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US wind installations drop in Q1'18, but 8,600 MW under construction

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US wind installations drop in Q1'18, but 8,600 MW under construction

The domestic wind industry saw installations in the first three months of 2018 sink by nearly three-quarters year-over-year, following a boom in 2017 spurred in part by changes to production tax credit. Meanwhile, 8,573 MW of wind projects were under construction with online dates ranging from 2018 to 2020.

The U.S. added 436 MW wind capacity during the first quarter, according to an analysis from S&P Global Market Intelligence. A year earlier the industry installed 1,644 MW, an unusually strong first quarter that was the industry's best in five years. Cumulative wind capacity is now just shy of 90,000 MW.

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Six projects in middle America, from Montana all the way down to Texas, went online during the quarter. The biggest operational project was the 200-MW FTWIND (Flat Top Wind I) in Texas, which Alterra Power Corp. owns a 51% stake in. BlackRock Real Assets owns the other 49%.

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The drop in wind installations stems in part from the production tax credit, or PTC, beginning to drop in value as part of a scheduled phase-out Congress agreed to in December 2015. Projects that started construction or other qualifying development work in 2016 were eligible for 100% of the credit's $23/MWh value, while developers that started construction in 2017 were eligible for only 80% of the credit's value. Further 20% declines continue annually through 2019, after which time the PTC will be completely phased out.

Both developers and industry groups have emphasized that the domestic industry can no longer depend on PTC in order to sustain growth. The American Wind Energy Association's CEO Tom Kiernan said during the lobbying body's annual conference in May that extending PTC was a home run for the entire industry. But, clean energy supports will need to focus on "a rally of single and doubles" and other smaller victories to keep the industry going. And companies throughout the wind energy supply chain are not holding out for PTC to get another extension.

"We're not counting on it," Vikas Anand, GE Renewable Energy's general manager for onshore wind in the Americas, said during a May 8 panel on turbine manufacturing during AWEA's annual conference. Steve Lockard, president and CEO of TPI Composites Inc. said during a May 8 speech that the U.S. bought itself stability and time with the PTC phase-down, but it is now up to industry players to find ways to improve the energy source's economics and bring down levelized cost of electricity.

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During the first quarter 2018, developers announced 950 MW of new wind projects. From that, two projects with a combined 570 MW in capacity are from Apex Clean Energy: Ta'teh Topah Wind Project and Pass Creek Wind Project, two South Dakota facilities that are scheduled to come online in 2021.

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Of the 10 largest utility-scale projects in advanced development or under construction, three of them have a nameplate capacity of more than 1,000 MW: Power Company of Wyoming's Chokecherry and Sierra Madre Wind Energy Project, Invenergy LLC's Wind Catcher Wind Farm and Viridis Renewable Energy Corp's Little Medicine Bow Wind Farm (Viridis Eolia Master Plan).

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As of May 16, more than 73,000 MW of wind capacity was scheduled to come online through 2022. A quarter of that capacity was in advanced development or under construction. S&P Global Market Intelligence considers a wind project to be in advanced development when two of the following five criteria are met: financing is in place, a power purchase agreement is signed, turbines are secured, required permits are approved or a contractor has signed on to the project

Analysts are forecasting that wind installations will likely peak in 2020 in the 10,000 MW to 13,000 MW range. Then in 2021, installations could drop in half. However, some industry players are eyeing offshore wind to help cushion the expected installation drop. On May 23, Massachusetts and Rhode Island officials picked two offshore wind projects for procurement to supply their electric utilities, totaling a combined 1,200 MW. There could be more offshore wind projects to grow the young industry, after U.S. Interior Secretary Ryan Zinke made a wave of announcements to boost offshore wind development, including potentially adding more leases off of the East Coast for development.

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