5 Predictions for the US wind market this year

New wind power infrastructure will see a near-record year of growth in 2020, as sponsors are lining up as much as 14GW of new projects to start operation ahead of the end-of-year deadline to qualify for the full federal PTC.

PJ Deschenes
February 3, 2020
5 Predictions for the US wind market this year

New wind power infrastructure will see a near-record year of growth in 2020, as sponsors are lining up as much as 14GW of new projects to start operation ahead of the end-of-year deadline to qualify for the full federal PTC.

By mid-2020, much of the push to complete the record year will be in the hands of construction and tax equity finance professionals (and lawyers). This leaves many in the industry to plan for what happens in the coming years of more modest levels of new project development.

1. Point of entry acquisitions

Despite the phase out of federal tax credits, the US will remain one of the largest and most attractive renewable energy development markets.

As several large, conventional energy companies advance plans to build low carbon energy businesses, several leading independent wind developers will be acquired as “point of entry” acquisitions.

We expect to see as many as three acquisitions, not including the close of the buyout of Pattern Energy by the Canadian Pension Plan Investment Board.

2. More proxy off-take

The proxy revenue swap (PRS) is one of the best recent innovations in the US wind market. Over 3GW of projects use PRS, and these structures provide superior risk management relative to conventional energy hedges.

PRS and related risk management structures like proxy generation PPAs will proliferate in the US wind industry in 2020 and going forward.

3. Services war

Operations and maintenance (O&M) services have consolidated in the hands of manufacturers (OEMs) and asset owners.

As fleets of wind assets grow in size, these two groups will compete for ascendancy. Winning odds in this war for service dominance are in heavy favor of asset owners as the decision makers for project operations.

OEMs will have to introduce compelling, value-enhancing innovations if they hope to retain, let alone grow, their services businesses beyond 2020.

4. Ownership transition

The fleet of uncontracted projects in the US continues to grow with nearly 30 GW of assets reaching the tenth year of operating life over the coming two years. Many wind asset owners have already started to manage their fleets through divestiture of legacy, uncontracted assets.

New wind owners among both strategic and financial investors have entered the US wind industry through acquisition of legacy assets, and we expect this ownership transition to continue and expand.

5. New financing structures

The first four predictions will drive the need for new financing structures that consider new risks, and approaches to risk management and operation across the growing fleet of wind power plants in the US.

A key focus for us in 2020 will be to work with our clients and bring forward new forms and sources of financing to support growth in US wind.

We look forward to Financing Wind North America in Boston in May among other occasions to advance new financing ideas with our prospects and clients.

NEWS IN BRIEF

OX2 AGREES TO SELL 132MW FINNISH SCHEME

OX2 has agreed to sell its 132MW Metsälamminkangas wind project in Finland to Lundin Petroleum. The scheme is set to be made up of 24 turbines and be built without subsidies. It is due to be commissioned in 2021. Read more

GLOBAL MARINE GROUP SELLS FOR $250M

An investment affiliate of J.F. Lehman & Co. has agreed to buy Global Marine Group from HC2 Holdings for around $250m. This excludes the previously-announced sale of GMG's 49% joint venture with Huawei. Read more

EVERGY TO GROW WIND PORTFOLIO BY 660MW

Evergy is set to grow its wind portfolio by 660MW to 4.5GW by buying power from the 199MW Expedition Wind by National Renewable Solutions; part of the 193MW Jayhawk Wind by Apex Clean Energy; the 178MW Ponderosa by NextEra; and the 128MW Flat Ridge 3 by AEP Renewables. Read more

VAN OORD TEAMS UP ON 600MW IN ESTONIA

Van Oord has teamed up with Saare Wind Energy to develop the 600MW Saaremaa offshore wind farm in Estonia. Read more

SSE STARTS ON 47MW SUBSIDY-FREE EXTENSION

SSE Renewables has started building a 47MW extension to the 70MW Gordonbush wind farm in Scotland on a subsidy-free basis. Read more

New wind power infrastructure will see a near-record year of growth in 2020, as sponsors are lining up as much as 14GW of new projects to start operation ahead of the end-of-year deadline to qualify for the full federal PTC.

By mid-2020, much of the push to complete the record year will be in the hands of construction and tax equity finance professionals (and lawyers). This leaves many in the industry to plan for what happens in the coming years of more modest levels of new project development.

1. Point of entry acquisitions

Despite the phase out of federal tax credits, the US will remain one of the largest and most attractive renewable energy development markets.

As several large, conventional energy companies advance plans to build low carbon energy businesses, several leading independent wind developers will be acquired as “point of entry” acquisitions.

We expect to see as many as three acquisitions, not including the close of the buyout of Pattern Energy by the Canadian Pension Plan Investment Board.

2. More proxy off-take

The proxy revenue swap (PRS) is one of the best recent innovations in the US wind market. Over 3GW of projects use PRS, and these structures provide superior risk management relative to conventional energy hedges.

PRS and related risk management structures like proxy generation PPAs will proliferate in the US wind industry in 2020 and going forward.

3. Services war

Operations and maintenance (O&M) services have consolidated in the hands of manufacturers (OEMs) and asset owners.

As fleets of wind assets grow in size, these two groups will compete for ascendancy. Winning odds in this war for service dominance are in heavy favor of asset owners as the decision makers for project operations.

OEMs will have to introduce compelling, value-enhancing innovations if they hope to retain, let alone grow, their services businesses beyond 2020.

4. Ownership transition

The fleet of uncontracted projects in the US continues to grow with nearly 30 GW of assets reaching the tenth year of operating life over the coming two years. Many wind asset owners have already started to manage their fleets through divestiture of legacy, uncontracted assets.

