By Teresa Hansen, Power Engineering magazine Associate Editor
Wind power capacity has increased at record rates for the third straight year. According to the American Wind Energy Association (AWEA), capacity increased by 27 percent in 2006 and is expected to increase an additional 26 percent in 2007. At the end of 2006, more than 11,600 MW of U.S. electricity was generated by wind, making it the second largest source of new power generation in the country--second only to natural gas. Sustaining this growth rate and growing wind capacity even more were key issues discussed recently at AWEA's WINDPOWER 2007 Conference and Exhibition held in Los Angeles.
Last year, President Bush urged the industry to grow U.S. wind capacity to 20 percent of the nation's total installed capacity by 2020. The industry is working to meet that goal. "The benefits of reaching this goal are huge for the environment, national energy security and the country's economy," Randall Swisher, AWEA's executive director, told attendees during the opening session. A vital wind energy industry will help reduce the cost of natural gas, revitalize rural America and create many new manufacturing jobs, Swisher said.
Thanks in great part to continued phenomenal growth, the general mood in the wind energy industry is positive and upbeat. Most industry experts understand, however, that sustaining this growth and increasing wind energy's status in the electricity supply mix will not be easy. Speakers at WINDPOWER 2007 cautioned that barriers to providing 20 percent of the nation's electricity capacity (more than 300 GW) by 2020 are large. Many speakers emphasized that the barriers will only be overcome if the industry works together to convince lawmakers to make policy that allows success.
Tom Daschle, former U.S. Senator and current special policy advisor for Alston + Bird LLP, who spoke at the event's opening session, emphasized that the industry must work effectively with government and the investment community. Much of wind energy's growth is being driven by the nation's growing interest in fighting global warming, he said. "Climate change is the catalytic factor that will make the impossible possible," said Daschle.
"Accelerating wind power development is the most readily available near-term step we can take to fight global warming," said Swisher. "Wind generates 100 percent clean, zero-emissions electricity at a lower cost than any other (zero emission) power technology, and can be deployed today to meet the exponentially increasing electricity demand."
Steve Sawyer, Global Wind Energy Council's secretary general, who also spoke during WINDPOWER 2007's opening session, told attendees that climate change is wind energy's biggest driver and the wind industry needs to take advantage of it.
Daschle agreed, telling attendees, "Wind producers need to seize on it and remain united and focused."
Production Tax Credit
Stable policy support that includes a federal long-term production tax credit (PTC) is a must for wind energy to succeed. "The PTC has been on-again off-again for far too long," said Swisher. The PTC has been extended five times in the past few years and has been allowed to expire every time before being extended another year. (The current PTC is set to expire at the end of 2008 and lawmakers have the opportunity to renew it before it expires.) Most speakers agreed that another PTC expiration will stifle wind energy's growth and that a long-term (five to 10 year) PTC is needed to send a signal to investors and manufacturers that the wind energy business is here to stay.
According to Steven Chalk, Deputy Assistant Secretary for Renewable Energy in the Office of Energy Efficiency and Renewable Energy at the U.S. Department of Energy, supply chain restraint and material supply are additional barriers to wind energy's success that can only be improved with a long-term stable public policy. Chalk said that today's manufacturing base for wind energy components cannot keep up with current demand. Therefore, additional manufacturing capacity will be required if the industry is to meet the goal of 20 percent capacity by 2020.
Speakers emphasized that supply chain development is tied directly to the PTC. They said manufacturers won't make long-term capacity investments until public policy encourages them to spend money on infrastructure. Similar investments in labor, cranes and other value chain components are also stymied by the lack of long-term policy.
Vic Abate, GE Energy's Renewable Energy vice president, pointed out that the United States has an opportunity to develop a new manufacturing base that can supply components worldwide. "We can create an economic boom in some areas of the country where it is really needed," he said.
Karl Rábago, AES - Alternate Energy's government and regulatory affairs director, believes that if developed to its potential, the wind energy industry could be the biggest economic boom in the United States since the dot com boom, and the biggest ever in rural America.
The investment community also is looking for a clear signal from policy makers. Investors eager to get into the wind energy business exist and a long-term PTC will ensure that wind energy is a good investment.
