Annual Report on US Wind Power Perfomance Trends-2007(Presentation)

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    1

    Annual Report on U.S. WindPower Installation, Cost, and

    Performance Trends: 2007Ryan Wiser and Mark Bolinger

    Lawrence Berkeley National Laboratory

    - Report Summary -

    May 2008

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    2

    Presentation Overview Introduction to 2007 edition of

    U.S. wind market data report

    Wind installation trends

    Wind industry trends

    Evolution of wind pricing Installed wind project costs

    Wind turbine transaction prices

    Wind project performance

    O&M cost trends

    Integration/transmission/policy Coming up in 2008

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    3

    2007 Annual Market Data ReportPurpose, Scope, and Data:

    With a focus on 2007, summarize trends in the U.S. wind power market,including information on wind installations, industry developments, powersales prices, project costs, performance, O&M costs, policy trends

    Scope primarily includes wind turbines and projects over 50 kW in size

    Data sources include AWEA, EIA, FERC, SEC, etc. (see full report)

    Report Authors:

    Primary Authors: R. Wiser and M. Bolinger, Berkeley Lab

    Contributions from others at Berkeley Lab, AWEA, NREL, DOE, ExeterAssociates, George Washington University

    Available at: http://www1.eere.energy.gov/windandhydro/

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    Record year for new U.S. wind capacity: 5,329 MW of wind added (more than doubleprevious record) Roughly $9 billion in investment

    U.S. Wind Power Capacity Up 46% in 2007

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    1982

    1983

    1984

    1985

    1986

    1987

    1988

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    AnnualCapacity(MW

    )

    0

    3,000

    6,000

    9,000

    12,000

    15,000

    18,000

    CumulativeCapacity(M

    W)Annual US Capacity (left scale)

    Cumulative US Capacity (right scale)

    Source: AWEA

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    Wind Power Contributed 35% of All NewGenerating Capacity in the US in 2007

    Wind was the

    2nd-largestresource addedfor the 3rd-straight year

    Up from 19% in2006, 12% in

    2005, and

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    U.S. Led the World in 2007 Wind CapacityAdditions; Second in Cumulative Capacity

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    U.S. Share of Global Wind Capacity:27% of 2007 Additions, 18% of Cumulative

    0%

    10%

    20%

    30%

    40%

    50%60%

    70%

    80%

    90%

    100%

    1982

    1983

    1984

    1985

    1986

    1987

    1988

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    US%of

    WorldwideA

    nnualGrowth

    0

    10

    20

    30

    40

    5060

    70

    80

    90

    100

    Cum

    ulativeCapa

    city(GW)Cumulative Non-US Capacity (right scale)

    Cumulative US Capacity (right scale)

    US Proportion of Annual Growth (left scale)

    Source: Earth Policy Institute, BTM Consult, AWEA

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    0%

    2%

    4%

    6%

    8%10%

    12%

    14%

    16%

    18%20%

    22%

    Denmark

    Spain

    Portugal

    Ireland

    Germany

    Greece

    Netherlands

    Austria

    India

    UK

    Italy

    Sweden

    U.S.

    France

    Australia

    Canada

    Norway

    China

    Japan

    Brazil

    TOTAL

    ProjectedWindGeneration

    a

    s%ofElectric

    ityConsumption

    Approximate Wind Penetration, end of 2007

    Approximate Wind Penetration, end of 2006

    Source: Berkeley Lab estimates based on data

    from BTM Consult and elsewhere

    U.S Lagging Other Countries in Wind As aPercentage of Electricity Consumption

    Note: Figure only includes the 20 countries with the most installedwind capacity at the end of 2007

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    Geographic Spread of Wind Projects in theUnited States Is Reasonably Broad

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    Texas Easily Exceeded Other States inAnnual Capacity Growth

    16 states had >100 MW of

    wind capacity at the end of2007 (9 had >500 MW)

