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The numbers are in and…it’s a bit of a mixed bag.  Nationally, we saw a 15% increase in capacity since the beginning of 2010.  That’s an increase of 5,115 megawatts and brings the country to 40,180 megawatts.  Unfortunately, that’s 50% less growth than we saw in 2009.

Minnesota, National Wind’s home state, added 22% capacity, beating the national mark.  The state added 400 megawatts in 2010.  The added capacity brings Minnesota to 2,200 megawatts of wind energy and bumps it to #5 in the nation for total capacity.

Internationally, the big news is that China has supplanted the U.S. as the world leader in wind energy.  China added 16,000 megawatts in 2010, more than three times that of the U.S., bringing its total to 41,800 megawatts.  These numbers reflect tremendous growth–China’s wind energy capacity increased by 62% last year.  The U.S. had led the world in most wind energy installed since 2008 when it overtook Germany for the top spot.

Elizabeth Salerno, AWEA Director of Industry Data & Analysis, argues that 2011 is likely to be a better year for U.S. wind than 2010. “Wind’s costs have dropped over the past two years, with power purchase agreements being signed in the range of 5 to 6 cents per kilowatt-hour recently,” Salerno said. “With uncertainty around natural gas and power prices as the economy recovers, wind’s long-term price stability is even more valued. We expect that utilities will move to lock in more wind contracts, given the cost-competitive nature of wind in today’s market.”  That, combined with the fact that we’ve entered the year with 5,600 megawatts already under construction, suggests a brighter outlook.

Wind energy still faces challenges, however.  Chief among these is the inconsistency of federal support.  The Production Tax Credit is set to expire in 2012.  The American Recovery and Reinvestment Act’s Treasury grant program, set to expire in 2010, received a last-minute extension through 2011.  We still lack a national renewable portfolio standard.  Congress continues to pass short-term measures and pass the football on the kind of long-term, consistent standards required to ensure clean energy will have a prominent place in our future.  The uncertainty caused by this inconsistent support hurts investment and slows growth.  The fact that China has overtaken us is evidence of this–they’ve shown leadership, so where’s ours?

China Wind Farm

Photo by: Mike Locke

The United States wind industry gained a new competitor as China surpasses Germany last year to reach the world’s #2 spot for total installed capacity.  Currently, the US sits in a comfortable lead with 35,159 MW of total installed capacity;but with China’s exponential installation growth, our hold may not be very strong.  According to the Global Wind Energy Council (GWEC), in 2004, there were only 764 MW of wind capacity installed in China.  That number has been doubling almost every year, reaching 25,805 MW by the end of 2009.

Goals for wind turbine installations have been growing as well.  In 2007, China announced a national target of 5,000 MW installed by 2010.  Only a year later, that number increased to 10,000 MW.  After a whopping 13,785 MW growth in 2009, China set a new target of 35,000 MW installed by 2011, and 150,000 MW installed by 2020—a fivefold jump from the original 30,000 MW goal in 2007 and 50,000 MW more ambitious than the US goal of 100,000 MW installed by 2020.

The push behind China’s renewable energy boom lies in their National Renewable Energy Legislation.  First effective in 2006, the legislation states a national preference for the development and utilization of alternative energy resources.  This meant setting a national commitment of 15% renewable energy use by 2020 and providing increased government funding for green energy research and projects.  The legislation also requires power grid operators to purchase all energy generated from renewable sources, with a penalty for those who do not abide.

wind turbine production

Engineers work on a wind turbine part.

Despite our difference in governing styles, the United States could stand to learn a thing or two from China’s National REL—especially in the economic success it has created.  According to the Chinese Renewable Energy Industries Association (CREIA), renewable energy accounted for 1.12 million jobs in 2008 and is climbing by 100,000 each year.  The majority of these jobs come from manufacturing companies.  China is currently the leading producer of wind turbines and solar panels.  In the wind industry, that success was facilitated by the adoption of the “70% domestic” rule in 2004 which states that all turbines in Chinese wind farms must have at least 70% of its parts made in Chinese factories.  The impact was phenomenal.  The Chinese turbine production industry has grown from only six manufacturers in 2004 to nearly 90 at the end of 2009.  The government recently abolished this requirement to allow for more participation in the international market.  According to GWEC, only 17 Chinese-made wind turbines were exported in 2009.

