Growth of Wind Generation in the Electric Cooperative Community | 2
Total Page：16
File Type：pdf, Size：1020Kb
Business & Technology Strategies TechSurveillance Growth of Wind Generation in the Electric Cooperative Community BY LAURA MOOREFIELD, MOOREFIELD RESEARCH & CONSULTING, WITH CONTRIBUTIONS FROM DALE BRADSHAW, TECHNICAL EXPERT FOR NRECA JUNE 2017 subject matter experts for questions on this topic Dan Walsh, Manager of Generation, Environment and Carbon Work Group, [email protected] Dale Bradshaw, Technical Expert and Liaison for the Generation, Environment and Carbon Work Group, [email protected] article snapshot: What has changed in the industry? The wind industry is growing rapidly and is the fastest growing renewable in total megawatts installed. Electric cooperatives are on the front lines of this trend with more than 5,400 MW of wind capacity — about 7 percent of total U.S. wind capacity — and continued growth is expected. But the Production Tax Credit (PTC), a federal tax credit that has been a key driver of U.S. wind developments is being phased-out by 2020. What is the impact on cooperatives? Cooperatives that already own and purchase wind energy may be affected by increasing amounts of wind on the grid, but the PTC phase-out could open new opportunities for co-ops to own more wind farms. In fact, with 100 percent debt financing, low cost-for-capital, and the PTC dropping by 20 percent, 2017 may be the year that it becomes more economical for electric cooperatives to finance their own wind farms. The additional PTC decrease in 2018 will favor cooperative-owned wind farms even more. However, as discussed in a previous TechSurveillance article (Variability and Uncertainty in Renewables’ Generation: Creates Operational, Reliability, and Cost Challenges for G&T Cooperatives), the intermittent and non-dispatchable nature of renewables presents operational, reliability, and economic challenges for generation and transmission (G&T) cooperatives requiring development of fossil generation and other options to integrate this lowest-cost renewable generation option. What do co-ops need to know or do about it? This is the first in a series of NRECA TechSurveillance reports on Wind Generation that will promote what cooperatives have done to date; and support, inform, and connect those who seek to add additional wind resources to their generation mixes. This report provides an overview of how much wind generation capacity electric cooperatives currently own and purchase, and how they do it. Future reports will cover current and advanced wind technologies, and failure and maintenance issues. s business and technology strategies generation, environment and carbon work group Growth of Wind Generation in the Electric Cooperative Community | 2 STATUS OF WIND GENERATION IN THE U.S. Wind power has seen massive growth in the U.S. over the past decade. In 2005, there was less than 10,000 MW of installed wind capac- ity nationwide (see Figures 1 and 2) . By the end of 2016, that had increased to more than 81,000 MW, outpacing existing hydroelectric dams — previously the largest source of in- Image credit: Sebastian Celis via Creative Commons stalled renewable capacity — by more than 1,300 MW.1 In 2016, wind provided more than “Robust wind deployment in the United States 5.5 percent of U.S. electricity, up from less than since 2008 has been driven by substantial 1 percent in 2006.2 These changes are felt advancements in wind technology and cost across the country. Today, forty-one states have reductions, coupl ed with continued state and utility-scale wind farms; and Rhode Island now federal policy support” (U.S. DOE, 2015, Wind has the country’s first off-shore wind farm. Vision, p. xxxvi). cumulative currently operational capacity by initial operating year wind: 81,312 MW thousands megawatts hydro: 79,985 MW 90 80 70 60 50 40 30 20 10 0 1915 1925 1935 1945 1955 1965 1975 1985 1995 2005 2015 Source: U.S. Energy Information Administration FIGURE 1: U.S. Utility-Scale Wind and Hydro Electric Generating Capacity, as of Dec 2016 million megawatthours 35 30 hydro 25 20 15 10 wind 5 0 2002 2004 2006 2008 2010 2012 2014 2016 Source: U.S. Energy Information Administration FIGURE 2: U.S. Utility-Scale Wind and Hydro Monthly Electricity Generation Capacity (Jan 2002–Dec 2016) 1 But due to capacity factors, the EIA still expects hydro to edge out wind in 2017 in terms of total energy production. 