Wind Power is Ready : Wind Power is Ready Clean Energy Technology for Our Economy and Environment American Wind Energy Association, 2002 Image courtesy of NEG Micon
Wind Power Market Overview : Wind Power Market Overview
Ancient Resource Meets 21st Century Technology : Ancient Resource Meets 21st Century Technology
Wind Turbines: Power for a House or City : Wind Turbines: Power for a House or City
Ready to Become a Significant Power Source : Ready to Become a Significant Power Source Wind could generate 6% of nation’s electricity by 2020. Wind currently produces less than 1% of the nation’s power.
Source: Energy Information Agency
Wind is Growing Worldwide : Wind is Growing Worldwide Source: AWEA’s Global Market Report 1. Germany: 8754 MW
2. U.S.: 4260 MW
3. Spain: 3195 MW
4. Denmark: 2492 MW
5. India: 1507 MW
Wind Taking Off in the U.S. : Wind Taking Off in the U.S. U.S. installed nearly 1,700 MW in 2001
Wind power capacity grew by 66%
Over 4,265 MW now installed
Expecting over 2,500 of new capacity in 2002-2003 combined Source: AWEA’s U.S. Projects Database
Slide8 : United States Wind Power Capacity (MW) 4,270 MW as of 07/31/02 Alaska
0.9 California
1,715.9 Colorado
61.2 Hawaii
1.6 Iowa
324.3 Kansas
113.7 Maine
0.1 New Hampshire
0.1 Massachusetts
1.0 Michigan
2.4 Minnesota
322.7 Montana
0.1 Nebraska
3.5 New Mexico
1.3 New York
48.2 North
Dakota
1.3 Oregon
156.9 Pennsylvania
34.5 Tennessee
2.0 Texas
1,095.5 Utah
0.2 Vermont
6.0 Wisconsin
53.0 Wyoming
140.6 Washington
180.2 South
Dakota
2.9 Source: AWEA’s U.S. Projects Database
Slide9 : 1,697 MW added in 2001 Kansas
112
Wisconsin
30 Pennsylvania
24 New York
30 Oregon
132 Washington
180 Iowa
82 Minnesota
218 Texas
915 Main Areas of Growth in 2001 Source: AWEA’s U.S. Projects Database
Slide10 : U.S. Wind Power Capacity Growth *Source: AWEA’s U.S. Projects Database
Wind Power Economics : Wind Power Economics
Cost Nosedive Driving Wind’s Success : 38 cents/kWh Cost Nosedive Driving Wind’s Success 2.5-3.5 cents/kWh Levelized cost at excellent wind sites in nominal dollars, not including tax credit
Wind Power Cost of Energy Components : Wind Power Cost of Energy Components Cost (¢/kWh) = (Capital Recovery Cost + O&M) / kWh/year
Capital Recovery = Debt and Equity Cost
O&M Cost = Turbine design, operating environment
kWh/year = Wind Resource
Capital Costs : Capital Costs Revenue Streams
Commodity Power Sale: $30-$45/MWh
Production Tax Credit: $18/MWh
“Green Credit”: New Market, Values Vary
Debt/equity ratios close to 50%/50%
Increased debt/equity ratios can significantly increase return
Long-Term Debt : Long-Term Debt Better loan terms with longer-term power purchase agreement (PPA)
Loan terms up to 22 years, determined largely by PPA
Debt coverage ratios close to 1.4
Equity Considerations : Equity Considerations Return requirements vary with risk
Percieved risk of wind projects may be larger than real risk
Returns evaluated after tax credit
Wind energy projects can expect return in low teens
Turbine Technology Constantly Improving : Turbine Technology Constantly Improving Larger turbines
Specialized blade design
Power electronics
Computer modeling produces more efficient design
Manufacturing improvements
Slide18 : How big is a 2.0 MW wind turbine? This picture shows a Vestas V-80 2.0-MW wind turbine superimposed on a Boeing 747 JUMBO JET
Construction Cost Elements : Construction Cost Elements
Technology Improvements Leads to Better Reliability : Technology Improvements Leads to Better Reliability Drastic improvements since mid-80’s
Manufacturers report availability data of over 95%
Improved Capacity Factor : Improved Capacity Factor Capacity Factors Above 35% at Good Wind Sites
Performance Improvements due to:
Better siting
Larger turbines/energy capture
Technology Advances
Higher reliability Examples: Project Performance (Year 2000)
Big Spring, Texas