New wind owners among both strategic and financial investors have entered the US wind industry through acquisition of legacy assets, and we expect this ownership transition to continue and expand.

5. New financing structures

The first four predictions will drive the need for new financing structures that consider new risks, and approaches to risk management and operation across the growing fleet of wind power plants in the US.

A key focus for us in 2020 will be to work with our clients and bring forward new forms and sources of financing to support growth in US wind.

We look forward to Financing Wind North America in Boston in May among other occasions to advance new financing ideas with our prospects and clients.

NEWS IN BRIEF

OX2 AGREES TO SELL 132MW FINNISH SCHEME

OX2 has agreed to sell its 132MW Metsälamminkangas wind project in Finland to Lundin Petroleum. The scheme is set to be made up of 24 turbines and be built without subsidies. It is due to be commissioned in 2021. Read more

GLOBAL MARINE GROUP SELLS FOR $250M

An investment affiliate of J.F. Lehman & Co. has agreed to buy Global Marine Group from HC2 Holdings for around $250m. This excludes the previously-announced sale of GMG's 49% joint venture with Huawei. Read more

EVERGY TO GROW WIND PORTFOLIO BY 660MW

Evergy is set to grow its wind portfolio by 660MW to 4.5GW by buying power from the 199MW Expedition Wind by National Renewable Solutions; part of the 193MW Jayhawk Wind by Apex Clean Energy; the 178MW Ponderosa by NextEra; and the 128MW Flat Ridge 3 by AEP Renewables. Read more

VAN OORD TEAMS UP ON 600MW IN ESTONIA

Van Oord has teamed up with Saare Wind Energy to develop the 600MW Saaremaa offshore wind farm in Estonia. Read more

SSE STARTS ON 47MW SUBSIDY-FREE EXTENSION

SSE Renewables has started building a 47MW extension to the 70MW Gordonbush wind farm in Scotland on a subsidy-free basis. Read more

New wind power infrastructure will see a near-record year of growth in 2020, as sponsors are lining up as much as 14GW of new projects to start operation ahead of the end-of-year deadline to qualify for the full federal PTC.

By mid-2020, much of the push to complete the record year will be in the hands of construction and tax equity finance professionals (and lawyers). This leaves many in the industry to plan for what happens in the coming years of more modest levels of new project development.

1. Point of entry acquisitions

Despite the phase out of federal tax credits, the US will remain one of the largest and most attractive renewable energy development markets.

As several large, conventional energy companies advance plans to build low carbon energy businesses, several leading independent wind developers will be acquired as “point of entry” acquisitions.

We expect to see as many as three acquisitions, not including the close of the buyout of Pattern Energy by the Canadian Pension Plan Investment Board.

2. More proxy off-take

The proxy revenue swap (PRS) is one of the best recent innovations in the US wind market. Over 3GW of projects use PRS, and these structures provide superior risk management relative to conventional energy hedges.

PRS and related risk management structures like proxy generation PPAs will proliferate in the US wind industry in 2020 and going forward.

3. Services war

Operations and maintenance (O&M) services have consolidated in the hands of manufacturers (OEMs) and asset owners.

As fleets of wind assets grow in size, these two groups will compete for ascendancy. Winning odds in this war for service dominance are in heavy favor of asset owners as the decision makers for project operations.

OEMs will have to introduce compelling, value-enhancing innovations if they hope to retain, let alone grow, their services businesses beyond 2020.

4. Ownership transition

The fleet of uncontracted projects in the US continues to grow with nearly 30 GW of assets reaching the tenth year of operating life over the coming two years. Many wind asset owners have already started to manage their fleets through divestiture of legacy, uncontracted assets.

New wind owners among both strategic and financial investors have entered the US wind industry through acquisition of legacy assets, and we expect this ownership transition to continue and expand.

5. New financing structures

The first four predictions will drive the need for new financing structures that consider new risks, and approaches to risk management and operation across the growing fleet of wind power plants in the US.

A key focus for us in 2020 will be to work with our clients and bring forward new forms and sources of financing to support growth in US wind.

We look forward to Financing Wind North America in Boston in May among other occasions to advance new financing ideas with our prospects and clients.

NEWS IN BRIEF

OX2 AGREES TO SELL 132MW FINNISH SCHEME

OX2 has agreed to sell its 132MW Metsälamminkangas wind project in Finland to Lundin Petroleum. The scheme is set to be made up of 24 turbines and be built without subsidies. It is due to be commissioned in 2021. Read more

GLOBAL MARINE GROUP SELLS FOR $250M

An investment affiliate of J.F. Lehman & Co. has agreed to buy Global Marine Group from HC2 Holdings for around $250m. This excludes the previously-announced sale of GMG's 49% joint venture with Huawei. Read more

EVERGY TO GROW WIND PORTFOLIO BY 660MW

Evergy is set to grow its wind portfolio by 660MW to 4.5GW by buying power from the 199MW Expedition Wind by National Renewable Solutions; part of the 193MW Jayhawk Wind by Apex Clean Energy; the 178MW Ponderosa by NextEra; and the 128MW Flat Ridge 3 by AEP Renewables. Read more

VAN OORD TEAMS UP ON 600MW IN ESTONIA

Van Oord has teamed up with Saare Wind Energy to develop the 600MW Saaremaa offshore wind farm in Estonia. Read more

SSE STARTS ON 47MW SUBSIDY-FREE EXTENSION

SSE Renewables has started building a 47MW extension to the 70MW Gordonbush wind farm in Scotland on a subsidy-free basis. Read more

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