Wind Industry Logs Biggest Year Since 2009

The U.S. wind industry installed 2,000 megawatts of capacity in the first quarter, nearly four times the amount installed in the same period last year, as developers race to capture a lucrative federal tax credit that is gradually being phased out. The industry is now in year three of a five year phase-down of the Production Tax Credit (PTC). Starting this year, however, the credit’s value will drop by 20 percent each year for projects that start construction from 2017 through 2019. Despite the reduction in the PTC credit, it was the industry’s biggest first quarter since 2009 as wind energy continues its march toward price parity with other renewable and non-renewable energy sources.

New wind turbine installations in the first quarter spanned the U.S. from Rhode Island and North Carolina to Oregon and Hawaii. Great Plains states Texas (724 MW), and Kansas (481 MW), led the county in total megawatts installed. Texas continues as the overall national leader for wind power capacity, with 21,000 MW installed, enough to power more than 5 million average homes. Wind energy’s production footprint continues to expand with North Carolina becoming the 41st state to harness wind power, bringing online the Southeast’s first wind farm in 12 years.

Expanding wind farms continue to benefit rural America, where 99 percent of wind farms are built. According to AWEA’s recently released 2016 Annual Market Report, wind now pays over $245 million per year in land-lease payments to local landowners, many of them farmers and ranchers.

Demand remained strong in the first quarter. There were 1,781 MW signed in long-term contracts for wind energy, the most in a first quarter since 2013.

About a quarter of the megawatts installed in the first quarter are contracted to buyers outside the utility industry, including, including Amazon Inc and Alphabet’s Google who have continued to expand their renewable energy portfolios. Home Depot Inc and Intuit Inc also signed contracts for new wind projects for the first time in the first quarter. In addition to leading brands, wind power reliably supplies a growing number of cities, universities, and other organizations – including the Department of Defense. This quarter, a Texas wind farm came online to supply a power purchase agreement (PPA) with the U.S. Army.

Just a handful of companies represent nearly all the utility wind capacity additions since the beginning of 2016. They include Xcel Energy Inc, Berkshire Hathaway Inc’s MidAmerican Energy, Alliant Energy Corp and DTE Energy Co.

There are 9,025 MW of wind projects under construction and an additional 11,952 MW in advanced development.


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        FROM THE CHART ROOM

        Mexico Oil Exports Head Lower

        mexico-export-loading

        In terms of the OPEC / NOPEC production cut deal, Mexico appears to be trailblazing from an export perspective. The Latin American nation committed to cut crude production by 100,000 bpd, and Mexican export loadings are down by ~200,000 bpd from last October’s reference date. This does not necessarily mean Mexico is complying; better than expected refinery utilization in the first quarter of the year has led to higher domestic crude demand (something affirmed by slowing Mexican product imports). The chart shows that loadings for the US have been rebounding since late last year. Another issue with Mexico is the rise of oil and gas. But at home the Mexican energy industry has a huge problem with fuel theft, an issue of particular interest as international companies start investing in retail sales of gasoline. Mexico loses over $1 billion each year due to fuel theft, with 1.5 million gallons of fuel are stolen every day. In 2009, there were under 500 illegal taps. In 2016, there were nearly 7,000 – nearly a 15-fold increase. Pipeline theft in Mexico rose 52 percent in 2015. Read more on Fuel Fix.


         

         

        Michael Best Strategies’ Energy Team

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