    TX widened its lead over CA

    in cumulative wind capacity

    Neither TX nor CA was inthe top tier of states for wind

    as a % of in-state generation 6 states have in-state wind

    generation that exceeds 4%of total in-state generation:MN, IA, CO, SD, OR, NM

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    Wind Now >10% of Some Utilities Sales

    See full report for

    the many

    assumptions usedto generate the

    data in this table

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    >225 GW of Wind in Interconnection Queues

    MISO (66 GW), ERCOT (41 GW), and PJM (35 GW) make up 2/3 of total

    Twice as much wind as next largest resource (natural gas) in queues

    Not all of this capacity will be built.

    0

    50

    100

    150

    200

    250

    Wind Natural Gas Coal Nuclear Solar Other

    Nameplate

    Capacity(GW) Entered Queue in 2007

    Total in Queue at end of 2007

    Source: Exeter Associates review of interconnection queues

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    Interest in Offshore Wind Continues in theU.S., but No Such Projects Are Yet Online

    All wind projects installed in theU.S. to date are land-based

    Some interest exists in offshorewind in several parts of the U.S.

    Several projects were put at riskin 2007 due to concerns abouthigh and uncertain costs

    Projects presented in table toright are in various stages ofdevelopment

    State Proposed OffshoreWind Capacity

    Massachusetts 783 MW

    Delaware 450 MW

    New Jersey 350 MW

    New York 160 MW

    Texas 150 MWOhio 20 MW

    Georgia 10 MW

    TOTAL 1,923 MW

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    14

    GE Remained the Dominant Turbine Vendor

    Although the three largest

    vendors lost U.S. marketshare in 2007

    all vendors saw U.S.

    installations of their turbinesgrow in 2007

    Vestas

    29%

    GE Wind

    60%

    Mitsubishi

    8%

    Other0.1%

    Suzlon

    1%

    Clipper0.1%

    Gamesa

    2%

    Source: AWEA project database

    2005

    Gamesa

    2%

    Suzlon

    4%

    Mitsubishi

    5%

    Other0.1%

    GE Wind

    47%

    Siemens

    23%Vestas

    19%

    2006Mitsubishi

    7%

    Suzlon4%

    Clipper

    1%

    Nordex0.05%

    Gamesa

    11%

    Vestas

    18%Siemens

    16%

    GE Wind

    44%

    2007

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    Soaring Demand Spurs Expansion of U.S.Wind Turbine Manufacturing

    Note: Map is

    not intended to

    be exhaustive

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    Average Turbine Size Continued to Grow

    40% of turbines installed in 2007 were larger than 1.5 MW, upfrom 34% in 2006 and 24% in 2004/2005

    0.71 MW

    0.88 MW

    1.21 MW

    1.42 MW

    1.60 MW 1.65 MW

    0.0

    0.2

    0.40.6

    0.8

    1.0

    1.21.4

    1.6

    1.8

    1998-99 2000-01 2002-03 2004-05 2006 2007

    1,425 turbines 1,987 turbines 1,757 turbines 1,960 turbines 1,532 turbines 3,230 turbines

    1,018 MW 1,758 MW 2,125 MW 2,776 MW 2,454 MW 5,329 MW

    AverageTurbineSize(MW)

    Source: AWEA project database

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    Average Project Size Approached 120 MW

    Average project size has doubled since 2004-2005, and tripledsince 1998-1999

    0

    20

    40

    60

    80

    100

    120

    140

    1998-99 2000-01 2002-03 2004-05 2006 2007

    29 projects 27 projects 46 projects 44 projects 35 projects 45 projects

    Nameplat

    eCapacity(M

    W)

    Average project size, by COD (excludes projects < 2 MW)

