WIND – SO BIG IT WON'T FAIL

Fighting Against Impact Of Economic Crisis, U.S. Wind Energy Industry Installs 1,200 MW In Second Quarter; Manufacturing slowdown seen; industry calls for strong near-term renewable energy targets to keep US in worldwide lead
Shawna Seldon, July 28, 2009 (American Wind Energy Association)

SUMMARY
The AWEA 2nd Quarter 2009 Market Report has been interpreted in the media as success and failure, with foreboding and celebration, and in many shades between.

Cries of both hurrah and woe miss the mark. The report is a matter of fact, the activity of an industry once thought niche and even now called by some incipient that in fact is just beginning to take its rightful place among the nation’s Big Energies.

Like most of the biggest and most successful of the major market players these days, the wind industry’s performance this year has not been what it was last year but wind power is holding its own.

The economic downturn had one clear and immediate short-term impact on all major energy projects. It dramatically impeded developers’ access to capital. The dearth of financing is, now, being felt. Effects are expected to continue registering until the benefits of the federal stimulus package work their way through the qualifying process.

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A surprisingly productive 1Q 2009, in which more than 2,800 megawatts of capacity were installed (see WIND BOOMS IN FIRST QUARTER 2009), was the result of momentum developed by the wind industry in 2008.

Growth slowed by almost 2/3 in 2Q 2009, when 1,210 megawatts of new capacity were installed. It is important to confront the enormous drop off from 1Q to 2Q before taking comfort in the fact that the cumulative 4,000+ megawatts of installed capacity for 2009, thanks to the remarkable buildup in the first quarter, remains greater than the 2,900+ megawatts of cumulative capacity installed in the first half of 2008.

2009’s bigger number led to hurrahs. The steep drop off led to cries of woe.

In 2Q 2009, the U.S. wind energy industry’s 1,210 megawatts of new capacity, built in just 10 states, brought the total installed U.S. wind power capacity to 29,440 megawatts, the most in the world. Wind power now offsets a full 2% of U.S. electricity sector greenhouse gas emissions (GhGs). That’s like taking 9 million cars off the road.

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2Q 2009’s biggest growth was in Missouri, which expanded its capacity 90%. Pennsylvania (28% expansion) and South Dakota (21% expansion) filled out the top 3. Texas remains the leader in cumulative installed capacity, with 2/3 as much wind power as the entire nation of China.

While impressive metrics are always welcome, trends matter. The American Wind Energy Association (AWEA) noted reduced turbine and component orders and less turbine and component manufacturing activity in Q2 2009. There is simply no way to characterize that as anything other than a troubling trend boding ill.

AWEA CEO Denise Bode described manufacturing as the “canary in the mine.” She used the opportunity of the Q2 report’s release not just to celebrate, but to look ahead and call on Congress to strengthen and pass the Renewable Electricity Standard (RES) now before it that requires regulated U.S. utilities to obtain a significant portion of their power from New Energy sources over an extended period.

In the absence of a national policy supportive of New Energy growth, Bode and other New Energy industry leaders see a continuance of the trend toward diminishing manufacturing, the loss of jobs and the migration of opportunity to China and Europe.

There will be an AWEA webcast on the Q2 report Wednesday, July 29, at 2PM ET. Click to register.

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COMMENTARY
Ask any surfer: It is exhilarating and terrifying to stand precariously at the crest of a momentous wave without knowing exactly when and how it will break.

The one thing everybody knows about this moment in history is that it surely will be historic. The economy will come back, carrying with it a wave of change unlike anything the U.S. has known in at least a half century – or it will fall away and leave the vagaries of possibility floundering and contending.

Exemplary of the times it typifies, the wind industry may send its riders crashing into the undertow (of a worsening economy) or carry them smoothly to the warm safe harbor of shore (and a New Energy economy).

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A recent study of the industry by Ryan Wiser and Mark Bolinger of the Lawrence Berkeley National Laboratory (see WIND, A BOOM, A WIND JOBS BOOM) called 2008 a “banner year” and described the consequences of the economic downturn as “upheaval.”

