WIND ENERGY – the good, the bad, and the ugly news!

WIND ENERGY – the good, the bad, and the ugly news!

I recently had the opportunity to attend the WINDPOWER 2008 Conference & Exhibition in Houston Texas. This event is reported to be the largest annual wind energy event in the world. There were approximately 770 exhibits and roughly 12,000 attendees. Actual wind turbine blades were on exhibit outside the conference center and a complete nacelle (turbine housing) was open for inspection on the exhibit floor. 

The GOOD news is that the wind industry has made giant strides over the past year. In 2007 alone, the U.S. wind industry installed 5,300 MW of new generating capacity—more than one-third of all the new capacity added to the U.S. power grid last year.  Experts say 2008 will be another record year of wind power installations. In fact, the American Wind Energy Association (AWEA) reported that 1,400 MW of additional capacity were added during the first quarter of 2008.By talking to the conference attendees, you could also get a sense of the enormous potential for wind energy in the United States. Several states are already realizing significant employment and economic growth from the wind industry. In 2005, the average wind turbine contained less than 30 percent American-made components.  Three years later, in 2008, domestically manufactured content is approaching 50 percent.  As domestic manufacturing capacity grows, production and installation costs come down and jobs are created for American workers in virtually every skill level—from factory-line workers to mechanical engineers.  

A recent report by the U.S. Department of Energy entitled “20% Wind Energy by 2030 – Increasing Wind Energy’s Contribution to the U.S. Electricity Supply” highlights what this vision could mean to the U.S. economy. According to the report, the 20% scenario could generate 150,000 directly related jobs, add 200,000 jobs through economic expansion, increase property tax revenues to more than $1.5 billion by 2030 and increase annual payments to rural landowners to more than $600 million by 2030. At this same time, the 20% wind vision could reduce CO2 emissions by 825 million metric tons by 2030 and reduce reliance on foreign sources of natural gas.  

The BAD News is that the supply chain will need to expand significantly to support continued growth in wind energy. It’s clear that many are recognizing the supply-chain shortages as a business opportunity. However, to implement the 20 percent wind scenario, DOE’s report says that new wind power installations would have to increase from the current 5,300 MW annually to more than 16,000 MW per year by 2018 and continue at that rate through 2030. Last year was a huge year for the wind industry. To triple that rate of production over the next decade will require an enormous effort by our manufacturers.In addition, the developers need to obtain permits to site the wind farms and the wind operators need to find a way to get the power from the wind farms to the load centers. Obtaining the transmission right-of-ways and constructing the transmission lines are major obstacles by themselves. Putting together the infrastructure, while at the same time developing the needed supply chains is no easy task. The Assistant Secretary of Energy, Alexander Karsner, has called the effort “ambitious but feasible”.The UGLY news is that the U.S. does not have a consistent energy policy to reward investment in the domestic wind industry. Like it or not, we are part of a global economy. International wind turbine manufacturers and suppliers are evaluating weather to invest their wind dollars in the U.S. or take their investment dollars to China or Europe or elsewhere. Having only short-term production tax credits (PTC’s) and no federal Renewable Portfolio Standards (RPS’s) in the U.S. increases the attractiveness of the manufacturers investing in other countries. 

In order to achieve the 20% wind milestone, steady federal policy support is needed, including a long-term extension of the production tax credit and a national renewable electricity standard.  Long-term incentives would unleash billions of dollars in investment. 

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