A turning point for wind power
In 3 years, maintenance slated to outpace cost of installing new turbines
Before long, the industry will be spending more on maintenance and operations than new installations.
The North American wind industry will reach a turning point in three years when the industry begins to spend more on operations and maintenance than it spends on installing new wind turbines.
The shift is a result of the billions of dollars companies have already spent to build massive wind farms across the windiest landscapes, benefiting from tax breaks in the United States and Canada to encourage renewable energy development, according to a study by the research and consulting firm IHS Markit. Now, companies are spending more money than ever on operations and maintenance to keep the older turbines running and productive.
Rapid expansion
Energy companies spend as much as $6 billion annually on wind-related operations and maintenance, a market IHS Markit expects to grow nearly 40 percent to $8.3 billion annually by 2027.
Wind power has expanded rapidly in recent years as technology has advanced and efficiency has increased, allowing turbines to produce electricity at lower wind speeds. The cost of windgenerated power declined by one-third between 2010 and 2016, according to the Energy Department, and in 2017 accounted for about 6 percent of all electricity produced in the U.S.
Wind energy plays a much larger role in the generating mix in many states. In Texas, which leads the nation in installed wind generation capacity, wind generates 16 percent of the state’s electricity, according to the Energy Department. Texas has wind generating capacity of more than 20,000 megawatts — more than double the second-place state, Oklahoma. (A megawatt can power about 200 Texas homes on a hot summer day.)
In an increasing number of states, wind power is becoming the dominant renewable energy source, surpassing hydroelectricity. As wind has gained, hydroelectricity has declined. Few projects, which require damming rivers and streams and inundating nearby areas, are under construction.
A decade ago, Texas was one of just seven states that relied on wind power as the biggest source for renewable energy; 16 states now report that wind energy is their biggest source of renewable energy, according to the Energy Department. Additional states with wind power as their dominant source of renewable energy include Colorado, Oklahoma, Nebraska, North Dakota and Pennsylvania.
New opportunities
But the North American wind turbine fleet is aging, with the average age rising from 7 years today to 14 years in 2030, according to the IHS Markit study. As the turbines age, they cost more to maintain, which has become a new growth opportunity for companies eager to expand into that part of the wind industry.
Some 50,000 utility-scale wind turbines producing nearly 100,000 megawatts of generating capacity have been installed in 42 states and 12 Canadian provinces and territories. Within a decade, IHS Markit predicts producers will add 50 percent more turbines, with most installed before federal tax credits expire during the early 2020s.
Wind companies spend the most running and maintaining older and larger wind turbines installed before 2010, according to the study.
In more and more states, wind power is becoming the dominant renewable energ y source.