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Wind energy sector accounted for 42% of new capacity in 2020, a record high

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Essential Energy Insights - October 2021


Wind energy sector accounted for 42% of new capacity in 2020, a record high

Record growth in the wind energy sector is helping the U.S. make progress toward President Joe Biden's 2035 clean electricity goal even as the country remains "well behind" China, Denmark, Germany and other wind leaders in the percentage of power it gets from the energy source, the U.S. Energy Department said.

Wind accounted for 42% of all new installed U.S. power capacity in 2020, more than any other source, the DOE said in a report focused on land-based wind. It was one of three wind market updates the agency released Aug. 30.

Nearly $25 billion invested in new utility-scale onshore wind added 16,836 MW of capacity to the grid in 2020, the agency reported. Land-based turbines produced 10% of electricity for 16 states in 2020, while Iowa generated as much as 57% of its power from wind, and several other Midwestern states generated more than 30%. Nationwide, wind's market share was 8.3% of total generation.

Wind energy boom 'underscores progress'

The wind industry's expansion has been aided by a steep decline in wind turbine prices, which have fallen from $1,800/kW in 2008 to $770/kW-$850/kW now, the DOE said.

Offshore wind projects grew 24% in 2020 to reach 35,324 MW, according to a second report from the DOE. Notably, the U.S. Interior Department's Bureau of Ocean Energy Management announced Aug. 30 that it is preparing an environmental impact statement for the 880-1,300-MW Sunrise Wind Offshore Farm off the coast of New York. The project is spearheaded by Ørsted A/S and Eversource Energy.

The Sunrise Wind project, under a power purchase agreement with New York, is one of several large-scale offshore wind projects that are fueling the greening of the U.S. power grid. In 2020, renewable energy outpaced coal and nuclear as electricity sources for the first time.

The momentum has continued in 2021. The American Clean Power Association reported earlier this month that the wind industry installed another 2,824 MW during the second quarter. The renewable sector as a whole logged a second-quarter record with 56 new projects installed in 27 states, the trade group said.

Such results "underscore both the progress made and the capacity for much more affordable wind power to come — all necessary to reach President Biden's goal of a decarbonized electricity sector by 2035," Energy Secretary Jennifer Granholm said in a statement, promising that the agency will "double down" on efforts to help ramp up deployment.

Opinions differ on 2035 goal

But without a massive ramp-up in new transmission nationwide coupled with the recognition that progress will be incremental, there is little hope for a fully decarbonized grid in 2035 or beyond, cautioned Frank Maisano, a senior principal with the Policy Resolutions Group at the Bracewell LLP law and government relations firm, which serves clients across the energy sector.

"Eight percent is a huge success from where we were 10 years ago," Maisano said in an interview. "It just goes to show that when utilities find acceptance and develop projects, and when customers demand cleaner options like they do in so many places, we can make progress. But look at New Orleans and Louisiana right now; they're worried they'll be running out of gas to keep their generators going."

Some fossil fuels such as natural gas will continue to be part of the energy mix for a long time, regardless of what climate policies prescribe, Maisano predicted.

Many utilities are counting on carbon capture and hydrogen technology innovations to help them run natural gas plants for several more decades, saying such plants must supplement intermittent renewables to keep power affordable and reliable.

Renewable energy players, predictably, tend to have a more bullish outlook.

"These DOE reports show that the clean energy future is well underway in America," Heather Zichal, CEO of the American Clean Power Association, wrote in an email. "Moving quickly on climate change in the U.S. will require meeting the Biden administration's goal of reaching 100% carbon-free power by 2035. The growing offshore wind industry can play a significant role in this as the next major source of homegrown American energy, representing a once-in-a-generation opportunity for the maritime industry and coastal and port communities."

According to the association, more than 415,000 Americans already work in the renewable energy industry. The bipartisan infrastructure bill now moving through the U.S. Congress could provide more than 1 million direct clean energy jobs and inject more than $1 trillion of investment into the economy, the trade group estimated.

The third report the DOE published Aug. 30 focuses on growth in the distributed energy sector in 2020. The report found that unlike in the other wind categories, new capacity of distributed energy actually declined from 20.5 MW installed in 2019 to 14.7 MW in 2020, an annual variation the agency said could be due to normal project-development cycles.