In 2011, roughly one-third of the new generating capacity installed within the US was in the form of wind turbines, according to a new report prepared by the Department of Energy. That represents nearly seven Gigawatts of new wind installations. Although that leaves the nation a distant second to China (which installed a hefty 17.6GW), it's about double the capacity installed in the next closest country (India) and leaves the US firmly in second place in total wind capacity, with 47GW.

It's important to note that this capacity doesn't reflect the typical output of these wind farms, since the wind doesn't always actually blow. Nevertheless, the steady growth of wind capacity has now pushed the amount that is actually generated by wind to over three percent of the annual national consumption of electricity. The top four countries in this regard—Denmark, Portugal, Spain, and Ireland—all produce over 18 percent of their needs through wind. The US ranks thirteenth.

That said, several states within the US would be competitive with the international results. Wind accounts for over 22 percent of the electricity generated in South Dakota, and just under 19 percent of electricity generated in Iowa (four other states are also above 10 percent). These are important figures, because the US grid isn't especially well structured to handle over 20 percent of its power coming from intermittent sources like wind. The experience gained by the nations and states could prove invaluable as wind power continues to grow.

And there are plenty of indications that other states will be pushing into higher percentages. The new capacity was installed fairly broadly, with 19 states seeing over 100MW of new construction, led by California, with over 900MW.

That said, the growth of installations may be in for a bumpy ride in the near future. Key federal incentives are due to expire in 2014, which may lead to a construction boom next year, followed by a bust if they are not extended.

The prospects for renewing the credits are mixed. Wind turbines are a rare example of successful domestic manufacturing. Eight of the 10 major suppliers have operations based in the US, and over two-thirds of the equipment installed in 2011 is estimated to have been made domestically—the largest fraction seen since wind started experiencing large growth. But, as with coal and nuclear, the plummeting cost of natural gas has made wind power look less appealing. Although well-sited wind installation remains cost-competitive relative to the average wholesale electric price, the drop in the cost of electric generation, primarily driven by natural gas prices, has left the average wind plant on the wrong side of the price curve for the last several years (in sharp contrast to wind's performance through most of the last decade).

The report notes that trends in newer generating hardware are getting harder and harder to detect, as the large installed base now means that new installations have a shrinking impact on the nation's overall performance. Nevertheless, a couple of trends seem to be showing up as newer hardware is put in place. After a couple of years of inching up, the price-per-capacity is dropping a bit again. Perhaps more significantly, the cost of operation and maintenance is dropping with time.

Capacity factor—the degree to which the actual output matches the rated capacity—has held steady at about 30 percent. The growing size of turbines, which should raise them to where winds are steadier, should raise the capacity factor, but the trend is being undercut by the fact that we're placing more turbines where the wind resources simply aren't as good. There are plenty of reasons why—access to transmission lines, local renewable energy requirements, etc.—but it illustrates how extraneous factors can undercut what should otherwise be obvious progress.

One thing that could reverse that trend is the start of offshore wind, which should have access to very steady winds. So far, however, the US has not seen any offshore farms built.

Overall, the report sends a bit of a mixed message. Wind has bounced back in a big way from the economic contraction, and is playing a large and growing role in the country's future energy economy. But the credits and incentives that help make new installations happen simply haven't had the long-term stability that, say, new fossil fuel developments have enjoyed. Until that's the case, the market is likely to experience sporadic contractions.

The full report and associated documents are available here.