    Source: Berkeley Lab analysis of AWEA project database

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    Developer Consolidation Continued at aTorrid Pace Acquisition and investment activity

    continued strong trend that began in2005

    2007: 11 deals = 37 GW of wind

    development pipeline2006: 12 deals = 34 GW

    2005: 8 deals = 12 GW

    2002-04: 4 deals = 4 GW

    A number of large, foreigncompanies have entered the U.S.

    wind development business inrecent years

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    Comfort With and Use of InnovativeFinancing Structures Increased IRS Revenue Procedure 2007-65 provides safe harbor guidelines

    for wind projects using institutional investor flip structure

    More than a dozen institutional tax investors active in 2007

    Some tax investors becoming comfortable with project-level debt

    2007 also saw a first-of-its-kind tax equity structure geared towardsmunicipal utilities and cooperatives (White Creek)

    Butgrowing dependence on 3rd

    -party tax investors has left the U.S.wind sector vulnerable to the global credit crisis

    Institutional tax investors lately have fewer profits to shelter

    Demand for affordable housing tax credits drying up, driving yieldssharply higher will this spillover into wind?

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    IPP Project Ownership Remained Dominant

    Utility ownership (both IOU and POU) gained some ground

    Community wind lost market share

    0

    2

    4

    6

    8

    10

    12

    14

    16

    18

    1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

    Cumu

    lative

    Ins

    talle

    dCapacit

    y(GW)

    Community

    Publicly Owned Utility (POU)

    Investor-Owned Utility (IOU)

    Independent Power Producer (IPP)

    Source: Berkeley Lab estimates based on AWEA project database

    Community:50 MW (1%)

    IPP: 4,414 MW

    (83%)

    IOU:

    598 MW

    (11%)

    POU:268 MW (5%)

    2007 Capacity by

    Owner Type

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    Contracted Sales to Utilities Remained theMost Common Off-Take Arrangement

    But sales to power marketers are becoming more prevalent So are merchant plants primarily in TX and NY

    02

    4

    6

    8

    10

    12

    14

    16

    18

    1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

    Cum

    ulative

    Ins

    tal

    ledCapac

    ity(G

    W)

    On-Site

    Merchant/Quasi-Merchant

    Power Marketer

    Publicly Owned Utility (POU)

    Investor-Owned Utility (IOU)

    Source: Berkeley Lab estimates based on AWEA pro ject database

    Merchant:

    799 MW

    (15%)

    IOU:

    2,558 MW

    (48%)

    POU:

    919 MW

    (17%)

    2007 Capacity by

    Off-Take Category

    Marketer:

    1,052 MW

    (20%)

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    Upward Pressure on Wind Power PricesContinued in 2007

    Berkeley Lab maintains a database of wind power salesprices; next few slides present data from that database

    Sample includes 128 wind projects installed from 1998-2007,

    totaling 8,303 MW (55% of total added capacity over thattimeframe)

    Prices reflect price of electricity as sold by project owner (i.e.,

    busbar energy prices) Prices reduced by receipt of state/federal incentives (e.g., the PTC) and

    by any value gained through separate sale of RECs (though only 10 of128 projects appear to receive additional REC revenue)

    As a result, prices do not reflect wind energy generation costs; priceswould be higher were state/federal incentives and RECs not available

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    Cumulative Average Sales Price for Sampleof Projects Built After 1997 Remains Low

    Small increases in 2006 and 2007 are due to rising prices from newly builtprojects, but cumulative nature of graphic mutes degree of price increase

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    1999 2000 2001 2002 2003 2004 2005 2006 2007

    7 projects 10 projects 20 projects 36 projects 53 projects 66 projects 87 projects 107 projects 128 projects

    450 MW 562 MW 701 MW 1,582 MW 2,466 MW 3,267 MW 4,396 MW 5,801 MW 8,303 MW

    W

    indPowerPrice(2007$/M

    Wh)

    Cumulative Capacity-Weighted Average Wind Power Price (+/- 1 standard deviation)

    Source: Berkeley Lab database

    Sample includes projects built from 1998-2007

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    Binning by Commercial Operation DateShows that Prices Have Increased Recently