The American market has the potential to grow at such an electrifying pace as well if we adopt a National RES.  The “Job Impacts of a National Renewable Energy Standard” study, conducted in 2009 and published by the RES Alliance for Jobs, found that a 25% by 2025 national standard would support an additional 274,000 jobs than an industry without a public policy.  The American Solar Energy Society’s (ASES) Green Jobs Report also forecasts more favorable outcomes for implementing an RES.  In the “business as usual” scenario, which means no changes in policy or major initiatives, the report only predicts a 130% increase in revenue and a 160% increase in jobs created in the next two decades.  The alternative scenario, which calls for a sustained public policy commitment, predicts a potential revenue growth of 1,200% and a 1,300% increase in jobs in the next two decades.  These are astounding differences for the adoption of one piece of legislation.

Figure 1

Change in Renewable Electricity Supported Jobs in 2025 With a 25% RES by 2025.

Every other summer, my parents and I take a trip back to China to visit our family.  I will never forget how my homeland greets me as I step onto its streets.  Outside, the sun burns earnestly on a cloudless horizon.  Its light is obscured by a permanent layer of smog, causing the sky to remain a dusty gray-blue hue and trapping in the oppressive heat.  Take a breath, and the summer’s fever invades the lungs, infecting the veins within milliseconds.  “Sauna days,” my uncle chuckles as he lifts my last suitcase into the car, “do you miss them?”

I don’t.  I really don’t.  Sauna days are the worst part of my Eastern adventures.  Hopefully, these muggy summers become more bearable with the help of a strong national commitment to greener energy, making my future vacations a lot more enjoyable.  As for the rest of the seasons I spend in the good old US of A, here’s hoping we are headed in the same direction.

Much to our excitement, wind energy continues to grow as a way of meeting U.S. demand for electricity, now accounting for about 40% of the new yearly additions to the country’s electrical capacity. However, as the industry continues to grow, one of the challenges it continually faces is transmitting electricity from rural wind farms to the urban areas that need it.  To put this issue into perspective, the US transmission system is like a highway system with many local roads but few interstates; a fine system on a local level but not as good over long distances. To overcome this barrier, the federal government and the American Wind Energy Association are advocating for the creation of an intrastate electrical superhighway that would connect the country with a spider web of high-voltage transmission lines. The only question is deciding who pays for it — an especially tricky question since long-distance power lines would benefit many people over a large geographic area. The oil- and coal-based power plants that have the lions’ share of US energy production don’t have this problem: luckily for them, they can be built near cities, limiting the need for long-distance transmission.

Luckily, solutions have begun to arrive from the grassroots level. A recent breakthrough was made by the Southwest Power Pool (SPP), a regional association of power companies which helps manage the transmission grid in the American Southwest. Several weeks ago, the Federal Energy Regulatory Commission (FERC) approved their new cost allocation plan which creates a “highway/byway” system of paying for transmission. Basically, the cost to build power lines that carry large amounts of power (300+kV) are distributed among many utilities in the region because the lines will serve wide areas. Smaller transmission lines (less than 100kV) are paid for entirely by local utilities since they are intended mostly for local use. For lines of intermediate size (100-300kV), local utilities pay much of the cost but other utilities around the region chip in too. FERC’s acceptance of this plan clears the way for SPP and other utilities to start building longer transmission lines, especially in the wind-rich Heartland, which is SPP’s primary area of service.

This newly approved highway/byway system will allow transmission lines to be built between Wichita, KS, Spearhead, KS, and Hitchland, TX. Once completed, these lines will span much of southern Kansas and the Oklahoma Panhandle, one of the most wind-abundant regions in the country. The construction of these power lines will likely be a huge boost to area wind projects whose electricity will now become accessible to new population centers.

New interstate transmission lines on a national scale would help consumers save billions of dollars. For instance, according to one study done by the Electric Reliability Council of Texas (ERCOT), a $4.9 billion dollar investment in new transmission would pay for itself in less than three years and save ratepayers about $1.7 billion per year for each year after that. Not bad. Further investment in transmission would also act as a huge incentive for the wind industry to expand into more wind-rich locations, bringing all the benefits of new jobs, local income, reduced emissions, and fewer “natural” catastrophes (ie, oil spills) with it.

Federal efforts to plan new interstate transmission lines have been repeatedly thwarted in the past by one question: who pays for the updates? SPP’s cost allocation plan could be the revelation that finally marks the genesis of a nation-wide interstate transmission overhaul. What we need now is for more regional transmission operators to adopt “highway/byway” plans similar to SPP’s. The adoption of such policies would be a good first step toward a much-needed update to our national grid.

Cover of the May 10th issue of The New Yorker magazine. Cover by Bob Staake.

