A CALL FOR WIND

Great Expectations; U.S. Wind Energy Development
March 2010 (Governors Wind Energy Coalition)

THE POINT
When wind talks, people listen. The industry has New Energy’s most installed megawatts, biggest valuation and most mature technology and is, therefore, the New Energy sector’s leading public voice. As the second-biggest builder of new U.S. electricity generation capacity for 4 years running and a provider of 85,000 jobs (more than coal mining), the wind industry speaks with authority.

It is therefore worth noting that the wind industry welcomed a new paper from Republican and Democratic Governors from 29 states calling for political leaders in Washington, D.C., to take action on a list of 6 national policy priorities and infrastructure needs. It is also worth noting that Governors from BOTH parties and MORE THAN HALF the nation’s states signed on to what was essentially a wind industry wish list.

What it comes down to is this: What wind wants is what the states want for wind because there is wind and or wind jobs in most states and when the wind industry comes to a state it brings good-paying jobs with benefits, tax revenues and a chain of economic benefits that lead to across-the-spectrum growth.

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Great Expectations; U.S. Wind Energy Development, from the bipartisan Governors Wind Energy Coalition, calls on Congress and the Obama administration to:

(1) Adopt a National Renewable Electricity Standard (RES) requiring the nation’s regulated utilities to obtain a significant portion of their power from New Energy sources by a specific date.
(2) Develop adequate new interstate transmission system infrastructure to provide access for onshore and offshore wind and other New Energy resources.
(3) Fully support coastal, deep water, and offshore wind technology and transmission research and development (R&D).
(4) Streamline permitting processes for offshore and onshore wind projects.
(5) Expand the U.S. Department of Energy effort at the state level to accelerate wind technology innovation.
(6) Extend the Treasury Department grants made available as a substitute for the Investment Tax Credit (ITC) by the 2009 American Recovery and Reinvestment Act (ARRA), and adopt a long-term Production Tax Credit (PTC) and make it available to a bigger pool of investors.

There is no doubt that the newest and most eye-catching item on the Governors’ list of priorities is the emphasis on expanding opportunities to offshore wind. Like the first skyrocket that goes up into the July 4th night sky, there can be no more clear signal that the show – in this case the offshore wind energy development show – is ready to begin.

If the nation’s political leaders can find their way through the partisan morass in which they are now lost and approve the 6 measures on wind’s wish list, as submitted by this imprssively long and diverse bipartisan list of Governors, the U.S. will much sooner be richer in revenues and domestic jobs, relieved from dependence on imported and environmentally devastating fossil fuels and on the way to renewed international economic competitiveness.

By coincidence, it will allow wind and the other New Energies to kick-start the turn-around of global climate change in the process.

Less than a footnote: Curiously absent from the list of signatory Governors is the leader of the wind industry's leading state, secessionist Texas Republican Governor Rick Perry. Is that another "no," Governor?

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THE DETAILS
The Governors’ Wind Energy Coalition, made up of 29 red and blue state Governors, defines its purpose as addressing the “pressing” needs of jobs, energy, and climate by the development of homegrown New Energies.

The failure of the U.S. to provide consistent long-term policies and adequate infrastructure to develop its New Energy assets has left it open to the price volatility of the Old Energies.

The nation’s business community and public-at-large are now calling for New Energy and the transition to battery powered personal transport to maximize energy and economic security through a shift away from imported fossil fuels.

The need is for new infrastructure that will generate New Energy and smart, new transmission infrsatrucutre to serve battery electric personal transport, New Energy and Energy Efficiency.

Why Governors want wind. (click to enlarge)

New transmission will also increase competition in electricity markets, drive prices down and increase grid reliability.

Wind is already the New Energy resource most price competitive, as demonstrated by the fact that it provided 42% of all new U.S. electricity generation capacity built in 2008, second only to natural gas, and is expected (when the final numbers come out) to be shown to have been similarly positioned in 2009.

