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U.S. Wind Market Overview

By Nick SetaroEnvironment, Library

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Executive Summary

The scope and scale of domestic wind energy is growing rapidly, and now presents a viable alternative to legacy resources. In order to be a primary source of energy, wind must be cost-competitive without relying on subsidies and incentives. While subsidies and associated policies still have a material impact on the industry, they no longer determine its feasibility as underlying market economics favor wind.

Since wind is now cost-competitive with legacy resources, the industry sits at an inflection point with rapid growth ensuing. Many utilities are incorporating wind farms into the broader energy mix and renewables are expected to account for a growing share of total energy generation. Some experts believe that the market share of wind energy will reach 50% by 2050, an ambitious yet plausible projection.

The production cost of wind energy is historically low in 2019, as improved turbine technology is supplemented by Production Tax Credits. Experts predict that production cost of wind energy will not be this low for the next decade, once these subsidies expire at the end of the year. This is especially important for wind projects, but also influences other areas of the industry.

Investors can gain exposure to the wind industry throughout the supply chain and ancillary businesses. Instruments across several asset classes allow investors to tailor their approach to the risk parameters and goals the portfolio. For example:

  • Publically traded equities, wind and clean-tech ETFs or YieldCos for equity exposure.
  • Debt and fixed-income products including green bonds and project financing opportunities.
  • Actively managed mutual funds and hedge funds capturing opportunities in wind and the broader clean-technology space.
  • Private equity and venture capital funds allowing investors to participate in the growth of emerging technologies and ownership of privately held companies or infrastructure assets.

Investing in the wind industry generates an impact on the global and local levels:

By providing capital for companies, investors facilitate a shift to renewables that ultimately reduces the consumption of fossil fuels. In the long term, this transition has the power to slow or possibly halt the effects of climate change.

Investors can also have an immediate impact on isolated rural communities near wind farms. These projects initially create jobs during the construction phase and later require technicians to operate and maintain facilities.

Overall, impact investors can expect to facilitate multiple positive effects by infusing capital into firms driving growth in the wind industry.