37% CF in first 9 months
Springview, Nebraska
36% CF in first 9 months
Slide22 : Bottom Line 20 Years of Wind Technology Development Economy of scale reduces price per kw of capacity Technology improvements yield more energy bang for the buck Combined, they dramatically reduce turbine price per unit of energy produced
Benefits of Wind Power : Benefits of Wind Power
Advantages of Wind Power : Advantages of Wind Power Environmental
Resource Diversity & Conservation
Cost Stability
Economic Development
Benefits of Wind Power Environmental : Benefits of Wind Power Environmental No air pollution
No greenhouse gasses
Does not pollute water with mercury
No water needed for operations
Electricity Production is Primary Source of Industrial Air Pollution : Electricity Production is Primary Source of Industrial Air Pollution Source: Northwest Foundation, 12/97
Benefits of Wind Power Economic Development : Benefits of Wind Power Economic Development Expanding Wind Power development brings jobs to rural communities
Increased tax revenue
Purchase of goods & services
Benefits of Wind Power Economic Development : Benefits of Wind Power Economic Development Case Study: Lake Benton, MN
$2,000 per 750-kW turbine in revenue to farmers
Up to 150 construction, 28 ongoing O&M jobs
Added $700,000 to local tax base
Benefits of Wind Power Fuel Diversity : Benefits of Wind Power Fuel Diversity Domestic energy source
Inexhaustible supply
Small, dispersed design reduces supply risk
Benefits of Wind Power Cost Stability : Benefits of Wind Power Cost Stability Flat-rate pricing can offer hedge against fuel price volatility risk
Electricity is inflation-proof
Wind Project Siting : Wind Project Siting
Siting a Wind Farm : Siting a Wind Farm Winds
Minimum class 4 desired for utility-scale wind farm (>7 m/s at hub height)
Transmission
Distance, voltage excess capacity
Permit approval
Land-use compatibility
Public acceptance
Visual, noise, and bird impacts are biggest concern
Land area
Economies of scale in construction
Number of landowners
Slide33 : Power in the Wind (W/m2) Density = P/(RxT)
P - pressure (Pa)
R - specific gas constant (287 J/kgK)
T - air temperature (K) Area = r2 Instantaneous Speed
(not mean speed) kg/m3 m2 m/s
Perceived Market Barriers : Perceived Market Barriers Siting
Avian
Noise
Aesthetics
Intermittent Fuel Source
Actual Market Barriers : Actual Market Barriers Transmission constraints
Financing
Operational characteristics different from conventional fuel sources
Wind Characteristics Relevant to Transmission System : Wind Characteristics Relevant to Transmission System Intermittent output
Generally remote location
Small project size
Short/flexible development time
Low capacity factor
Wind Development Issues Transmission Grid Operating Rules : Wind Development Issues Transmission Grid Operating Rules What wind wants:
Liquid, transparent spot market for imbalance settlements
Near real time, flexible scheduling protocols
Robust secondary markets in transmission rights (“flexible firm”)
Postage stamp pricing allocated to load (or volumetric pricing)
Statistical determination of conformance to load shape to set value
What wind gets:
System designed exclusively to transport firm, fixed blocks/commodity strips
Rigid advance scheduling protocols/onerous imbalance charges
License plate pricing allocated to incremental generation
Grid balkanization/rate pancaking
Wind Development Issues Transmission Expansion : Wind Development Issues Transmission Expansion What wind wants:
Pro-active regional planning with political buy-in.
Programmatic expansion focused on shared goals.
Public infrastructure financing repaid through user fees.
What wind gets:
Reactive, piecemeal gridlock decoupled from political process.
Project specific expansion focused on immediate needs of existing players.
Uncertain capacity rights as sole rate recovery mechanism.