As the Governors are keenly aware, when wind fulfills its capability (as determined by the U.S. Department of Energy) of providing 20% of U.S. electricity by 2030, it will:
(1) Support roughly 500,000 good quality U.S. jobs, 150,000 per year employed directly;
(2) provide wind-generated electricity in 46 states and jobs in every state;
(3) save energy-related costs of $100-to-$250 billion (through 2030) and avoid incremental costs of ~$40 billion;
(4) cut greenhouse gas emissions (GhGs) by~ 25% (compared to a no-wind scenario);
(5) cut natural gas consumption 50% and coal consumption 18%;
(6) avoid the building of 80,000 MW of new coal plant capacity;
(7) cut water use 15+% (by 2030), ~one-third of which will be in dry western states; and
(8) increase annual property tax revenues to $1.5+ billion and rural landowner payments to $600+ million (by 2030).

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Because providing 20% of U.S. power would by no means expend the nation’s wind assets, wind power is capable of also playing an even more vital role in the overnight charging of the coming fleet of battery electric vehicles.

But, the Governors’ statement reminds, business-as-usual won’t get the nation there.
(1) New transmission is needed;
(2) Streamlining of siting and environmental permitting is needed;
(3) Long-term, certain financial incentives and mandates are needed.

These 3 things will come in the Governors’ 6-item wish list.

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The agenda called for by the Governors:

(1) Adopt a National Renewable Electricity Standard (RES) requiring the nation’s regulated utilities to obtain a significant portion of their power from New Energy sources by a specific date.

The Governors call for an RES requiring the nation’s regulated utilities to obtain 10% of their power from New Energy sources by 2012. Despite observing that the public is broadly and uniformly in favor of New Energy, the Governors can only muster unanimity for a weak RES, weaker than almost any individual state’s RES. It is a meager standard and reflects the difficulty of getting agreement in such a diverse group but it is a beginning. As the paper points out, a substantial and long-term standard costs the nation dearly in jobs, revenues and emissions.

The Governors’ paper suggests, ironically, that a minimum standard would allow states with greater capacities to exceed it, a sorry observation indeed in a world where even emerging economies like China and India have set challenging national goals. Nevertheless, as the paper points out, any RES mandate is better than a flimsy voluntary guideline.

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(2) Develop adequate new interstate transmission system infrastructure to provide access for onshore and offshore New Energy resources.

The U.S. transmission system is the result of a century of linkages between circumscribed localities for the delivery of Old Energy. It does not have the flexibility go where New Energy is or the high voltage, high load-carrying capability to deliver New Energy to where it is needed.

National policy must make it easier to site, permit and build new regional interconnections from the wide-open rural places where New Energy is to the electricity-hungry population centers where it is needed. There must also be a national high capacity smart backbone system to efficiently shift electricity from various variable sources to where the demand is.

The cost for modernization is estimated at $75-to-$100 billion and could readily come from the well-rewarded $5-to-$10 billion per year invested in transmission by the private sector.

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(3) Fully support coastal, deep water, and offshore wind technology and transmission research and development (R&D).

Some of the richest U.S. winds are off the Atlantic coast and on the Great Lakes and Gulf of Mexico. Though Europe is already harvesting offshore winds in less challenging conditions on its more welcoming continental shelf, the U.S. lacks the best technology to explore its offshore assets. The Governors’ paper recommends the U.S. make R&D for turbines and transmission that can better endure the daunting offshore environment a national priority and points out that there can be big economic rewards for mastering offshore technology.

(4) Streamline permitting processes for offshore and onshore wind projects.

The U.S. also lacks the regulatory clarity and freedom to explore the offshore environment. The Governors’ call on the federal government's Energy and Interior bureaucracy to provide clearer guidelines and to streamline the permitting process.

The U.S. Department of Interior (DOI) must coordinate between the Department of Defense (DOD) Army Corps of Engineers and the Army, Navy, Air Force, and Marines, the Environmental Protection Agency (EPA), the Federal Aviation Administration (FAA) and the Federal Energy Regulatory Commission (FERC). It must also coordinate with state regulators. The Governors recommend a 3-year pilot program with innovative procedures that step up the development of offshore wind capacity.

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(5) Expand the U.S. Department of Energy effort at the state level to accelerate wind technology innovation.

Wind power technology brings enormous economic benefits to the states. It promises to play a big part in revitalizing manufacturing and exports. Investment and R&D are needed. Both can come from expansion of the public-private partnerships developed in the U.S. Department of Energy (DOE) Wind Energy Program. Investment and R&D begins with basic science at the National Laboratories and states’ academic institutions and ends with marketable proprietary products through which the U.S. can capture industry dominance.

