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North American Wind Energy Market - Investment Opportunities
Frost & Sullivan, Dec 2009, Pages: 50
This Frost & Sullivan research service titled North American Wind Energy Market - Investment Opportunities provides market trends, market drivers, market restraints, industry challenges, investment trends, and key growth segments. In this research, Frost & Sullivan's expert analysts thoroughly examine the markets for both offshore and onshore wind technologies.
Market Overview
Promise of Steady and Sustainable Returns Ramps up Attraction Quotient for the North American Wind Energy Market
To further the quest for newer, cost-effective renewables and promote energy security, various nonconventional sources of energy are being put to the test. Among the entire gamut of renewables, wind energy is the most mature. During 2008, the largest incremental capacity of 8,545 MW was added in the United States. Though the country has a meager penetration rate of 1.0 percent compared to 20.0 percent in Denmark, the recent spurt in installations has unveiled the potential offered by the U.S. market. Compared to other renewables, which are still in their early stages of development and require large capital outlays and promise high returns, wind has surpassed this stage, making it a more consistent and sustainable investment. 'The Government has chalked out several initiatives to mitigate the effects of the economic recession and provide a leg up for companies in the renewable energy sector,' notes the analyst of this research service. 'Some noteworthy incentives include the American Recovery and Reinvestment Act of 2009’s (ARRA’s), extension of the production tax credits (PTC) and investment tax credits (ITC) and the ambitious ‘20% wind energy by 2030’ goal.' Incessant research is underway to rev up the efficiency of wind energy to achieve this goal.
The U.S. Department of Energy Secretary Steven Chu has allocated $45 million from the ARRA for a wind energy test facility to technologically enhance the performance of wind turbines. The rollout of many wind projects is expected in 2010 as the two-year stimulus grant period collapses. Developers are thronging to get projects commissioned and take full advantage of the benefits under the stimulus. This has opened up tremendous opportunities for the growth of the wind energy market in 2010. Incremental capacity was the lowest in Q2 2009 due to the impact of the economic downturn. The introduction of the stimulus package and various incentives enabled recovery of installations in the subsequent quarters as Q3 outdid Q2 and Q4 is expected to provide a massive increase.
Despite the buzz surrounding wind energy, there are some concerns clouding the market landscape. In the absence of an efficient storage mechanism, wind energy can never contribute to base-load power generation due to the inherent problem of intermittency. The variability in wind speeds adds costs to the extent of 5 percent to 10 percent to the wholesale price, leading to a spike in the cost of wind power. As the Cap and Trade bill has been deferred to the spring of 2010, hopes that wind energy will compete alongside conventional energy were quashed. The expected price hike in electricity due to the cap and trade system was supposed to increase the attractiveness of renewable energy, particularly wind. Recent activity in the smart grid segment has enabled it to evolve from the realms of idealism to reality. On the price front., funding provided by the ARRA has helped reduce the cost burden. 'Over the past 20 years, wind energy production costs have reduced by 80 percent, thereby providing enormous scope for improvement and attaining grid parity,' says the analyst. 'Technological improvement and efficiency enhancement will clear the decks for the achievement of cost reduction in the long run.'
Technologies
The following technologies are covered in this research:
- On-shore
- Off-shore
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