Wind Power: A Research Primer

Although $40-a-barrel oil has taken some of the wind out of the sails of the green energy movement, in the longer term renewables are certain to grow. The International Energy Agency has just released a handy guide to wind power, Renewable Energy Essentials: Wind.

The brochure notes that production costs onshore range from $75/MWh to $97/MWh at high to medium quality wind sites. Onshore wind is competitive at sites with good resource and grid access. Offshore wind can produce up to 50% more electricity than onshore, but hardware and installation are more expensive.

The IEA suggests that by 2050, wind power could supply up to 12% of world electricity with concentrated effort and technological innovation.

In a survey of the history of wind power and its prospects, The Economist says wind power is poised to make a significant contribution to curbing greenhouse gas emissions.

In America alone, about 35% of new electricity-generating capacity in 2007 came from wind power. The IEA projects that by 2030 wind power will produce 14% of the electricity in the European Union, accounting for 60% of its growth in electricity generation (though additional policy measures could increase this share even further).

From a zero-fuel-cost, zero-carbon perspective, notes Victor Abate, vice-president of renewables at GE Energy, wind power is currently the most cost-effective and scalable technology available to mankind.

Wind power has made great progress, but the industry faces new growing pains. One of these is the need to win greater public acceptance for the technology. As well as complaining that wind turbines spoil the view or make too much noise, opponents of wind turbines also worry about the danger they pose to birds. (Proponents respond that many more birds are killed annually by cats, vehicles and buildings.)

But perhaps the greatest obstacle to the wider adoption of wind power is the need to overhaul the power grid to accommodate it. Transmitting wind power from rural areas with strong winds to populated areas with high demand will require expensive new transmission lines.

Comments

[Ferdinand E...:]

Very very wrong. The reason for the popularity of wind is that many people -to include decision makers - think that they have a choice. For instance, it was long believed in Germany that nuclear could be dispensed with, and wind would give them the energy THEY CANNOT DO WITHOUT. They are gradually finding out the truth. Wind has also been given a good - but undeserved - press in Denmark.

If you read German and Danish, you will learn that wind is over-rated. Yes, some wind power definitely makes sense, but not the amount indicated in this article. As for the statement that wind is the most cost effective and most "scalable" technology available to mankind, this is quite simply moonshine. But what else could that gentleman say? Could, for instance, he say that Sweden is one of the most wind-power friendly countries in the world, and if wind-power was as efficient as he says, there would be a windmill on every rooftop and street corner.

Professor Ferdinand E. Banks

2008 Dec 10 09:49 AM

[smlcap:]

Professor, Politics and greed go a long way in keeping the windmill off every rooftop and street corner. Perhaps wind is over rated. I think that is true of most new technology, energy related or otherwise.

2008 Dec 10 10:00 AM

[Todd Peterson:]

Thank goodness for the clever folks that "know" that oil will stay low, and that oil-price increases are years away. They are the ones that allow for opportunities by those that invest based on fundamentals. I am buying DXO now.

All you have to do is look at the previous demand and supply figures and you can see that it is headed back up. The only reason it is down now is because we're in a depression or recession. Once it is over, we will once again see that supply does not have a chance of keeping up with demand. It is really very simple. Todd Sullivan is right on target to recommend DXO.

The only thing I'm worried about is that disruptive technology advances will put the oil men out of business for good. And if that happens, as a good American patriot, I'll celebrate it and eat my losses in oil.

2008 Dec 10 02:59 PM

[update:]

Windmill pork barrel spending IS NOT A SENSIBLE ECONOMIC PLAN IN A DEPRESSION.

The reason people are turning to windmill power is because the Democrats killed Bush's energy plan eight years ago to increase drilling, nuclear power, energy grid infrastructure and gas refinerys.

You can't do a friggin thing anymore but build overrated windmills.

THIS IS A JOKE. THIS IS NOT AN ACCEPTABLE ANSWER TO OUR ENERGY NEEDS.

2008 Dec 10 03:45 PM

[Pete C.:]

"As well as complaining that wind turbines spoil the view or make too much noise, opponents of wind turbines also worry about the danger they pose to birds."

Apparently stocks of turbine producers have the direct opposite effect on your portfolio: cleanenergysector.com/.../

Regardless of whether or not wind is the answer environmentalists are looking for, it looks like wind energy stocks are a very viable way to profit in this ridiculously bad economy.

Pete

2008 Dec 10 04:10 PM

[rrbatch:]

This article leaves unsaid a key point in the linked IEA brochure: the "capacity factor", or the amount actually produced by a wind generator as a fraction of its continuous operating power rating, is 20-40%. Wind is a highly variable power source, so the operator has to maintain alternate generators in "spinning reserve" to prevent sags in voltage or frequency when the wind velocity abates.

Wind generators can offset a part of the energy load over time, but they do not offset the fixed cost of base load and peaking power plants, which need to provide 100% of demand when the wind is calm. In addition, siting wind turbines in remote areas (where the wind speed may be more uniform and environmental objections less) implies the construction of new and lengthy transmission corridors. Even if the public would accept these "blights", the energy losses in transmission further reduce the economic benefits of wind generation.

I doubt that anyone would be investing in wind farms without tax incentives, and the idea that wind generation is more environmentally acceptable may be equally as fallacious as its economic benefit.

2008 Dec 10 04:38 PM

[Henry Buttal:]

I agree with rrbatch. The costs of generator grade wind, which requires a massive investment, is only sustainable in the near term with the tax incentives. In addition, here in Texas, we have already seen a near grid brown down brought on by the variability of wind power in March of this year. And a significant part of the often un-factored capital cost is the requirement of new power line infrastructure to the often remote locations.

Investing in companies that are building the turbines is highly speculative - call it the "greener" fool theory. Wind will continue to become more important as fossil fuel costs continue to rise, but don't be surprised if there is a wind bubble. The discovery and development of massive new natural gas fields here in the U.S. will impact generator economics for several years to come. Pickens has already recognized that as an issue. This will inevitably impact orders in the U.S.

The one potential near term driver is carbon credits/taxes. It doesn't seem likely given the current economy that Obama would embark on anything too onerous to industry, but he is playing footsie with Al Gore (who only cares about his legacy, not economics or a rational implementation of policy), which, in the short term, could make a pure wind play attractive on strictly a momentum basis. Place your stop losses accordingly....

2008 Dec 10 07:23 PM

[jse17:]

"The reason people are turning to windmill power is because the Democrats killed Bush's energy plan eight years ago to increase drilling, nuclear power, energy grid infrastructure and gas refinerys."

Yes, and Sarah Palin is an intellectually astute thinker that the democratic voters failed to appreciate.

Try to avoid confusing your political perspective with reality!

2008 Dec 11 09:24 AM