Last week’s issue of The New Yorker magazine featured one of my favorite recent covers. As displayed on the left, the cover depicts the morass of Cape Wind, the oft-covered wind farm proposed off the coast of Massachusetts: a pilgrim sails out from the colony of Cape Cod, joust in hand, prepared for a duel with the turbines in front of him. I’ll try and contain the English major side of my personality that really wants to textually analyze the illustration, except to say that I think the allusions to Don Quixote are apt and ferociously clever, as Cape Wind’s journey over the past decade has been nothing if not quixotic.

The last few weeks have provided a veritable flood of news about Cape Wind, and since we haven’t talked about the project in a little while, we wanted to fill you in and ensure that you’re up to date on all the latest developments:

  • First, and perhaps most importantly, on April 27th the US Interior Secretary Ken Salazar announced that Cape Wind had been given regulatory approval to proceed. Hurdles still remain, however. Groups opposed to the project, including the Wampanoag tribe–who believe the wind farm would violate their tribal rights to unobstructed views of the sunrise for sacred ceremonies–are likely to file lawsuits that could delay the project for years. Having said that, Mr. Salazar stated that he does not believe the lawsuits will ultimately derail the project. Another hurdled faced by the project is that when its approval was announced, no agreement had been reached with a utility company to offtake the electricity produced by the turbines. However…
  • …on May 7th, utility company National Grid announced that they would buy half of the project’s output, or a nameplate capacity of 150 MW. That electricity would make up about 3% of the load that National Grid generates or buys. While the electricity produced by Cape Wind will cost more per kilowatt hour than electricity generated by other sources, Jim Gordon, the President of Cape Wind Associates, says National Grid’s customers will see their rates rise by only five cents a day as a result of the purchase. While Cape Wind will need to find an off taker for the second half of their output before securing financing and beginning construction can begin, Gordon said their deal with National Grid will provide a helpful framework when working with other utilities.

So there’s your Cape Wind update in a nutshell. We’ll continue to keep you posted on updates to the project and other cool New Yorker covers.

Here at National Wind, we’re really very fond of the the 2008 report from the Department of Energy, 20 Percent Wind Energy by 2030. Well, last month the National Renewable Energy Laboratory released a report which found that the United States is well on its way to achieving that goal, a whole six years early. (As proof of the industry’s progress so far, the Energy Information Administration projects wind to provide 5% of all electricity consumed in the US by 2012.)

The biggest hurdle to reaching that level of wind energy penetration continues to be transmission. Dave Corbus, who oversaw the study for NREL, summed up the problem: “We can bring more wind power online, but if we don’t have the proper infrastructure to move that power around, it’s like buying a hybrid car and leaving it in the garage.” However, even that obstacle isn’t insurmountable. The report estimates that the costs associated with integrating even such a large amount of wind energy into the grid amount to roughly two cents per household per day — a mere $7.30 per year.

This study was released just before another report from NREL that found the United State’s wind potential to be three times higher than previously thought. The new study reports that wind energy could provide 37 million gigawatt hours of electricity a year, nine times more energy than the country currently consumes. Expressed in watts, the United State is capable of producing 10,000 GW of electricity, an enormous number considering covering 20% of the nation’s electric needs would require only 300 GW of wind energy.

The new estimates of the US’s wind resources take into account the enormous strides in turbine technology made since 1993, the last time the country’s wind potential was measured. These numbers only include onshore wind energy potential, not taking into account the nation’s potential offshore wind resources.

For Denise Bode, the CEO of the American Wind Energy Association, these new numbers provide all the more reason to pass a comprehensive renewable energy standard:

The wind resource is there, vast and inexhaustible, waiting for us. Meanwhile, the economy can’t wait, job creation can’t wait, and America can’t wait. We need Congress to act now and pass a comprehensive climate and energy bill that includes a strong national Renewable Electricity Standard.

Cape Wind, a developing, offshore wind farm in the Nantucket Sound, is a promising wind energy project. If completed, it will become the first offshore wind project to be installed in the United States. If completed, it’s 130 turbines will provide electricity for over 400,000 houses — nearly all of the electricity for the Cape Cod area. If completed, it will be a major victory for renewable energy advocates who have been fighting against project opposition for almost a decade. That victory appears more likely as the federal government is getting involved for a final push that could end the battle over Cape Wind once and for all.

The Secretary of the Interior, Ken Salazar, announced last month that a “common sense” solution must be reached on the dispute over Cape Wind before March 1, 2010. Toward that end, Salazar invited the principal parties involved in the project to a meeting to find agreeable terms on which to finish the permitting process.

