US special: TPI's Lockard bullish on coal crossover

Hello Denver! Yes, this week we are finally due to kick off our Financing Wind North America conference, in association with our headline sponsor FTI Consulting, and it is fair to say that we’re just a little bit excited. Go Nuggets!

This conference will give us a great opportunity to discuss all of the biggest issues in the US wind industry, and we have featured contributions from some of our speakers – including Apex’s Mark Goodwin, Goldwind’s Saad Qais, Onyx InSight's Ashley Crowther and Principle Power’s Joao Metelo – on our blog in recent weeks. Our key topics include what is going to happen after the end of the production tax credit, ongoing challenges with building grid links, and the prospects for wind if Donald Trump wins a second presidential term in 2020.

However, despite these challenges, the prospects for wind are still good because of the strong economics of the sector. That’s the view of Steve Lockard, president and CEO at TPI Composites, and chairman at the American Wind Energy Association, who we caught up with at the WindEurope conference in Bilbao earlier this month.

He said that the wind industry has reached an important milestone because it costs around the same to build wind farms – between $30/MWh and $55/MWh depending on where you are in the country – as it does to operate existing coal plants.

Renewables consultancy Energy Innovation reported last month that wind and solar could replace 74% of the US coal fleet and save money for customers because this ‘coal cost crossover’ point has been hit, and that would rise to 86% by 2050.

Lockard said this is one reason to have confidence in US wind after the PTC expires for new wind projects by the end of 2019: “If the price is roughly the same then coal is going to be retired even faster even without production tax credits,” he said. This phaseout will be supported by commitments from industries and businesses in the US to reduce their carbon dioxide emissions over the coming decades.

He highlighted the importance of large US institutional investors in driving these changes: “Many investors are pushing for sustainability metrics in their investments: BlackRock, State Street, Vanguard, massive mutual fund, index funds are saying to their investments, ‘You need to be reporting on a quarterly basis on sustainability’.”

He said this economic argument would hold true regardless of what happened with high-profile measures that are driving debate, such as the Green New Deal: “These fundamentals are driving the market – economics and customer choice and investors – and that’s true with or without a moonshot Green New Deal-type approach.”

That said, Lockard is positive about some aspects of the Green New Deal, because it is driving a debate in Washington DC about climate change. Despite Trump’s anti-wind rhetoric, there are only 150 members of the 535 in the US Congress – or 28% – who question the scientific consensus that climate change is happening and that it is being exacerbated by humans. That is positive as it suggests progress can be made.

And while he said that the Green New Deal proposed by Senator Ed Markey and Congresswoman Alexandria Ocasio-Cortez was an “extreme liberal position”, he said it was good that it was opening discussion about a ‘green real deal’ on which Democrats and Republicans could agree.

“I appreciate that the debates are happening, that positions are being staked out – some more practical than others – but even without a federally-funded moonshot, change is happening,” he said. “We’re hitting this crossover point and, on the wind side, we’re not done reducing cost. We will continue to reduce cost.”

One way this will happen is by pairing wind with other technologies, including solar and storage, to achieve higher penetration rates.

“Rather than thinking we might be constrained at 20% wind or 40% wind [on the grid], if they’re hybrid systems then very high penetration rates could be achieved,” he said. “The hybrids are coming and, to me, it all comes back to economics. If the economics are good then the technology gets pulled into the market.

As we convene in Denver, this economic argument gives us a reason to be positive.