Departments - Features
Not just chasing the wind
2/15/2010
Taking a look at the ins and outs of the wind power generation industry.
The triple energy-related challenges of the 21st Century are economic and energy growth, energy security, and climate protection.
Energy helps drive the United States and has a significant impact on the quality of life and the health of people. In 2005, net imports of liquid fuels, primarily petroleum, accounted for 60% (16% coming from the Middle East) of domestic consumption. Furthermore, recent measurable changes to the Earth’s climate, and improved science-based predictions of possible changes in the future, have signaled a call to action to reduce the environmental impacts associated with energy use via reductions to the nation’s carbon emission footprint. In 2007, a goal was set to reduce oil usage in the United States by 20% over the next 10 years. To achieve this goal, 15% of the reduction will come from expanding the supply of alternative fuels, and the remaining 5% from increasing motor vehicle efficiency.
Technologies such as solar, hydro, biomass, and wind power energy are past the test stage and ready for full-scale production. Wind power, in particular, is a viable alternative energy source that has been sporadically utilized. In economic terms, the market potential for wind depends on the cost. It already supplies about 1% of American electricity, powering the equivalent of 4.5 million homes. The cost of producing wind power has fallen by as much as 90% since 1980. Now in 2010, electricity from new wind power projects will be cheaper than electricity from new conventional power plants, according to the Department of Energy (DOE). To further wind power discussion, the DOE recently published “20% Wind Energy by 2030.”
There are several advantages and disadvantages of wind energy:
Advantages:
- No pollution: Wind energy is fueled by the wind, so it is a clean fuel source with no emissions.
- Domestic source: Wind energy is a domestic source of energy, produced in the United States.
- Renewable: Wind energy relies on the renewable power of the wind, which cannot be depleted.
- Lower cost: Wind energy is one of the lowest-priced renewable energy technologies available today, costing between four and six cents per kilowatt-hour (kWh), depending upon the wind resource and project financing of the project.
- Creates wealth: Wind turbines can be built on farms or ranches, thus benefiting the economy in rural areas, where most of the best wind sites are located.
Disadvantages:
- Cost: Initial capital requirements for wind energy are significant.
- Wind is not always blowing: Wind is intermittent and does not always blow when electricity is needed. Wind energy cannot be stored – unless batteries are used – and not all winds can be harnessed to meet the timing of electricity demands.
- Location: Good wind sites are often located in remote locations, far from cities where the electricity is needed.
- Core competency: Wind resource development may compete with other uses for the land, and those alternative uses may be more highly valued than electricity generation.
- Noise/visual pollution and bird deaths: Birds have been killed by flying into the rotors and, in addition, noise produced by the rotor blades and the aesthetic impacts of turbines are negative factors.
The introduction of deregulation of power companies in many states has only increased the demand for energy choices. To meet the demand, power companies offer low cost rate plans, and even offer green or environmentally-friendly power products to lure customers.
Many customers (consumers and businesses) of power companies have been asking for wind generation power. In 2003, Nebraska Public Power District (NPPD) gathered more than 115 of its customers to conduct a day long session about Nebraska’s future energy options. According to the results, 96% of customers said the utility should carry out a 200-megawatt (MW) wind power project and 94% of customers said the plan should be rate-based instead of offered as a green power subscription program to only those customers interested in purchasing it.
Many utility executives agree that wind power is increasingly viewed as a mainstream power resource in areas of the country where the wind resources are strong. Currently, 500 utilities in 33 states offer renewable energy programs. Some of the more predominate players in the wind energy market include: Florida Power & Light (FPL); Xcel Energy (the fifth largest utility in the country); Puget Sound Energy (PSE); Minnesota Power; MidAmerican Energy Co.; Nebraska Public Power District (NPPD); Oklahoma Gas and Electric (OGE); and Southern California Edison (SCE). SCE purchases the most (1,025MW) and Xcel Energy currently purchases the second largest amount of wind power in the nation (884MW).
In spite of many power companies being involved in the purchase of wind energy, a major deterrent exists. The widespread use of wind energy is limited because there are not enough power/transmission lines connecting rural producers (where the wind is) to the hungry metropolitan areas (where the wind energy is needed).
States with a single agency that operate a single grid are better positioned for faster development of transmission lines. Texas’ Public Utility Commission recently approved transmission lines across the state, capable of delivering as much as 25,000MW of wind energy by 2012.
Typically, the wind power farm owner/developer will sell the energy it produces to utility companies. However, purchasing one or more large wind turbines can be a substantial investment.
As a result, most wind power farm projects are funded by those with deep pockets. Much of the boom in wind power developments in the United States are being driven by foreign power companies with experience developing wind projects, including Iberdrola of Spain, Energias de Portugal, E.ON AG of Germany, and Windkraft Nord of Germany. Foreign companies own two-thirds of the wind projects under construction in Texas.
U.S.-based utility companies are also funding wind power development projects. FPL has a wind farm in the Sweetwater, TX, one of the largest wind-powered facilities in the world. Shell and the TXU Corp. are planning to build a 3,000MW wind farm in the Texas Panhandle, propelling ahead of two FPL Texas wind farms installations to become the biggest in the world.
