With the extension of the federal wind energy production tax credit in September, capacity installations in 2005 look likely to beat all previous records, the American Wind Energy Association (AWEA) said last week in its quarterly U.S. market outlook. The previous high for new wind power capacity installations in one year was 1696 MW in 2001. Most industry participants agree that 2005 will be a better year, with some predicting installations to exceed 2500 MW.

"Conditions are right for next year to be a record-breaking year," said AWEA Executive Director Randall Swisher. "We will see what the U.S. industry can do at a full-speed run for the next fourteen months. As natural gas prices continue to demonstrate volatility, and coal prices are increasing as well, wind power looks more attractive as a way to diversify a utility's supply portfolio."

The slow-down in installations in 2004 that resulted from the expiration of the production tax credit (PTC) means that many projects that have been in the development pipeline are now ready to move forward quickly. Wind power project developers and wind turbine and component manufacturers are now racing to lock up supply contracts for the coming year.

At the same time, rising and volatile natural gas prices make wind energy attractive in terms of the long-term stable energy price that the technology can offer. Once a plant is built, it requires no fuel and produces no harmful emissions. According to the Energy Information Administration, in the best wind resource areas such as the plains states and the upper Midwest, wind energy is the lowest-cost new electricity resource (with the PTC in place) when natural gas prices rise above about US$3.50 per thousand cubic feet. On the New York Mercantile Exchange, natural gas prices topped $7 per thousand cubic feet in October, and most experts expect it to continue in the range of $5 for the foreseeable future.

The more wind energy capacity is installed, the more it will help to reduce the current natural gas supply shortage in the U.S., according to AWEA. The increasing use of natural gas to power electric generating plants is preventing the nation from building up its storage levels during the summer. But in many areas of the country where wind farms are generating electricity, they are directly helping to conserve vital natural gas supplies.

"We estimate that the wind farms already in place, and those that will be installed by the end of 2005, will be saving over 0.5 billion cubic feet (Bcf) of natural gas per day in 2006," said Swisher. "Using conservative growth estimates of 3000 MW installed every two years for the next four years, the U.S. could top 15,000 MW of installed wind power capacity by the end of 2009, which would save nearly 0.9 Bcf/day by the end of this decade."

Because the tax credit was extended relatively late in the year, AWEA expects the U.S. to install approximately 480 MW of new capacity in 2004, well above its previous estimate of 350 MW but far below previous strong years such as 2001 (1696 MW) and 2003 (1687 MW). The full list of expected installations throughout the year is provided below.

If installed wind power capacity were to consistently expand at a rate of 18% per year, AWEA said, 6% of the nation's electricity could be generated by wind power by the year 2020, resulting in over $100 billion of investment, in addition to saving millions of cubic feet of natural gas. AWEA is continuing to pursue policies-such as a long-term PTC extension and federal and state renewables portfolio standards (RPS)-that will move the wind industry beyond the boom-and-bust cycles that have resulted from short-term PTC extensions in the past.

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Wind Energy Projects To Be Completed in 2004

State

Project Name

Location

Installed Capacity (in MW)

Project Developer

Power Purchaser

Turbine Manufacturer

Number of Turbines

Alaska

Kotzebue Wind Project

Kotzebue

0.1

Kotzebue Electric Association

Kotzebue Electric Association

AOC

2

California

Altamont (repower)

Altamont Pass

20

FPL Energy

PGE

Vestas

31

California

Tehachapi

Tehachapi

4.5

Coram Energy, LLC

Southern California Edison

GE Wind

3

California

SMUD II

Solano County

4.62

Sacramento Municipal Utility District (SMUD)

SMUD

Vestas

7

California

Karen Avenue
III

San Gorgonio

4.5

Whitewater Energy Corp.

GE Wind

3

Colorado

Prowers County

1.5

Arkansas River Power Authority

Arkansas River Power Authority

GE Wind

1

Colorado

Prowers County

4.5

Lamar Utilities Board

Lamar Utilities Board

GE Wind

3

Idaho

Fossil Gulch

Gore Hill Bench, west of Great Falls

10.5

United Materials /Exergy Development

Idaho Power

GE Wind

7

Illinois

Manlius

Manlius

1.65

Engineers Architects Professional Corp.

Bureau Valley High School

Vestas

1

Illinois

Crescent Ridge

Bureau County

54.5

Illinois Wind Energy/Eurus

ComEd

Vestas

33

Iowa

Intrepid

Buena Vista, Sac Counties

159

Clipper Wind/GE

MidAmerican

GE Wind

106

Iowa

Neppel wind power project

Armstrong

1.5

Alliant Energy

Vestas

1

Minnesota

Carleton College

Northfield

1.65

Carleton College/Xcel Energy

Vestas

1

Minnesota

Northfield School District

Northfield

1.65

Northfield School District

1

Minnesota

SMMPA

Fairmont, Redwood Falls, and Wells

6.6

SMMPA

Vestas

4

Minnesota

Maiden Winds Power Project

West Pipestone

8.25

Dan Juhl/Edison Capital

Xcel Energy

Vestas

5

Minnesota

Minn Wind III-IX

Near Luverne

11.55

Xcel Energy

Vestas

7

Minnesota

JJN Wind Farm

Buffalo Ridge

1.5

JJN Wind Farm

JJN Wind Farm

Vestas

1

New Mexico

Caprock Wind Ranch

Quay County

60

Cielo Wind Power

Xcel Energy

Mitsubishi

60

Ohio

AMP-Ohio/ Green Mountain Energy Wind Farm

Bowling Green

3.6

American Municipal Power - Ohio

American Municipal Power - Ohio

Vestas

2

Tennessee

Buffalo Mountain wind farm

near Oak Ridge

27

Invenergy

TVA

Vestas

15

Texas

Sweetwater Phase II

near Sweetwater

91.5

DKRW, Babcock & Brown, and Catamount Energy Corp

GE Wind

61

Total installed capacity

480