Renewables ahead by a nose
Wind power has been soaring for several years, driven by state mandates (renewable portfolio standards) and federal subsidies (the production tax credit). But the boom represents a start from a tiny base; wind power remains a miniscule contributor to the national electric supply. Considering its inherent dispatchability problems (wind is intermittent) and the need for backup generation if the resource is to be a major contributor to total U.S. supply, wind’s future could be summed up as positive but limited.
In November, the American Wind Energy Association (AWEA) upped to 4,000 MW its earlier prediction that 3,000 MW of wind power would be added to U.S. grids in 2007. Either number would top the 2006 record of 2,454 MW. In its second-quarter report on the state of the generation niche, America’s biggest wind power promoter said 935 MW of capacity were commissioned during the quarter, bringing first-half 2007 capacity additions to 1,059 MW. In the third quarter alone, 1,251 MW of wind power were added, including 600 MW in Texas alone.
But there is a supply-chain cloud on wind energy’s horizon, according to AWEA. The news release announcing the Q2 report warned, “Wind power developers report that turbine availability is a limiting factor—in other words, there is demand for even more wind energy but companies can’t build more projects because there aren’t enough manufacturing facilities for turbines and turbine parts in the country because the U.S. government’s intermittent policy toward renewables has discouraged companies from investing in manufacturing facilities.”
If conventional economics holds, the shortfall in the supply of wind turbines will raise the cost of wind farm construction. However, unmet demand for ingredients common to all power projects—concrete, rebar, steel, labor, and other commodities—are bidding up their costs, too. It’s a sellers’ market, which further undermines the economics of wind power.
That highlights a policy problem for wind. Congress refuses to make a long-term commitment to the 1.8 cents/kWh production tax credit for renewable energy plants. The view of many legislators is that the credit should be a short-term subsidy to help the industry reach commercial viability, as opposed to a permanent entitlement.
The wind industry sees the sop differently. Said Randall Swisher, AWEA executive director, “What is critical at this juncture is for the U.S. government to put in place a full-value, long-term extension of the production tax credit and a national renewable energy portfolio standard requiring that utilities generate more electricity from renewable sources. These policies will give the clear, big-picture signal of support for renewable energy that this country urgently needs.”
Renewable resources technologies as a whole aren’t proliferating nearly as quickly as wind power. According to the EIA, wind generation grew from 3,684 MW in 2001 to 8,706 MW in 2005. But the entire category of renewable energy generation grew only from 95,096 MW in 2001 to 98,791 MW.
The vast majority of American renewable-fueled power production (using the EIA’s definition) comprises conventional hydro plants, the bane of most mainstream environmentalists. Hydro’s heyday here seems to have passed; no one is proposing new projects and old ones are fading away. In 2001, big hydro generated 78,916 MW; in 2005, the figure was 77,541 MW.
Other renewable generation technologies—photovoltaic arrays, biomass combustion, and geothermal energy extraction—remain trivial and slow-growing. Nationwide, solar electric generation accounted for 392 MW in 2001 and 411 MW in 2005, and just a handful of larger projects are on the horizon. Biomass generation—from plants burning wood, wood waste, and municipal solid waste (including landfill gas)—made the slimmest of gains: from 9,708 MW in 2001 to 9,848 MW in 2005. There is little evidence to suggest that any of these proven renewable fuel technologies will grow substantially in 2008. However, some of their less-conventional brethren are enjoying major development funding (see “Google this: ‘Clean and cheap power’ ”).
Your turn
There you have it—our thoughts about what to expect in 2008. We’ve given you the best information and data available, and we encourage you to use them to form your own opinions about U.S. generation options. We haven’t been shy about telling you what we think, and we hope you’ll repay the favor. Send your comments to editor@powermag.com and we’ll publish the most interesting letters.
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