Wind, clean energy break new ground for US generation stack share

Spring 2022 saw a series of firsts when it comes to onshore wind and renewable energy's share of the US generation stack, data show, but the wind sector's pace of growth is set to slow at a time when observers say it needs to be heading in the opposite direction for climate goals to be met.

On 29 March, wind turbines in the Lower 48 states produced 2,017 GWh of power, making wind the second-largest source of generation that day, behind only natural gas, according to the US Energy Information Administration's (EIA) Hourly Electric Grid Monitor.

Wind garnered a larger slice of the pie than coal-fired and nuclear generation separately on other days earlier in 2022, and then surpassed both sources on a single day for the first time on 29 March, the EIA said.

In the US, wind speeds, and correspondingly, the output of wind farms, tend to peak in the spring, government data show. Wind's share of the generation stack also often reaches new highs at this time of year as competition from alternate sources of electricity is less fierce.

Power demand tends to be lowest in the spring and fall months, which are known in the US as the shoulder seasons, so some generators—including owners of both nuclear and coal units—reduce their output or schedule maintenance at this time.

California

A few days after the nationwide first, the California Independent System Operator (ISO) set a new record on 3 April, when 97.6% of electricity on the grid came from renewable energy, it said. The brief peak broke the previous record of 96.4% set on 27 March. Before that, the grid's record for clean power was 94.5%, set on 21 April 2021, the ISO said. Wind tends provide about a quarter of the California renewable load, with solar producing over 60%.

California added the second-most clean power capacity of any US state in 2021 at almost 2.7 GW, and also ranked second in operational capacity terms at just over 22.9 GW, according to the American Clean Power Association (ACP).

To California's east, the Southwest Power Pool (SPP), which covers parts of Oklahoma, Kansas, Nebraska, North Dakota, South Dakota, and neighboring states, and the Electric Reliability Council of Texas (ERCOT) both reported records on 29 March for wind's share of the generation stack. SPP reported wind penetration of 88.5% on 29 March 29, and ERCOT said wind covered 67.2% of its system's needs for the same day.

The EIA said it does not expect wind to surpass either coal-fired or nuclear generation for any month in 2022 or 2023, based on its latest forecasts. It may not take much longer though, observers say.

Texas, which headed ACP's operational renewable capacity at the end of 2021 and most capacity added during the year tables, burns more coal and emits more CO2 and sulfur dioxide than any other state in the US.

But academics at Rice University—located in the state's energy capital, Houston—believe all the state's coal-fired capacity could be replaced by wind and solar. There's already enough wind and solar projects in ERCOT's interconnection queue to do so, they said in research published earlier this spring. In addition, "it's not always windy and not always sunny, but it's almost always windy or sunny somewhere in Texas," they said.

On a nationwide basis, renewable energy sources' share of annual US generation will rise from 20% in 2021, to 22% in 2022, and to 23% in 2023, as a result of continuing increases in solar and wind generating capacity, the EIA said in its latest monthly Short-Term Energy Outlook (STEO) report, released 12 April.

This increase in renewable generation will lead to a smaller slice of the pie for natural gas- and coal-fired generation, it said. Gas units' share is expected to decrease from 37% in 2021 to 35% in both 2022 and 2023 while the share of coal will fall from 23% in both 2021 and 2022 to 21% by 2023, EIA said.

Temporary slowdown for wind

However, the pace of growth in the wind sector is set to slow in the next couple of years, the government agency said. EIA estimates the US added 14 GW of new wind capacity in 2021, but only expects 10 GW of new wind capacity will come online in 2022 and 4 GW in 2023, it said in the latest STEO. The pace of growth is set to slow because a tax credit is currently set to expire at the end of 2022 and much-publicized offshore wind auctions will not net significant installations for some years.

As a result, if more government support for the wind sector isn't forthcoming in short order (in a country that ranks second overall in installed capacity globally), then the long-term impact will be palpable, at least the way one trade association tells it.

In its 17th annual flagship report, Global Wind Report 2022, the Global Wind Energy Council (GWEC) forecasts that by 2030 less than two-thirds of the global wind energy capacity required for a 1.5 degrees Celsius and net-zero pathway will be in place, "effectively condemning us to miss our climate goals."

A four-fold increase in the pace of the global wind fleet buildout is now necessary to avoid a temperature increase of more than 1.5 degrees Celsius compared with pre-industrial levels, as the Paris Agreement seeks, GWEC said.

Spring in offshore wind sector's step

Even without the tax credit, a much larger part of the US' future wind capacity growth involves plans to add offshore facilities alongside the existing and future onshore fleet.

The Biden administration plans to build 30 GW of offshore capacity by 2030, but will need a supply chain revolution to do so. In March, a group of government agencies led by the National Renewable Energy Laboratory released the first of two reports laying out a roadmap to create that supply chain.

Another solution to the problem GWEC envisions may be collaboration between erstwhile rivals, which is already beginning. On 1 April, Danish wind turbine manufacturing giant Vestas inked a deal with a unit of its biggest rival, GE Renewable Energy. Vestas said that "in the continuous journey to develop the wind energy supply chain and produce main components close to key markets," the company had signed an agreement for LM Wind Power to produce onshore turbine blades in Brazil.

Spring 2022 also saw the Department of Interior ramp up efforts to kickstart offshore wind through its US Bureau of Ocean Energy Management (BOEM) unit.

An auction of lease areas off New York and New Jersey by BOEM 23-25 February produced multiple firsts for offshore wind in the country, including a $1.1-billion winning bid by a German energy giant making a splash in the arena. The lease sale saw the loftiest overall high bid total for an auction of any energy development rights in American waters since 2008.

Then BOEM completed an environmental review and Interior on 25 March announced an auction for two lease areas off the coast of the Carolinas on 11 May. The lease areas cover 110,091 acres in the Carolina Long Bay area that, if developed, could result in at least 1.3 GW of offshore wind energy, it said.

Across the country, BOEM on 6 April announced the release of a draft environmental assessment public comment for California's first offshore wind leases. The Morro Bay Wind Energy Area is located approximately 20 miles off the central California coastline, and up to 3 GW of capacity could be on tap there. Comments are due by 6 May.

But it's not just a government-led movement. Trident Winds, a Seattle-based developer, said 4 April it submitted an unsolicited lease request to BOEM for the first floating offshore wind farm off the coast of Washington State. The 2-GW Olympic Wind project would be sited 43 miles off the coast of the Olympic Peninsula.

Posted 19 April 2022 by Keiron Greenhalgh, Senior Editor

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.