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US to Witness Record 2020 Wind Installations: Stocks in Focus

In spite of facing disruptions due to the COVID-19 pandemic, the U.S. wind industry is on track to set a record for turbine installations this year. Per a recent report by the U.S. Energy Information Administration (EIA), project developers expect more than 23 gigawatts (GW) of wind turbine generating capacity to come online in the United States in 2020.

Notably, this capacity addition reflects 74% growth when compared with the industry’s previous record of adding 13.2 GW capacity in 2012. Naturally, this turns our attention toward companies operating in the U.S. wind industry. But before discussing these stocks, let us take a look at the industry’s track record so far.

Impressive Q3 Figures

As stated in its latest report by the American Wind Energy Association, the U.S. wind industry installed nearly 2,000 megawatts (MW) of new wind power capacity in the third quarter of 2020, setting a record for third-quarter additions. Notably, wind turbine installations through the third quarter increased 72% on a year-over-year basis.

Impressively, the two largest single-phase wind projects in U.S. history came online during the third quarter, the 525 MW Aviator Wind project in Texas and the 496 MW Cheyenne Ridge project in Colorado.

Factors Driving Wind Installations

Steadily declining cost of wind energy has been a primary growth driver. In particular, the average installed cost of a wind project in 2019 was $1,436/kW, reflecting a 16% decline over the last five years. This was possible due to a decline in wind turbine prices. For instance, wind turbines last year were priced from $700-$900/KW, representing a 50% decline from 2008.

Such declining costs must have boosted rapid wind turbine installations in the recent times.

Also, with installers aiming to reap the benefits of the impending phaseout of the full value of the U.S. production tax credit (PTC) at the end of 2020, we have witnessed more capacity additions than average so far this year.   

Significant investment in wind power generation has also been boosting capacity additions in this industry. Per a report published by BloombergNEF, the United States hit a record $55.5 billion in renewable energy investments in 2019, reflecting annual growth of 28%, with wind and solar leading the way.

All these factors are expected to continue to boost the U.S. wind industry’s growth in the near term, thereby enabling it to meet the aforementioned expectation for record wind turbine installations by 2020-end.

Stocks Likely to Gain

Considering the above discussion, it is quite evident that the U.S. wind industry is set to rally, which should encourage investors to keep the following stocks in their watchlist. Since these stocks contribute significantly to the U.S. wind industry, the latest projections are expected to benefit their profitability.

Siemens AG SIEGY provides highly reliable and cost-efficient wind turbines. Currently, its turbines spread across the world generate more than 35,000 megawatts of wind power. The company has a leading position in the U.S. wind industry as well. It was awarded the world’s largest single onshore order to date, a 1,050 MW order from MidAmerican Energy, for a series of onshore wind power plants in Iowa.

General Electric Company’s GE renewable energy unit is one of the world's leading wind turbine suppliers, with over 42,000 units installed across the globe. The company’s U.S. wind capacity exceeded 40 GW.  

NextEra Energy NEE is the world's largest generator of renewable energy from wind and sun based on 2019 MWh produced on a net generation basis. The company added approximately 1,125 MW of new generating capacity and repowered wind generating capacity totaling 1,091 MW in the United States in 2019.

Vestas Wind Systems VWDRY designs, manufactures, installs and services wind turbines across the globe. With over 23,500 MW installed and more than 24,000 MW under service, Vestas Wind enjoys a dominant position in the U.S. wind industry.

These Stocks Are Poised to Soar Past the Pandemic

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Siemens AG (SIEGY): Free Stock Analysis Report
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