A $143 Billion Windfall for Investors

David Fessler By David Fessler, Energy and Infrastructure Strategist, The Oxford Club

Alternative Energy

It’s no secret that the Lone Star State has a reputation for being pro-fossil fuels.

After all, it’s an energy juggernaut, producing 37% of America’s crude and 28% of its natural gas. According to the Railroad Commission of Texas, the state produced 2.43 million barrels of crude per day in January.

What most people don’t know is that Texas is also one of the greenest states in the Union. It produces more wind power than its next three largest competitors combined.

It has more than 40 wind farms, with a total maximum capacity of 20.3 gigawatts (GW). Last year, wind power produced 12.68% of all the electricity generated in Texas.

And other wind farms are popping up across the U.S. That’s great news for U.S. energy suppliers and, more importantly, energy investors.

Green Energy Turns Into Greenbacks

The growth of wind energy in Texas started nearly two decades ago. In 1999, the Public Utilities Commission of Texas (PUCT) mandated that 5,000 megawatts (MW) of renewable capacity be installed by 2015, and 10,000 MW by 2025.

Incredibly, Texas exceeded the 2025 goal in 2010, just 11 years after the mandate.

One of the challenges along the way was that most of Texas’ windy planes are in the western part of the state.

So the PUCT planned a series of transmission lines totaling 3,000 miles to move the generated power to eastern Texas markets. In February 2016, Texas set a record for wind energy production… 45% of the state’s total electricity load was met via wind power. That was a state and national record.

However, with the continued installation of wind farms, it won’t be long before Texas smashes its own record.

The Rest of America Cashes In on Wind Power

The growth in wind isn’t just limited to the Lone Star State.

The cumulative capacity of wind power is growing at a blistering pace. From 2015 to 2016, it grew more than 11%.

And most of that growth is thanks to U.S. onshore wind.

U.S. offshore wind may be in its infancy, but U.S. onshore wind is already on a fantastic growth track…

  • There are more than 52,000 utility-scale wind turbines spinning today.
  • Forty-one states (plus Guam and Puerto Rico) have utility-scale wind farms.
  • Total installed U.S. wind capacity at the end of 2016 was 8.203 GW.
  • Investment in the wind power industry over the last decade was $143 billion.
  • Wind-related jobs in the U.S. at the end of last year totaled more than 100,000.
  • There are more than 500 wind-related manufacturing companies in the U.S.

The map below shows which states have wind and how much power they produce. The Southeastern states have no onshore wind farms due to a general lack of steady breezes, unlike other parts of the U.S.

Texas, on the other hand, has the highest wind power capacity. Many other states are big wind power producers as well.

Wind Power Is on Sale in the U.S.

Why is the growth of U.S. wind power on such a tear? Over the last seven years, the cost of wind power has dropped 66% in the U.S.

Remember Fessler’s First Law of Technology: “Technology marches on.” Wind power technology is no exception.

Engineers continue to design more efficient turbines, lighter and stronger blades, and cheaper and more powerful control systems. It’s a credit to American manufacturing and ingenuity.

It also has been a boon to employment in the industry. The position of “wind turbine technician” is the fastest-growing profession in America.

And many of those jobs are coming from large corporations like General Electric (NYSE: GE). But there are still several wind turbine pure plays out there.

The largest is Vestas Wind Systems (OTC: VWSYF). Vestas is a Danish maker of wind turbines.

I covered Vestas in last week’s article on offshore wind. The company is also heavily involved in onshore wind.

My recommendation is to keep an eye on the wind energy industry. Its growth is going to continue to skyrocket… and smart investors will want to have at least one play in the space.

Good investing,

Dave