Mexico wind investment high while U.S. wind power price reaches record low

Central American renewables investment soars while U.S. Congress pushes to end PTC and U.S. installations plummet in face of policy instability.

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According to a new report by Bloomberg New Energy Finance (BNEF, New York, N.Y., USA), strong momentum in clean energy in Mexico and the six main countries of Central America — Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica and Panama — are pushing investment to new highs.  Clean energy investment in Mexico totaled $1.3 billion in the first half of this year, compared to $1.6 billion in the whole of 2013, putting the country on track to set a new record. Meanwhile investment in Central America is at $317 million for the first half of 2014. The report notes that all of these countries have unusually good wind, solar, geothermal and hydroelectric power resources. BNEF's analysis of the project pipeline suggests that Mexico and Central America are likely to install just over 1 GW of wind power capacity this year, with potentially another 1.3 GW in each of 2015 and 2016.

Meanwhile, the U.S. House of Representatives is leading yet another attack against the wind production tax credit (PTC), issuing a letter to House leaders calling for an end to the incentive. According to Mike Pompeo, Rep-Kansas, who wrote a similar letter last year, this is an effort toward "the fight to end crony subsidies for energy corporations," as well as "an effort to keep electricity costs low for millions of American families."

Interestingly, the U.S. Department of Energy (DOE, Washington, D.C.) and its Lawrence Berkeley National Laboratory (Berkeley, Calif., USA) have released the “2013 Wind Technologies Market Report”, which shows that power purchase agreement (PPA) prices have reached all-time lows, falling to $25/MWh nationwide, a new record. Indeed, the average price of wind PPAs executed in 2013 compares favorably to projections for gas-fired power generation costs through 2040. The report also noted that wind turbine prices have dropped from a high of $1,500/kW in 2008 to between $900/kW and $1,300/kW for recent transactions.

Because the U.S. Congress has been unable to establish a stable policy regarding the PTC, installations last year dropped to just 8 percent of those in 2012. The U.S. fell to sixth place in annual wind additions in 2013 and was well behind the market leaders in wind energy penetration after being in the forefront for additional installations from 2005 through 2008 and again in 2012. The U.S. remains second in terms of cumulative capacity, though, reaching an installed total of 61 GW, equal to 4.5 percent of the country’s total electrical demand. However, because of the PTC uncertainty, the outlook for new U.S. wind installations beyond 2016 is very unclear.