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US wind energy market facing constraints in 2010: IHS study

The recession-induced drop in power demand and lower electricity and natural gas prices have "had a profound effect on utility willingness to ink power purchase agreements," IHS said. In addition, the study said that increased transmission congestion and reduced utility demand have reduced growth in traditional "wind hot spots".

The US wind energy market faces constrained growth and increased competition in 2010 after a record-breaking 2009 that saw the installation of
9,800 MW of capacity, IHS Emerging Energy Research said in a study Wednesday.

But the analyst said that, given the number of favorable state and federal government policies, the industry is on track to add more than 165,000
MW of capacity through 2025, giving the US about 200,000 MW of wind generation.

The study forecasts projected that the US will add between 6,300 MW and 7,100 MW of wind capacity this year, a number that would be 40% to 60% below 2009 adds. The IHS study that that 2010 "marks the first time since 2004 that the US wind industry will not surpass the previous year's growth level."

The company said that despite "unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult
near-term market landscape especially in light of continued energy policy uncertainty. However, the US wind market is poised to emerge from this
near-term uncertainty with a clearer path toward strong future growth."

The study projected that the US wind industry will invest $330... more [truncated due to possible copyright]  

The US wind energy market faces constrained growth and increased competition in 2010 after a record-breaking 2009 that saw the installation of
9,800 MW of capacity, IHS Emerging Energy Research said in a study Wednesday.

But the analyst said that, given the number of favorable state and federal government policies, the industry is on track to add more than 165,000
MW of capacity through 2025, giving the US about 200,000 MW of wind generation.

The study forecasts projected that the US will add between 6,300 MW and 7,100 MW of wind capacity this year, a number that would be 40% to 60% below 2009 adds. The IHS study that that 2010 "marks the first time since 2004 that the US wind industry will not surpass the previous year's growth level."

The company said that despite "unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult
near-term market landscape especially in light of continued energy policy uncertainty. However, the US wind market is poised to emerge from this
near-term uncertainty with a clearer path toward strong future growth."

The study projected that the US wind industry will invest $330 billion between 2010 and 2025, with more than 90% spent on onshore projects. The Midwest, Great Plains and Rocky Mountain states will act as major wind export hubs to areas with large appetites for renewables, including California, the Mid-Atlantic and the South, the study said.

IHS added that although the US "is closer than ever to tapping into its enormous offshore potential with the the expected completion of the Cape Wind project in 2013, offshore is expected to account for only 5% of total US wind build in 2025."

The recession-induced drop in power demand and lower electricity and natural gas prices have "had a profound effect on utility willingness to ink
power purchase agreements," IHS said.

In addition, the study said that increased transmission congestion and reduced utility demand have reduced growth in traditional "wind hot spots"
such as Texas, Minnesota and California, forcing developers to look to states with less ideal wind resources and more difficult development conditions.

"Transmission remains one of the greatest barriers to the development of US wind projects," the study said, adding that "[c]oordinated national
policies will be necessary to more efficiently link the US' vast wind resources to high-demand regions." But even if those policies are in place, IHS said there "will be a lag of several years" before those projects begin operatin. "A national renewable energy standard or federal energy policy legislation along with a streamlined transmission siting and cost allocation process are the essential ingredients to building a robust future US wind market."

Citing the drop in turbine demand, IHS said "turbine manufacturers and their suppliers will increasingly look to differentiate themselves based on cost, product, services and track record." The study said the US supply chain continues to expand domestically, supported by strong prospects for future
wind growth. "The surge in US wind installations over the past three years has encouraged established European players and new entrants from Asia to enter the US market, ensuring a steady supply of turbines ... for the foreseeable future."


Source: http://www.platts.com/RSSFe...

MAY 26 2010
http://www.windaction.org/posts/26517-us-wind-energy-market-facing-constraints-in-2010-ihs-study
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