U.S. WIND ONSHORE, EUROPEAN WIND OFFSHORE SET RECORDS IN ‘09

U.S. Wind Energy Industry Breaks All Records, Installs nearly 10,000 MW In 2009; Manufacturing Investment, Jobs Still Lag
January 26, 2010 (American Wind Energy Association)
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The European offshore wind industry - key trends and statistics 2009
January 2010 (European Wind Energy Association)

SUMMARY
U.S. wind power, with almost 10,000 megawatts of new installed capacity built in 2009, had its 6th consecutive record-breaking year of growth. For the 4th year in a row, wind was second only to natural gas as the preferred source of new electricity generation.

Perhaps the most important part of wind’s record-breaking year, as profiled by the American Wind Energy Association (AWEA) in its Q4 2009 summary, is that the performance came despite the worst recession since the Great Depression of the 1930s and a credit freeze that left much of U.S. business and industry nearly paralyzed. Buoyed by support from the Obama administration, wind saw growth in construction, operations and maintenance, and management jobs and was a singular bright spot in an otherwise bleak economic picture.

The one sector of the wind industry that stalled due to the financial downturn, despite provisions in the American Recovery and Reinvestment Act (ARRA) designed to sustain growth, was manufacturing. Plans made in 2007-08 to expand wind’s manufacturing capacity did not come to fruition in 2008-09. This was only in part because of the lack of financing.

The hesitation of international and national wind manufacturers to expand U.S. capacity had much to do with the failure of Washington, D.C., to implement policies that would assure a growing market.

While the U.S. continues to haggle over the proposed offshore wind projects in the New England, Mid-Atlantic and Great Lakes regions, European nations continue to lead the way in developing ocean wind resources.

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The European offshore wind industry - key trends and statistics 2009, from the European Wind Energy Association (EWEA), makes it clear that European wind manufacturers and developers, with enormous financial backing from their governments and visionary policy guidance from the European Commission, are pioneering offshore technology and positioning themselves to dominate the sector.

Eventually, installations will be green-lighted in North America and throughout the rest of the world. By then, Europe’s wind industry will have manufacturing and field development expertise that will make them more than merely competitive in the field. It will be virtually necessary for U.S. manufacturers and developers to share the wealth of their markets in order to build state-of-the-art projects.

In 2009, 199 wind turbines totaling 577 megawatts were installed and connected to the grid. That was a 54% increase on the previous year and brought the total number of European offshore turbines installed and connected to the grid to 828, in 38 projects across 9 European countries, comprising a total installed offshore capacity of 2,056 megawatts.

Europe's offshore wind industry used ~€1.5 billion in 2009 and that is expected to double in 2010 to ~€3 billion.

In 2010, Europe is expected to complete installation of 1,000 megawatts, an increase of 75% over 2009. There are 17 offshore projects, representing a potential capacity of 3,500 megawatts, under construction in Europe. There are 52 more projects, representing a potential capacity of 16,000 more megawatts, that have been fully green-lighted.

Utilities and developers are at present estimated to have 100+ gigawatts of potential offshore wind installed capacity being planned.

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COMMENTARY
Wind’s U.S. manufacturing sector saw a drop-off in investment and had one-third fewer job-rich facilities announced, expanded or brought online than in the preceding year. Orders sent to wind’s supply chain dropped off due the slowed economy, causing sales to stagnate and inventories to burgeon. The result was a net job loss in the sector.

U.S. wind’s installed capacity growth was due in part to the 2007-08 expansion’s momentum. An expansion in manufacturing capacity would have required brand new investment. That it did not happen can be attributed to the reluctance of wind manufactures to take on new risk.

The manufacturers’ reluctance was a direct response to the refusal of the U.S. Senate to follow the lead of the House of Representatives and pass legislation containing policies and incentives that would assure the wind industry of a long-term market. Without such policies, investment in new manufacturing capacity is much riskier than making similar investments in places like China where governments have established targets and incentives guaranteeing long-term growth.

