Mar 27, 2023
New US Wind Energy Capacity Fell 56% as Tax Relief Dwindled
(Bloomberg) -- The pace of US onshore wind-farm installations tumbled last year, in a sign that the industry’s struggles aren’t limited to the fledgling offshore sector.
US wind developers installed 6.7 gigawatts of power generation capacity last year, a 56% drop from the prior year, S&P Global said Monday in a report. That happened due to declining tax breaks for developers even amid the Biden administration’s push to add more renewable energy.
Wind developers have identified a five-year project pipeline of 77.2 gigawatts, which means the industry would need to install an average of 15.4 gigawatts of wind capacity annually to meet the figure, S&P said in the report. One gigawatt is about equal to the electric generating capacity of a large nuclear reactor or natural gas-fired power plant.
For onshore wind, the drop in activity was mostly the result of the declining production tax credit, which was eliminated for projects that started construction last year, according to S&P. The Inflation Reduction Act that was signed in August restored the value of the tax credit, which S&P sees as boosting wind farm construction in future years.
The offshore sector, meanwhile, has struggled to move forward amid inflation and mounting political push-back.
Industry group American Clean Power calculated the annual decline in the number of onshore wind installations at 37% in a research report last month.
--With assistance from Brian Eckhouse.
(Updates with offshore wind’s struggles in penultimate paragraph.)
©2023 Bloomberg L.P.