Wind Power: Poised for Take Off?
A survey of projects and economics.
The amount of electricity generated from wind in the U.S. is expected to surge this year - owing in large part to hydropower shortages out West, natural gas price volatility across the country, and high capacity factors for wind turbines, which help to offset the intermittent nature of wind energy generation.
As of March 2001, proposals were in the works for some 2,000 new megawatts (MW) of new, wind-powered generating capacity. Of that amount, 1,500 MW or more may be completed in 2001, more than twice the previous record of 732 MW set in 1999.
If that scenario should unfold as projected, then total generating capacity from wind will have jumped from 2,550 MW at the end of 2000 to over 4,000 MW by the end of 2001, with the increase representing a 60 percent annual growth rate and a $1.5 billion investment. Moreover, a clear message will have emerged out of the confusion surrounding supply shortfalls and electricity price volatility: That wind power can prove beneficial to a utility' s supply portfolio for basic economic reasons, by reducing risk associated with fuel prices and supplies.
Regional Hot Spots
Texas, California, and the Pacific Northwest led the list of new wind energy projects proposed during the year.
Pacific Northwest. In February, the Bonneville Power Administration (BPA) issued a request for proposals (RFP) for 1,000 MW of wind energy, the largest wind RFP ever from a single agency or utility, and soon drew an enthusiastic response. BPA issued its RFP because it wanted to supplement its large hydropower capacity with another renewable power source, and wanted that new generating capacity to come online "fast."
The response to the RFP just "blew [us] away," said BPA renewable power resource manager George Darr. Twenty-five proposals were submitted, totaling about 2,600 MW. The proposals also included room for expansion of the projects to a total of 4,000 MW.
It did not take long for the process to bear fruit. On June 25, U.S. Energy Secretary Spencer Abraham announced that the Department of Energy (DOE), through BPA, intended to sign pre-development agreements for seven of the wind power projects submitted in the RFP, providing 830 MW of new generating capacity for the Pacific Northwest.
"We' re celebrating moving a mature, renewable technology," said Abraham. According to DOE, the average first-year cost of the power was expected to come in at "less than 3 cents per kilowatt-hour (kWh)." And after adding in the costs of "firming up the intermittent wind generation," DOE projected that BPA' s wind program would be "cost-competitive with other sources of generation such as coal and natural gas."
Texas. Texas alone will account for over a third of the new capacity to come online this year in the United States. The jump in new investment was triggered by the state' s Renewables Portfolio Standard, which was included by legislators in the state' s electricity restructuring law. The RPS program requires utilities to diversify their portfolio with a minimum amount of renewable energy.
TXU is leading the wind power boom in the state, and will be one of the largest purchasers of wind energy in the nation. By the end of this year, TXU will be buying electricity from 427 wind turbines totaling about 355 MW of generating capacity and producing enough power to meet the average annual energy requirements of more than 72,000 homes. Texas will have installed, by the beginning of 2002, between 600 and 800 MW of wind power generating capacity, and have largely exceeded the RPS' initial requirement of 400 MW of new renewable energy by 2003. Other factors at play in the state include fair transmission policy, a superb wind energy potential, and the technology' s competitive cost.
California. To the west, in California, a batch of long-delayed projects, totaling about 700 MW, has been approved and should be moving forward, after a period of uncertainty caused by the meltdown of the state' s electricity markets. In Wyoming, the 50-MW Rock River I wind project, in Arlington, will boost the total installed capacity in the state from 85 MW to more than 130 MW. In Montana, Montana Power Co. has recently issued a request for proposals for 150 MW of wind power (and received proposals totaling 1,650 MW in response).
Midwest. In the Midwest and Great Plains, Northern Iowa Windpower, a joint venture between Zilkha Renewable Energy and Midwest Renewable Energy Corp. has announced plans to construct an 80-MW wind project in Worth County, to be called the "Top of Iowa" wind farm. Two large wind farms, of 130 MW and 79.5 MW each, have just received the go-ahead in Minnesota. FPL Energy soon was to begin construction on a 110-MW, 170-turbine wind farm in Gray County, in southwestern Kansas. The project is expected to produce enough power to serve approximately 33,000 homes in Kansas and Missouri, when it is completed by year' s end. In Wisconsin, FPL Energy is installing a 25.5-MW wind farm in Iowa County.
Wind energy forecasts don' t all agree.