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There are 3 such policies that would be especially important in the U.S.: (1) A Renewable Electricity Standard (RES) requiring regulated utilities to obtain a significant portion of their power from New Energy sources by the middle of the 2020s; (2) a law putting a price on greenhouse gas emissions, either through a cap&trade system or through another mechanism, so that it will become more expensive to go on using fossil fuels than to transition to New Energy; and (3) laws and/or regulations to facilitate new transmission that can deliver wind and the other New Energies from the remote locations where they are generated to the population centers where they are needed.

U.S. wind built 4,041 megawatts in the 4th quarter last year. It was the biggest quarter of 2009, though not as big as the 4th quarter of 2008.

The 9,922 megawatts built for the year expanded U.S. capacity by 39% and brought the total U.S. installed wind capacity to over 35,000 megawatts. It increased wind’s 5-year average annual growth rate to 39% from the 32% mark for the 2003-to-2008 period.

Wind power and natural gas together accounted for ~80% of all new power capacity installed in the U.S. in 2009.

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Wind now generates enough electricity in the U.S. to power the equivalent of 9.7 million homes. It avoids ~62 million tons of carbon dioxide per year (equivalent to taking 10.5 million cars off the road). It will conserve ~20 billion gallons of water per year that would otherwise be used in conventional power plants.

Texas was once again the most active state in the building of wind power and, in fact, added during 2009 more capacity than the total installed capacity of California, the 3rd leading state. Washington state moved past Minnesota into 4th place in state rankings by adding almost 5 times as much new capacity as Minnesota during the year.

At the end of 2009, the top 5 states for installed capacity (and their total installed megawatts) were Texas (9,410), Iowa (3,670), California (2,794), Washington (1,980) and Minnesota (1,809).

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The states that added the most capacity in the year (and their new installed megawatts) were Texas (2,292), Indiana (905), Iowa (879), Oregon (691) and Illinois (632).

Though offshore wind remains an unacted on proposal in the the U.S., there is offshore activity outside Europe.

The China National Offshore Oil Corp. (CNOOC), the country’s largest offshore oil producer, installed a 1.5 megawatt turbine in Liaodong Bay in the northeast Bohai Sea in 2007. In 2009, China began building what is the first operating offshore project outside Europe, near Shanghai Dongdaqiao. By the end of 2009, 15 turbines had been installed and 3 were connected to the Chinese grid. Expected to be completed this year, the project will have 34 Sinovel 3 megawatt turbines.

China will also build the Rudong Offshore Wind Farm, three 3 megawatt turbines, in Jiangsu province and there are plans for offshore projects in Shandong province, Zhejiang province and Fujian province.

Taiwan is planning the 600 megawatt Changhua Offshore Windfarm. It will be built in the Taiwan Strait by Taiwan Generation Corporation in partnership with SeaEnergy Renewables of Europe.

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North America’s biggest offshore wind project will be built off the coast of British Columbia, a 1,750 megawatt undertaking that will be installed in 5 phases. Siemens, a veteran European wind player, will supply 110 3.6 megawatt turbines for the first phase.

In the U.S., there are 10 offshore projects, representing 2,000 megawatts of potential installed capacity, being planned by 4 companies. None has yet been approved.

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As European wind producers move into the offshore environment, the shape and demands of project develop are changing. The standard onshore turbine is 1.5-to-2 megawatts for large, state-of-the-art projects. The average offshore turbine is 2.9 megawatts and there are cutting-edge installations with 5 megawatt turbines.

In 2009, the average size of offshore projects increased from 62.2 megawatts to 72.1 megawatts.

Projects also moved into half-a-meter deeper water in 2009 but the average 12.5 meter depth is much shallower than 2010’s average construction depth of 21.8m. They are also moving farther offshore. In 2008, it was 10.5km; in 2009, it was 14.4km; projects now under construction are an average 30.1km from shore.

