by Avery Yale Kamila
(July 2003) It’s a good time to be in the business of turning the
breeze into kilowatts. Costs are down, political support is rising and
technology has improved. At the same time, a trio of recent studies forecast
a bright future for this age-old energy generation technology.
A Market Poised for Growth
Navigant Consulting recently made public the results of a renewable energy
study they conducted on behalf of U.S. and Canadian utility companies. Their
research forecasts a doubling of renewable energy in the U.S. over the next
decade. Wind and biomass are projected to make up 85 percent of this new
capacity. Currently, the U.S. has 4,700 megawatts of wind power, which
will increase to 6,000 megawatts by the end of 2003.
"Wind is clearly the most economic of renewable energy technologies,"
observes Lisa Frantzis, Navigant’s director of renewable and distributed
energy and a lead researcher for the consulting firm’s study. Today the
cost of electricity generated from wind averages 3 to 3.5 cents per kilowatt
hour, which compares favorably with traditional energy generation.
New research form Stanford University has quantified wind’s potential
as a domestic energy source. Researchers Mark Jacobson and Christina Archer
published the first measurements of wind speed at the height of modern
turbines (262 feet versus 164 feet), in the May 13 Journal of Geophysical
Research.
Their data revealed that of the 1,300 U.S. sites monitored in the
study, 24 percent experience regular gusts that are fast enough to make
wind power competitive with coal and natural gas. According to Jacobson,
these fast winds average 15 to 16 miles per hour, or seven to seven and a
half meters per second. At monitoring sites that were offshore or on the
coast, 37 percent experienced fast winds. Previous studies have mapped fast
winds at the height of old turbines, but no study had determined the
percentage of U.S. sites that experience such gusts. The Stanford study
identified new sites that are ideally suited for wind farm construction
along the southern and southeastern coasts.
"Another thing this study shows is that if you link wind farms together,
the average energy output is a little more smooth," says Jacobson, who has
conducted numerical modeling of climate and weather for over a decade and
has studied wind turbines for the past three years. Since the release of
the research, he has been busy taking phone calls from developers interested
in the study’s implications for their land.
Earlier this year, the Renewable Energy Policy Project completed the
first study that investigated the impact of commercial wind farm construction
on surrounding property values. "In looking at sales data, we found no
evidence that these wind farms had a negative impact on the sale prices of
homes," reports Fred Beck, the author of the study. These findings refute
the common claim made by wind farm opponents that the presence of commercial
wind turbines cause property values to decline.
The study identified 27 wind farms that were installed between 1998 and
2001 with a generating capacity of at least 10 megawatts. Many of these
sites had few surrounding property sales, so those wind farms were eliminated
and the list was narrowed to 10. A five-mile radius was drawn around each
site and the property transactions within this view shed were analyzed. Real
estate sales prices were benchmarked against a comparable community and the
researchers interviewed local assessors and reviewed census data. In many
cases, the study found that properties within the view shed actually
increased in value faster than prices in the surrounding community.
Sensing growth potential, large corporations have invested in the market.
Most notable is General Electric’s acquisition of Enron’s wind assets, a move
that Kathy Belyeu, an analyst for the American Wind Energy Association,
estimates has allowed General Electric to "capture 40 or 50 percent of the
market so far this year." Other big players include ABB, FPL Energy and
Shell Wind.
The Importance of Policy Incentives
Driving much of the growth in the wind power market is the presence of the
federal Production Tax Credit (PTC) and the growing number of states that have
renewable portfolio standards. The PTC offers a tax credit to commercial
producers of renewable energy for 10 years. The credit is set to expire
at the end of this year.
"This is an incentive for developers to get their project on line by this
year," says Belyeu and adds that the American Wind Energy Association is
lobbying to have the credit extended.
Its future remains uncertain because the PTC is part of the politically
controversial Energy Policy Bill. The PTC last expired on December 31,
2001, but it was extended retroactively for another two years as part of
the economic stimulus plan signed into law in 2002.
"The PTC ensures that developers can get financing," explains Frantzis.
"If you look at what happened in 2002 versus 2001, you see a 73 percent
reduction in new capacity additions in one year. Most of this reduction
is a result of uncertainty surrounding the PTC. Uncertainty does
more harm than good."
At present, 12 states have renewable portfolio standards that mandate
a minimum amount of energy that must be generated from renewable sources.
An additional three states have goals for renewable generation and another
six are considering adopting standards. Each state has different criteria
for what qualifies as renewable energy, however, wind and solar are included
in all. The Navigant study notes that the 15 states that have enacted
standards or goals are expected to invest up to $4.37 billion in renewable
energy development by 2012. The report cautions that some of this funding
could be appropriated by state legislatures struggling to eliminate budget
deficits.
Green pricing programs are another stimulus for the growth of
renewable energy. These programs ask utility consumers to pay a
voluntary premium for renewable energy generation. According to the
National Renewable Energy Laboratory, more than 300 utilities in 32
states offer these programs.
Political sentiment is also fueling support for renewable power.
Consumers are demanding cleaner energy sources, scientists are demanding
reduced air emissions and security experts are demanding domestic energy
generation. Despite the uncertainty of the PTC, political support coupled
with recent research can only mean that an ever increasing percentage of
our power will flow from wind.
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