Only 43 MW of wind capacity was brought online in the third quarter of 2013, continuing a yearlong trend of minimal wind capacity installations in the U.S., but construction activity is ramping up as the industry seeks to tap into the extended production tax credit.
Though developers are now getting projects underway, the first three quarters of 2013 saw 432 MW of wind capacity completed, after a staggering increase in capacity installations at the end of 2012 ahead of the scheduled expiration of the wind production tax credit.
Developers are now striving to begin construction or meet a safe harbor clause by the end of 2013 in order to qualify for the extended credit. On Sept. 20, the Internal Revenue Service clarified the “continuous efforts” and “continuous construction” requirements for the extended credit. Projects that are brought online by the end of 2015 will be deemed to have met “continuous” requirements, while those that take longer will be subject to scrutiny.
Members of the wind industry are forecasting a recovery, at least for a couple of years, as projects that began construction or met the safe harbor clause by the end of 2013 come into service. However, long-term expectations are still uncertain. Currently, industry advocates are lobbying Congress to extend the production tax credit again. The production tax credit originated in the Energy Policy Act of 1992, and has been extended multiple times since its original expiration in 1999. In an Oct. 2 Congressional subcommittee hearing about the extension, some lawmakers focused on the question of how long the industry would need the production tax credit before they could wean themselves off of it.
The only wind unit to come online in the third quarter was the 42.7-MW unit at Ocotillo Wind Energy Facility in Imperial County, Calif. Owned by Pattern Renewables LP, a subsidiary of Riverstone Holdings LLC and Pattern Energy Group LP, this was the second unit brought online at the plant, following the 222.8-MW unit that came online in December 2012. Both units have 20-year power purchase agreements for their entire capacities with Sempra Energy subsidiary San Diego Gas & Electric Co.
Eight units totaling 1,527 MW were announced during the third quarter. The largest of these was the 1,000-MW unit at Lincoln County Wind Project in Lincoln County, S.D. The project is owned by Dakota Plains Energy, which also owns the 300-MW Campbell County Wind Farm in Campbell County, S.D. The second-largest wind unit announced in the third quarter of 2013 was the 120 MW unit at Addison Energy Wind, which is in Kern County, Calif., and owned by Addison Energy Resources LLC.
The U.S. has 116,265 MW of wind capacity in development. Of that capacity, 7,562 MW, or about 7%, of all planned wind capacity is in advanced development or under construction. The remaining 108,703 MW of wind capacity is in early stages of development or postponed, and risks not qualifying for the production tax credit if Congress does not pass another extension. Developers that counted on the production tax credit in their planning process could see their projects jeopardized if they miss the deadline. SNL Energy considers a project in early development when the permitting process begins and moves a project to advanced development when two of the following five criteria are satisfied: financing is in place, power purchase agreement is signed, turbines are secured, required permits are approved or a contractor has signed on to the project.
Wind-rich Texas leads the nation with 1,031 MW of wind capacity in advanced development or under construction. Neighboring New Mexico comes in second with 818 MW, while California, which leads the way by a large margin in utility-scale solar development, comes in third with 549 MW.
The largest wind project in advanced development or under construction is the 800-MW Mescalero Ridge Wind Project in Chaves County, N.M. The project is owned by Caithness Energy LLC, which also owns 85 MW of operating wind capacity and 399 MW of planned wind capacity in Oregon. The project does not have any signed power purchase agreements.
The second-largest wind project in advanced development or under construction is the 364-MW phase one of the Cape Wind Offshore project. Cape Wind Offshore has a total planned capacity of 468 MW, and is located off the coast of Massachusetts in Nantucket Sound. The project is owned by Energy Management Inc. subsidiary Cape Wind Associates, and has three 15-year PPAs for the majority of its capacity with Northeast Utilities subsidiary NSTAR Electric Co. and National Grid plc subsidiaries Massachusetts Electric Co. and Nantucket Electric Co. In July, Cape Wind Associates stated that it intends to meet the requirements necessary to qualify for the production tax credit.
About the data: Only units with known online months are included in this analysis. Use SNL Energy's Power Plant Projects, Power Plant Unit Projects and Regional Power Plant Outlook templates to generate a list of active power plant and power plant unit projects and a summary of operating power plants by fuel type and NERC region.