The Year in Wind: Boom Followed by Gloom

By Jeff St. John

Wind power is the largest and fastest-growing renewable energy source worldwide, and 2008 saw that growth continue. The United States, after years of playing catch-up, took the top spot of wind power producing country from Germany in 2008. Big utility investments and power purchase agreements drove the increase, and the reauthorization by Congress of production tax credits for wind farms as part of an $18 billion energy tax credits helped wind power continue its march.

But the economic downturn and drying up of investment capital from Wall Street is likely to stall that record-setting growth. As the year wound to a close, big wind power projects were scaled back. Still, that could help the industry catch up with itself, as new wind turbine equipment manufacturing facilities catch up.

At the same time, some of the key drawbacks to wind power – a lack of transmission capacity to bring it from where it's generated to where it's most needed, and the fact that the lion's share of wind power is generated at night when electricity demand is lowest – led to a renewed interest in energy storage systems and increased transmission capacity to better integrate the energy resource.

Batteries for the Grid (Feb. 29)
Wind power's key drawback is its intermittency – that is, because the wind doesn't blow all the time, wind power can't be relied on to provide baseline power. The fact that wind blows strongest at night, when electricity demand is at its lowest, is also a problem.

That's a drawback that utilities are hoping that new battery technologies can solve. Minneapolis-based Xcel Energy, American Electric Power and Tokyo Electric Power Co. announced they were testing sodium-sulfur batteries from NGK Insulators. Other potential energy storage solutions include flywheels and compressed air storage.

Duke Energy Buys More Wind Power (June 26)
Duke Energy's $320 million purchase of wind farm developer Catamount Energy underscored the interest that utilities have in wind power as a large-scale source of renewable energy. The purchase put the Charlotte, N.C.-based utility on the path to have 500 megawatts of wind power farms in operation by the end of the year, with an additional 5 gigawatts of projects under development. Other utilities making wind plans included Florida Power & Light Co., with hopes to spend $688 million building 110 megawatts of solar power plants in the state.

Wind Power Waiting on Transmission-Line Boom (July 25)
Beyond wind power's intermittent nature, the biggest barrier to its wider adoption is the electricity grid to deliver it from the regions with the best wind power potential – such as U.S. Midwest – to population centers. The U.S. Department of Energy estimates that reaching 20 percent wind power will cost $60 billion in new wind-power transmission by 2030. T. Boone Pickens, the Texan oil tycoon who plans to build the largest wind farm in the country, expects to need major new transmission. The Texas Public Utility Commission in July approved a plan for $4.83 billion in new transmission lines.

U.S. Wind Power Doubles in Two Years (Sept. 3)
The wind power building spree in the United States helped it pass Germany as the world's biggest wind-energy generator (see The Week: Plugging Into Renewable Energy). The scale of that growth was summed up by the American Wind Energy Association in September, when it reported that the nation had doubled the amount of wind power it generate to more than 20 gigawatts in the last two years. While Germany still wears the crown for having the most installed wind-power capacity, the United States generated more wind power due to stronger winds – another indication of the industry's potential.

Blowing Offshore Power Into Oregon (Oct. 8)
Building wind farms at sea has proven difficult in the United States, where companies likeCape Wind have faced opposition from coastal residents and environmentalists. Renewable-project developer Principle Power said in October that it had $20 million to try to build the country's first offshore wind park off the Oregon coast, which it hopes to grow to an eventual 150 megawatts.

Other offshore wind-farm developers include Bluewater Wind, which announced in June that it had signed a contract to sell Delmarva Power up to 200 megawatts of power from a project off the Delaware coast (see Can Bluewater Blow Offshore Wind Into U.S.?) And the New Jersey Board of Public Utilities has selected Garden State Offshore Energy, a joint venture between PSEG Renewable Generation and Deepwater Wind, to build a 350-megawatt wind farm off its coast.

Masdar Bets on Massive Offshore Wind Park (Oct. 16)
While offshore wind farms face battles in the United States, they're a bigger part of wind power development in Europe. In October, Abu Dhabi's alternative-energy investment fund, Masdar, said has taken a 20 percent stake in the London Array, a 1-gigawatt offshore wind farm project to be built in Thames River estuary. Masdar's stake helped ease worried about the project, expected to cost as much as £1.5 billion ($2 billion), that rose in April when Shell Oil said it was pulling out of it.

Still, despite the fact that offshore wind farms can rely on stronger and steadier winds than their land-based counterparts, the costs and technical challenges of building at sea have limited development. Offshore wind power made up only 1.1 gigawatts of the more than 94 gigawatts of wind-generating capacity that was in operation at the end of 2007, the American Wind Energy Association reports.

Energy Financing Gone With the Wind (Oct. 22)

While Congress' one-year renewal of production tax credits in October satisfied the wind power industry's desire for reliable incentives, the financial crisis that fell upon Wall Street in late 2008 may have a more powerful negative impact on wind power's continued development. With no debt financing available from Wall Street banks, fewer companies would be able to develop the kind of "mega projects" needed to feed the growing demand for energy, Reyad Fezzani, CEO of BP's wind and solar operation, said in October.

Wind Turbine Shortage Over? (Oct. 23)
The turmoil on Wall Street may have a silver lining for the wind power industry – with demand slowing down, a long-running shortage of equipment and parts for wind turbines was easing in October, Brad Johnson, director of business development at John Deere Renewables, said in October.

The huge growth in wind power led to backlogs at turbine makers like Vestas Wind Systems in Denmark, as well as a big boost in the building and expansion of turbine component manufacturing capacity. Those new and expanded factories will be supplying a slower-growing industry, perhaps helping to bring lower prices to wind farm developments.