2 https://www.eia.gov/electricity/data.cfm Growth of Wind Generation in the Electric Cooperative Community | 3 Texas, Iowa, Oklahoma, California, and Kansas highest shares of wind energy in their statewide lead the nation in installed capacity,3 while Iowa, electricity generation (as shown in Figures 3 Kansas, Oklahoma, and the Dakotas have the and 4). <1% 1% to <5% 5% to <10% 10% to <15% 15% to <20% 20% and higher AK *Rolling 12 month Average, November 2015 – October 2016 2.8% WA 7.2% VT ME MT ND 15.3% 7.6% MN 13.1% OR 20.1% 17.4% 12.1% WI ID SD NY NH 2.3% 15.2% 2.4% 2.9% WY 29.0% MI MA 0.7% 9.5% IA 4.0% RI NE PA CT NV 36.3% IN OH 1.6% 9.3% IL NJ 0.9% UT 5.0% 1.1% DE CO 5.9% WV CA 2.1% MD 1.4% 16.9% KS MO 1.8% VA 7.0% 30.0% 1.5% KY NC AZ OK TN 0.1% NM 0.5% 24.5% 10.8% AR SC AL MS GA U.S. Total: 5.5% HI TX LA 6.9% 12.7% FL PR Source: American Wind Energy Association, 2017 FIGURE 3: U.S. Wind Energy Share of Electricity Generation by State 0 to 100 MW >100 MW to 1,000 MW >1,000 MW to 5,000 MW AK >5,000 MW to 10,000 MW >10,000 MW 62 WA VT 3,075 119 ME MT ND 695 MN 901 OR 2,746 3,526 3,163 ID SD WI NY NH 185 973 WY 977 648 MI 1.827 MA 115 RI 52 1,490 IA 1,611 PA CT 5 NE NV 6,917 IL 1,369 NJ 9 1,328 OH 152 UT 4,026 IN DE 2 CO 545 391 1,895 WV MD 190 CA 3,026 KS MO 686 VA 5,662 4,451 1.5% KY NC TN 29 AZ OK 268 NM 6,645 1,112 AR SC MS AL GA TX GU HI 20,321 LA <1 203 PR FL 125 Source: American Wind Energy Association, 2017 FIGURE 4: U.S. Installed Wind Capacity by State (2016 year end) 3 https://www.energy.gov/eere/articles/why-corporations-are-buying-us-wind-power Growth of Wind Generation in the Electric Cooperative Community | 4 40% Approximate Incremental Wind Penetration, end of 2015 35% Approximate Cumulative Wind Penetration, end of 2014 30% 25% 20% 15% 10% Estimated Wind Generation as a as Generation Wind Estimated Proportion of Electricity Consumption Proportion Electricity of 5% 0% U.K. Italy India Brazil Japan China Spain Turkey France Poland Ireland Austria Mexico Canada GLOBAL Sweden Portugal Romania Australia Germany Denmark Netherlands United States United Source: U.S. DOE, 2015 Wind Technologies Market Report, August 2016, p. 7 FIGURE 5: International Wind Energy Share of Electricity Generation by Country TABLE 1: International Ranking of Wind Capacity Despite these achievements, the U.S. still lags Cumulative Capacity behind many countries in wind energy utiliza- (end of 2015, MW) tion (see Figure 5 and Table 1). At the end of 2015, total U.S. wind capacity (74 GW) was China 145,053 second only to China’s (145 GW), but fourteen United States 73,992 countries, including Turkey, Italy, and Canada, exceeded the U.S. in terms of wind’s share Germany 44,986 electricity generation — estimated to be 5.5 India 25,352 percent at the end of 2015. For comparison, Spain, Ireland, Portugal, and Denmark meet Spain 22,665 from 25 to 40 percent of their electricity needs United Kingdom 13,388 with wind. Canada 11,190 ELECTRIC COOPERATIVES AND WIND France 10,243 Electric cooperatives are not standing on the Brazil 9,346 sidelines — 561 co-ops in 37 states now use wind power.4 Thirty-five distribution co-ops and Italy 8,851 25 G&T companies own and/or purchase wind Rest of World 68,464 power directly. The majority is acquired through power purchase agreements (PPAs), due to the TOTAL 433,530 significant production tax credit of $23/MWh Source: U.S. DOE, 2015 Wind Technologies Market Report, that will be phasing out by 2020. As of Febru- August 2016, p. 6 ary 2017, electric cooperatives purchased 4 http://www.electric.coop/wp-content/Renewables/wind.html Growth of Wind Generation in the Electric Cooperative Community | 5 nearly 5,600 MW of wind power capacity atives with electricity, contributes an additional through PPAs and owned nearly 460 MW of 390 MW of wind capacity. Going forward, seven wind capacity. This represents more than three- G&Ts and three distribution cooperatives have quarters of electric cooperatives’ renewable announced plans to purchase about 990 MW capacity and about 7 percent of total US wind from new projects that will be commissioned capacity.5 Tennessee Valley Authority, a U.S. between 2017 and 2020. (See Figure 7.) corporate agency that supplies many cooper - Like all electric utilities, electric cooperatives can acquire wind energy by owning their own wind farms and/or purchasing it from separate entities through PPAs. All G&Ts that own wind power also have PPAs for additional wind capacity, Wind: 6,469 MW = 79% with the exception of Buckeye Power, Inc., an Hydro: 692 MW = 8% Ohio G&T that owns one wind turbine at a high Solar: 417 MW = 5% school demonstration project.