    Graphic shows prices in 2007 from projects built from 1998-2007

    Prices will likely rise further to more fully reflect turbine price increases

    0

    10

    20

    30

    40

    50

    60

    70

    1998-99 COD 2000-01 COD 2002-03 COD 2004-05 COD 2006 COD 2007 COD

    14 projects 22 projects 31 projects 26 projects 14 projects 21 projects

    624 MW 901 MW 1,793 MW 1,717 MW 766 MW 2,502 MW

    Capacity-Weighted Average 2007 Wind Power Price (by commercial operation date)

    Individual Project 2007 Wind Power Price (by commercial operation date)

    2007W

    indPowerPrice(2007$/M

    Wh)

    Source: Berkeley Lab database

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    25

    Regional Differences Explain Some of theUnderlying Variability in Wind Sales Prices

    Texas and the Heartland are lower-price regions, while California and theEast are higher-price regions (sample size is problematic in many regions)

    0

    10

    20

    30

    40

    50

    60

    70

    Texas Heartland Mountain Great Lakes Northwest New England California East

    1 project 15 projects 6 projects 3 projects 4 projects 1 project 2 projects 3 projects

    161 MW 868 MW 926 MW 413 MW 530 MW 42 MW 188 MW 141 MW

    Capacity-Weighted Average 2007 Wind Power Price

    Individual Project 2007 Wind Power Price

    200

    7WindPower

    Price(2007$/

    MWh)

    Source: Berkeley Lab database

    Sample includes projectsbuilt in 2006 and 2007

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    Wind Has Been Competitive with WholesalePower Prices in Recent Years

    Wholesale price range reflects flat block of power across 23 pricing nodes (see previous map)

    Wind prices are capacity-weighted averages from cumulative project sample

    0

    10

    20

    30

    40

    50

    60

    70

    80

    90

    2003 2004 2005 2006 2007

    53 projects 66 projects 87 projects 107 projects 128 projects

    2,466 MW 3,267 MW 4,396 MW 5,801 MW 8,303 MW

    200

    7$/MWh

    Nationwide Wholesale Power Price Range (for a flat block of power)

    Cumulative Capacity-Weighted Average Wind Power Price

    Source: FERC 2006 and 2004 "State of the Market" reports, Berkeley Lab database, Ventyx

    Wind project sample includesprojects built from 1998-2007

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    Wind Built After 1997 Was Competitive withWholesale Prices in Most Regions in 2007

    Note: Even within a region there are a range of wholesale power pricesbecause multiple wholesale price hubs exist in each area (see earlier map)

    0

    10

    20

    30

    40

    50

    60

    70

    80

    Texas Heartland Mountain Northwest California Great Lakes East New England Total US

    4 projects 65 projects 15 projects 13 projects 12 projects 6 projects 12 projects 1 project 128 projects

    476 MW 2,857 MW 1,757 MW 1,219 MW 691 MW 547 MW 714 MW 42 MW 8,303 MW

    2007$/MWh

    2007 Average Wholesale Power Price Range By Region

    2007 Capacity-Weighted Average Wind Power Price By Region

    Individual Project 2007 Wind Power Price By Region

    Source: Berkeley Lab database, Ventyx

    Wind project sample includes projects built from 1998-2007

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    Focusing Just on Wind Projects Built in2006 and 2007 Tells a More Cautious Story

    The recent rise in wind prices is making wind somewhat less competitivein wholesale markets throughout the U.S., though wind prices remain atthe lower end of the wholesale price range

    0

    10

    20

    30

    40

    50

    6070

    80

    Texas Heartland Mountain Great Lakes Northwest New England California East Total US

    1 project 15 projects 6 projects 3 projects 4 projects 1 project 2 projects 3 projects 35 projects

