Power producers who invested billions in turbines are finding that making money off the wind can be as unpredictable as the energy source itself.
NextEra Energy, NRG Yield and Duke Energy all said a lack of sufficiently windy days cut into second-quarter sales. Neither power generators nor forecasters seem to know exactly why.
“There was a definite trend with several utilities talking about weak wind resources,” said Shahriar Pourreza, an analyst for Guggenheim Partners. “This isn’t something that has been major in the past, so definitely a phenomena worth following to see if it’s sustainable or an anomaly.”
Wind, once a marginal resource for power suppliers, has begun to matter.
Installations surged sevenfold in the U.S. last year, making it the largest market for the technology worldwide after China, according to Bloomberg New Energy Finance.
Spurred by tax incentives and state clean-energy standards, wind accounted for 4.4 percent of U.S. power generation in 2014, up from 1.9 percent five years ago, the Energy Department said.
Tax credits for wind production are expected to more than double to $2.4 billion in the fiscal year ending Sept. 30, according to an August 2014 estimate, the latest available from Congress’ Joint Committee on Taxation.
Wind credits might reach $3.6 billion annually by the fiscal year ending in 2018, the committee reported.
Developers have been installing turbines in the gusty plains of the Midwest and Texas, as well along mountain passes in California and other Western states. Wind provided nearly 10 percent of electricity production in Texas and 7 percent in California last year.
While conventional power plants produce electricity continually, wind power is intermittent, dependent on air flows.
Utilities have gotten better at predicting when the wind will blow, but it’s not yet an exact science. One theory is that El Niño is responsible. That’s a condition when the surface of the equatorial Pacific Ocean warms and the atmosphere reacts, changing weather patterns around the world.
NextEra, the biggest wind-power producer in North America, agrees El Niño might be playing a role. While posting a profit of $1.59 a share in the second quarter, light winds cost the company 14 cents a share.
“Although we cannot draw any firm numerical conclusions, we do know the strong El Niño cycle that we are now in tends to be correlated with below-average continental wind resource,” NextEra chief financial officer Moray Dewhurst said on an Aug. 3 earnings call.