The benefits of extending the PTC are well-known in Washington D.C., where the issue isn't so much whether it should be extended, according to Michael Andrews, a former member of the U.S. House of Representatives from Texas and a current government relations consultant, who spoke in a breakout session at WINDPOWER 2007. Rather, he said, the pushback comes when the discussion turns to how to pay for a five-year PTC. Estimates for a five-year PTC are about $10 billion. Andrews said he expects the PTC to be extended for three years at the most.
Renewable Portfolio Standards
Renewable portfolio standards (RPS) are state policies that require electricity providers to obtain a minimum percentage of their power from renewable energy resources by a certain date. Currently, 23 states plus Washington D.C. have such standards. There is no question that these standards have attributed significantly to wind energy's growth.
Although most standards cover all forms of renewable energy technology, wind energy is the biggest beneficiary because it is farther ahead than most other renewable energy technologies. "Wind is clearly the most ready for large scale deployment," said Abate.
Because not all states have adopted an RPS, many in the industry believe it is time for the federal government to adopt a nationwide RPS. A federal RPS bill has been introduced and passed in the Senate in the past, but it has always fallen short in the House of Representatives.
Daschle and U.S. Congressman Jerry McNerney (Calif.-11th District), who also spoke at WINDPOWER 2007, both believe 2007 may be the year that Congress passes such a bill. If the bill makes it to the President's desk, Rep. McNerney said President Bush is "in the mood to sign such a law."
Other industry experts are not as convinced that a federal RPS will complete the law-making process this year. In early June, U.S. Senator Pete Domenici (Rep. N.M.) issued a press release saying he believes a federal RPS will be an unfair burden on consumers and that he and other Senators plan to introduce an alternative standard--the Clean Energy Portfolio Standard (CEPS). The CEPS would encourage the use of a variety of clean energy resources, including nuclear power, landfill gas and clean coal technologies, as well as a broad set of renewable energy technologies.
"Transmission is the single biggest long-term restraint to wind energy meeting its potential," said Swisher. This statement was echoed many times by other speakers at WINDPOWER 2007. Because wind energy is intermittent and not easily dispatched into the existing transmission infrastructure, future growth will depend on technology and regulatory development that allows it to be incorporated into the nation's electricity grid.
Many experts believe that the transmission arena is another area where the federal government must become involved. Daschle said that state public utility commissions hold too much power when it comes to transmission decisions. He believes the federal government needs to step in and promote a national grid strategy to ensure wind power meets its potential.
Wind energy's largest potential in the United States lies in the center of the country--the Great Plains--where transmission infrastructure is sparse compared to much of the country. "We must find a way to unlock wind resources from the plains with adequate transmission," Robert Lukefahr, BP Alternative Energy's Power Americas president, said.
Lukefahr said that providing sufficient transmission would be a challenge, but that it is doable. "The energy industry went through a similar challenge when it built natural gas pipelines," he said. The petroleum industry did it; they didn't look at all the natural gas in the country and say "it's too hard to get the natural gas where it needs to be, so we aren't going to try," he said. The electricity industry must take the same approach, he said.
According to Swisher, AWEA worked with AEP on a transmission study designed to determine where additional transmission infrastructure is needed and how much it will cost to install a "backbone" transmission system to meet not only wind energy's needs, but the needs of all electricity generators. The cost of such a system was estimated at $60 billion. "While this is a lot of money," said Swisher, "it isn't that much when you look at the value of such a system."
All the experts who spoke about wind energy's ability to supply 20 percent of the nation's electricity by 2020 agreed the goal is a mammoth challenge that cannot be met with today's technologies and policies. The experts, however, did agree that the goal is attainable and will be met if the wind energy industry works together and stays focused on the goal.
"I'm optimistic that the industry can meet its goals," said Lukefahr. "The energy industry has shown that it can achieve amazing things in a short time." In 1999, for example, the Energy Information Administration predicted that 3,600 MW of wind capacity would be installed by 2020. That amount was surpassed in 2002, Lukefahr said. He also pointed out that in 1977, one in five megawatts of U.S. electricity came from oil-fired generation technology; today less than 2 percent of the nation's capacity is oil-fired. And, his last example was perhaps the most astonishing. In the late 1970s, the deepest off-shore oil well was in 500 feet of water. Today an offshore well sits in 7,000 feet of water and extends more than five miles under the sea bed.
These examples show that great things have been accomplished in the energy industry. There is no reason to believe such incredible feats will not continue.