    161 MW 868 MW 926 MW 413 MW 530 MW 42 MW 188 MW 141 MW 3,268 MW

    2007

    $/MWh

    2007 Average Wholesale Power Price Range By Region

    Individual Project 2007 Wind Power Price By Region

    2007 Capacity-Weighted Average Wind Power Price By Region

    Source: Berkeley Lab database, Ventyx

    Wind project sample includes projects built in 2006 and 2007

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    REC Markets Remain Fragmented andVolatile

    Renewable energycertificate (REC) marketshave experienced significant

    price variations by: market type: compliance vs.

    voluntary

    geographic region specific design of state RPS

    policies

    $0

    $10

    $20

    $30

    $40

    $50

    $60

    $70

    Jun-02

    Sep-02

    Dec-02

    Mar-

    03

    Jun-03

    Sep-03

    Dec-03

    Mar-

    04

    Jun-04

    Sep-04

    Dec-04

    Mar-

    05

    Jun-05

    Sep-05

    Dec-05

    Mar-

    06

    Jun-06

    Sep-06

    Dec-06

    Mar-

    07

    Jun-07

    Sep-07

    Dec-07

    CT Class I DC Class IMA MD Class INJ Class I PARI New TX

    Avg

    Mon

    thlyRECPr

    ice

    (2007$/MWh)

    Source: Evolution Markets

    Compliance Markets

    $0

    $5

    $10

    $15

    $20

    Jun-0

    3

    Sep-0

    3

    Dec-0

    3

    Mar-

    04

    Jun-0

    4

    Sep-0

    4

    Dec-0

    4

    Mar-

    05

    Jun-0

    5

    Sep-0

    5

    Dec-0

    5

    Mar-

    06

    Jun-0

    6

    Sep-0

    6

    Dec-0

    6

    Mar-

    07

    Jun-0

    7

    Sep-0

    7

    Dec-0

    7

    West

    National

    Midwest/SPP

    Avg

    Mon

    thlyRECPrice

    (2007

    $/MWh)

    Source: Evolution Markets

    Voluntary Markets

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    Wind Power Sales Prices Are Affected byInstalled Project Costs...

    0

    10

    20

    30

    40

    50

    60

    70

    $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 $2,200 $2,400

    Installed Cost (2007 $/kW)

    Sample includes 89 projects built from 1998-2007, totaling 7,272 MW

    Source: Berkeley Lab database

    2007WindPowerPrice(2007$/MW

    h)

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    ...and by Project Performance

    0

    10

    20

    30

    40

    50

    60

    70

    15% 20% 25% 30% 35% 40% 45% 50%

    2007 Capacity Factor (%)

    Sample includes 101 projects built from 1998-2006, totaling 5,778 MW

    Source: Berkeley Lab database

    2007WindPowerPri

    ce(2007$/MW

    h)

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    $0

    $500

    $1,000

    $1,500

    $2,000

    $2,500

    $3,000

    $3,500$4,000

    $4,500

    1982

    1983

    1984

    1985

    1986

    1987

    1988

    1989

    1990

    1991

    1992

    1993

    1994

    1995

    1996

    1997

    1998

    1999

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    InstalledProject

    Cost(2007$/kW)

    Individual Project Cost (227 online projects totaling 12,998 MW)

    Average Project CostPolynomial Trend Line

    Source: Berkeley Lab database (some data points suppressed to protect confidentiality)

    Installed Project Costs Are On the Rise,After a Long Period of Decline

    Projects proposed for construction in 2008 (not shown in graphic) are~$210/kW higher still (averaging ~$1,920/kW)

    Increase of ~$370/kW

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    34

    Regional Differences in Wind Project CostsAre Apparent

    Heartland low-cost region, East and New England high-cost

    $0

    $500

    $1,000

    $1,500

    $2,000

    $2,500

    $3,000

    Heartland Great Lakes Mountain Texas Northwest California East New England

    38 projects 7 projects 7 projects 14 projects 12 projects 6 projects 9 projects 5 projects

    2,496 MW 500 MW 905 MW 1,584 MW 1,531 MW 283 MW 575 MW 47 MW

    Inst

    alledProjectC

    ost(2007$/kW

    ) Average Project Cost

    Individual Project Cost

    Average Cost, Total U.S.