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The advances in turbine size and the approaches into more challenging ocean environments have pushed construction methods. Monopiles driven into the seabed are used for 65% of turbines and gravity foundations, which settle into the seabed, are used for 23% of the turbines.

There were a series of crucial highlights regarding the financing of offshore projects in 2009. The credit crisis had a disproportionately inhibiting impact on the work of independent project developers. Along with the move to bigger turbines and deeper waters, the lack of available credit meant the role of governments became yet more important.

The European Investment Bank became more involved in the offshore wind industry and its role is expected to continue being crucial.

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The European Commission’s Recovery Plan provided a crucial €255 million to keep 6 projects advancing.

A unique joint financing arrangement for the Belwind and Boreas projects is expected to be a template for similar deals going forward. Newcomers on both the development and finance sides are coming into the space.

The installation vessel fleet is expanding as fast as the industry can build but its necessarily slow growth could be the limiting factor in the expansion of the offshore industry.

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As Yogi Berra said, predictions are always difficult, especially predictions about the future. Nevertheless, the future of wind in the U.S. and Europe looks incredibly exciting.

If Washington’s lawmakers can find it in their cold hearts to cooperate, the nation can reap enormous rewards from an industry that, despite the politicians’ recalcitrance, was one of the few bright spots in a dark 2008-09 economy. The U.S wind industry is fully capable of providing 20% of U.S. power by the mid 2020s and bring hundreds of thousands of quality jobs to the Rust Belt, the Heartlands and other underdeveloped and rural regions where jobs are most needed.

In Europe, the offshore wind industry is set for a 2010 growth of 75% over a banner 2009. But that’s just the beginning. The projects under construction and in planning could generate an industry that will provide 40-to-55 gigawatts of electricity in 2020 and 150 gigawatts in 2030.

So far, nothing has been able to stop wind in this century. Not natural disasters or naysayers or fossil fools and their lobbyists or not-in-my-backyard NIMBYs and build-absolutely-nothing-anywhere-near-anything BANANAs or a disastrous economy. It is hard to see what, aside from policymakers' lack of vision and courage, is going to slow wind in the coming decades.

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QUOTES
- Denise Bode, CEO, AWEA: “The U.S. wind energy industry shattered all installation records in 2009, chalking up the Recovery Act as a historic success in creating jobs, avoiding carbon, and protecting consumers…But U.S. wind turbine manufacturing – the canary in the mine -- is down compared to last year’s levels, and needs long-term policy certainty and market pull in order to grow. We need to set hard targets, in the form of a national Renewable Electricity Standard (RES), in order to provide the necessary stability for manufacturers to expand their U.S. operations and to seize the historic opportunity we have today to build up a thriving renewable energy industry.”

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- From EWEA: “2010 will be a defining year for the offshore wind power market in Europe. The economic crisis permitting, 2010 will see around 1,000 MW installed offshore in European waters with more than 10 farms being completed. The installations expected in 2010 should amount to more than a 75% market growth compared to 2009 installations. Europe’s 2010 offshore market could make up approximately 10% of Europe’s total annual wind market, making the offshore industry a significant mainstream
energy player in its own right.”

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- From EWEA: “Looking beyond 2010, there is a significant pipeline of offshore projects at varying stages of development. Currently 17 wind farms are under construction in European waters, totaling more than 3,500 MW…In addition, a further 52 offshore wind
farms in European waters have been fully consented, totaling more than 16,000 MW…In 2020, EWEA expects between 40 GW and 55 GW of offshore wind farms to be feeding electricity to the grid in the EU…EWEA has identified proposals for over 100 GW of offshore wind projects in European waters – either under construction, consented, in the consenting phase or proposed by project developers or government proposed development zones. This…provides a good indication that EWEA’s expectation that 150 GW of offshore wind power will be operating by 2030 is feasible.”