American wind power is increasingly becoming an economic driver for the U.S. economy and is on track to meet 10% of our energy needs by 2020. I recently had the opportunity to sit down with Tom Kiernan, CEO of the American Wind Energy Association (AWEA) for an interesting discussion on the growing industry. This conversation is part of “Experts Only,” a new podcast by CleanCapital that explores the intersection of energy, innovation and finance.
The economic benefits of wind power extend across the economy. Here are a few highlights from our conversation, and you can listen to the full episode here.
Wind power is growing and creating careers for Americans across the US.
Wind Technicians are the fastest growing job in America, according to the Bureau of Labor and Statistics. Tom pointed at that these are not just jobs, but lifelong careers. When you build a wind farm, there are contracts in place to maintain those wind farms for 20-30 years. This means if you do a great job, this is a career that cannot be outsourced and will be around for a long time.
American innovation and policy stability drives down costs.
Technological advances that allow wind turbines to reach stronger, steadier wind and improving efficiencies have resulted in two-thirds drop in costs. In many parts of the country, wind power is now the cheapest source of new electric generating capacity. Most turbine parts are also made in the United States. Congress passing a bipartisan five year extension of the Production Tax Credit with a phase down supported by the industry. That has provided the stability the industry needed to thrive.
Companies are buying wind power because it’s affordable, reliable and clean.
Fortune 500 companies increasingly turn to wind power. One of the innovations the industry is seeing is different financial structures that make these deals possible. From virtual power purchase agreements (PPAs) to direct connections, companies like General Motors are going all in on clean energy by contracting with nearby wind farms and negotiating PPAs for wind energy. Companies are also making decisions on where to build their data centers and manufacturing facilities based on where renewable energy like wind power is available.
Innovations in finance are expanding capital markets for the maturing industry.
The wind industry was traditionally funded through tax equity investors (as a result of the tax credit) but overall private equity investment in wind is on the rise. In 2016, $9.7 billion in private capital was invested in wind power, up from $8.8 billion the previous year in the U.S. This is because increasingly productive wind farms provide good returns. It’s exciting to see the industry transition from tax equity to new financing opportunities, and to see how that expands the marketplace.
The wind industry is a great American success story. Investors like CleanCapital will have our eyes on the evolving financial market and the opportunity it presents for investors. For those interested in learning more about the wind industry, give the episode a listen. If you are interested in continuing the conversation on energy, innovation and finance, follow us on Twitter @CleanCapital_.