HOUSTON — American Wind Energy Association CEO Tom Kiernan kicked off last week’s WINDPOWER 2019, the group’s annual conference and trade show, by reeling off statistics on what he called the wind industry’s “extraordinary momentum.”

• • • More than 39 GW of wind capacity under construction or in advanced development. “That’s like building [the wind capacity of] Texas, Iowa and California all over again,” Kiernan said during his May 21 welcoming address.
    • More than 97 GW of installed wind capacity nationwide through the first quarter of 2019, nearing the 100-GW mark.
    • A record number of industry employees, with 114,000 “in all 50 states.”
    • $1 billion in annual economic support “to the communities we live in and work in,” and another $250 million in annual land-use payments.

The industry still faces challenges, Kiernan acknowledged. The federal tax credits that helped fuel wind energy’s growth begin to phase out in 2021. The industry faces uncertainty with laws that differ state by state and opposition to transmission development.

Kiernan said AWEA’s agenda is focused on three programs: market design and transmission; a carbon price; and “scientific, evidence-based best practices” for siting turbines.

“We’re seeking market rules in each RTO that will enable utility-scale wind and solar to compete fairly for all the services on the grid,” he said. “We’d like to see FERC create a national transmission system to allow congestion and curtailment to decline.”

Kiernan called for “meaningful legislation” that will create a carbon price. “Fortunately, politicians in D.C. and the states and around the world are talking about carbon more than ever before,” he said.

“On the left, you have the Green New Deal. On the right, more productive conversations than we’ve ever had before,” Kiernan said. “The future of our industry, the future of the clean grid, the future of our economy [and] the future of our planet will depend upon our success in working with our partners to implement solutions to these problems.”

“This is an exciting time in the wind industry, with a tremendous development pipeline and 97 GW operating today,” said Duke Energy Renewables President Rob Caldwell, AWEA’s incoming board chair. “I feel really fortunate we will hit 100 GW in my term.”

Cost-effective Solutions

Kiernan moderated a panel of industry leaders that addressed how to ensure the industry continues to provide cost-effective solutions and collaborates to continue its push toward a clean-energy economy.

“It now feels like in the renewable section, it’s not a question of if, but a question of wind and how. When solar? When storage?” said Michael Skelly, late of Clean Line Energy and now a senior adviser with Lazard Asset Management. The wind industry is “right on top of the avoided cost, even without tax credits. With gas at $3/MMBtu or $4/MMBtu and if we can get the infrastructure, create the markets and properly site these projects, there’s a tremendous amount of headroom.”

“We’re not going to have an integrated grid until people focus on connectivity. We need a big system to move electrons a lot easier … so it doesn’t matter where you are when you produce,” Pattern Energy CEO Michael Garland said. “We as an industry have to get behind some of these initiatives in Congress, like the infrastructure bill, to support transmission. Most people don’t want transmission in the backyard, and it only takes a few people to stop it. We’re seeing resistance in solar right now that we didn’t use to … it’ll get more complex.”

Google’s head of energy strategy, Neha Palmer, said her company is seeking “viable mechanisms” to allow it to buy all the renewable power it needs. Google last year said it had reached its 100% renewable energy target, and it has completed more than 6 GW of renewable energy contracts.

“We want products to deliver renewable energy that helps us meet our goal. What we need now is power,” she said. “We would like to see renewable generation tailored to provide that service. We all have this 100% goal. The next stage is matching our consumption with the supply.”

“Power markets pull those things together,” Skelly said. “If you have markets designed properly, and they work well, in theory, you ought to be able to place different resources where they work most efficiently.”

Researchers See Continued Opportunities

Research analysts shared their prognostications for the renewables industry, forecasting flat load growth but increased opportunities for both wind and solar energy.

Dan Shreve, head of global wind research for Wood Mackenzie, said wind energy is “absolutely maturing” and becoming a “bigger and bigger part of the energy puzzle.”

“It’s important to understand how wind fits in when you’re talking about adding new generation into the power mix,” he said, projecting flat load growth until 2040, when he expects 80 million electric vehicles to be on U.S. roadways. “It’ll be quite a while to wait to make that larger impact for new power demands on the grid. We’re looking at a levelized cost of electricity from wind, solar and natural gas. They’re the favored elements. That massive adoption of energy renewables comes at a cost to someone, and here it’s coal and nuclear.”

Shreve foresees continued coal plant retirements, as does David Hostert, head of wind research for Bloomberg New Energy Finance.

“Half of the U.S. coal capacity is waiting for someone else to close so they can make their money,” Hostert said. “There is a significant portion of capacity that is going to retire … and will create an opportunity as it needs to be replaced.”

