Global Onshore Wind Market Report

Fiscal aid and financial incentives have been fundamental drivers for onshore wind deployment. In August 2022, the IRA became a law that expedites tax credits for wind energy projects. Under this, the Investment Tax Credit (ITC) allows 6% to 30% tax credits for land-based wind projects depending on project size and labour factors. Besides, projects above 1MW capacity must satisfy new apprenticeship and existing wage requirements to obtain the 30% ITC for projects that begin construction before 1st January 2025 (US Department of Energy, 2023). 

Historically, the Production Tax Credit (PTC) has supported onshore wind energy by assisting developers. However, its phase-out in 2021 affected capacity installations in the subsequent year. In August 2022, IRA significantly boosted onshore wind power producers by renewing the PTC. This allows developers and owners to claim a federal income tax credit on every kilowatt-hour of electricity supplied to the grid annually for ten years (US Department of Energy, 2023). Thus, utility-scale wind projects can choose between PTC and ITC to assist project visibility and maximise efficiency. In association, the new PTC provides credits for manufacturing and supplying wind power project components, thus providing a fillip for the domestic equipment manufacturing and supply chain.

Other than fiscal initiatives at the Federal level, state-level incentives assist the development of renewable technologies. An executive order by the Biden Administration mentions establishing a federal-level goal for decarbonisation by 2050. Following the same target, in November 2022, a renewable portfolio standard (RPS) was designed for 36 states and the District of Columbia. This encourages electricity suppliers to give their customers a minimum share of electricity produced from eligible renewable resources. Among these, 12 states and the District of Colombia mandate the RPS obligations to attain 100% clean electricity by 2050 (EIA, 2022). 

Policy impetus has also helped wind power generation to gain a competitive position through economies of scale. Thus, it is progressively competitive to build a new wind power plant instead of a new coal or gas-based one. The wind developers also benefit from the high wholesale power prices in the US market (Mercom, 2023). Particularly during summer, such a trend of rising prices has been a major propelling factor. While long-term PPAs are the conventional way for wind power offtake, many projects also keep some capacity aside for the wholesale power market.

The Inflation Reduction Act sets the stage for a fundamental transformation of the US renewable sector. IRA is expected to accumulate $114 billion in total investments in the US renewable sector by 2031 (PV Magazine, 2023). In the latest announcement, the Biden-Harris administration has committed to providing $20 billion through grants that will be deployed through two separate and complementary competitions ($14 billion through the National Clean Investment Fund (NCIF) and $6 billion through the Clean Communities Investment Accelerator (CCIA)), each aimed at mobilizing a national-scale clean energy financing network (The White House, 2023). Further, in 2023, the US Agriculture Department announced providing $11 billion to rural communities to bring them clean energy under the Powering Affordable Clean Energy programme. About $1 billion is allocated to finance renewable energy projects, including large-scale wind, solar and geothermal projects, through partially forgiving loans available for renewable energy enterprises and electric utilities (NPR, 2023). Although not specifically for onshore wind, the declining LCOE prices for wind power can make project financing available for the technology.

The PPA prices are on a rise in the US. This effect of supply chain constraints ignited a halt in project development in 2021-2022 (Mercom, 2023). Curtailing this depends on state aid and plans to reshore supply chain constraints under the IRA, as the paused projects are anticipated to come online by 2024. Such changes can stabilise PPA prices that can thrive renewable deployment as hybrid projects get significant PPA attention. Besides, heightened energy price uncertainty will compel businesses and off-takers to seek long-term contracts to guarantee stability.

In association with deploying new projects, repowering is another segment in the US with a significant scope considering the ascending age of wind turbines. GE Renewables has topped this market by repowering more than 4GW of wind capacities in the US (GE, 2019). In 2023, Vestas bagged a 139MW order to repower a project in Pennsylvania. Further, it is forecasted that the repowering of age-old wind turbines has a scope of attracting $25 billion by 2030, indicating a wide array of opportunities for OEMs to stack revenue (WindESCo, 2023).

Lastly, the OEMs operating in the onshore wind sector will particularly benefit from the advanced manufacturing production (AMPC) credit from the IRA (US Department of Energy, 2023). This will help OEMs reverse declining equipment sales margins in the short term and incentivize investment in manufacturing capacity for the US onshore wind power market, thereby creating an opportune pricing environment for manufacturers.