    Source: Berkeley Lab database

    Sample includes projects built from 2004-2007

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    35

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    $1,600$1,800

    $2,000

    1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

    Announcement Date

    Orders 300 MWPolynomial Trend Line

    Source: Berkeley Lab database

    TurbineTransactionPrice(2007$/

    kW)

    Since turbines are often ordered 12 or more months in advance,further project cost increases are expected

    ~$600/kW

    increase

    since2001

    Project Cost Increases Are a Function ofWind Turbine PricesFigure depicts reported transaction prices from

    49 U.S. wind turbine orders totaling 16.6 GW

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    Wind Project Performance Is Improving

    Of the projects installed prior to 2004, 3.6% had capacity factors in excess of 40%; of

    the projects installed from 2004-2006, 25.9% had capacity factors in excess of 40%

    Note: Sample consists of 170 wind projects built from 1983-2006, totaling 10,564 MW

    (91% of nationwide capacity at end of 2006)

    0%

    10%

    20%

    30%

    40%

    50%

    Pre-1998 1998-99 2000-01 2002-03 2004-05 2006

    20 projects 23 projects 34 projects 35 projects 34 projects 24 projects936 MW 914 MW 1,778 MW 1,938 MW 2,723 MW 2,275 MW

    2007CapacityFac

    tor

    Capacity-Weighted Average 2007 Capacity Factor

    Individual Project 2007 Capacity Factor, by COD

    Source: Berkeley Lab database

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    37

    Regional Performance Differences AreApparent

    Sample size is problematic in several regions (New England, Great Lakes, Hawaii)

    Texas relatively low average is heavily influenced by a single large project

    0%

    10%

    20%

    30%

    40%

    50%

    New England Great Lakes East Texas Northwest Mountain California Heartland Hawaii

    3 projects 2 projects 6 projects 9 projects 11 projects 8 projects 9 projects 43 projects 2 projects

    3 MW 105 MW 535 MW 1,602 MW 1,077 MW 868 MW 605 MW 2,100 MW 41 MW

    2007Capac

    ityFactor

    Capacity-Weighted Average 2007 Capacity Factor

    Individual Project 2007 Capacity Factor

    Sample includes projects built from 2002-2006

    Source: Berkeley Lab database

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    Average Wind Project O&M Costs from2000-07 Are Affected By Year of Installation

    Capacity-weighted average 2000-07 O&M costs for projects built in 1980s equal $30/MWh,

    dropping to $20/MWh for projects built in 1990s, and to $9/MWh for projects built in 2000sNote: Sample is limited, and consists of 95 wind projects totaling 4,319 MW; few projects insample have complete records of O&M costs from 2000-07

    $0

    $10

    $20

    $30

    $40

    $50

    $60

    $70

    1980 1985 1990 1995 2000 2005

    Last Year of Equipment Installation

    AverageAnn

    ualO&MCosts

    2000-07(2

    007$/MWh)

    Projects with no 2007 O&M data

    Projects with 2007 O&M data

    Source: Berkeley Lab database; five data pointssuppressed to protect confidentiality.

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    O&M Costs Appear to Decrease forRecently Constructed Projects, andIncrease with Project Age

    Note: Sample size is extremely limited; figure only includes projects over 5MW in size and built from 1998-2006

    $0

    $5

    $10

    $15

    $20

    $25

    $30

    $35

    1 2 3 4 5 6

    Number of Years Since the Last Year of Equipment Installation

    Ann

    ualO&MCost(

    2007$/MWh)

    1998-2000 (Average +/- Std. Dev.)

    2001-2003 (Average +/- Std. Dev.)

