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North American Wind Power Plant Service Market
Frost & Sullivan, Feb 2009, Pages: 57
Fair Winds Blow through the North American Wind Power Plant Service Market
The new administration in the United States is almost certain to toughen its stand on emission legislation and promote renewable energy, giving wind power additional advantages over coal- and natural gas-based electricity. Federal policies on climate change will compel the power industry to lower carbon dioxide emissions, which in turn, will benefit the wind power market and its plant service market. Plant owners that wish to sidestep the issue of emissions are likely to invest in wind power. However, the continuous expansion of wind power in the United States could be hindered by the lack of transmission capacity and expiration of the federal renewable production tax credit (PTC). Once plant owners increase the wind power capacity to comply with regulations, the demand for wind services will improve significantly. In 2007, 5,715MW of new capacity was added in North America, bringing the cumulative capacity of wind power plants to 18,750MW. The total installed wind capacity in the United States alone increased to 5,329MW in the same year, resulting in a total cumulative capacity of 16,904MW.
Apart from capacity expansion, the market is expected to gain substantially from the extension of PTC beyond 2009. If this does not happen, wind installations are likely to drop and consequently, the revenues in the wind power plant service market could plummet by 2010. As the PTC reduces the price of wind-generated electricity, electric utilities and other investors have shown greater interest in wind power. The PTC allows an income tax credit of 2.1 cents per kilowatt-hour for the production of electricity from utility-scale wind turbines. This provision has been extended several times and, most recently, has been stretched for one more year, until December 31, 2009. However, this extension has created uncertainty in the market about the availability of credit when new projects are completed. 'The intermittency of PTC's status has slowed down the implementation of planned renewal projects,' says the analyst of this research. 'The PTC is expected to be extended by five years; if implemented, this will result in a major change from the present situation.'
An offshoot of the rising activity in the wind power market is a shortage of components in key supply chain areas including single main bearings, gearboxes, generators, and main shafts. This scenario can mainly be attributed to the overall demand pressure in the wind and other industries that use wind turbine components. For instance, bearings are applied in different rotating machinery and in multiple industries such as agriculture, ship propulsion, rotating equipment for power stations, transportation, and mining machinery. 'The consequence of the shortage has been important delays in component shipment,' notes the analyst. 'Wind turbines in the field suffering from component failures can remain idle for months while awaiting components.' To solve this issue, companies should seek to improve the training of their own personnel and ensure proper maintenance and effective fault and failure diagnosis.
This Frost & Sullivan research service titled North American Wind Power Plant Service Market provides drivers, restraints, and main industry participants. In this research, Frost & Sullivan's expert analysts thoroughly examine the following markets: transactional, contractual, and advanced services.
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