At a time when the global markets are grappling with the deadly coronavirus, encouraging data in the U.S. Wind Industry Fourth Quarter 2019 Market Report by the American Wind Energy Association (AWEA) instils confidence among investors. In 2019, project developers added 9,143 MW of wind power capacity to the grid, leading it to be the U.S. wind industry’s third-strongest installation year. Moreover, additional wind projects of around 44,000 MW equivalent to more than $62 billion in investment are either in advanced development stage or have under construction status. Notably, with 16 GW in new offshore wind goals pledged in 2019, East Coast states consistently accelerated demand for offshore wind energy.
Highlighting the progress of the U.S. wind industry, Tom Kiernan, CEO of AWEA, has said, “today, there are nearly 60,000 wind turbines spinning across 41 states powering the equivalent of over 32 million American homes. Demand for wind energy is greater than ever as evidenced by corporations and utilities signing contracts in record numbers.” Commenting on the ongoing projects, he informed that around 200 projects are proceeding in 33 states from the wind belt in America’s heartland to the offshore wind market (read: Best Thematic ETFs for 2020).
What’s Behind the Momentum?
The U.S. wind industry has been getting support from high demand for wind power from the utilities and corporate buyers. In 2019 also, the U.S. wind industry saw a record 8,726 MW of power purchase agreements (PPA) from utilities and corporate buyers. In fact, 60% of PPAs totaling 5,266 MW in 2019 came from the utilities sector with Northern Indiana Public Service Company, Walmart (NYSE:WMT) and AT&T (NYSE:T) being the top three purchasers.
Moreover, expiration of production tax credit (PTC) at the end of 2020 seems to be the primary driver of wind capacity addition in 2020. It has consistently provided huge support to wind power development in the United States over the past few years.
In today’s time, the ‘carbon neutral’ status is a coveted one for every country. In this regard, updates on sustainability initiatives undertaken by the government or corporates are rampant. Thus, according to U.S. Energy Information Administration’s (EIA) latest report, 42 gigawatts (GW) of new electric generation capacity is projected to start commercial operation in 2020. Of these capacity additions, wind power accounts for the largest share at 44%.
Moreover, technological advancements, increasing investments, growing government initiatives and rising awareness across the globe about adopting clean energy have been leading to a rise in demand for wind energy. Per a report by National Renewable Energy Laboratory, wind energy investment in the United States has averaged nearly $13.6 billion annually since 2006.
First Trust ISE Global Wind Energy Index Fund (LON:FAN) to Shine
The fund seeks investment results that correspond generally to the price and yield, before the fees and expenses, of the ISE Global Wind Energy Index. With a basket of 43 holdings, the fund has $101.8 million in AUM. It trades in average volumes of 33,000 shares a day. The fund has an expense ratio of 60 basis points. It has gained 16.3% over the past year.
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First Trust Global Wind Energy ETF (NYSE:XLE) (FAN): ETF Research Reports
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