MORE STATES WANT WIND

EDP Says More U.S. States Are Now Attractive for Wind Energy
Joao Lima, June 25, 2009 (Bloomberg News)

SUMMARY
The message is finally getting through: Wind is Big Energy. More and more states are instituting policies inviting wind project development.

EDP-Energias de Portugal SA builds and owns wind installations across the U.S. and is finding more market opportunities in more places than ever before.

EDP is the 4th biggest wind energy producer in the world. It operates wind projects in New York, Illinois, Iowa, Minnesota, Oklahoma, Texas, Kansas and Oregon.

With a growing competition for wind power and wind manufacturing facilities across the U.S., EDP is making plans to channel as much as a third of its 3 billion-euro ($4.2 billion) 2009 development budget into U.S. projects. Other international wind developers are moving in the same direction.

Installed capacity is growing. (click to enlarge)

The single most important U.S. driver of wind development is the Renewable Electricity Standard (RES). More than half of the nation’s states have RESs requiring regulated utilities to obtain a portion of their power from New Energy by a designated year. The RES contained in the just passed Waxman-Markey legislation could require all states to obtain 15-to-20% of their power from New Energy sources by 2020 if the Senate ratifies the measure.

EDP’s commitment to wind is partially attributable to goals established by the European Union (EU), to which Portugal belongs. The EU’s “triple 20” calls for member nations to obtain 20% of the power from New Energy sources, become 20% more energy efficient and cut their greenhouse gas emissions (GhGs) 20% by 2020.

Manufacturing capacity is growing. (click to enlarge)

EDP's wind power development plans call for the installation of 1,200-to-1,300 megawatts worldwide. Its 2012 target is 10,500 megawatts across Europe and the U.S., moving wind to 38% of its energy portfolio. Wind was 19% of the EDP portfolio in 2007.

click to enlarge

COMMENTARY
Like so many other wind producers, EDP is especially interested in developing the U.S. Midwest in the short term. There are other regions with winds just as good, such as the Great Lakes, the Mid Atlantic offshore and the Pacific Northwest. But building in those regions entails significant challenges like environmental battles, regulatory complications and new technologies.

The Midwest has relatively fewer difficulties. Many of the Plains states are getting used to courting wind companies. There is some existing transmission – though not enough – and Midwestern ranchers and farmers are starting to like the money being offered for land leases.

The Cinderella story among wind-powered states in 2008 was Iowa, which leapt to 2nd place in installed capacity and became the U.S. leader in the proportion of its electricity obtained from wind.

The haves and the could-haves. (click to enlarge)

The top 3 U.S. wind-producing states: Texas, Iowa, California.

The 3 fastest-growing wind states: Indiana, Maine, Nebraska.

It became clear from 2008 statistics that the U.S. wind energy industry had turned from an adjunct, boutique energy supply into a mainstream power source. The U.S. added over 8,600 megawatts of new installed capacity last year and overtook Germany to become the world’s biggest producer of wind energy-generated electricity. The U.S. added 2,800+ megawatts more wind power in the first quarter of 2009, passing 28,200 megawatts of total capacity. Yet the U.S. wind potential has barely been tapped.

The leaders. (click to enlarge)

The U.S. is also just beginning to build a domestic manufacturing capability. Denmark's Vestas, the world’s biggest wind turbine manufacturer, is planning and developing $1 billion in U.S. manufacturing facilities.

Along with Vestas and EDP, Spain’s Iberdrola and the UK’s BP Alterantive Energy have shifted major emphasis to U.S. development. BP recently announced it would take much of its capital out of the booming UK offshore wind industry, where there are big expenses, significant resistance and many unknowns, to invest in the U.S. Midwestern market where the expense, resistance and unknowns remain manageable.

Last week, for the first time, the U.S. Department of the Interior granted permits to explore offshore development along the Atlantic coast.

A lot of states are getting a lot of their power from wind. (click to enlarge)

QUOTES
- Antonio Mexia, CEO, EDP: “We’re seeing today a bigger number of markets that are attractive than in the past…There has been an increase in the number of states that have standards and that give importance to renewable energy.”
- Mexia: “The more interesting states are the ones in the center that have a lot of wind…It’s the three variables of resources, regulation and volume of production that determines the greater or lesser interest in different zones.”
- Mexia: “We’re optimistic about the U.S. …”