Reporting that wind power constituted 42% of all new energy generation capacity built in the U.S. in 2008, Wiser and Bolinger bothered little with predictions and, instead, described what wind needs going forward: (1) New interconnections to existing transmission, (2) New transmission, and (3) A national RES.

The urgency of instituting the policies and building the infrastructure to support the wind industry’s growth has never been greater. With the pressures of global climate change impinging on it, the GhG-spewing coal industry can no longer be the backbone of power generation it once was. Paying for their spew will make coal plants too expensive and capturing their spew will also make coal plants too expensive.

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Despite what some misled politicians might preach, nuclear energy is not the answer. It is neither truly emissions-free nor without seriously worrisome problems. It presents the risks of weapons proliferation and the piling up of radioactive waste. And in a world where water resources will become progressively precious, it is terribly water-intensive and water wasteful. Indicative of how economically untenable nuclear power really is, the Department of Energy recently withdrew loan guarantees from a major project.

Because the U.S. must and will need to rely more and more on wind power as the industry grows its capacity toward its goal of supplying 20% of U.S. electricity by 2030, the nation must build its wind manufacturing base. It is acceptable, for now, to rely on imported towers, blades, nacelles and components. But the U.S. can never again allow itself to be reliant on imported energy.

The good news: 3 turbine/turbine component manufacturing facilities opened, 4 were expanding, and 8 were announced in 2Q 2009. A total of 20 facilities have opened, are expanding or were announced in 2009.

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The bad news: There were 55 such facility additions/expansions/announcements in 2008. Also, supply chain companies have stopped hiring or have furloughed employees because deals for new installations are not closing.

In the 2nd half of the 20th century, reliance on imported energy meant succumbing to the whims of oil-rich tin pot potentates. 21st century energy dependence would be the reliance on Asian wind and solar manufactories. That is unacceptable. Let Asians build for themselves if they can. The U.S. must restore its capacity for making things and that should begin with wind.

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QUOTES
- From the Wiser/Bolinger Wind Technologies report: “…2008 continued a string of record-breaking years for the U.S. wind industry, which has put the U.S. ahead of schedule vis-à-vis the deployment path laid out by the U.S. Department of Energy (2008) to reach 20% wind penetration by 2030.”
- From the Wiser/Bolinger Wind Technologies report: “…expectations are for a slower year in 2009, in large part due to the impact of the global recession…After a slower 2009, most predictions show market resurgence in 2010 and continuing for the immediate future, as the ARRA 2009 policy changes come into full swing, and as financing constraints are relieved…[T]hese near-term projections would maintain the nation’s early progress towards meeting 20% of its electricity demand with wind power by 2030.”
- Denise Bode, CEO, AWEA: “The numbers are in, and while they show the industry has been swimming upstream…the fact is that we could be delivering so much more…Our challenge now is to seize the historic opportunity before us to unleash this entrepreneurial force and build up an entire new industry here in the U.S. that will create jobs, avoid carbon, and strengthen our energy security. To achieve that, Congress and the Administration must pass a national Renewable Electricity Standard (RES) with strong early targets.”

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- Missouri Governor Jay Nixon: “Missourians know that in order for us to grow our state’s economy and create the jobs of the twenty-first century, we must embrace new technology and advances like the ones presented to us through renewable wind energy…So I’m proud that the American Wind Energy Association’s quarterly report shows no state has capitalized on these growth opportunities more aggressively over the last three months…”
- Denise Bode, CEO, AWEA: “Manufacturing investment is the canary in the mine, and shows that the future of wind power in this country is very bright but still far from certain…The reality is that if the nation doesn’t have a firm, long-term renewable energy policy in place, large global companies and small businesses alike will hold back on their manufacturing investment decisions or invest overseas, in countries like China that are soaring ahead. The instances where manufacturing investment is moving forward in the U.S. are in states like Kansas that have demonstrated a commitment to renewable energy and passed a renewable electricity standard. This type of commitment now needs to be made at the national level.”