Led by projects in California, Colorado, Minnesota, New York, Texas and Washington state, the U.S. wind power market could reach a cumulative installed capacity of nearly 49,000 MW by 2015, according to a study by Cambridge, MA-based consultant Emerging Energy Research (EER).

The study estimated total U.S. wind capacity of projects in various stages of development is in excess of 125 GW. With more than $65 billion forecasted to be invested in additional wind capacity between 2007 and 2015, the United States is projected to rank first in the world with 19% of the cumulative installed global wind capacity.

“With greater certainty in the energy policy fundamentals underpinning U.S. wind growth potential, the U.S. market has become a core demand hub for global wind players across the value chain, with both aggressive foreign wind development players as well as numerous global wind turbine vendors investing significant sums to secure a long-term U.S. wind market position,” said EER senior analyst Joshua Magee.

The domestic wind market is expected to reach record levels both this year and in 2008, with 7,650 MW of new wind projected over the two-year period. However, beginning in 2009, annual wind additions are expected to dip because of transmission bottlenecks. Post-2011, with new transmission build-out, the U.S. market will move “toward a new plateau of growth, with the market expected to reach as much as 5 GW per year by 2015.”

Several “key” states will have provided the largest contributions to the overall domestic wind portfolio by the end of 2015, led by Texas with 23% of total MW growth. California, Minnesota, New York, Colorado and Washington combined are forecasted to account for about 30% of total market growth, according to EER.

The study also found that rapid consolidation in the past two years has changed the composition of the U.S. market, which has solidified around a group of 10 to 15 large independent power producers (IPP).

“Fueled by the tremendous annual market potential since 2005, industry consolidation in the U.S. wind market has reached an all-time high, with domestic U.S. power generation companies vying with aggressive foreign entrants for U.S. wind company acquisition opportunities,” said Magee. “As annual U.S. wind development becomes increasingly dominated by companies with the right combination of greenfield experience, financial muscle and turbine supply, the race is on between major U.S. power players and European IPPs and utilities for U.S. market positioning.”

The next five years will continue to witness shifts in the competitive market environment as a second round of consolidation among IPPs begins. U.S. players could see “increasing erosion of market share” as European entrants led by Spain’s IBERDROLA SA and Portugal’s EDP-Energias de Portugal SA challenge long-standing U.S. wind IPPs such as FPL Group Inc.

Florida-based FPL edged out IBERDROLA to become the top global wind power owner in 2006 (see Power Market Today, March 12). IBERDROLA already has its hand in several North American wind power projects; a U.S. subsidiary agreed to buy Maryland-based CPV Wind Ventures LLC in April (see Power Market Today, April 12). EDP gained entry into the U.S. wind market in March with an agreement to acquire Horizon Wind Energy LLC (see Power Market Today, March 28).

At the same time, the study found that domestic utility wind procurement has reached an all-time high, with several companies seeking to extract more value by exploring wind project ownership and development.

“Within the last two years, wind has moved out of the realm of a fringe source of power generation and into the mainstream U.S. energy market, where it is now largely seen as an important way to diversify utility energy portfolios throughout many regions of the country,” said Magee. “In addition to state RPS [renewable portfolio standard] demand, many utilities such as Xcel Energy and MidAmerican are finding that wind provides a cost-saving hedge against natural gas fuel price volatility, offering a further incentive for the large-scale deployment of new wind plant.”

Investments in new transmission capacity also are expected to play a central role in determining the timing and geographic focus of new wind opportunities, especially as existing grid infrastructure begins to become saturated in several key wind regions and states, according to EER.

“A combination of federal and state renewable energy policy incentives such as the PTC [production tax credit], national and state RPS, and carbon emissions regulations will be crucial to spur the transmission expansion into high-wind resource areas that will be necessary to continue driving U.S. wind growth upward,” Magee said.

To learn more about the study, visit www.emerging-energy.com/.

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