US wind shakeout looms, warn execs

Large amounts of wind capacity nominally under construction in the US may not actually get built, with senior turbine executives warning that a “shake out” is looming for the US project pipeline.

The American Wind Energy Associations claims that there was more than 12GW of wind capacity under construction at the end of 2013, with nearly 11GW entering construction in the final quarter of the year alone.

The “worst-case scenario” of a 50% attrition rate on that figure is unlikely, but “I’d bet you’ll see at least a 30% fall out”, says Duncan Koerbel, the Denver-based chief technology officer for India’s Suzlon Group.

Koerbel made his prediction while speaking Thursday at AWEA’s Windpower conference.

Many smaller developers have rushed to meet the requirements under the start-stop Production Tax Credit, often signing power purchase agreements (PPAs) at prices that may prove economically unviable.

“The tagline is there’s more wind under construction in the US than in the history of wind. But there are a lot of deals out there that are pretty thin,” says Koerbel, and many projects simply “won’t pass muster”.

While declining to make precise predictions of their own, other turbine executives agreed that a significant chunk of that 12GW figure will not get built.

Daniel McDevitt, chief executive of Nordex USA, says that many developers have unrealistic expectations about how much turbine prices will come down, and have baked those assumptions into their projects.

“We’ve seen situations where developers come in in and give you [their target for turbine prices], and say, ‘This is what I assume it’s going to be,’ and I think we all know that some who might have been too aggressive are now finding themselves with a problem,” says McDevitt.

“You’re seeing some developers who took too much risk, and didn’t evaluate the situation the way they should have.”

David Hardy, vice president for sales at Vestas, says that the “artificial end date” created by the PTC’s expiration means that wind projects that aren’t “actually mature enough” are forced to press ahead anyway.

“It’s such a strain on our industry,” Hardy says. “It’s so painful.”