Forget Fracking—Wind Energy Prices Hit a Record Low in the U.S.
Wind energy is on the verge of becoming competitive with fossil fuels: Prices for the carbon-free electricity fell to a new low last year, according to a study released Monday by Lawrence Berkeley National Laboratory.
Another sign that wind power is becoming a major power in the United States: Since 2007, wind farms have accounted for a third of the nation’s new electricity capacity, the study states.
Nationwide, wind energy only generates about 4 percent of the country’s electricity. But the story is different in individual states. Wind supplied 27 percent of Iowa’s electricity in 2013, 26 percent of South Dakota’s, and 19 percent of Kansas’. Wind farms generated between 12 percent and 17 percent of electricity in six other states.
The map below shows that most states now have a stake in wind energy.
This is an especially big deal, given that new industry fell off a cliff last year as Congress let a key tax credit for wind power expire. Only 1,087 megawatts’ worth of wind turbines were installed in 2013, compared with 13,131 megawatts in 2012.
“The continued decline in average wind prices, along with a bit of a rebound in wholesale power prices, put wind back at the bottom of the range of nationwide wholesale power prices in 2013,” the report’s authors wrote. “Wind energy contracts executed in 2013 also compare very favorably to a range of projections of the fuel costs of gas-fired generation extending out through 2040.”
Why has wind gotten so cheap? Mass manufacturing has made wind turbines cheaper, for one thing. Technological advances have also helped turbines generate more electricity, even in areas with low wind speeds.
Expect prices to continue to drop. Congress earlier this year renewed the Production Tax Credit, which pays wind energy producers a premium for the electricity they generate, for projects that begin construction in 2014. That has triggered another building boom, with a record 14,600 megawatts’ worth of wind farms under construction.
But the U.S. still lags other countries in wind power. Denmark, for instance, gets nearly 35 percent of its electricity from wind energy.
Report coauthor Ryan Wiser, a staff scientist at Lawrence Berkeley, said it’s difficult to predict how long the PTC will be needed to keep U.S. wind farms competitive with natural gas–fired power plants.
It depends partly on natural gas prices, which currently are low because of the fracking boom.
“We could eliminate the PTC today, and some wind projects would still be built on economic terms,” Wiser said in an email. “Moreover, by 2030, it's pretty clear that many wind projects would not likely need the PTC.”
In other words, the sky’s the limit.