Salazar’s remarks took a determined stance on a successful mediation:

“After several years of review, it is now time to move the Cape Wind proposal to a final decision point. If an agreement among the parties can’t be reached, I will be prepared to take the steps necessary to bring the permit process to conclusion. The public, the parties, and the permit applicants deserve certainty and resolution.”

Secertary of the Interior, Ken Salazar (right), meets with Chairman of the Mashpee Wampanoag Tribe, Cedric Cromwell.

Salazar’s strong words confront what could be a final hurdle in approving Cape Wind for construction. Two Wampanoag tribes have claimed that the Nantucket Sound is the site of their religious ceremonies which require an unobstructed view of the sunrise. They also claim the site of the wind project would disturb ancient burial grounds that are now underwater. The National Park Service muddled the matter further by saying that Nantucket Sound is eligible for listing on the National Register of Historic Places. Settling this matter could decide the fate of the project and Salazar is prepared to do so.

A recent meeting with the Mashpee Wampanoag tribe at a sunrise ceremony shows Salazar personally listening to concerns and arguments on both sides of the issue. He holds onto his March 1st deadline for the Wampanoag tribes and the developer, Energy Management, to reach an agreement over Cape Wind. However, he commented that he is “not holding [his] breath on consensus” being reached and has suggested that he will have to single-handedly settle the matter himself.

The coming weeks will be critical for the future of Cape Wind. The escalating drama of the project has provided a unique opportunity for a high-ranking official of Salazar’s stature to comment on wind. Salazar said he holds a “bullish” stance on wind energy which remains a priority for the Obama administration.

In early 2009, a look back at 2008 saw wind energy posting record numbers of growth in the United States. In terms of new installed capacity, new project announcements, project expansions, and manufacturing capability, 2008 was the banner year for the leading form of alternative energy options. 8,350 megawatts of  new wind energy connected to the grid — a 50% increase on 2007 — and employment by the wind sector grew by 35,000. At the time, with the recession deepening, most analysts expected 2009 to fall well short of the previous year’s figures with equally dismal job losses to match. Surprisingly, things didn’t quite turn out that way.

The New York Time's Growth Chart

The New York Times' Growth Chart

Aided by the American Recovery and Reinvestment Act, the wind energy sector grew by 39% in 2009. With an additional 9,992 megawatts, wind generated enough electricity to power over 2.4 million homes and cut back on millions of cubic tons of carbon emissions. Wind was also one of the biggest contributors of new energy last year, closely matching growth in natural gas. The two energy options combined for 80% of all new electricity generation in the country.

Stimulus money from the ARRA came in the form of cash grants that helped dislodge wind projects that had become stuck in development, unable to raise capital in the soured investment climate. Without these new investment options, wind may have seen a dramatic blowback in production. The American Wind Energy Association had predicted up to a 50% slowdown in growth but cited government action as a critical preventative measure in their quarterly release:

“The clear commitment by the President to create clean energy jobs and the swift implementation of ARRA incentives by the Administration in mid-summer reversed the [worsening economic] situation. Recovery Act incentives spurred the growth of construction, operations and maintenance, and management jobs, helping the industry to save and create jobs in those sectors and shine as a bright spot in the economy.”

Despite the impressive figures and strengthening performance through the fourth quarter of 2009, AWEA went on to temper its good news with a cautionary warning. Investment in wind manufacturing has decreased which resulted in net job losses for the manufacturing sector. It may be, as the New York Times observed, that growth in 2009 came as a carryover from 2008’s momentum and that continued growth will lag without additional incentives from legislature in the form of a national Renewable Energy Standard (RES). 29 states have already enacted their own RES policies but a cue from the federal government could open up more investments in domestic manufacturing. Lack of transmission capacity is also seen as a long-term growth inhibitor.

Growth in 2009 lifted output from wind energy over 35,000 megawatts and has brought the U.S. close to generating 2 percent of its electricity from wind turbines. That may sound marginal, but output has increased sevenfold from 2002 levels and is becoming an ever larger presence in the country’s energy portfolio. It could be difficult for wind to top 2009’s figures in 2010, but the same was said after 2008. Here’s hoping 2010 will again surpass expectations.

