Permitting and interconnection delays mean many US wind projects may not be finished in time for the full PTC
Karl-Erik Stromsta in Lenexa
Recharge News online
Delays to wind projects in the central US mean 2021 could prove to be nearly as big a year for the market as the anticipated peak year of 2020, despite the step-down of the production tax credit (PTC), says Rob Freeman, chief executive of Tradewind Energy, the country’s leading wind developer.
Tradewind, part-owned by Italy’s Enel Green Power, built a market-leading 1.2GW of US wind capacity last year using a mixture of Vestas, GE and Nordex turbines, and plans to add another 2-3GW during the PTC’s phase-out window.
Like many, Freeman believes 2020 could be a historically large year for the US wind market. “The market’s really big years have been in the 8-13GW range, and certainly the industry will handle that – probably plus some.”
Meanwhile 2021 could surprise on the upside, even though projects completed that year will only receive 80% of the PTC. “I don’t have a crystal ball but it may look a lot like 2020,” Freeman told Recharge in an interview at Tradewind’s headquarters.
Some analysts have forecast a near halving of the US wind market in 2021.
“It’s the first step-down of the PTC, but I’m very hopeful the industry will find a way to offset that first step-down and still keep the pricing at a comparable level,” Freeman says.
Developers would naturally prefer to complete projects in 2020, with relatively few publicly aiming at the 80% PTC so far. But many projects are already being pushed back into 2020, opening the possibility they could spill over into the following year.
The lengthy permitting process and long interconnection queues now endemic in key wind development regions are part of the problem. Developers, too, are voluntarily holding some projects back with an eye to procuring ever more cost-effective turbines.
“There’s a built-in incentive for developers to price projects further out because of a declining cost curve,” Freeman says.
“The problem that’s obviously going to create is there will be more projects to be built in the back year or years [of the PTC] than there are resources and equipment available. Everyone’s a bit concerned about that and trying to figure out how to manage it.”
Tradewind, for one, expects to bring projects on line in 2021. “We’ll definitely be in a position with safe-harboured machines for 2021. I don’t know exactly what that’s going to look like, but we’re hopeful 2021 will still be a strong year for us.”
Few people better understand the tangle of conflicting signals within the US wind market than Freeman, who has led Tradewind since 2003 – as long as the US wind market has existed at scale. He’s navigated the company through numerous PTC expiration cycles, the gas fracking boom, and most recently the dramatic rise of solar energy.
Although he harbours serious concerns about the availability of transmission in the years ahead, Freeman is not entirely persuaded by the view held by some analysts that the wind market is in for a sharp tumble after the PTC expires for good.
“We expect our solar portfolio to be as big as our wind business through the 2020s.”
Power-purchase agreements could rise to the “mid- to upper-$20s” per MWh in high-wind areas in the absence of the PTC, he acknowledges. That compares to sub-$20/MWh wind PPAs being seen in some today with the PTC in place.
“But $26, $27, $28 [per MWh] power – and it’s carbon free? I think that’s a pretty good deal.”
Five years ago Tradewind made the decision to diversify into utility-scale solar development, and now claims a 6GW development portfolio – much of it located in the Southeastern US, a region with virtually no installed wind capacity.
“Most of our revenue still comes from wind, and that will be true for another couple of years,” Freeman says. “But we expect our solar portfolio to be as big as our wind business through the 2020s.”
“Whether wind declines or doesn’t decline, we expect our solar platform to be able to produce 500-1,000MW a year in the 2020s.”
The cost of solar energy will fall below wind in some parts of the country in the years ahead, Freeman says. “But there’s a certain amount of geographic separation that just happens to be there, where for the most part your windiest markets aren’t your best solar markets.”
“So I don’t necessarily see a situation where solar ends up stealing all the market share from wind. I think they’ll happily coexist in the US.”