    2004-2006 (Average +/- Std. Dev.)

    Last Year of Equipment Installation(projects >5 MW only):

    n=6 n=10 n=10n=19 n=3 n=3n=5n=18n=21

    Source: Berkeley Lab database; averages shown

    only for groups of three or more projects

    n=6

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    Smaller Projects Appear to ExperienceHigher O&M Costs, on a $/MWh Basis

    Note: Sample size is extremely limited

    $0

    $10

    $20

    $30

    $40

    $50

    $60

    50 MW

    Project Size (MW)

    AverageAnnua

    lO&MCosts

    2000-07(200

    7$/MWh)

    Pre-1998 (Average +/- Std. Dev.)1998-2000 (Average +/- Std. Dev.)

    2001-2003 (Average +/- Std. Dev.)

    2004-2006 (Average +/- Std. Dev.)

    Last Year of Equipment Installation:

    n=11n=4n=6n=15 n=11 n=17 n=10n=3 n=7

    Source: Berkeley Lab database; averages shown only for groups

    of three or more projects

    n=5

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    Studies Find that the Cost of IntegratingWind into Power Systems Is Manageable

    Wind integration costs are < $10/MWh for capacity penetrations of up to ~30%

    Regulation impacts are small, load-following and unit commitment larger

    Larger balancing areas and use of wind forecasts ease integration challenges

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    Solutions to Transmission Barriers Beganto Emerge in 2007, but Constraints Remain U.S. DOE National Electric Transmission Congestion Reportdesignated two

    national interest corridors, in Southwest and Mid-Atlantic FERC issued Order 890 in February 2007

    Adopts cost-based energy imbalance policy

    Requires transmission providers to participate in local/regional planning process

    Requires transmission providers to examine re-dispatch and conditional firm service

    FERC approved California ISO proposal for new interconnection category forlocation-constrained resources (e.g., Tehachapi wind)

    Several states began to proactively develop transmission infrastructure for wind

    Texas PUC designated 5 Competitive Renewable Energy Zones (CREZ), with a potential23 GW of wind, to which transmission could be built in advance of generation

    Colorado initiated a similar process to identify Energy Resource Zones (ERZ)

    Likewise, California launched the Renewable Energy Transmission Initiative (RETI) to

    identify renewable energy zones and prepare transmission plans to them

    Large number of transmission projects planned that include wind

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    Federal and State Policy Efforts in 2007Continued to Drive Wind Development

    Federal PTC currently in place through 2008

    $170 million of Clean Renewable Energy Bonds to 102 windprojects

    $2.7 million of USDA 9006 grant awards to 7 large windprojects (8.2 MW)

    Four new state RPS policies (IL, NH, NC, OR), and many

    revisions to existing state RPS policies (additional state RPSactivity has occurred in 2008)

    State renewable funds, tax incentives, utility planning, green

    power, and growing interest in carbon regulation all alsoplayed a role in 2007

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    Coming Up in 2008 Rising wind power prices, transmission availability, siting

    and permitting conflicts, and other barriers to wind

    development remain

    Nonetheless, 2008 is expected to be another banner year

    for the U.S. wind industry, with >5,000 MW projected Drivers include rising cost of fossil generation, mounting

    possibility of carbon regulation, increasing state support

    for wind, and looming PTC expiration

    Unless the PTC is soon extended beyond 2008, 2009could be a year of retrenchment

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    For More Information...See full report for additional findings, a discussion of the

    sources of data used, etc. http://www1.eere.energy.gov/windandhydro/

    To contact the primary authors

    Ryan Wiser, Lawrence Berkeley National Laboratory510-486-5474, [email protected]

    Mark Bolinger, Lawrence Berkeley National Laboratory

    603-795-4937, [email protected]

    To contact the U.S. Department of Energys Wind Program

    Drew Ronneberg, [email protected] Steve Lindenberg, [email protected]