US Wind Installations More Than Double in Q1: Stocks in Focus

While majority of the industries struggled due to the impacts of the coronavirus pandemic, the U.S. wind industry held its ground with over 1,800 megawatts (MW) of new wind power capacity installed in first-quarter 2020. This came as a major confidence booster for renewable investors, particularly those who have wind stocks in their portfolio.

Per the latest report published by American Wind Energy Association (AWEA), eleven new wind projects totaling 1,821 MW became operational during the first quarter, 117% higher than the first quarter of 2019. The United States now has 107,443 MW of operating wind power capacity, with nearly 60,000 wind turbines operating in 41 states and two territories.

Factors Aiding Installations

Factors like hefty investment in wind power generation, particularly by corporates in recent times along with extensions of the Production Tax Credit (PTC) and the federal Investment Tax Credit (ITC) for offshore wind energy have been bolstering adoption of wind energy in the United States. Moreover, a steady decline in levelized cost of wind energy over the past couple of years, thanks to decline in price of U.S. wind turbines, growth in turbine heights and improved capacity factors, have been boosting wind installations.

While these factors were already present, it is necessary to mention that U.S. wind industry experienced a notable progress in turbine technology during the January-March period, which lowered cost and enhanced performance. Notably, in the first quarter, the first 4 MW turbines in the United States started operations.

Moreover, construction activity reached a new record in the first quarter of 2020, with 24,690 MW under construction across the country, representing 11% increase from the previous quarter.

In addition, developers and corporate buyers announced their highest ever quarterly volume of new power purchase agreements (PPAs), at 2,859 MW, in the first quarter. Utilities announced 1,719 MW of PPAs, led by Evergy and AEP Energy. Corporate customers announced 430 MW of wind PPAs in the first quarter.

All these events cumulatively bolstered U.S. wind installations in the first quarter.

Looking Ahead

At the end of March 2020, near-term wind power capacity pipeline comprised 44,441 MW of wind power, including 19,751 MW in advanced development. Total pipeline increased 14% year over year driven by strong demand from utilities and corporate purchasers along with an increase in offshore wind project announcements. Moreover, per the U.S. Energy Information Administration’s recently released Short-Term Energy Outlook, the electric power sector is expected to add 20.4 gigawatts of new wind capacity in 2020, amid the COVID-19-led uncertainty.

Stocks to Watch

The impressive projections for the U.S. wind industry have made us optimistic regarding the U.S. wind industry’s growth prospects. Consequently, we have zeroed in four stocks that investors might want to keep a tab on as they are major wind players and are expected to gain in coming days.

Siemens AG SIEGY provides highly reliable and cost-efficient wind turbines. Currently, more than 35,000 megawatts of wind power is installed with its turbines. Further, more than 50,000 of its wind generators and corresponding wind converters are being used worldwide for onshore and offshore applications.

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. Notably, GE Renewable Energy led turbine installations in the first quarter, capturing 70% of the market.

NextEra Energy NEE is the world's largest generator of renewable energy from wind and sun based on MWh produced on a net generation basis in 2019. It has currently 119 wind projects in the United States and Canada.

Vestas Wind Systems VWDRY designs, manufactures, installs and services wind turbines across the globe. It has more than 113 GW of wind turbines in 81 countries. The company  was ranked second in turbine installations during the first quarter, capturing 22% of the market.

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