FPL Cuts Wind Power Plans (Oct. 27)
As the economic downturn cut out the legs of debt financing for wind power projects, developers looked to utilities to pick up the slack. But the October announcement from FPL Group (NYSE: FPL), which owns utility Florida Power and Light Co., that it would build less wind-power capacity than previously expected – 1.1 megawatts, down from 1.5 megawatts – worried some looking to utilities to pick up the slack.

The news came soon after Gamesa, a Spanish wind-turbine manufacturer, said it had temporarily halted production and would wait for customers to confirm their purchase plans before providing sales or production guidance for next year. Still, analysts said the long-term prospects for wind power remained bright, given its established ability to deliver clean, renewable electricity.

Knocking the Wind Out of Pickens (Oct. 29)
Texas oil billionaire T. Boone Pickens made news in July when he announced he was building a $12 billion, 4-gigawatt wind farm expected to open in 2011 as part of an energy plan he said could wean the United States from dependence on foreign oil. Pickens had spent $2 billion on the project by the time the economic crisis put a crimp in his plans, leading Pickens to say he may have to delay the project after his hedge fund, BP Capital, lost $2 billion because of falling oil and natural gas prices.

Texas Wind Farms Paying People to Take Power (Dec. 10)
Wind power's limitations in providing electricity when and where it is needed was highlighted by a December report that some wind power farms in Texas were paying the state's main grid operator to take their power. For the first half of 2008, power producers, mostly wind farms, paid the grid operator to take electricity nearly 20 percent of the time, said Mike Giberson, an energy business instructor at the Texas Tech University. Because wind power developers receive tax credits for the power they produce, paying groups like the Electric Reliability Council of Texas (ERCOT) to take it can make financial sense. The lack of transmission lines from wind power farms in West Texas to population centers of Dallas and Austin also played a part.

Small Wind Spreading Its Wings (Dec. 11)
While the vast majority of wind power comes from huge turbines made by companies like GE and Vestas, a small but growing group of companies building smaller wind turbines of 100 kilowatts or less also got to their feet in 2008. Southwest Windpower said in December that its 2009 shipments of small wind turbines for commercial buildings would nearly double from 2008 thanks to international expansion and tax credits in the U.S. Earlier in the year, Mariah Power announced it had closed $500,000 in financing to bring its total capital to $1.25 million, and Marquiss Wind Power raised $1.3 million in its first round of funding in January (see Small Wind Hits an Updraft).

Comments

[rickh:]

I live in Nebraska, the "Saudia Arabia of Wind," and here, there is much more wind during the day than at night.

2008 Dec 23 09:33 PM

[Paul Killinger:]

Jeff,

Thank you for this truly fascinating post detailing the advancement of wind energy in the U.S., which is a vital component to our ability to generate adequate electricity in the future.

I was especially taken with your update on the installation of SMALL wind turbines. They share neither the financing problems, transmission dilemmas, nor the regulatory delays and lawsuits of their larger brethren.

I hope you will continue to avail us of their progress.

2008 Dec 24 11:16 AM

[Paul Killinger:]

Just fantasizing, but what would happen if we ALL installed one, took the tax credits and sold back the excess power to our electric service providers? Is such a concept even feasible to your mind?

2008 Dec 24 11:30 AM

[Ferdinand E...:]

23 Billion and 4 'gigawatts' don't go together. Of course, dont get hung up on that.

The problem is that wind is oversold. When are people/voters going to come down from cloud 9 and look more closely at what wind can and can't do. Yes, people/voters want wind because they've been lied to so much that they don't know whether they are coming or going, but the likely attempt by President Obama's energy team to over-exploit wind should be discouraged as soon as possible.

2008 Dec 24 03:47 PM

[billp37:]

Tuesday December 23, 2008 we drove from Lubbock to Austin.

From Post, TX to about 30 miles south of Sweetwater a simply unbelieveably number of wind turbines have recently appeared.

Probably measured in the thousands. Some new power lines too near Roscoe, TX and South of Sweetwater.

Looks to be a lot of money in putting-up wind turbines.

Let's see how much money can be made selling electricity produced by them.

www.prosefights.org/wi...

Another question is: What is the HEAT RATE for wind-generated electricity?

We are becoming increasing convinced that the laws of thermodyamics are not repealed for wind or solar energy.

What are the adverse unintended consequences of wind and solar electric power generation?

HEAT OUT = HEAT IN - some loss.

1 Kilowatt hour = 3412.14163 BTUs.

Again, energy is an area of INTEREST, not one of ABILITY or EXPERTISE.

Applied cryptography is hopefully an area of ABILITY and EXPERSTISE.
But is NOT an area of INTEREST.

www.prosefights.org/nm...

2008 Dec 24 06:40 PM

[fran:]

F. BANKS--

interesting articles on limits of solar and associated commentary on public weakness with numeration of subject by R. Bryce-12/23 comment to 12/22 article, i-r-squared.blogspot.c...

highlights limits by three "brutal cops"-

energy density

cost

scale

solar articles and Bryce comments worthy of people's time.


On Dec 24 03:47 PM Ferdinand E. Banks wrote:

> 23 Billion and 4 'gigawatts' don't go together. Of course, dont get
> hung up on that.
>
> The problem is that wind is oversold. When are people/voters going
> to come down from cloud 9 and look more closely at what wind can
> and can't do. Yes, people/voters want wind because they've been lied
> to so much that they don't know whether they are coming or going,
> but the likely attempt by President Obama's energy team to over-exploit
> wind should be discouraged as soon as possible.

2008 Dec 25 08:03 PM