Can wind energy boost its slice of the pie over the next twenty-odd years to over 40 times its current market share, as once proposed by the previous administration, and still envisioned by the American Wind Energy Association?
Clinton Administration. In 1999, during the Clinton Administration, U.S. Energy Secretary Bill Richardson unveiled Wind Powering America, a government initiative promising that wind energy would supply at least 5 percent of the nation' s electricity needs by year 2020. And the AWEA sees a 6 percent share as possible, as noted in the accompanying text.
But compare those hopeful goals with figures for actual U.S. electricity generation for calendar year 1999, as compiled by the U.S. Energy Information Administration. The EIA put wind energy production for 1999 at 4.46 billion kilowatt-hours (kWh), or about 0.12 percent of the 3,693 billion kWh produced in the U.S. from all energy sources for the same year.
In other words, the Clinton Administration' s goal of a 5 percent share for wind energy by 2020 would require the wind industry to boost its share of the generation fuel mix some forty-fold, or by a factor of 41.4, to be more exact. Such growth appears at odds with various other energy forecasts.
U.S. Dept. of Energy. In its "Reference Case Forecast" in Annual Energy Outlook 2001, the U.S. EIA predicts that U.S. electricity production in 2020 will climb 43 percent above the figure for 1999, hitting a total of 5,299 billion kWh.
Nevertheless, EIA forecasts only 13.1 billion kWh of wind energy generation in 2020, or about 0.24 percent. (EIA Annual Energy Outlook 2001, Tables A8, A17. See also, Glenn R. Schleede, "It' s Time for a National Energy Policy Reality Check," Energy Market & Policy Analysis, Reston, VA, June 21, 2001, contact EMPAInc@aol.com.)
Thus, the EIA forecast implies a doubling of market share for wind energy over that period - an impressive rate of growth, but a far cry from a 40-fold increase, as envisioned by DOE and AWEA.
WEFA Group. When contacted by the Fortnightly, the WEFA Group (www.wefa.com, formerly the Wharton Economic Forecasting Associates) posed a forecast similar to that offered by EIA.
"We do not explicitly forecast wind energy, but rather, embed it in the 'other' [category for] electricity," said Margaret Rhodes, manager, U.S. Energy Outlook.
Speaking for WEFA, Rhodes put U.S. wind energy production at 5 billion kWh for year 2000, which dovetails EIA' s figure of 4.46 billion kWh for 1999, but offered a slightly more conservative forecast for 2020.
"Our forecast is rather low; approximately 5000 million kWh were generated from wind in 2000, and we are projecting that only to double, which would barely equal 0.3 percent of today' s total electricity generation.
"We are conservative, because of rather borderline economics. Nearly all of our wind capacity additions are based on known projects that are already in the pipeline.
"Outcomes could be more robust than we are projecting, if additional states enact 'green' mandates or portfolio standards (we incorporate only enacted regulatory programs) and if some of the newer non-mandated projects coming on line produce a track record of more favorable economics."
In particular, Rhodes noted the Stateline project highlighted by AWEA.
"It will be interesting," she said, "to note the progress of the new project in the Pacific Northwest."
Gas Technology Institute. In recent years, the Gas Technology Institute (formerly Gas Research Institute) has been known for its , produced by GTI' s Gas Resource Analytical Center, in Arlington, Va. However, that office was closed in June, according to GTI public relations director Joseph Hilyard. As Hilyard explained, by about 2004 GTI will no longer need to present long-term forecast data to substantiate funding requests filed at the Federal Energy Regulatory Commission.
When contacted by the , Hilyard explained that GTI' s most recent baseline projection, published in March, did not distinguish between wind energy and other renewable energy sources, such as geothermal, solar photovoltaic, and solar thermal. Also, GTI was able to provide projections only to the extent of central station electric generating capacity owned by regulated electric utilities, thus omitting the merchant generation sector, and rendering the GTI data of little value for predicting growth in wind energy capacity.
In fact, GTI' s baseline forecast showed a decrease in net utility-owned generating capacity, down 2.7 percent from 1999 to 2020, but with utility owned renewable energy capacity virtually unchanged over the same period, and showing net increases in some regions, such as the Southwest Power Pool and the Southeastern Electric Reliability Council.
