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.
ENERGY TRANSPORTATION NEWS
- The Company Behind the Dakota Access Pipeline is in Another Controversy
- Another Inhofer Heads to the White House
- Pembina to Buy Veresen for $4.3 Billion as Pipelines Bulk Up
- Trump’s American Pipe Dream
- TransCanada Runs Into Road Bump
- Industry, Greens Set to Clash Over Proposed Oversight Reforms
- Energy Transfer Opens 2 Natural Gas Lines to Mexico
- US House Looks to Expedite Pipeline Permitting
- Omnibus Offers Double-digit Boosts for 2 EPA Air Programs
- Senate Dems Press Pruitt Over Alleged Conflict on Ozone
- EPA Sends Proposal for Repealing Controversial Water Rule
- Omnibus Deal Signals Shift From Riders In GOP Strategy
- Safety Measures Lacking Ahead of 2015 Calif. Refinery Blast – CSB
ENERGY REGULATORY NEWS
- Thune Bill Would Revamp Regulatory Cost-benefit Analyses
- Court Suspends Litigation on Climate Rule in Win for Trump
- Pentagon Urges Lawmakers to Keep Eastern Gulf Ban
- Jeers, Cheers as EPA Hosts Webinar on Rule Rollbacks
- Key Dems Press Zinke for Info on Reg Review Task Force
ENERGY POLICY NEWS
- Omnibus Winners and Losers
- Energy Will Remain a Policy Cornerstone of Trump Administration
- Angus King Pushes Tougher Export Reviews
ENERGY MARKET NEWS
- Exxon, Chevron Earnings Point to Sign of Strengthening Oil Industry
- Oil Prices Fall Sharply on Output Concerns
- Oil & Gas Industry Leads in Severe Injuries
- Murphy Oil CEO: Now is the Time to Invest in Deepwater
- EPA Considers Waiver Allowing Gasoline with 15% Ethanol Year-Round
- LNG Terminal Brings Rising Profits, Revenues to Cheniere
GLOBAL ENERGY NEWS
- Trump Administration’s Push for Gas Exports Faces Market Glut
- Mexico Posed for Belated Energy Growth from Deepwater to Gas Stations
- OPEC Oil Output Falls in April but Compliance Weakens: Reuters Survey
- Pemex Ready to Invest in Deepwater Gulf with New Partners
- Big Oil Gets In Early on Argentina Shale
- Oil Rebounds on Saudi Assurances Russia Will Extend Supply Cuts
ENERGY TAX NEWS
- Trump Study of Gas Tax Could Run Afoul of GOP, Rural Voters
- Ryan calls Tax Reform “Crown Jewel”
- Pass-through Tax Reform Legislation in the Works
- Trump Takeaway From Health Bill Fight: Do Your Own Arm-Twisting
- Appetite Among Senators to Lump Orphan Clean Incentives Into Broad Bipartisan Bill
RENWEABLE ENERGY NEWS
- Okla. Senate OKs Bill to Charge EV Owners $100 Each Year
- Trump Picks Renewable Energy Policy Skeptic to Lead DOE Office
- How Oil, Coal and Wal-Mart Became Part of ‘Socially Responsible’ ETFs
FROM THE CHART ROOM
Mexico Oil Exports Head Lower
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
- Denise Bode
- Greg Brophy
- Beth Cubriel
- Andrew Cook
- Chip Englander
- Sarah Helton
- Ross Romero
- Thomas Schreibel
- Kevin Swanson
- Jeffrey Sherman (Michael Best)
About Michael Best Strategies
Michael Best Strategies focuses on achieving clients’ objectives through unparalleled strategy development and deployment for implementation, pragmatic guidance on public policy development, and government relations. The Strategies team specializes in a full range of services, including government relations, public policy consulting, grassroots advocacy, public affairs, conference planning, and strategic political relationships. For more information, visit michaelbeststrategies.com.