In light of the recent power emergency in Texas last week brought about by scorching temperatures of up to 100ºC in some parts, wind power has become a hot topic in the local press. Wind farms now account for almost a third of the capacity of Texas, and this is set to rise due to recent revelations that wind power prices are now lower than that of natural gas. It is now much cheaper to build and operate wind farms than it is to buy fuel for an equivalent natural gas plant.
Impact on local industry
This is having a positive knock on effect for local industry. For example a leading service provider for TGM Wind, Kardie Equipment, has recently relaunched its specialized wind turbine generator cleaning service due to an increase in customer demand. The development of wind turbine technology offers a wide range of opportunities for all kinds of businesses from design and management to cleaning.
Farmers and rural estates stand to benefit too. Leasing land to wind turbine development provides a steady source of income that is unaffected by crop surpluses, floods, trade wars, droughts and heatwaves. Farmers stand to earn up to $8,000 per wind turbine on an annual basis.
Tax credits likely to influence spike in production
The US Department of Energy released a report in July that details the state of wind power in the US since 2018. The report shows a decrease in wind hardware prices, despite new turbine designs increasing the power generated per turbine, hence the reduced cost of building and operating wind farms. Further to this, wind energy is particularly cheap at the moment due to a tax credit that has been given to the generation of renewable energy.
However, this tax credit allocation is already starting to fade out, which will ultimately lead to uncertainty in the power market. In response to these vanishing credits, developers are seizing the opportunity to start wind turbine development projects in advance, which means we are likely to see a rise in wind farm construction over the next two years, which could be followed by a sudden drop off once the credit has been extinguished.
The economic case for wind energy
Wind energy is currently in an incredibly competitive position, and the economical case for wind energy will remain strong even once the tax credits have dried up. The price of wind power in the US has plummeted from $70 per MegaWatt-hour in 2009 to below $20 per Megawatt-hour in 2018. Despite the expected regional variation, this is the lowest national average to date. This makes wind power a much more cost-effective alternative to natural gas, which is above $20/MW-hr for the gas alone, let alone the cost of a plant to generate the electricity.
A big reason for this decrease in the cost of wind power is due to wind turbines now being built on better technology. As a result of improved tech, more power is now being generated per turbine, as a result, it now makes more economical sense to install wind turbines even in areas that don’t have the best wind resources, resulting in a more widespread use of wind technology.