Harvard Business School Professor Clayton Christensen coined the term "disruptive technology" in his best-selling 1997 book, The Innovator’s Dilemma. According to Christensen, a disruptive technology unseats a dominant technology by creating products that are so much cheaper or better in one or more ways that they quickly become the new mainstream standard, transforming an entire industry. E-mail supplanting snail mail and personal computers replacing typewriters are two good examples. In short, a disruptive technology is a real pain in the status quo.
Given its high-tech cachet, it’s not surprising that the label of disruptive technology has increasingly been applied to wind power. But does wind meet Christensen’s criterion as a game-changer? Yes, Denmark already gets 15% to 20% of its electricity from windmills, and it is projected that wind will provide almost 5% of the UK’s power supply by 2010. Wind penetration is likewise growing rapidly in the U.S., where the 2,750 MW expected to be commissioned this year equate to about 20% of all new domestic capacity—second only to natural gas–fired plants. Yet, although wind farms are now on every utility’s radar screen and are delivering 50% more megawatt-hours than last year, wind power still accounts for just 0.6% of total U.S. generation.
Face the facts
I don’t view wind as a disruptive technology but rather as only one of several untraditional but promising generation options available to utilities today. It’s good that wind power has now "gone mainstream" and is mature enough to take honest criticism and put it to good use. The reality is that wind has pluses and minuses that must be carefully incorporated into pragmatic considerations of cost, reliability, and siting issues (see our Special Report on the challenges facing wind energy).
A shortage of turbines could slow wind’s momentum. GE, the world market leader, is said to be sold out for 2007 and already has bookings into 2008. As turbine vendors build new factories to keep pace with demand, the wait for a machine could grow to a year or more. Another drag: The rising cost of steel, needed for gearboxes and blades, pushed up the average cost of a wind turbine by an estimated 30% last year. The sticker shock is punishing developers bidding on utility renewable power solicitations. Along with transmission constraints, higher costs are the reason why California utilities are seeing half their contracted wind capacity projects fail.
Although wind power is poised for continued substantial growth, unless these issues are resolved in short order, a once-in-a-lifetime opportunity could be missed. Fans of wind power are particularly concerned that (another) expiration of the federal Production Tax Credit for wind at the end of 2007 will decimate investment in the sector (again). Depending on what happens in Washington, turbine vendors will face either of two situations, one bad and the other disastrous: a stack of orders that can’t be filled or no orders at all. Will wind power disrupt—or be disrupted? Stay tuned.