With a key federal tax incentive about to expire, the U.S. installed a 5.5 gigawatts of wind power in December to cap off a year that saw a record 13.2 gigawatts of wind energy come online, according to a report released Friday by research firm Bloomberg New Energy Finance.
The U.S. now boasts a total of 60 gigawatts of wind energy, accounting for 6% of the nation’s total generating capacity.
According to Bloomberg New Energy Finance, wind power prices have dropped more than 21% since 2010. Falling prices and the looming expiration of the production tax credit, which pays a premium for wind energy, unleashed a wind farm building boom last year.
“It’s clear that the economics, aided by the PTC, drove wind growth in 2012,” Amy Grace, a wind analyst with Bloomberg New Energy Finance, said in a statement. “Eleven gigawatts of capacity was built in states without any near-term state mandated demand.”
“This means that in most areas, utilities are buying wind power because they want to, not because they have to,” she added.
In some part of the country such as Texas, wind energy is now competitive with natural gas-fired power plants, the report said.
Congress renewed the production tax credit this month for another year, allowing developers to claim the incentive as long as they begin construction in 2013.
But Bloomberg New Energy Finance said the damage from the uncertainty around whether the tax credit would be extended has already slammed the industry and the boom of 2012 is unlikely to be repeated this year.
“Wary of PTC uncertainty all of last year, developers and investors were reluctant to build pipelines for the coming year,” the report stated. “Asset financing for U.S. wind projects crested in the first half of 2012 at $9.6 billion preparation for the 2012 burst, and then plummeted to $4.3 billion in the second half of 2012.”
California led the boom, installing 1,738 megawatts of wind power in 2012, followed by Kansas, Texas, Oklahoma and Oregon.