In addition, utility companies are buying independent wind development companies. Recently, Duke Energy, a utility that provides energy to about four million customers, purchased Catamount Energy, a wind developer, for $240 million. Catamount has 300MW of renewable energy in operation, including the Sweetwater project in Texas.
In addition to utility companies (FPL, TXU, Duke Energy) and wind farm developers (Catamount Energy) many farmers are interested in utility-scale projects installed on their land – if the farmer has enough land and wind, and lives in an area free of city ordinances/regulation.
Last year, approximately 7,000 Americans (homeowners, farm operators, and others) bought small wind systems. Moreover, since 1990, the small wind industry has reported an annual growth of 14% to 25%, according to the American Wind Energy Association (AWEA).
Generally, homeowners, farm operators, and others place a wind turbine on their property to produce electricity for their own use or to augment their current electric utility service. Typically, this person will buy a 1.5kW wind turbine that will meet the needs of a home requiring 300kWh per month.
Of the wind systems distributed in 2006, about 19% went to farms, according to AWEA, which defines small wind as wind-powered electric generators with rated capacities of 100kW or less. A small wind system may include a turbine, tower, inverter, wiring, battery, and foundation.
Costs for small wind systems have come down somewhat – the typical wind system costs between $15,000 to $60,000, with payback periods of six to 30 years depending on factors such as wind resource quality, location, permitting costs, prevailing energy costs, and turbine performance.
Although these projects are typically developed, installed, and owned by a wind power developer or energy company (and sometimes by a group of farmer investors), farmers can earn royalties or a combination of flat fee and royalties of $2,000 to $5,000 or more per year per MW installed. In these cases, farmers do not use the electricity but they sell it to the area utility or wholesale power market. In other cases, these farmers even sell their excess electricity to a power company. Alternatively, a farmer can be paid a flat fee (i.e. $500) per month, per turbine, to allow the developer or use his/her land.
Manufacturers (OEMs) in the United States generally classify wind turbine systems in two ways: less than 100kW and more than 100kW.
Generally, the smallest system that is used for a home or farm-scale machines, is a 1kW size machine. The most popular system produced is generally 2MW, as tall as 30-story building, costs $3.5 million, and can produce six million kWh of electricity each year. This system produces enough energy to run 600 average American Households. The largest wind turbine (3MW) was installed recently in Rio Vista, CA. Typically, OEMs assemble subcomponents at a plant close to the site in which the turbine will be erected.
The DOE estimates that achieving 20% wind energy will require the number of turbine installations to increase from approximately 2,000 per year in 2006 to almost 7,000 per year in 2017. Heavy capital requirements and rapid growth in this industry have led to the development of a few very large international OEMs. These OEMs are working directly with the wind farm developers, which include power/utility companies, independent wind developers, and even farmer-cooperatives. Many OEMs are also vertically integrating by buying smaller companies to bring production in-house and get access to a new set of component suppliers. For example, Siemens purchased Winergy, and Suzlon bought Hanson Transmission for their gearbox manufacturing capabilities.
Achievements in technology and design worth noting include a growing standardization of turbine sizes, turbines demonstrating 98% reliability, rotors performing at 80% reliability, and the design of more slender blades and higher tip speeds. There are, however, a few challenges.
MAJOR WIND TURBINE
MANUFACTURERS(OEMs) |
1. GE Wind Energy (Tehachapi, CA),
50% U.S. market share
2. Siemens Energy and Automation (Germany)
23% U.S. market share
3. Vestas (Denmark)
19% U.S. market share
4. Clipper Wind Power (Carpentaria, CA)
5. Gamesa Energy (Spain),
div. of Iberdola.
6. Suzlon Wind Energy Corp. (India) |
Lack of integrated supply chain/logistics includes bottlenecks at component manufacturing levels; availability of raw materials at an affordable cost; bottlenecks with transportation due to the very limited availability of specialty trailers and cranes; and lack of standardization of sub-components. Several key materials are crucial to the production of a wind turbine. The availability of some key raw materials – including fiberglass (about nine metric tons required per megawatt of wind turbine capacity), resins, and permanent magnets cause bottlenecks that lead to low component levels. The glass fiber requirements alone would be about half the level used domestically for roofing shingles (which is currently the largest consumer of fiberglass) and about double the amount now used in boat building.
To foster development of a robust supply chain, many individuals involved in the wind power industry believe that the U.S. government should provide steady policy support, including a long-term extension of the production tax credit (PTC) and a national renewable electricity standard (RES). Most agree however, that the best way for the OEMs to increase political (and social) support is to create a high quality product.
An area of concern for the OEM has been the anticipated shortage of labor as well as companies that are able to meet the demand of mass production. One study concluded that the places where large manufacturing companies once existed – the rust belt – have a plentiful supply of companies and workers to make the components.
A high cost of production is also a negative factor that lies ahead for OEMs.
Recently, an industry group met to discuss how subcomponent suppliers could help. In the end, the group agreed that the strongest need is for precision multi-axis machining, large welding and fabrication, injection molding, and long shaft CNC turnings. As far as needed materials: large bearings and permanent magnets (70% imported from China) top their list.
TMG-IMC, North America
Irving, TX
tmg-imc.com