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
General Electric Company’s
NextEra Energy
Vestas Wind Systems
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