After a strong 2009, the problems associated with the recession and lack of a US energy policy caught up with the wind industry this year.
Wind supplied 2% of the world's electricity in 2009. Even during the dog days of the recession, installations charged ahead 31%, ending the year with a breathtaking 38,343 MW in new capacity for a cumulative world total of 158,505 MW. It was the highest growth rate in the last eight years.
Also of note, China surpassed the US as the largest wind turbine market, installing 13,803 MW, and reaching a total of 25,805 MW. China accounted for over a third of the world's wind installations in 2009, more than doubling its cumulative capacity for the fourth consecutive year. The US also had a record-breaking year, installing over 10,000 MW.
China introduced a feed-in tariff for new onshore wind plants, but because of inadequate transmission capacity about 25% of its existing wind capacity has yet to be connected to the grid.
To remedy this lack of oversight, China's National Energy Board announced in late April that 11 provinces must dovetail renewable energy installation schedules - which are mostly wind - with related transmission infrastructure development. The schedules will be used to set targets through 2015 and to choose which projects are eligible for national subsidies.
India became the fifth largest wind producer in 2009. India and China now serve 29% of the world market, with 4 of the top 10 turbine manufacturers.
Not So Good in 2010
As 2009 progressed, however, it became clear the wind industry was living off orders from the previous year and that headwinds were in store for 2010.
Poor project financing conditions in 2009 meant few orders this year. A meager 539 MW was installed in the US during the first quarter of 2010, the lowest levels since early 2007.
In addition, the American Wind Energy Association (AWEA) attributes the slow-down to low energy demand, low natural gas prices and a lack of long-term market signals. On top of that, there's increased competition, over-loaded inventories and pressure to reduce prices. IHS Emerging Energy Research expects the U.S. wind industry to add only 6300 -7100 MW in 2010.
"2010 marks the first time since 2004 that the U.S. wind industry will not surpass the previous year's growth level. Despite unprecedented federal wind incentives, reverberations from the financial crisis continue to create a difficult near-term market landscape especially in light of continued energy policy uncertainty," IHS Senior Analyst Matthew Kaplan said.
In a 2010 U.S. Wind Industry Monitor opinion poll (conducted by Droege & Comp), wind executives say lack of financing (72%), lack of national energy policy (67%) and lack of transmission (54%) are "important" or "very important" obstacles to industry growth.
Heightened transmission congestion and waning utility demand for wind are straining growth in traditional wind hot spots including Texas, Minnesota and California, forcing developers to go to states with less prolific resources and more arduous development conditions. Low energy prices have led to waning interest among utilities, making power purchase agreements difficult to get signed.
