The State of the Wind Market - Renewable Choice Energy
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Statistics on the wind power market. Renewable Choice Energy is a leading provider of climate change solutions including green power, carbon offsets, and renewable energy advisory services. Recognized as a trusted partner to numerous major brands, Renewable Choice was the recipient of the prestigious Green Power Supplier of the Year award in 2012 from the U.S. Environmental Protection Agency and has been featured in hundreds of media outlets. To learn more, visit www.renewablechoice.com.
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The State of the Wind Market - Renewable Choice Energy
- 1. State of the Wind Market
- 2. A Partner to Leading Brands
- 3. Slowdown in Construction in 2010 • 5,115 MW installed in 2010 • 51% less capacity installed than 2009 • • Constraints in capital and credit markets impacting development 2009 was a record-setting year with • 40,180 MW of total capacity 10,010 MW installed • Enough to power over 9 million homes Sources: AWEA U.S. Wind Industry Annual Market Report - Year Ending 2009; AWEA 4th Quarter 2010 Market Report
- 4. U.S. Energy Infrastructure Renewables: 2.5% (Biomass: 1.31%; Wind: 0.83%; Solar: 0.01%; Geothermal: 0.35%) Oil: 1.6%; Other fossil fuel: 0.5% source: EPA eGRID2010 Version 1.1
- 5. Installed Capacity by State Source: AWEA 2010 Market Report
- 6. U.S. Wind Power Installed Capacity Large scale wind projects are happening across the U.S. as states reach increasing levels of wind production. Source: AWEA 2010 Market Report
- 7. Voluntary Purchases are Critical • Voluntary purchases of RECs represented OVER 50% of all wind sales in 2008 • Voluntary buyers are making as big or bigger of an impact as state-level requirements Source: Lawrence Berkeley National Laboratory and National Renewable Energy Laboratory
- 8. Voluntary REC Markets are a Major Driver of Green Power Development • Green Power sales have grown at a compound annual rate of 37% between 2005 and 2009. • Most of the demand (62% in 2009), and most of the growth, stems from the purchase of unbundled RECs. Source: National Renewable Energy Laboratory
- 9. Financing a Project: The Four Legs of Wind Energy Depreciation Tax Incentives Energy Sales Renewable Energy Credits
- 10. Value of RECs to Wind Projects * Value as a percent of 20 year rate requirement Source: John Deere Renewables
- 11. Voluntary Market • Most organizations lack the ability to install onsite renewable energy: – Zoning restrictions – Lack of natural resources – Capital limitations • RECs allow businesses to purchase grid-sourced renewable energy
- 12. One Commodity – Two Markets Compliance Voluntary Renewable Energy Credits
- 13. Compliance vs. Voluntary Markets • Not all RECs created equal in Compliance Markets – Varying State Requirements • Technology type, vintage, project start date, etc. • Compliance Market drivers: Rules & Price – Politically driven, varying interests at stake – RECs often purchased with cost as only driver • Voluntary Market provides a driver for projects outside compliance states and increases demand for all RECs
- 14. One Commodity – Many Compliance Markets www.dsireusa.org / June 2011
- 15. Straight From The Developer "By converting Plant Mitchell to biomass, we hope to not only help grow the renewable resource base in Georgia but also to expand the market for renewable energy credits, which ultimately will foster additional renewable energy development.“ ~ Mike Garrett, President and CEO, Georgia Power “To any developer doing a wind farm in today’s market, renewable energy credits are critical to the revenue stream in taking a project over the top. If we do another one, it certainly will be a critical factor.” ~ Dave Osburn, Oklahoma Municipal Power Authority “In ten years, Wind will be bigger than oil in Texas.” ~ T. Boone Pickens, Pickens Plan “Selling of RECs makes the construction of more renewable energy generation plants possible and also makes existing renewable generation more commercially viable.” ~ Tim Swanson, Director of Origination for Florida Power & Light (FPL) “There isn’t a single renewable facility that goes online in this country where RECs aren’t considered in the core financing.” ~ Steve Maller, John Deere Wind Energy
- 16. Contact Sales@renewablechoice.com 877.810.8670 4775 Walnut Street, Suite 230 . Boulder, CO 80301 . 877.810.8670 . www.renewablechoice.com
Hinweis der Redaktion
- Main Point: In 2007, the wind energy market nearly doubled it’s output over the previous year. In 2007, the wind energy market nearly doubled it’s output over the previous year, with over 5,200 MW of new wind capacity installed, representing 15.9 Billion kWh per year. Currently, the 48 Billion kWh of wind energy produced in the US is accounting for just over 1% of total electricity use. The 45% increase in just a single year helps to move us toward the department of energy’s goal of 20% renewables by 2020.
- Main Point: Texas, California, and Minnesota are making huge strides in wind energy installations. The existence of RECs allows parties in states with less optimal wind resources to take advantage of green energy produced in high capacity states.
- Main Point: Large scale wind projects are being developed that rival the scale of conventional energy plants. While the US as a whole is only at approximately 1.5% wind powered, some states have demonstrated that achieving more significant clean energy ratios is feasible.
