MAKE’s latest wind power outlook for North America forecasts another boom and bust cycle for the US market and a westward shift of wind power installations in Canada. In the US, the four-year installation window for the latest extension of the production tax credit (PTC) will drive a record ~40GW market from 2017 to 2020. Various considerations on the demand- and supply-sides of the industry will result in most of this capacity reaching commercial operation in 2019 and 2020, potentially exposing projects to complications from political upheaval and construction resource shortages.
Several such complications loom in the US outlook: Corporate tax reform threatens to reduce the appetite for tax equity investments that have financed more than half of all US wind installations in recent years. A border adjustment or other tariff action would destabilize a domestic supply chain that has become increasingly reliant on turbine components sourced from abroad. Shortages in engineering, procurement and construction resources are on the horizon as well.
After 2021, the PTC phase-down offers limited value, and in the absence of long-term policy drivers like the Clean Power Plan, wind will fight for new capacity additions in pure-LCOE competition for the first time in US history. The quality of a project’s wind resource will be paramount in achieving the low LCOE required to win market share from established natural gas and emerging solar development. Developers will particularly prize projects in states with abundant land, favourable wind resources and access to transmission given the impact those project parameters have on LCOE. In all, only 11.5GW of onshore wind will be installed from 2022 to 2026 in the US, almost entirely confined to a handful of states in the centre of the country.
MAKE forecasts Canada will install 6.2GW of new wind capacity from 2017 to 2026. From 2017 to 2019, Eastern Canada will continue to host most new wind capacity, after which the region’s outlook will decline amidst dwindling political support for new wind power, a largely decarbonized electricity sector and lacklustre growth in electricity demand. Beginning in late 2019, procurements in Alberta and Saskatchewan will shift the balance of new demand westward through the remainder of the forecast period. In Eastern Canada, only Quebec will install meaningful wind capacity after 2021, as it stands to benefit from appetite in the US Northeast for imported Canadian hydroelectricity and wind power as a complementary non-hydro renewable resource.