Burst of construction in December delivers record year for US wind

Bloomberg New Energy Finance finds industry installed 13.2 gigawatts of
capacity as equipment costs fell and the expiration of a key subsidy loomed

New York, 22 January 2013 – The US wind industry installed a record 13.2
gigawatts of new nameplate generating capacity in 2012 with a surge of new
installations coming in the last month of the year. December 2012 alone saw
5.5GW installed – by far the most ever in a single month – as
developers rushed to bring projects to completion ahead of expiration of
the federal Production Tax Credit.

The figures were compiled by research company Bloomberg New Energy Finance,
based on the world’s leading database of transactions and projects in
clean energy. The previous record had been set in 2009, with 10GW
installed. The 2012 capacity addition represented more than a 102% increase
over 2011's number, when the industry installed 6.5GW.

With the 2012 bonanza now in the books, wind projects account for 60GW of
total cumulative capacity across the US, comprising 6% of the country's
overall electricity generating capacity.

Wind economics have improved dramatically in the last several years.
Equipment prices, as tracked via Bloomberg New Energy Finance's Wind
Turbine Price Index, have fallen by more than 21% since 2010. Over the same
period, performance of turbines, measured in terms of average capacity
factor, has risen. These two effects combined have resulted in a more than
21% fall in the levelized cost of electricity for a typical US wind project
since 2010.

Still, a policy-related factor helped drive 2012's massive swell of
development and construction activity, particularly in the last month of
the year. The industry's most important subsidy, the Production Tax Credit
(PTC) was due to expire at midnight on 31 December; only projects becoming
operational before that date would have qualified for the credit, barring
legislative action to extend the incentive. Ultimately, Congress allowed
the PTC to lapse but then retroactively extended it on 1 January of this
year, as part of the so-called 'fiscal cliff' rescue package.

The 2012 numbers are especially striking in light of the attractiveness of
competing options, specifically natural gas. On the back of the shale gas
'miracle' and the very mild winter of 2011-12, natural gas prices sank
below $2/MMBtu in April 2012, the lowest in a decade. At these fuel prices,
natural gas plants present stiff competition for wind projects when the two
compete head-to-head to meet the needs of electric utilities. Bloomberg New
Energy Finance estimates that the levelized cost of electricity for a wind
project in the Texas Panhandle, the windiest part of the country, is below
$30/MWh, when the PTC is taken into account as a benefit for the project
owner. For comparison, wholesale power at today's natural gas prices in
that region costs roughly $25-30/MWh.

Many states have mandates requiring certain amounts of new clean energy
generation be added each year. But this latest boom is being driven by
different dynamics, according to Amy Grace, lead analyst, North American
wind, at Bloomberg New Energy Finance.

“It’s clear that the economics, aided by the PTC, drove wind growth in
2012. 11GW of capacity was built in states without any near-term state
mandated demand,” said Grace. “This means that in most areas, utilities
are buying wind power because they want to, not because they have to.”

Though the industry had much to celebrate in 2012, the 2013 outlook is
bleak. Wary of PTC uncertainty all of last year, developers and investors
were reluctant to build pipelines for the coming year. Asset financing for
US wind projects crested in the first half of 2012 at $9.6bn, in
preparation for the 2012 burst, and then plummeted to $4.3bn in the second
half of 2012. As a result, the upstream portion of the industry has taken
grievous hits. Companies that produce turbines, blades, and other
components of wind equipment – including manufacturers such as Vestas,
Gamesa, Clipper and Siemens – have all either initiated or announced
layoffs.

The leading wind developers behind the 2012 build numbers were NextEra
(1.5GW new capacity added), Caithness Energy (0.8GW), and BP (0.8GW).
Turbine manufacturers that were the greatest beneficiaries of these
installations were GE (4.5GW of turbines sold to 2012 US wind projects),
Siemens (2.9GW), and Vestas (2.2GW).

The table below shows statistics by state, for the top 10 states in terms
of new 2012 US wind build.

Ranking // State // Wind build in 2012 (MW) // Cumulative wind capacity
through 2012 (GW)
1 California  (1,738)  (5.5)
2 Kansas  (1,589)  (2.6)
3 Texas  (1,532)  (11.9)
4 Oklahoma  (1,224)  (3.0)
5 Oregon  (845)  (3.6)
6 Illinois  (803)  (3.6)
7 Iowa  (790)  (5.1)
8 Michigan  (700)  (1.0)
9 Pennsylvania  (568)  (1.4)
10 Colorado  (496) (2.5)



ABOUT BLOOMBERG NEW ENERGY FINANCE

Bloomberg New Energy Finance (BNEF) is the world’s definitive source of
research, forecasts, data and news in clean energy and related industries,
including power, gas, carbon and water. BNEF has staff of more than 200,
based in London, Washington D.C., New York, Beijing, Hong Kong, Tokyo, New
Delhi, Cape Town, São Paulo, Singapore, and Sydney.

BNEF Insight Services provide economic analysis in the following industries
and markets: wind, solar, bioenergy, geothermal, hydro & marine, gas,
nuclear, carbon capture and storage, energy efficiency, digital energy,
energy storage, advanced transportation, carbon markets, REC markets, power
markets and water. BNEF’s Industry Intelligence Service provides access
to the world’s most comprehensive database of assets, investments,
companies and equipment in the same sectors. The BNEF News Service is the
leading global news service focusing on finance, policy and economics for
the same sectors. The group also undertakes applied research on behalf of
clients and runs senior-level networking events, including the annual BNEF
Summit, the premier event on the future of the energy industry.

New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009,
and its services and products are now owned and distributed by Bloomberg
Finance L.P., except that Bloomberg L.P. and its subsidiaries distribute
these products in Argentina, Bermuda, China, India, Japan, and Korea. For
more information on Bloomberg New Energy Finance: http://about.bnef.com.

ABOUT BLOOMBERG

Bloomberg, the global business and financial information and news leader,
gives influential decision makers a critical edge by connecting them to a
dynamic network of information, people and ideas. The company’s
strength—delivering data, news and analytics through innovative
technology, quickly and accurately—is at the core of the Bloomberg
Professional service, which provides real time financial information to
more than 300,000 subscribers globally. Bloomberg’s enterprise solutions
build on the company’s core strength, leveraging technology to allow
customers to access, integrate, distribute and manage data and information
across organizations more efficiently and effectively. Through Bloomberg
Law, Bloomberg Government and Bloomberg New Energy Finance, the company
provides data, news and analytics to decision makers in industries beyond
finance. And Bloomberg News, delivered through the Bloomberg Professional
service, television, radio, mobile, the Internet and two magazines,
Bloomberg Businessweek and Bloomberg Markets, covers the world with more
than 2,300 news and multimedia professionals at 146 bureaus in 72
countries. Headquartered in New York, Bloomberg employs more than 13,000
people in 185 locations around the world.