US/Canada Wind Power Markets and Strategies, 2005-2010

Important Findings
EER's 286-page research-based market study, US/Canada Wind Power Markets and Strategies 2005—2010, was released in December 2005. Following are highlights of growth/capacity, key themes, and trends to watch. For additional information on US/Canada wind power markets, access the press release on this study.

Growth/Capacity

• The North American wind power market is operating at an entirely new level. New wind power plant installations in North America will surpass 4,000 MW in 2006 and may grow by nearly 6,000 MW per year by 2010 if the US government continues with favorable regulatory policies.
• Both the US and Canada experienced record installations of wind power plant in 2005, but an even bigger boost is expected in 2006 when new installations in North America will grow by over 50%.
• Wind power capacity in the US has the potential to grow from just 6,700 MW in 2004 to over 28,000 MW by 2010. In Canada, wind power capacity is expected to grow from nearly 450 MW in 2004 to over 6,200 MW by 2010.
  

Key Themes

• In the past, inconsistent PTC policies discouraged investments in local manufacturing. The result has been a shortage of wind turbines and components, at a time when the market is exploding. The shortages have forced some developers to postpone and even to cancel projects.
• All wind turbine vendors active in North America sold out available capacity in 2005. With few exceptions, traditional turbine vendors are no longer able to guarantee delivery before the end of 2007. Despite record installations in 2005 and huge growth in 2006, the nearly US$4 billion market has been constrained by turbine and component suppliers. While the growth is unprecedented, wind turbine shortages have forced many wind IPPs and developers to table projects. Others have taken advantage.
• In Canada, provincial level renewable energy RFPs have emerged as the key drivers behind the growth of the wind power industry. Between 2004 and 2006, provincial governments and utilities will have issued RFPs for 6,000 MW of renewable energy, with the lion’s share awarded to wind projects. Among the most significant efforts to date in Canada are two RFPs from Hydro-Québec totalling 3,000 MW of wind power to be delivered between December 2006 and December 2013.
• A sharp increase in US wind power installations follows the extension of the production tax credit (PTC), first at the end of 2004 and further extended to 2007 through the passage of the Energy Policy Act of 2005. This three-year horizon is breaking the boom and bust cycle that has plagued the US wind industry.
  

Trends to Watch

• Turbine shortages threaten future growth in US wind industry. The door is wide open for new entrants willing to take the risk. Gamesa, Suzlon, and Clipper are all building manufacturing facilities in the US.
• With the extension of the PTC in the US, development activity is expected to remain strong. However, it is not clear to what extent turbine supply shortages will stall new projects, as many developers have already signed turbine supply contracts for 2006 and 2007. The US market faces significant risk of a slowdown again in 2008, as the current PTC is effective only until the end of 2007.
• While the Canadian wind power market remains small, with only a handful of experienced wind IPPs, a slew of new entrants backed by major energy companies have entered the market and are poised to capitalize upon the new market growth. Heavy hitters such as TransCanada, with Cartier Wind Energy Group, and Brascan Power, which purchased Superior Wind Power in 2005, point to the role major energy companies will continue to have in the growth of the Canadian wind power industry and the challenge and the increased competition ahead for the existing market leaders.