It was just last week when I shared the great news of another record year for US wind power in 2008. The ~7 GW projected to come online this year is a huge feat all of us climate activists should celebrate. But the wind industry is not immune to the financial seizure gripping global markets. A leading US wind developer, Florida Power & Light (FPL), has given a first glimpse of the impact on wind’s growth for 2009. In the company’s third quarter report, FPL announced a 25% cut in 2009 capacity growth from their previous forecast.
They now plan to install 1.1 GW of wind turbines (rather than 1.4 GW), ~15% lower than this year’s 1.3 GW projection. Assuming all wind developers will follow FPL and also cut their additions by 15%, US wind capacity will grow by ~6 GW in 2009. Such growth would still represent the second-largest annual capacity growth in US wind and would translate into 25% growth to ~30 GW in total capacity (far surpassing Germany, the world’s largest wind producer until this year).
The slower rate of growth may help to lower wind power costs which have been overheating these past few years on 27+% annual growth. With the current Production Tax Credit (PTC) expiring at the end of 2009, the US wind industry in 2010 and beyond will depend on federal government actions. They could renew the PTC at its current rate of ~2 cents per kWh or they could reduce the credit slightly to encourage the gradual emergence of a lower-cost mature wind industry that is less dependent on government subsidies. Eventually, federal cap-and-trade climate legislation which is supported to pass in 2009 will reward wind producers for their low-carbon electricity versus natural gas, oil, and especially coal.
In oil news, OPEC declared they are poised to host another emergency meeting before December if the price continues to fall below the current level of ~$63. Many Canadian tar sands projects are being delayed, spurring even the OECD consumers group, the International Energy Agency (IEA) to hope the price will stop falling. Nobuo Tanaka, IEA’s head, is worried that further delays would exacerbate a dramatically tighter oil supply market once the global economy begins recovering. This is the story peak oil analysts see playing out in the several years ahead: economic recovery runs into more record high oil prices, which knocks the economy into the ditch until economic recovery triggers even higher record oil prices that knock the economy down again, etc. They see this cycle repeating itself until we are able to lower oil consumption even in times of economic growth (by increased efficiency and substitute deployment). That’s where continued growth in wind and solar become even more important as potential substitutes for oil so that our climate doesn’t suffer the potential substitute of more polluting coal.
Tomorrow’s weekly EIA oil report should be interesting to see which is stronger: lower gas prices or the economic downturn in influencing the direction of demand. As always, I’ll give you the details as soon as they emerge.