Government incentives and strong demand for electricity will stimulate growth
Los Angeles, CA (PRWEB) April 01, 2012
The Wind Power industry’s revenue is expected to grow a brisk 19.3% annually to $4.3 billion in the five years to 2012, with an anticipated revenue rise of 7.6% from 2011 to 2012. Favorable government assistance has made this energy source cost competitive with other types of electricity generation sources, lifting wind power's share of the total amount of electricity generated in the United States from 0.4% in 2005 to about 2.3% in 2010, says IBISWorld industry analyst Justin Molavi. This industry generates revenue from owning and operating wind farms and selling the energy to downstream customers. Most of the wind power generated in the United States comes from independent power producers (firms that do not have distribution operations) rather than the major electricity utilities.
The federal government's production and investment tax credits and state government mandates for renewable energy have made it attractive for players to construct wind farms at a breakneck speed. These incentives lowered the cost of wind power generation and mandated certain downstream buyers to purchase renewable energy, Molavi said. An extension of grants for renewable energy investment was passed by the US Congress and signed by President Obama, extending the cash credits to December 31, 2011. Therefore, the Wind Power industry continued growing quickly as firms put wind farms together before the expiration of the cash grant program. This trend, however, might reverse as the Production Tax Credit, a government-funded incentive that pays producers per unit of energy they sell for a specified period of time, is set to expire at the end of 2012.
Over next five years, stronger economic growth is expected, combined with a continued focus on lifting energy self-sufficiency and reducing greenhouse gas emissions. These trends will contribute to ongoing strong growth in wind power production. As consumers and businesses start spending more on electricity, greater demand for electricity is expected. The largest industry players are already constructing wind farms at accelerating rates, increasing this industry’s market share concentration. Combined, the four largest industry participants - NextEra Energy Inc., Iberdrola Renovables, MidAmerican Energy Holdings Company and Xcel Energy - hold less than half of the industry’s market share. Industry concentration reflects the industry's rapid growth and consolidation trends. As government incentives continue to be favorable for the industry, industry participants will seek to acquire assets to boost revenue. Combined with favorable government assistance, the industry will ride the high winds as the economy kicks back in gear and electricity demand rises. However, a key tax credit may not be extended past 2012, moderately limiting revenue growth over the next five years. For more information, visit IBISWorld’s Wind Power report in the US industry page.
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IBISWorld industry Report Key Topics
Firms in this industry operate wind farms, which consist of wind-operated turbines that are used to generate electricity.
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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