U.S. Wind Power Shows Strong Growth in 2016 and 2017

S. Patricia Batres-Marquez
Decision Innovation Solutions
11107 Aurora Avenue Urbandale, IA 50322
December 2017  

Data from the U.S. Department of Energy indicates by the end of December 2016, U.S. wind electricity capacity was equal to 82.17 gigawatts (GW), compared with 74.47 GW during the same period a year earlier. By June 30, 2017, wind capacity was equal to 84.95 GW. Cumulative wind power grew 10.3 percent between 2015 and 2016. Overall, from 2007 to 2016 wind power capacity increased 386 percent. 

The development of the U.S. wind industry is the result of several factors, but the main factor is the federal production tax credit (PTC). The PTC for wind was first enacted in 1994 and has expired and been extended several times. This is a 10-year inflation-adjusted per-kilowatt-hour (kWh) tax credit. The current PTC was approved in 2015, with expiration scheduled by 2019. The value of the tax credit is progressively reduced in 20 percent increments for projects commencing construction after 2016 (1) . For calendar year 2016, the tax credit was equal to $0.023 per kWh that was generated. Applying this 20 percent reduction in 2017, 2018, and 2019, the production tax credit is 80, 60, and 40 percent of the PTC value, respectively. There is no tax credit for projects starting construction in 2020 (U.S. Department of Energy). 

State-level renewable portfolio standards (RPS) also have played an important role in the development of the wind industry. RPS are policies that mandate electricity suppliers to incorporate in their resource portfolio an amount of electricity from renewable energy resources such as wind, solar, geothermal, hydro, and biomass energy. As indicated by the U.S. Department of Energy, RPS direct the location and amount of power development, and as of June 2017, there were 29 states and Washington D.C. with RPS. Texas, for example, established a RPS in 1999 and amended it in 2005 requiring 5,880 MW of renewable energy by 2015.  Iowa adopted a RPS in 1983 and required 105 MW of renewable energy by 1999. Oklahoma established a RPS in 2010 requiring 15 percent of total installed generation capacity for operating electric utilities to be renewable by 2015 (AWEA).

Other factors boosting the wind industry include improvements in cost and performance of wind power technologies, which have resulted in lower sales prices for all sectors (utility, corporate, and other purchasers).

In 2016, Texas installed the most wind capacity adding 2.608 GW. Oklahoma and Iowa increased their wind capacity by 1.461 GW and 0.705 GW, respectively. As Figure 1 shows, as of June 30, 2017, 53.8 percent (45.74 GW) of U.S. installed wind power capacity (84.95 GW) was located in five states: Texas (25.3 percent, 21.450 GW), Iowa (8.2 percent, 6.974 GW), Oklahoma (7.8 percent, 6.645 GW), California (6.5 percent, 5.561 GW), and Kansas (6.0 percent, 5.110 GW).

Figure 1. Q3 2017 Installed Wind Power Capacity (MW)

In 2016 the United States generated 226.871 million megawatt-hours, increasing 19 percent year-over-year. The most current data published by the U.S. Energy Information Administration indicates wind power generated about 6.1 percent (163.6 million megawatt-hours) of U.S. power supplies (2.699 billion megawatt-hours) during the January to August 2017 period. Wind power during this period generated 34.4 percent of total electricity from renewable sources (2) (476.3 million megawatt-hours).

Given their large installed capacity, Texas, Oklahoma, Iowa, Kansas, and California (see Figure 2) were the states that generated the most electricity from wind during January to August 2017. Texas is the leading state in wind power generation with 27.35 percent (44.753 million megawatt-hours) of U.S. total wind power generated during the first eight months of 2017, followed by Oklahoma with 9.51 percent (15.561 million megawatt-hours). Iowa, Kansas, and California accounted for 8.07 percent (13.199 million megawatt-hours), 7.27 percent (11.891 million megawatt-hours), and 6.04 percent (9.889 million megawatt-hours), respectively, of U.S. total wind power produced during the January to August 2017 period.

Top Five States that Generate Most Electricity from Wind PowerFigure 2. Top Five States that Generated the Most Electricity from Win (Million Megawatt-hours)

The leading states in terms of contribution of electricity generated by wind power to total in-state electricity are Iowa, South Dakota, Kansas, Oklahoma, and North Dakota. In 2016, Iowa and South Dakota produced more than 30 percent of their total in-state electricity generated last year. In addition, Kansas, Oklahoma, and North Dakota produced more that 20 percent of their electricity from wind in 2016 (see Figure 3). In 2017 (January to August) Iowa generated 34.5 percent of total electricity from its wind capacity installed, whereas 34.4 percent of Kansas’ electricity was supplied by wind power during the same period (see Figure 3).

Top Five States with Largest Share of Total Electricity from WindFigure 3. Top Five States with the Largest Share of Their Total Electricity Generated from Wind (%)

The November 7, 2017, Short Term Energy Outlook (STEO) published by the U.S. Energy Information Administration indicated U.S. wind capacity is expected to grow both in 2017 and 2018. U.S. wind capacity is forecast to reach 88 GW by the end of 2017 and 96 GW by the end of 2018. 

On November 16, 2017 the U.S. House passed a tax reform bill. Among other provisions, the House bill would retroactively cut federal production tax credits. According to the American Wind Energy Association, the House tax reform bill retroactively would change how businesses qualify for wind energy federal support. If provisions concerning PTC are approved, wind investors would have new rules midway through, and new wind industry investments could be discouraged since a consistent policy is needed to foster investment in the industry. The Senate tax proposal that passed the Finance committee does not affect the wind power federal policy. The Senate passed its tax reform bill on December 1, 2017. As we finished writing this report (December 4, 2017) the two chambers were expected to go to conference to reconcile the two bills.

Recommended Citation

Batres-Marquez, S. Patricia. 2017. “U.S. Wind Power Shows Strong Growth in 2016 and 2017." Renewable Energy Report, Agricultural Marketing Resource Center, Iowa State University. December.

(1) The American Recovery and Reinvestment Act of 2009 allowed wind projects to elect a 30 percent investment tax credit (ITC) instead of the PTC starting in 2009. This option has been included in all PTC extensions and is subject to the same phase down schedule as the PTC (i.e., the ITC will be reduced in 20 percent increments: from 30 percent (in 2016) to 24 percent (in 2017) to 18 percent (in 2018) to 12 percent (in 2019)).
(2) Both hydropower and non-hydropower sources such as wind, solar, biomass, geothermal, and landfill gas.