A wind turbine is pictured in the southern German town of Schonach, January 6, 2008. REUTERS/Vincent Kessler

NEW YORK (Reuters) - Installed U.S. wind energy capacity grew nearly 45 percent last year to 16,800 megawatts, or about enough to serve 4.5 million homes, as interest in low-carbon power grew, an industry group said on Wednesday.

Texas remained the top state in both total wind power capacity, which reached with 4,446 MW, and new wind power capacity, the annual report from the American Wind Energy Association said.

The two largest wind projects were both in Texas: Horse Hollow, owned by FPL Energy, a unit of FPL Group, and Sweetwater, owned by Babcock & Brown and Catamount.

Wind power remained the most common source of new installed electricity after natural gas. Some U.S. utilities increased investments in renewable power generation as the country moved closer to regulating greenhouse gases like carbon dioxide, much of which is generated by coal-fired power plants.

AWEA spokeswoman Christine Real de Azua said a U.S. incentive known as the production tax credit also helped the industry grow last year. The PTC is set to expire at the end of the year and wind backers hope Congress will renew it to ensure solid growth in coming years.

“With the right public policy, (wind) will be a growing and affordable part of our long term plans,” said Dick Kelly, the president and CEO of Xcel Energy Inc. In 2007, Xcel was the U.S. utility with the most wind power on it system for the third year running, with 2,635 MW, the report said.

While wind power growth soared last year, the industry has also faced challenges recently. The Texas electric grid operator had to briefly cut power service to industrial customers in late February when the wind in the state stopped blowing. While the industry said improvements in forecasting would help smooth electricity delivery going forward, the matter focused attention on the intermittent nature of wind power.

In Wednesday’s report, the state of California came in second in the category of total installed wind capacity, with 2,439 MW, Minnesota was third with 1,299 MW, and Iowa was fourth with 1,271 MW. Iowa

The largest manufacturer of turbines installed in the United States last year was GE Energy, with 1,560 turbines, while Denmark’s Vestas provided 537 turbines and Siemens provided 375.