The New York Times’s Green Inc. Blog recently reported that Brazil is preparing to host a government sponsored wind auction on December 14 in an effort to diversify their country’s energy portfolio. Brazil’s current energy supply is backed almost entirely by hydro power which creates immense difficulties when production from this sector slows due to droughts or infrastructure frailties. Having all your eggs in one basket, at least in terms of energy generation, is unwise and sooner or later, there are bound to be problems. Sao Paulo recently learned this lesson the hard way.

Attempting to proactively avoid such problems in the future, the Brazilian government is making a big investment in wind energy with plans to devote $6 billion to the burgeoning industry over the next two years.  Their first ever wind auction, which has attracted international players from the renewable energy field, has already received 441 proposals that tally up to 13.3 gigawatts of new wind energy. Of this collective figure, 2 gigawatts worth of projects are likely to be greenlit for development, most of which will be placed along Brazil’s 4,600 miles of coastline.

Brazil is already Latin America’s leader in wind energy with only 605 megawatts of installed capacity. The government has set a goal to increase that amount to 10 gigawatts by 2020. With energy consulting firms calculating Brazil’s technical potential for wind at a staggering 143 gigawatts there will definitely be room to grow for decades to come.

At least one part of President Obama’s stimulus bill is having its intended effect: reinvigorating investment in wind energy. Since slowing down in the first half of 2009 after torrid growth in 2008, money is again flowing into the wind industry from all directions.

On Tuesday, the U.S. Departments of Energy and Treasury handed out the first round of grants from a federal program created to induce investment in renewable energy. The program has distributed over $500 million in grants thus far, with the vast majority going to wind projects. These stimulus funds will provide a huge boost to the wind industry, giving momentum to projects that slowed during the economic downturn.

The program functions by providing a cash rebate equal to 30% of total investment as soon as the wind project begins producing energy. The grants are available to projects that begin construction by the end of 2010 and start operating by December 31, 2012.

However, the government is not the only one suddenly financing wind projects—now Wall Street is once again entering the fray. On Monday, the Wall Street Journal reported that within the last month, Morgan Stanley and Citigroup have each invested $100 million in separate wind farms. The banks, too, are being spurred by the stimulus money, seeing it as a deal too good to pass up.

All this talk of new development brings to mind a report issued earlier this year by the Energy Information Administration. The report, which predicted the country’s energy outlook years into the future, projected that wind energy would make up 5% of all electricity generated in the United States by the year 2012. Five percent is a huge number—it’s four times more wind generation than existed in the United States at the end of 2008. Expanding our wind turbine fleet from 2008’s 1.25% wind generation penetration to 5% would represent a total wind production of over 100 Gigawatts, enough to power over 25 million homes.

Although the market slowed in 2009, 2010 is expected to be a banner year for the wind industry, likely surpassing 2008 as the greatest growth year ever for wind projects. This massive growth is expected not only because of the stimulus money that’s now permeating the industry, but also because of the practicality and economic benefits wind power provides. It’s good news all around.

With a new year upon us, we reflect on the remarkable growth of the wind industry in 2008. The U.S. wind energy industry surpassed all previous records when it installed 8,358 megawatts (MW) of wind energy. This enormous increase boosted the nation’s total wind power generating capacity by 50%, which invested nearly $17 billion into the United States economy. Furthermore, the wind projects completed in 2008 accounted for a reduction of nearly 44 million tons of carbon emissions, which is equivalent to taking over 7 million cars off of the road. Wind energy generating capacity in the United States now amounts to an astounding 25,170 MW and produces enough electricity to power the equivalent of nearly 7 million households! It also helps build up our national energy supply with a clean, domestic source of energy.

The state leaders in wind energy generating capacity are ever shifting. Iowa, with 2,790 MW installed, now exceeds California with 2,517 MW. Currently, the top 5 states in terms of installed capacity are now Texas (7,116 MW), Iowa (2,790 MW), California (2,518 MW), Minnesota (1,752 MW), and Washington (1,375 MW). Colorado and Oregon are following close behind, both with over 1,000 MW in of capacity installed.

While the wind industry has an uncertain year ahead due to the nation’s financial situation, it is making significant contributions to the state of the economy. Approximately 85,000 people are employed in the wind industry, which is an increase of 35,000 wind industry jobs in the past year. These jobs are as wide-ranging as turbine component manufacturing, construction and installation, operations and maintenance, legal and marketing services, and many more. Turbine manufacturing jobs witnessed a growth spurt in 2008 as several wind turbine component manufacturing companies opened new production facilities across the country. U.S.-based turbine manufacturing facilities have grown by over 20% since 2005. This resulted in 70 new or announced facilities in the past 2 years and 13,000 new jobs in 2008 alone.

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