The Onshore Wind Energy Market
Wind energy is the largest source of renewable energy in the U.S., and together with solar energy, onshore wind has the lowest average price compared to conventional and other alternative renewable energy sources. With the ambition to reach 100,000 installed onshore turbines and have wind energy account for 20% of the country’s electricity demand by 2030, the opportunity in the U.S. onshore wind energy industry is paramount.
With the highly competitive electricity price and a current pipeline of more than 44 GW, the development of new onshore wind energy continues at a solid rate. As the pioneer of onshore wind energy, Denmark has a strong foundation for competing globally in this industry.
Furthermore, Denmark has an array of niche solutions and expertise for the operation and maintenance segment, which becomes increasingly important as the U.S. onshore fleet ages. Of the approximately 56,000 installed U.S. onshore turbines, 70% will be post-warranty by 2023.
North American Onshore Market
Geographical spread
There are significant regional differences in installed wind energy capacity across the U.S. Whereas Texas alone accounts for close to one third of the entire country’s installed capacity, the southeastern region has essentially no onshore wind energy. As a Danish business, it is therefore important to approach specific regions rather than the entire country.
Texas is by far the biggest onshore wind energy state with 29.4 GW of installed capacity, however another five states have installed between 5 and 10 GW, including Iowa, Oklahoma, Kansas, California and Illinois. Overall, the dominating regions for onshore wind energy are Texas, the Midwest, the Northern mountain states, and California.
Federal and Government Incentives
The U.S. wind industry is supported by both federal and state legislation. One of the key federal legislations has been the Production Tax Credit (PTC), which provides a tax credit per kilowatt-hour for the first 10 years of electricity generation for utility-scale wind. The PTC is currently in the process of being phased out, and projects coming online in 2020 are expected to be the last ones to receive this tax credit.
State legislation also plays an important role in the development and growth of the industry, and several states require that a certain amount of utility-scale energy must come from renewable sources. The requirements vary from state to state, and California and New York are among the most ambitious with a declared target of 50% by 2030.
Market Challenges and Opportunities
As the U.S. wind market matures, market consolidation increases, and the OEMs’ service organizations now face the challenge of having to service each other’s platforms. This provides a great opportunity for Danish service providers to enter the market, as the OEMs will tend to look for external expertise.
Other challenges that asset owners face include optimization of operations & maintenance, retrofitting and repowering of aging fleets, blade maintenance, and decommissioning and recycling of old wind farms. Danish companies that can provide solutions for these challenges, will find great opportunities in the U.S. onshore wind energy market
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