Consequences of Wind Characteristics : Consequences of Wind Characteristics Remote location and low capacity factor = higher transmission investment per unit output
Small project size and quick development time = planning mismatch with transmission investment
Intermittent output can = higher system operating costs if systems/protocols not designed properly
Federal and State Policies to Promote Wind Power : Federal and State Policies to Promote Wind Power
Production Tax Credit : Production Tax Credit Lowers price of electricity to make it more accessible to customers
Currently provides credit of 1.8¢ per kWh
Industry needs long-term extension to encourage investment
Renewable Portfolio Standard : Renewable Portfolio Standard Requirement that U.S. suppliers get 10% of supply from renewable sources by 2020
Texas example shows how RPS can enable green power markets to flourish by creating a supply of reasonably-priced renewable energy
Can create incentives to solve transmission issues
Standard Market Design & Interconnection : Standard Market Design & Interconnection Wind is “square peg in a round hole”
Intermittent
Site-specific, often rural
Small, with short construction lead time
SMD & Interconnection NOPRs designed to make markets more efficient, which could make a big difference in cost and availability of wind power
Clean Air Act : Clean Air Act Expect to see amendment to the Clean Air Act before 2004 elections
Without set-asides or direct allocation for renewables, would strip wind projects of ability to claim emissions reductions
Output based compliance that includes NOx, SO2 and CO2 could add revenue stream of 0.4 - 0.5 cents per kWh
Small Turbine Incentives : Small Turbine Incentives 30% Investment Tax Credit
Net metering
State Incentives : State Incentives State renewable portfolio standards
Public Benefits Funds
Electricity source disclosure
Government procurement
Green Power Market : Green Power Market
Green Power Market : Green Power Market Places a monetary value on environmental benefits
Raises visibility of renewable power & promotes customer awareness
Usually small scale, short-term contracts
Premium prices
Different Ways to Buy : Different Ways to Buy Green Pricing
Regulated utility offers customers choice to support wind power construction
Green Marketing
In competitive market, customers empowered to choose service providers that contract to purchase renewables
Green Tags
environmental attributes divorced from energy
Competitive Green Market : Competitive Green Market Has encouraged about 25 MW in CA & PA to date
Will encourage more than 75 MW in PA in next two years
Green Pricing : Green Pricing Has encouraged over 15 new wind projects to serve green pricing market
Smaller projects
Spread throughout the U.S. – raises visibility of wind power
Green Tags : Green Tags Two or three products offered now
BEF
PureWind
Has encouraged new capacity in New York, Iowa
The Story So Far... : The Story So Far... 40% of households have access to green power
Green Pricing: 20 million
Competitive Markets: 17 million
380,000 households are buying green power
Green Pricing: 130,000 households
Competitive Markets: 250,000 households
165,000 in CA; 80,000 in PA, much less elsewhere
330 aMW of renewables being supported
Green Pricing: 50 aMW
Competitive Markets: 280 aMW
Small Wind Turbine Market Development : Small Wind Turbine Market Development
Programs for small wind development : Programs for small wind development Buy-down programs
Exemptions from sales, property tax
Standardized zoning requirements
Buy-down programs : Buy-down programs CA renewables fund refunds 50% of the cost of a renewable system
CA sales account for over half of the small wind turbine market
MA buy-down program refunds 10% capped at $100
does not appreciably affect the market
Property-Sales Tax : Property-Sales Tax Property or sales tax exemption offered in several states
Programs to affect initial purchase price work best
Net metering programs (equalizing kWh costs paid and received by residential generators) do not seem to drive purchasing decisions
Future Trends in Wind Power : Future Trends in Wind Power
Expectiations for Future Growth : Expectiations for Future Growth 2,500 MW new added by end of 2003
20,000 total installed by 2010
6% of electricity supply by 2020
= 100,000 MW of wind power installed by 2020
Wind Energy “U.S. Proven & Probable Reserves” Nameplate MW : Wind Energy “U.S. Proven & Probable Reserves” Nameplate MW
Future Cost Reductions : Future Cost Reductions Financing Strategies
Manufacturing Economy of Scale
Better Sites and “Tuning” Turbines for Site Conditions
Technology Improvements
Future Technology Developments : Future Technology Developments Application Specific Turbines
Offshore
Limited land/resource areas
Transportation or construction limitations
Low wind resource
Cold climates ®Middelgruden.dk
Want to Know More About Wind Power? : Want to Know More About Wind Power? www.AWEA.org
Windmail@awea.org
Or write to
American Wind Energy Association
122 C St, NW, Suite 380
Washington, DC 20001