume is expected to steadily increase before peaking in 2020.

Completing projects in the later years of the decade invites considerable risk, however. The traditional challenges of project development are further complicated by exposure to policy proposals from the Trump administration: a border adjustment tax or other tariff action would destabilize a wind supply chain that has grown increasingly reliant on imported components while corporate tax reform threatens to reduce the appetite for the tax equity investments that have financed more than half of all US wind installations in recent years.

If projects are excessively concentrated in 2020, there will be a significant strain on engineering, procurement and construction (EPC) resources, especially if EPC providers are already contracted to conduct 80-20 repowerings and less able to temporarily pull resources from a burgeoning Mexican market than in previous years.

The PTC extension provides for a multi-year phase-out, but only the 80% PTC value will incentivize a meaningful quantity of wind installations. Beginning in 2022, wind power will effectively be left to compete solely on a levelized cost of energy (LCOE) basis. Due to competition amid sustained low natural gas prices and the rapidly falling cost of solar power, wind installations in this environment will be limited to a fraction of US states with favourable land availability, wind resources and available transmission capacity.

States in the central US “wind-belt” will be particularly well-positioned to compete on LCOE, but will require major transmission build-out to access distant demand centers. All wind projects will grow more vulnerable in this low margin environment: previously surmountable hurdles such as state-level policy changes and permitting difficulties will run a far greater risk of becoming project-killing obstacles.

The concurrent subsidized installation booms of wind and solar power through 2021, together with sustained large-scale natural gas capacity additions, slowed coal retirements under a weaker EPA and meagre growth in demand for electricity sharply limit overall demand for all new capacity additions in the latter half of the forecast period, compounding the market downturn.

Offshore wind power will be the exception to the economics-driven installations of the post-PTC period. Supported by robust state-level policies in the Northeast region, the first full-scale offshore projects will reach commercial operations beginning in 2021, and at least one new offshore wind development will be installed annually through 2026. Ultimately, some 2.2GW of offshore wind will enter commercial operation within the forecast period.

Canada will install 6.2GW of new wind capacity from 2017 to 2026. As in the US, the 10-year outlook in Canada is split into two distinct periods. From 2017 to 2019, Eastern Canada will continue to host most new wind capacity, after which the region’s outlook will decline amidst dwindling political support for new wind power, a largely decarbonized electricity sector and lacklustre growth in electricity demand.

Beginning in late 2019, traditionally carbon-intensive Western Canadian provinces Alberta and Saskatchewan will install the first capacity contracted under ambitious renewable procurement programs that will shift the balance of new demand decisively westward through the remainder of the forecast period.

The coming ten years will also see major growth in Canadian hydroelectricity exports to the US, especially to US Northeast. Wind will be packaged with hydroelectricity exports to help satisfy state RES requirements, which will boost the Quebec wind outlook after 2021, but not the wind outlook for the Atlantic Provinces, as their hydroelectricity will generally be paired with wind power from the US.