East Coast. Pennsylvania, New York, and West Virginia have put wind power on the map in the East as well. Pennsylvania' s second wind farm, Mill Run, currently under construction, will have a capacity of 15 MW, enough to power about 5,700 homes. Two other projects of 52 MW and 18 MW are also pending. In New York, five projects are currently proposed. The state' s market will get an additional boost from the implementation of Gov. Pataki' s recent executive order requiring all state agencies, including the New York City Metropolitan Transportation Authority, to purchase 10 percent of their electricity from renewable energy sources by 2005 and 20 percent by 2010. When completed, the first utility-scale wind farm in West Virginia, a 75-MW project located in Tucker and Preston counties, approximately 120 miles west of Washington, D.C., will be the largest in the Eastern States.
Scale and Impact
Of the numerous new projects currently planned, at least seven fall in the range of 100 to 200 MW, and three in the 200-plus-MW range.
These projects include (1) the 300-MW Stateline wind farm, under construction along the Washington-Oregon border; (2) the 278-MW King Mountain wind farm, under construction in West Texas; and (3) the 260-MW Nevada Test Site wind farm, to be installed on the federal government' s nuclear test site in Nevada. Such large wind farms deliver significant economies of scale.
The Stateline project, which would be the world' s largest single wind farm, is under development by FPL Energy. When fully operational, more than 450 wind turbines will generate enough electricity to power the equivalent of 70,000 homes annually - or about a third of the residences in Portland, Ore. PacifiCorp, through its non-regulated subsidiary PacifiCorp Power Marketing (PPM), would purchase the entire electricity output for marketing to customers in the West.
By year' s end, wind farms across the nation should be generating about 10 billion kilowatt-hours (kWh) annually, enough to power one million average American households. This output would displace 7.5 million tons of carbon dioxide, the leading greenhouse gas associated with global warming, which would be emitted if the same amount of power were generated from the average U.S. electricity fuel mix. On average, a single wind turbine with a rated capacity of one MW displaces 2,000 tons of carbon dioxide, 10 tons of sulfur dioxide, and 6 tons of nitrogen oxide each year. Wind turbine operation causes little or no disruption to previously existing land use, such as farming and ranching. Moreover, farmers often profit directly from the wind turbines in their fields. Farmers can earn about $2,000 per year in lease payments or royalties for every wind turbine installed on their land, while continuing to raise crops and livestock up to the base of the turbines.
Can Wind Fly on its Own?
Economics, reliability issues favor wind power, say proponents.
With the lights flickering in California, energy gurus, as well as legislators, are scrambling for a way to keep them on. In Texas, meanwhile, legislators decided clean energy is good, and they needed more of it. So, they passed a bill that said renewable energy resources would increase in that state by 2000 MW by 2009. What do both states have in common? They' re both looking at wind energy as the answer to each respective situation.
In the Southwest, there' s a saying: "Everything is bigger in Texas." That rings true with wind farms, too. As was mentioned in the accompanying text, the King Mountain project currently under construction in West Texas is one of the largest to ever be constructed, says the American Wind Energy Association. But, with Mother Nature being as fickle as she is, why choose wind over hydro or other renewable choices?
"Wind is probably the quickest and easiest to build," says Roy McCoy, manager of the renewable energy credit trading program for ERCOT. "It' s one renewable source we haven' t got a lot of here in Texas, so the market is wide open. ... It' s also easy to develop. The technology is good enough now to make it dependable, and quicker to put up."
? "Well, if the wind doesn't blow, we don' t get any electricity," says McCoy. "But, when the wind is blowing, we take it."
Despite the unreliability of the wind blowing, McCoy says another reason to use wind power is cleanliness. "It' s the cleanest energy source out there. There are no emissions associated with it. So, that' s good. It' s easier and cheaper to build, and a lot of it comes down to money. ... The real push [to wind power] came from Gov. Bush, when he was in office. His office pushed for clean air generation in Texas, because quite honestly, we don' t have a lot of it here," he says.
In California, with electricity prices soaring this summer, and rolling blackouts becoming a commonplace thing, state legislators are looking at alternative methods to keep the lights on. One method is wind power. Wind projects that had been on the back burner in California have now been moved to the front, and are under construction. Why wind power in California? "Why not?" says Claudia Chandler, assistant executive director of the California Energy Commission. "Wind power for California is the perfect match for when we have our peak demand - hot summer afternoons. Our peak demand is in the afternoon - particularly hot summer afternoons, when air conditioning loads are high. And when do the winds blow the hardest in California?" Yep, you guessed it. Hot, summer afternoons.
