WIND CAN DO MORE IF POLITICAL LEADERS WILL LET IT

US wind power: Industry sets sights on large slice of the pie
Sheila McNulty, May 26, 2009 (UK Financial Times)

SUMMARY
Wind energy now provides just under 2% of U.S. power but has been doubling its installed capacity at a startling rate and has barely begun to fulfill its potential. The industry is aiming to provide 20% of U.S. power by 2030.

Though the U.S. industry in 2008 overtook Germany to become the world’s biggest wind energy producer, it is just beginning to build in the regions where the resource is the richest.

T. Boone Pickens, energy entrepreneur and crusader for the Pickens Plan, calls the potential of the winds on the Midwestern Plains from Texas to the Canadian border “the Saudi Arabia of wind.” Though installed capacity is growing there, especially in Texas, the bulk of the plains assets remain undeveloped.

The National Renewable Energy Laboratory (NREL) of the U.S. Department of Energy (DOE) says there are 1,000 gigawatts of potential in the winds off the Atlantic Coast and more than 900 gigawatts of potential in the winds off the Pacific Coast. Several studies of the Great Lakes show similarly enormous potential. Yet no U.S. offshore installation has yet been built.

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Besides taking over world leadership, 2008 was notable for the wind industry in that its total of 85,000 U.S. jobs exceeded, for the first time, the number of U.S. jobs provided by the coal industry.

In another indication of the wind industry’s reach, its annual convention saw attendance jump from 13,000 in 2008 to 23,000 in 2009. 1,000 attended in 2001.

Wind also added an especially big booster in 2008, the President of the United States. Appearing at wind installations and manufacturing facilities in the Midwest, Mr. Obama did much to raise awareness about just how important an energy provider wind can be.

The industry is poised at the verge of assuming a role as a major power supplier. The only short-term obstacle is financing. Ample investment was available in return for valuable production tax credits until the economic downturn of 2008 left lending institutions with no need to offset income. Federal money – a big part of the $56 billion stimulus package’s New Energy grants and tax breaks (over 10 years) and an annual $15 billion federal budget investment in New Energy programs – will assume the financing burden once developers understand how to apply for funding and which programs to apply for. Until then, the industry has slipped into a slowdown.

The industry is expected to boom in the coming 18 months if policymakers don't mess things up. (click to enlarge)

A 2008 DOE study found it entirely feasible for wind to provide 20% of U.S. power. The Pickens Plan calls for that 20% to be used to generate electricity so that the nation’s natural gas, now 20% of the power on the grid, could be used as fuel for heavy transportation. Pickens’ idea is to move the U.S. away from oil imports and toward domestic natural gas and wind supplies. Because Pickens owns huge supplies of both natural gas and wind, his plan is rather self-serving – but not entirely misguided. Wind can be a big part of both a climate change reversing strategy and a national security strategy.

The biggest obstacle to wind's growth in the U.S. is national policy. The vast majority of the public and a narrower majority of political leaders support a Renewable Electricity Standard (RES) that, like President Obama’s campaign promise, requires regulated utilities to obtain 25% of their power from New Energy sources by 2025. Unfortunately, an influential and recalcitrant minority in the Congress has already forced this year’s energy and climate legislation, both in the House of Representatives and the Senate, to be scaled back from the standard for which President Obama campaigned and could block its passage.

From americanwindenergy via YouTube

COMMENTARY
The wind industry has proven its ability in the offshore environment in Europe, where there are more than 20 ocean installations.

Offshore projects in coastal New England and Great Lakes waters are moving forward slowly. The potential is so big it is beyond accurate estimate. Regulatory hurdles remain.

Development on the Midwestern Plains and Mountain West seems unwilling to wait for the economic recovery. Pickens is slowly readying the first phase of his planned 4,000 megawatt Texas Panhandle project and a 5,000 megawatt Clipper WindPower/BP project for the North Dakota-South Dakota border is being planned.

More indications of the coming expansion: Utilities are cancelling coal plant construction and buying wind. Duke Energy recently announced it was likely to build no more coal plants after the 2 it is now planning and purchased a 70-megawatt wind project in Pennsylvania. Vestas is spending billions on manufacturing facilities in Colorado. Grid operators and transmission regulators are busy making plans to intergrate wind supplies. A Wyoming company is planning a $4-to-$6 billion, 1000-turbine wind project with its own transmission system.

As soon as the industry's money mavens sort this out, growth will take off. (click to enlarge)

The wrench in the works: Powerful wind industry players, in a recent letter to Congressional leaders, warned against the scaling back of the RES in the energy and climate legislation, asserting that it could cost the U.S. industry in severely reduced growth, revenues and jobs. (See WIND LEADERS WARN ON WEAK RES)

According to the wind industry leaders who signed the letter, a standard that runs only 10 years to 2020 (instead of a decade and a half to 2025) may not justify the enormous investment necessary to build and sustain a U.S. wind manufacturing base. The nation, therefore, is “on the verge” of driving manufacturers to Asia and Europe where there are more substantial long-term policies.

Most of the major European nations have made major commitments to New Energy through 15- and 20-year feed-in tariffs. China has set a 100,000-megawatt wind capacity goal for 2020 and longer term commitments through mid century. These are the kinds of policies that justify billion-dollar investments in manufacturing infrastructure. At stake is an immense amount of domestic revenue and perhaps 100,000 or more domestic jobs.

In the absence of a long-term policy, the wind industry representatives warned, the U.S. wind industry is looking at a lost decade.

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QUOTES
- U.S. Vice President Joe Biden: “By harnessing offshore wind power and other resources, we will be able to power tens of millions of homes using clean, renewable power.’’
- T. Boone Pickens, energy entrepreneur and designer of the Pickens Plan: “Last month alone, we sent $18bn overseas, importing 386m barrels of oil. If we had a real and sensible energy policy, we could keep that money here in the US, enabling us to hire more than 1m teachers, or to create the broadband infrastructure needed to connect every household and business in the country, or to even restore the National Mall…We must harness our domestic resources to keep the money we spend on energy overseas right here instead, creating jobs and building important projects for America.”

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- Denise Bode, CEO, American Wind Energy Association: “The nation still lacks the long-term signal that is needed to build up renewable energy on large scale. The time is now for a national renewable electricity standard, a policy that more than 80 per cent of Americans favour and for which they voted…President Obama’s campaign position of generating 25 per cent of our electricity from renewable energy sources by 2025 will help revitalise our economy and protect consumers when they need it the most: when the price of the fuels used for electricity generation goes up.”