As the shale juggernaut rolls on, another booming US energy sector has rather slipped under the radar. US wind energy experienced a record year in 2012 with more than 13,000 megawatts of new capacity installed. To put this in perspective, the European Union, often cited as the undisputed global champion in all matters low carbon, installed just under 12,000 megawatts in the same period. High activity levels were seen in California, Oklahoma, and Kansas but it was oil & gas-rich Texas that led the way, now accounting for 20% of all US cumulative capacity.
Examining the historic trend reveals regular swings in activity driven by the unique workings of the Production Tax Credit (PTC) system. The PTC has come close to lapsing on a semi-annual basis causing developers to rush to get projects moving. Despite this uncertainty, we believe the general outlook is positive due to a combination of factors. For one thing, wind energy is a rare issue enjoying support from both sides of the political divide: increased renewable generation fits well with the Democratic Party’s policy platform, and politicians of all stripes can get behind construction and manufacturing jobs in their home states. Another positive factor is the sheer scale of the US power generation market, which means there is plenty of growth potential with wind energy still only accounting for a small sliver of supply.
Frank Wright, Douglas-Westwood Aberdeen
+44 1224 264972 or [email protected]