California, much like Texas, would also like to see their renewable energy resources dramatically increase over the next few years. Currently, renewable resources in California total 10 percent of the total mix. Of that, wind energy accounts for 2 percent. The program goal, says Chandler, is "to bring the eligible renewable mix to 18 percent as quickly as possible." And wind plays a big part of that. Currently, there is nearly 750 MW of wind energy nameplate capacity under construction in California.
So, is wind the answer? Some say yes, some say no. In California, when the desert winds blow in the hot afternoons, it' s a good solution. In Texas, it' s a mandate. But in the PJM controlled areas, it' s "simply a business decision," says Leslie Collins, a spokesperson for PJM ISO. Collins says that in the Mid-Atlantic area, many load serving entities are looking to wind power in order to diversify. "Some buy old nuclear plants, some build natural gas facilities and some build wind farms," she says. "It' s simply a business decision."
Is it a dependable source of energy in the region? "That' s a good question. Hydro plants have been a very responsive resource when we needed them. And we' re hoping wind is the same." Why wind? Once again, money. "The individual companies make their own decisions. PJM doesn't say one way or another, unless the decision poses a negative impact to our transmission grid."
About one-third of the new wind power proposed for 2001-2002 will come online primarily as a result of business considerations, without any additional incentive stemming from mandates for renewable portfolios or concerns about green marketing. Such business considerations relate to price stability, operating costs, and fuel diversity.
Price Stability. The extreme volatility in natural gas prices seen over the past twelve months or more has highlighted the fact that wind energy is impervious to fuel price hikes. Wind power plants generate electricity at a predictably constant price over the life of their wind turbines.
Operating Costs. The cost of producing electricity from wind has declined over the past twenty years by more than 80 percent. The cost has fallen from about 38 cents per kWh, in the early 1980s, to less than five cents/kWh (levelized over a plant' s lifetime including the federal wind energy Production Tax Credit).
Some of this cost reduction stems from economies of scale, as the cost of electricity from a wind plant varies based on its size and the average wind speed. A large plant (50 MW and up) at an excellent site (20 mph average) can deliver power for 3-4 cents/kWh; electricity from a small plant (3 MW) at a moderate site (16 mph) may cost up to 8 cents/kWh. In the not-too-distant future, analysts believe, wind energy costs could fall even lower.
Fuel Diversity. As noted by the American Gas Association, wind energy provides "a good fit," with electric generation fired by natural gas, as it offers "complementary" operational characteristics. ("Wind Power Grows, Complements Gas Turbines," , May 14, 2001.)
Consider the 300-MW Stateline project along the Washington-Oregon border, and the 1,000 MW of wind power requested by Bonneville Power, which should help diversify the agency' s fuel mix and offset reliance on electricity from local dams, thus extending regional water supplies.
Concerns About Reliability The fact that power output varies depending on whether and how strongly the wind is blowing, and may require "back-up" power, can pose concerns about electric system reliability. These issues certainly will be closely monitored as new wind plants come online across the country and as the proportion of wind power on the grid increases.
So far, in systems dependent on a relatively large proportion of wind power, as in Europe, the use of wind power has not called for large amounts of back-up capacity. Wind energy provides up to 20 percent of electricity supply on certain regional grids in Spain and Germany without causing reliability problems.
Moreover, in terms of capacity factor (plant availability), wind turbines hold their own against other generating resources.
Over a full year, a wind turbine typically is available 98 percent of the time, producing electricity more than 60 percent of the time, and generating about a third of its total rated potential, depending upon the site. This level of availability can help cushion the impact on a grid that is felt when a conventional fossil-fired power plant goes off-line for repairs and maintenance.
In California, for example, at the height of the energy crisis this year, close to 11,000 MW of generating capacity - an amount equivalent to about a third of the power needed by the state - was out of commission for required maintenance or because of breakdowns. Operating wind farms continued to be available throughout the crisis and in some cases helped to avert rolling blackouts.
An Industry Forecast
Wind power accounts today for only about 0.1 percent of total U.S. electricity production, yet America' s wind energy potential is ample enough to meet more than twice the total current U.S. consumption of electricity, according to federal estimates. Development of only a fraction of that potential would allow the U.S. to boost and diversify its electricity supply without sacrificing environmental standards or accelerating the depletion of natural resources.
With measures to sustain wind power' s recent growth, such as improved transmission capacity linking the Great Plain states to large electricity consumption centers in the East and West, the American Wind Energy Association estimates that wind power can provide 6 percent of U.S. electricity by 2020.
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