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8/7/2019 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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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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21
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$/M
Wh)
Source: Berkeley Lab database
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Regional Differences Explain Some of theUnderlying Variability in Wind Sales Prices
Texas and the Heartland are lower-price regions, while California and theEast are higher-price regions (sample size is problematic in many regions)
0
10
20
30
40
50
60
70
Texas Heartland Mountain Great Lakes Northwest New England California East
1 project 15 projects 6 projects 3 projects 4 projects 1 project 2 projects 3 projects
161 MW 868 MW 926 MW 413 MW 530 MW 42 MW 188 MW 141 MW
Capacity-Weighted Average 2007 Wind Power Price
Individual Project 2007 Wind Power Price
200
7WindPower
Price(2007$/
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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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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$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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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]