2002SlideShowbarebon es

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 PowerEnvironmental: 

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 PowerEconomic 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 PowerEconomic 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 PowerFuel Diversity: 

Benefits of Wind Power Fuel Diversity Domestic energy source Inexhaustible supply Small, dispersed design reduces supply risk

Benefits of Wind PowerCost 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 IssuesTransmission 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 IssuesTransmission 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