Impact Blog
Wind remains on track to become largest source of U.S. renewable energy in 2019

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      By John Miller, VP and ESG Senior Research Analyst, Calvert Research and Management

      Washington - Production of electricity from U.S. wind power disappointed in Q1 2019, driven down by below-average capacity factors across multiple production regions. However, that's not a sign that the influence of wind power is on the wane. Indeed, wind remains on track for the historic accomplishment of overtaking conventional hydropower as the leading U.S. source of renewable electricity in 2019.

      What happened in Q1?

      There's no doubt that the first part of 2019 hasn't gone as expected. Capacity factors - the ratio of the net electricity generated for the time considered to the energy that could have been generated at continuous full-power operation during the same period - fell in Q1. Reductions were driven by declines in the West, but were seen in nearly every other producing region.

      Using the widely followed Wind Production Index produced by NextEra Energy, Inc., actual wind speeds in the West were 15% below long-term averages in Q1. In March, West wind speeds were 21% below long-term averages.1 Another large wind operator, Avangrid Inc., reported U.S. wind production at its facilities was down 34% year over year.2

      Calvert Blog 5-9-19

      Looking at temperature and precipitation data for Q1 2019, most of the West reported average temperatures, with some below-normal divergence along the Columbia River and above-average precipitation across the Rockies, Southwest, and California. Overall snow cover was significantly above average, including rare sizeable snow accumulations in the Pacific Northwest.3

      Where do we go from here?

      Despite the slow start this year, wind's immediate outlook in the U.S. remains positive. In Q1 2019, the project queue for new wind facilities increased by 6,146 megawatts (MW) to a total of 39,161 MW, including 17,213 MW currently under construction. For context, 1 MW of delivered power is large enough to power 1,000 homes. Overall 841 MW of wind projects came online in the period, bringing the U.S. total installed capacity to 97,223 MW.4

      On the back of this growth, the U.S. Energy Information Administration (EIA) continues to project that wind will replace conventional hydropower (non-pumped storage) as the leading U.S. source of renewable electricity in 2019. This is a major and significant accomplishment, indicative of wind's economic footing. In the EIA's April 2019 update to its Short-Term Energy Outlook, wind production for full-year 2019 is estimated at 860,000 MWh per day, with conventional hydropower at 772,000 MWh.5 This gap is projected to widen in 2020, with wind production of 971,000 MWh per day, to hydropower's 763,000 MWh.

      Initially, the technology was heavily reliant upon Federal Production Tax Credits (PTC) for its economic footing. This has changed, and wind price curves have fallen. With the PTC set to decline annually by 20% increments beginning in 2020, Calvert will be actively monitoring for wind developers who remain competitive absent this credit.

      Bottom line: Despite quarterly variation in output, wind power continues to play a major role in the decarbonization of the U.S. power sector.