North American Wind Power Industry Schedules $44 Billion in Construction Starts Over Next 12 Months

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Fortunes are looking up for the North American wind power industry, as developers plan to begin construction on more than 180 projects worth more than $44 billion for the 12-month period between May 2014 and April 2015. Industrial Info doesn't expect all of those projects to kick off as scheduled, but the high volume of projects and the large dollar value of work suggest that wind power developers, equipment manufacturers and service providers will be very busy during the next year.

"What we're seeing is the next stage of project development, following the expiration of the federal Production Tax Credit (PTC) at the end of 2013," said Brock Ramey, Industrial Info's research manager for the North American Power Industry. "We expect to see a high level of construction kickoffs over the next 12 months, mainly for projects that qualified for the PTC."

To qualify for the PTC, developers had to make binding financial commitments worth 5% or more of a project's value by year-end 2013. Qualifying projects have two years to bring their projects online. Once running, projects that qualified for the PTC will receive tax credits worth 2.2 cents for each kilowatt-hour of electricity generated for a period of 10 years. The most active North American regions for wind power construction starts over the next year are the Southwest, Midwest, West Coast and Great Lakes regions.

Click on the image at right to see a summary of which North American regions have scheduled the start of construction for wind power projects.

Supporting this high level of project development has been the return of the tax equity market--in effect, the willingness of investors to pay cash today for the rights to the tax credits that will flow once a project begins operating. That source of capital disappeared several years ago, but has reemerged in recent months.

Wind power development also will be affected by the degree to which utilities have achieved their renewable-power mandates. There is no federal Renewable Portfolio Standard (RPS), but 29 states have enacted an RPS, and another eight have less-binding RPS goals, according to the Database of State Incentives for Renewables & Efficiency (DSIRE) maintained by North Carolina State University (Raleigh, North Carolina). States with the most aggressive RPS mandates include California (33% of retail electricity will come from renewables by 2020), Colorado (30% by 2020), New York (29% by 2015), Oregon (25% by 2025), Minnesota (25% by 2020) and Massachusetts (22% by 2020).

The wind power new-construction market is characterized by several very large projects, including:

• Cape Wind Nantucket Sound Offshore Windfarm, a $2.6 billion, 400-megawatt (MW) project scheduled to be built about five miles off the Massachusetts coast. This project is being developed by Cape Wind Associates (Boston, Massachusetts).
• Comanche Run Windfarm, a $1 billion, 500-MW Texas project being developed by Iberdrola Renewables LLC (Portland, Oregon).
• Montague Windfarm, a 404-MW, $827 million project also being developed by Iberdrola, to be built in Oregon.
• Golden Hills Windfarm, another Oregon project, which is slated to have generating capacity of 400 MW and will cost about $800 million to construct. A U.S. affiliate of BP plc (NYSE:BP) (London, England) is developing the project.
• Saddle Butte Windfarm, a 399-MW project with a total investment value (TIV) of $800 million, also slated to be built in Oregon. This project is being developed by a unit of Caithness Energy LLC (New York).
• K-3 Windfarm, a 350-MW project, valued at about $800 million, that is being developed for Illinois by Vision Energy LLC (Cincinnati, Ohio).
• Wyoming Windfarm, a 400-MW, $800 million project under development in Wyoming by Wyoming Wind & Power (Cheyenne, Wyoming).
• Cheyenne Ridge Wind Project, a 300- to 600-MW project under development for Colorado. That project, being developed by TradeWind Energy LLC (Lenaxa, Kansas), has a TIV of $750 million.
• Baker Ranch Windfarm, a 399.5-MW project being developed for Texas by Higher Power Energy LLC (Flower Mound, Texas). This project has a TIV of $700 million.

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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.