Charting the Wind: Where the Sector Is Headed

Perhaps the most echoed sentiment at the American Wind Energy Association’s (AWEA’s) WINDPOWER 2011 Conference & Exhibition, which took place May 22 to 25 in Anaheim, Calif., was the call to extend the Production Tax Credit (PTC), the industry’s policy driver, before it expires at the end of 2012. But that wasn’t the only theme. The throngs of companies and organizations that are shaping the rapidly emerging sector around the world had different notions of the factors that help or hinder the growth of wind power—and POWER was there to listen to their perspectives about everything from grid integration, to offshore energy, to technology innovation.

The Big Factor: Tax Credits

The keynote speaker at the conference’s opening session, Ted Turner, recently launched a new renewable energy venture—because, as he said, embracing renewables was more of an obvious business decision for him than launching the cable news network CNN was in 1980. Turner underscored the importance of stable policy incentives: "They must be long-term incentives so we can plan intelligently."

AWEA CEO Denise Bode—who drove to the podium at the opening session on a wind-inspired motorcycle—picked up on Turner’s speech as she lauded California’s recent passage of a 33%-by-2020 renewable portfolio standard. The state’s "unabashed vision [made] it the perfect breeding ground for the beginning of the American wind energy development," she said, referring to California’s history as the first state to site wind turbines in the 1980s. "Today, 30 years after those wind farms first appeared, the Golden State is once again challenging the nation, leading the charge."

The wind sector has had to endure a short-term policy approach, she lamented, because wind tax credits—PTCs and Investment Tax Credits (ITCs)—have been extended in one- and two-year increments, even being allowed to expire before being extended again. The status of the PTC and ITC will remain ambiguous until late next year. Meanwhile, uncertainties loom for other growth-driving measures: Congress has debated a federal renewable energy standard, but that measure, too, has fallen flat. The cash grant in lieu of tax credits granted by a Democratic Congress in 2009 is expected to expire at the end of this year and is unlikely to be renewed by the Republican-controlled and budget-conscious House. The future of wind power, as Bode suggested, depends on Capitol Hill—and the outlook is cloudy.

CEOs assembled in a key panel on the second day of the conference appeared to agree. Some painted a bleak picture of what could be. As GE Energy’s Vice President for Renewables Victor Abate told reporters: "If we don’t have a PTC by the middle of next year, factories are going to start shutting down." One issue, as Steve Trenholm, CEO of E.ON Climate and Renewables told the panel, was the lack of urgency felt by members of Congress. "Their response is, ‘Why are you talking to us now? It goes on for another year.’ Our company wants to invest and it wants to invest now, but it’s really hard to make that investment without long-term certainty."

Others, like Timothy Kemper, an executive for accounting group Reznick Group, said it looked likely that both tax credits could soon be renewed, because "there’s support in Congress for an extension," he said. "Neither requires a change in the Internal Revenue code. All it requires is a date extension."

Technology Innovations

One way that renewable energy companies are tackling the uncertainty is through innovation—technology breakthroughs. "Every OEM [original equipment manufacturer] is introducing advanced technology machines," GE’s Abate told the panel.

GE was just one of several companies to announce bigger, more powerful turbines at the conference. The company unveiled its GE 1.6-100, a 1.5-MW onshore turbine designed for increased performance in areas with lower wind resources. GE claims the turbine with blades that extend 100 meters is the "most efficient" when taking into account capacity factor in wind class. Danish company Vestas, meanwhile, launched its newest wind turbines: The V90-2.0 MW GridStreamer and V100-2.0 MW GridStreamer. Both the GE and Vestas turbines are modeled on a 2-MW series, and both feature larger rotors and an improved gear box.

Bigger offshore turbines are in the making, too. Sinovel, China’s largest wind turbine maker—and a company that last year international consulting firm BTM said usurped GE’s second-place ranking (behind Vestas) for global wind turbine market share—told POWER it was readying a 6-MW prototype in its production base in Yancheng, in east China’s Jiangsu Province. The company later announced that the SL6000, which may be applied in onshore and offshore wind farms, features 128-meter-diameter blades, parallel axes gear drive, and low-voltage ride-through capacity, which is necessary for installation in Chinese wind farms. The 6-MW model follows a 5-MW prototype that was announced in October—and the two turbines will help the company further tap global markets, a spokesperson told POWER.

This June, following the WINDPOWER conference, Siemens Energy also unveiled a 6-MW prototype, saying it had installed the massive offshore wind turbine in Høvsøre, Denmark, and initiated first trial operation. The new SWT-6.0-120 wind turbine has a rotor diameter of 120 meters and uses direct drive technology.

Siemens Vice President of Offshore Sales Michael Hannibal told POWER at WINDPOWER that Siemens’ wind turbine innovations have come a long way since 1989, when the Danish government first commissioned the company to engineer an offshore turbine. The offshore sector is a lucrative new market that is rapidly growing, and Siemens is prepared to invest millions in wind research and development, as well as production, over the next two years as demand for offshore turbines picks up, he said.

Asked to comment about Siemens’ interest in the potential North American offshore wind market, Hannibal said the company was eyeing the market, even establishing an office in Boston to expand on opportunities developing in the Northeast. He told POWER that government support will be crucial to the budding sector’s stability in the long term. One advantage that North America has over Europe is that it has a fresh slate to develop the right infrastructure—necessary harbors and equipment transportation options—constraints that currently affect the European market.

Integrating Wind onto the Grid

Several factors will limit the growth of wind. One is cost, but, as AWEA points out in a handy collection of flash cards titled "How to Talk to a Wind Skeptic" (and distributed to conference attendees) "a wind turbine’s ‘fuel’ is free" across the 20-year lifespan of a project" and "the cents-per-kilowatt-hour price for wind power can match or even beat new coal, nuclear, and natural gas generation."

Another limitation, noted by Dr. Fort Felker, director of the National Wind Technology Center at the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL), is grid integration. Felker, who also noted that wind could have a leg up on other generation modes in the future because it "uses virtually no water," said that NREL has committed substantial resources to determining the impacts of wind energy on systems operations. "More renewables are coming, and integration issues are certain," he told POWER.

Felker said that for the time being, until renewables constitute more than 35% of the nation’s portfolio, it is feasible for natural gas to provide the flexibility needed to counter the natural variability of wind. Energy storage, on the other hand, will play less of a role he said. "Right now, it’s not needed," mainly because "you can have a much larger penetration of wind than you have now with storage."

—Sonal Patel is POWER’s senior writer.