- Main Point: Voluntary green power purchases match the support for renewable energy provided by compliance markets, making each REC market equally critical to the success of wind energy in this country. Recently, the voluntary market has been growing faster than the compliance market.
- New chart pulled from Lori Bird presentation @ NREMC – slide 5 Main Point: Green Power production is driven by REC purchases in the Non-Residential market, such as corporations. Demand for renewable energy credits has followed the growth in US wind development. Voluntary Green Power tripled from 2003 to 2007, and much of that growth is being driven by businesses and organizations, rather than homeowner power purchases. (explain competitive market… solid explanation of each of these markets)
- Main Point: Wind power projects are made possible by four distinct revenue streams. Taking away any one of those streams can cripple wind development. Wind power projects are made financially viable for developers through the existence of four financing streams: Energy Sales, Tax Incentives, Depreciation, and Renewable Energy Credits. Projects depend on all four of these streams in order to be successful; remove any one of them, and the project may not occur. Market data suggests that without the existence of REC’s, approximately 57% of wind projects would no longer be financially viable.
- Main Point: Without the revenue stream provided by RECs, the only option that wind developers would have in order to achieve financial feasibility is to increase the price of energy sales. If this happens, wind power contracts would no longer be competitive with conventional power, and the diminished demand would dry up the market. (source: Steven P Maller - Manager, Business Process & REC Trading John Deere Wind) Wind power projects are made financially viable for developers through the existence of four financing streams: Energy Sales, Tax Incentives, Depreciation, and Renewable Energy Credits. Projects depend on all four of these streams in order to be successful; remove any one of them, and the project may not occur. Market data suggests that without the existence of RECs, approximately 57% of wind projects would no longer be financially viable. In this market driven economy, Renewable Energy Credits help drive the value of wind projects. On average, REC’s make up 13% of the controllable revenue streams (REC’s and PPA’s). Whether REC’s are simply pushing a project beyond the threshold of feasibility or providing that extra bit of capital to be reinvested in further development, it is clear that if we are to reach the Department of Energy’s 20% by 2030 target, REC’s will be a driving force in that process. (energy sales price will increase and power contract cease to be competitive) Assumptions: 50 MW project 30% NCF $2,100/KW Capital Wind Speed 6.7 m/s Turbine Nameplate 2.0 MW Debt Term 20 years
- Main Point: In most cases, RECs are the only feasible way to purchase renewable energy in the US, on a residential or commercial scale. Most parties interested in accessing renewable energy face zoning, resource, or capital restrictions that make such energy generation prohibitive. RECs provide an easy, effective method of obtaining clean, renewable energy.
- Source: www.dsireusa.org / June 2011
- Main Point: Often in compliance markets, RECs are purchased at the lowest cost allowable to meet state or federal requirements, while the voluntary market exists more as a means of driving renewable energy production while achieving strategic marketing objectives.
- **UPDATE WITH UPDATES FROM RECS AND CARBON DECK** NextEra Energy (formerly FPL) Main Point: The investors behind two of the largest wind farms of all time consider RECs to be critical to their projects success, and it is likely that without the existence of RECs, neither would be have been seen as a worthwhile investment. As one of the largest oil speculators in the history of Texas, Pickens has turned his attention to wind energy, this year investing $10 Billion in the largest wind farm on the planet. In 2005, Pickens said: “I was in wind energy for a minute…. I hate it. And when I got to looking at those damn things I said, I don't want to be a part of putting that on the horizon. I think it's homely and I don't like it. We took a loss and got out of it and I'm glad I did.” Given his history, his change in attitude is largely driven by the newfound profitability of wind energy, which is largely driven by the increased popularity and demand for RECs. The beauty of RECs is that on the small scale, RECs simply make a project financially sensible. However, on the large scale, RECs can make a project quite profitable, in turn drawing large investment from people such as Mr. Pickens who would otherwise be investing elsewhere. The existence of RECs made this project financially attractive to a man of Pickens’ investment capacity. Had it not been for RECs, Pickens may not have moved away from oil speculating. Main Point: The investors behind two of the largest wind farms of all time consider RECs to be critical to their projects success, and it is likely that without the existence of RECs, neither would be have been seen as a worthwhile investment. As one of the largest oil speculators in the history of Texas, Pickens has turned his attention to wind energy, this year investing $10 Billion in the largest wind farm on the planet. In 2005, Pickens said: “I was in wind energy for a minute…. I hate it. And when I got to looking at those damn things I said, I don't want to be a part of putting that on the horizon. I think it's homely and I don't like it. We took a loss and got out of it and I'm glad I did.” Given his history, his change in attitude is largely driven by the newfound profitability of wind energy, which is largely driven by the increased popularity and demand for RECs. The beauty of RECs is that on the small scale, RECs simply make a project financially sensible. However, on the large scale, RECs can make a project quite profitable, in turn drawing large investment from people such as Mr. Pickens who would otherwise be investing elsewhere. The existence of RECs made this project financially attractive to a man of Pickens’ investment capacity. Had it not been for RECs, Pickens may not have moved away from oil speculating.