Revenue will slump in the near term, but long-term offshore projects are being developed
Los Angeles, CA (PRWEB) December 21, 2012
The Wind Turbine Installation industry's volatile past five years masks the fact that demand for wind power has steadily increased. Indeed, over the past five years, installed wind power capacity in the United States has increased at an annualized rate of 27.8% to about 57,616 Megawatts (MW). “Annual industry revenue, however, is dependent not on the gradual implementation of wind power over many years, but on the level of new wind farm construction in any given year,” says IBISWorld industry analyst Kevin Boyland. Consequently, revenue may increase or decrease dramatically in any given year. Smoothing out this volatility, industry revenue is expected to increase at an annualized rate of 15.1% to $5.8 billion over the five years to 2012. The federal production tax credit (PTC), which has encouraged increased development of wind farms over the past five years, has been the primary driver of industry growth.
Unfortunately, this tax credit is set to expire at the end of 2012, casting a cloud of uncertainty over the industry. According to Boyland, “As wind farm developers rush to meet end-of-year installation deadlines to qualify for the PTC (before it potentially expires), revenue is expected to increase an astounding 59.9% in 2012.” However, regardless of whether the PTC is extended, wind turbine installation activity is expected to drop off significantly in 2013. Amid such an uncertain environment, developers have delayed or scrapped plans for new turbine installations, and getting such plans back on line will not happen right away. Moreover, the industry will have to contend with competition from a low price of natural gas and a meager increase in electric power consumption.
As installation activity drops off significantly, the Wind Turbine Installation industry's revenue is forecast to decrease 23.6% per year on average to $1.5 billion over the five years to 2017. While this pales in comparison to the overall robust growth of the past five years, the industry still has some bright spots on the horizon. Firms will likely generate a larger portion of revenue from maintenance and repair activities as operational wind turbines age and wind turbine technology becomes more sophisticated. At the same time, long-awaited approval of an offshore wind turbine installation in Massachusetts will likely lead to increasing development of other offshore projects. A drive toward offshore wind farms will expand the industry's scope moving forward, although the benefits will not be felt immediately as these projects often take several years to develop.
For more information, visit IBISWorld’s Wind Turbine Installation in the US industry report page.
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IBISWorld industry Report Key Topics
Industry firms transport, construct and install wind power collection systems, such as turbines, substations and interconnections services. The work performed may include new work, reconstruction, rehabilitation, and ongoing maintenance and repairs.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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