The Wind Energy Research and Development Act of 2009 (H.R. 3165), passed by the House of Representatives in September 2009 and awaiting Senate approval, provides for the development of multiple necessary pieces: (1) new materials and designs for better blades; (2) advanced performance and reliability gearbox technologies; (3) improved automation, materials, and assembly of components; (4) new, lower-cost, more transportable >100-meter tall towers; (5) advanced computational modeling tools, control systems, blade sensors and generators; (6) innovation in offshore technologies; (7) advanced assessments and mitigations for radar and electromagnetic communications interferences; (8) advanced turbine technology that maximizes power production at 100 kilowatts or less; and (9) higher efficiency transmission technologies.

The Governors’ paper emphasizes advancements in offshore technologies and the development of transmission networks to serve the offshore infrastructure. It calls for spending of at least $500 million per year.

The paper also calls for a new DOE initiative to advance 2 objectives not provided for by the pending legislation, (1) a State Wind Energy Technology Collaborative and (2) a State-Federal Workforce Development Initiative.

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(6) Extend the Treasury Department grants made available as a substitutes for the Investment Tax Credit (ITC) by the 2009 American Recovery and Reinvestment Act (ARRA), and adopt a long-term Production Tax Credit (PTC) and make it available to a bigger pool of investors.

The Treasury Department grant program saved the New Energies in 2009 by making it possible to finance projects in the absence of available credit. Though news on Wall Street is good for institutional investors and some credit is apparently freeing up somewhat, the general outlook is that the grant program will be just as necessary in 2010.

Eventually, the economy will stabilize and those left with money will be looking for someplace to invest it and someplace to lay off their tax burden. That is when demand for the Production Tax Credit (PTC) will return. When that happens, a stable and long-term PTC (and ITC) will entice more money into the wind and other New Energy industries. More investment means more growth and more growth means more economic benefits at the state level.

For the short-term, the Governors want Congress to extend the grant-in-lieu of tax credits provision of the 2009 stimulus bill and, beyond that, their paper calls for the establishment of extended and stable tax credit incentives.

As the paper points out, the Governors are well aware that virtually every public opinion survey taken anywhere in the nation shows the public wants more New Energy. Voters, the Governors know, associate New Energy with reduced dependence on imported fuels, new jobs, economic opportunity, a diminished threat of climate change and prevention of harms to human health and the environment.

These state leaders are now unhesitatingly clear about the need and the value of bringing New Energy to their economies and their electorates; the debate has shifted to HOW to bring it. That is an exciting advance.

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QUOTES
- Denise Bode, CEO, AWEA: “The Governors’ recommendations to the President and to Congress show that there is a strong agreement that an interstate transmission infrastructure and Renewable Electricity Standard are needed and welcome from the point of view of the states and not just the national public interest…The Governors know this because they are on the front lines of the battle to attract manufacturing investment and create jobs, and they see that renewable energy development brings jobs to their states. States are also on the front lines in transmission planning—and in this document, the Governors make it clear that they look forward to working with the federal government to build new interstate high-voltage transmission lines to diversify our energy portfolio with renewable energy, improve the reliability of the nation’s power system, and contain electricity costs.”

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- From the Governors: “As a bipartisan group of 29 governors from all areas of the nation, we share a concern that our dependence on unsustainable and carbon intensive energy sources is an unacceptable risk to the nation’s energy, economic, and environmental security. These recommendations include the governors’ top priorities — green economic development, job creation, and energy security…Congress began to address these national priorities last year when the House of Representatives passed the American Clean Energy And Security Act of 2009 (H.R. 2454). This legislation addresses several of the recommendations that follow, especially the renewable electricity standard. It is our hope that these recommendations will aid the Senate in its deliberations…”

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- From the Governors: “Working rapidly toward this goal [of providing 20% of the nation’s electricity by 2030] with supportive policies will spur investments that create thousands of good jobs that are critical to stabilizing our states’ and the nation’s economy. It will also reduce total consumer energy costs over time, diminish our dependence on foreign oil, decrease the trade deficit, and lessen carbon emissions. Toward this end, the governors developed these recommendations designed to put our nation firmly on a path to achieve the 20 percent wind energy goal and enable the entry of other renewable power sources to the market…”