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DOE: 2010 wind market saw decreased demand

The U.S. is only behind China as the fastest-growing wind power market, but installations here declined overall last year compared with 2008 and 2009.

The U.S. wind energy market took a hit in 2010 with a decrease in investment compared with 2008 and 2009.

That's according to the Department of Energy's "2010 Wind Technologies Market Report" (PDF) released yesterday.

The report measures investment in terms of how much wind energy capacity was built and connected to the national electric grid. About 5 gigawatts' worth of wind energy farms were installed in the U.S. in 2010, representing an $11 billion investment, according to the Department of Energy report. That represents a decrease in wind energy installations overall when compared to the 10 gigawatts that were installed in 2009 in the U.S., and the 8 gigawatts in 2008.

The report treats the decrease as a reverberation from the 2008 economic crisis, and not necessarily as an indication of issues within the industry itself.

Yearly total energy capacity in gigawatts added to the U.S. electric grid between 2000 and 2010

"The combination of the delayed impact of the global financial crisis, relatively low natural gas and wholesale electricity prices, and slumping overall demand for energy outweighed the ongoing availability of existing federal and state incentives for wind energy deployment, resulting in a steep drop in capacity additions relative to both 2008 and 2009," according to the report.

Despite the dip, however, the U.S. was still the second-fastest-growing wind energy market in the world in 2010. China was the world's fastest-growing market. The report noted that 25 percent of all the electricity capacity increases in the U.S. were wind power installations in 2010.

There was also a bright spot for those concerned about the overall decline in U.S. manufacturing. Wind turbine component manufacturing in the U.S. grew in 2010, as did use of those components in U.S. wind power installations. About 68 percent of components used in U.S. wind projects installed between 2009 and 2010 were made in the U.S. However, that figure should come with a large asterisk as it's partially attributed to the overall decrease in installations.

"In a major shift, the growth in U.S. wind turbine manufacturing capability, combined with the drop in wind power plant installations, led to an estimated over-capacity of U.S. turbine nacelle assembly capability of roughly 2.5 GW in 2010, in comparison to 4 GW of under-capacity in 2009," according to the DOE.

The cost of wind turbines overall has decreased 33 percent since 2008 and is now in the range of $900 to $1,400 per kilowatt. The Energy Department report also predicted an anticipated improvement in turbine efficiency in the coming years, which should help decrease the cost of wind energy even further.

The wind energy market report was much more optimistic, compared with the recent article in the July/August issue of Foreign Affairs which took a hard look at the global green-tech industry overall, not just wind.

That article focused on the risk of green tech becoming limited to a niche market unless governments adopt more long-term strategies and policies for developing it. The article upheld the U.S. government's Advanced Research Energy Projects Agency-Energy (ARPA-E) as a model for the type of government-backed research and development that can lead to self-sustaining industry growth.