IHS Associate Director Max Cohen sees wind and solar combining to capture 25% of the Lower 48’s electric production by 2040, with solar accounting for 9% by itself. He projects coal’s contributions to slip to 6%, with nuclear at 14%.

“We’ve been boosting solar more than wind,” Cohen said, noting that the economics for wind energy are still “robust,” even under a 20% production tax credit (PTC). “The economics slowly get better, but we see more solar installed every year than wind, starting in 2021. There’s an upside for wind, but state policies can be heavy-handed in their approach” with their support for existing nuclear energy.

Ryan Wiser, a senior scientist at the Lawrence Berkeley National Lab, said the decreasing cost of wind energy — a 69% reduction over the last 10 years — is enough to withstand the PTC’s phaseout by 2024. Those tax credits generate about $23/MW during a wind project’s first decade of operation.

“There are a variety of mechanisms or tools for the wind industry or broader energy sector to press down the cost of wind … even as penetration increases,” Wiser said. “The gap after the current PTC cycle won’t be long.”

“We’re hearing about single-digit [power purchase agreements] in ERCOT and SPP. Is that sustainable? Certainly not,” Shreve said, noting that maturing technology means subsidies are no longer required to beat new gas generation prices. “The PTCs have absolutely been instrumental in driving demand in the U.S. market for 20-plus years. If you’re talking about PPAs in the single digits, I think the [PTCs’] time has come.”

“I hope it isn’t the valley of death we all feared a few years ago,” Hostert said.

NARUC’s Wagner Cautiously Approaches Change

Iowa Utilities Board Commissioner Nick Wagner, president of the National Association of Regulatory Utility Commissioners, injected a note of caution to the festivities as he detailed the group’s focus on wind energy and the grid of the future.

“Nationally, we need to look at where it makes the most sense to put the resources, so we can reduce costs for everybody in the long run,” Wagner said. “While it seems maybe this industry is in its glory days and things look good, ask coal, gas and nuclear what they have to offer, because they’ve been in this same situation. At one point, the nuclear industry thought it would get to the point where it’s too cheap to measure.

“As we work through what we’re doing, ask what could change. There are things that can change very quickly, and we need to be prepared for those things,” he said.

Wagner proudly noted the leadership role his home state has played in the wind industry’s development. He said U.S. Sen. Chuck Grassley (R-Iowa) considers himself the father of the PTCs and that the state was the first to have a renewable portfolio standard.

“That requirement was 115 MW. It’s sort of a joke to us in Iowa,” Wagner said, pointing to the state’s current 9 GW of capacity.

He said Iowa’s advanced ratemaking allows the state “to build generation with regulatory certainty,” but he warned about major regulatory modifications during times of rapid change.

“I haven’t been in the industry for 30 years, but people tell me this is one of the fastest changes we’ve seen,” Wagner said. “I don’t agree we need a new regulatory model, but we have to balance the interests between the consumers and utilities. We want to be careful that, as things change, we don’t create a group of forgotten people with our decisions.”

Transmission Development a Key

Wagner said his state’s success with renewables was “not anything Iowa did.”

“The key to success is the RTOs,” he said. “Iowa could not be able to generate as much [wind energy] as we do without the benefit of being involved with MISO.”

Other speakers agreed with Wagner about the importance of RTOs and transmission development.

“There’s a lot of interest in moving to 100% renewables,” Shreve said. “It’s going to be increasingly important for long-haul bulk transmission to support those endeavors, if they want to support resiliency.”

“I think permitting is getting harder. We need more transmission to tap into the great resources around the country and move it around,” Garland said.

“We really need to get more transmission to where the demand is,” said Cohen, who expects transmission construction “ticking down.”

“A lot of what’s been done for transmission is hardening for weather or upgrading,” he said. “We don’t see a lot of transmission for wind. There’s kind of a transmission fatigue. They’ve kind of built what they’ve built, and they’re done.”

CLEANPOWER Hub to be Added to 2020 Event

AWEA welcomed nearly 8,000 attendees to its annual exhibition held May 20-23 at the George R. Brown Convention Center, with its largest exhibit hall in five years. Organizers are projecting 10,000 attendees at the 2020 event, which will be held June 1-4 in Denver.

The organization announced next year’s event will include a new exhibition hub, called CLEANPOWER, that will bring together the utility-scale wind power, solar power and energy storage industries. Kiernan said AWEA is “throwing the doors open” in creating more opportunities for industry representatives to learn from each other and do business.

“We’re seeing a lot of wind and solar on the grid just working really well together and helping to smooth out our variable production,” Kiernan said. “We hear from many of you that you do as much solar business at WINDPOWER as you do wind business. We like that. CLEANPOWER will be your hub for clean power moving forward.”

— Tom Kleckner