Category Archives: wind power

Energy Department Reports Highlight Strength of U.S. Wind Energy Industry

This is an excerpt from EERE Network News, a weekly electronic newsletter.

August 20, 2014

The United States continues to be a global leader in wind energy, ranking second in installed capacity in the world, according to two reports released on August 18 by the Energy Department and two of its national laboratories.

After modest growth in 2013, total installed wind power capacity in the United States now stands at 61 gigawatts, which meets nearly 4.5% of electricity demand in an average year, according to the 2013 Wind Technologies Market Report, released by the Energy Department and its Lawrence Berkeley National Laboratory. The report also finds that wind energy prices are at an all-time low, with utilities selecting wind as a cost-saving option. The success of the U.S. wind industry has had a ripple effect on the U.S. economy, spurring more than $500 million in exports and supporting jobs related to development, siting, manufacturing, transportation, and other industries. See the 2013 Wind Technologies Market Report .

In total, U.S. turbines in distributed applications, which accounted for more than 80% of all wind turbines installed in the United States last year, reached a cumulative installed capacity of more than 842 megawatts (MW)—enough to power 120,000 average U.S. homes—according to the 2013 Distributed Wind Market Report, released by the Energy Department and its Pacific Northwest National Laboratory. This capacity is supplied by roughly 72,000 turbines across all 50 states, Puerto Rico, and the U.S. Virgin Islands. In fact, a total of 14 states, including California, Iowa, and Nevada now each have more than 10 MW of distributed wind capacity. See the 2013 Distributed Wind Market Report and the Energy Department news release. Also, go to the Wind 3013 webpage for full coverage of the reports, including photos, video, interactive graphics, and more.

Chile Becoming the Most Attractive Renewables Market

Renewable energy is now cheaper than electricity sold on Chile’s spot market, and with global demand for copper expected to increase, so will the need for power at mines in the remote Atacama desert. The wind and solar projects that have been approved will require as much as $7 billion to complete.

“Chile is the market with the highest level of activity in the world,” Ben Warren, head of Ernst Young LLP’s renewables team, said in a telephone interview from London.

Pattern Energy Group LP, the closely held development unit associated with Pattern Energy Group Inc., completed in August Latin America’s largest wind farm, the 115-megawatt El Arrayan project. San Francisco-based Pattern has a contract to supply power to London-based mining company Antofagasta Plc and its Los Pelambres copper mine, perched high in the Andes Mountains about 80 miles (129 kilometers) away from the wind farm. The developer is also planning a solar farm in the Atacama region.

‘Favorite Nation’

“Chile is our most favorite nation,” Pattern Energy Chief Executive Officer Michael Garland said in an interview. “It’s got a good economy, a stable political environment and it’s a bit of an energy island with few indigenous energy resources.”

Chile imports more than 90 percent of its fossil fuels and pays the highest power rates in Latin America. Five years of drought have depleted reservoirs at hydroelectric dams, making Chile more dependent on coal and diesel to run electricity plants.

“We’ve gone from a perfect storm to a permanent storm,” said Carlos Finat, head of Acera, Chile’s renewable industry power association. Electricity on the spot market costs $130 a megawatt-hour. While power-purchase agreements for solar and wind power are typically confidential, renewable energy costs less, he said, according to data from the national power regulator.

Windy Coast

The country’s renewable potential can make up for the slack in the grid, Finat said. Chile has 4,000 miles of windy coastline. It has 137 volcanoes that are being evaluated as potential sites for geothermal power plants by Italy’s Enel SpA and New Zealand’s Mighty River Power Ltd. And the Atacama desert is the driest and sunniest place on Earth, well-suited for solar projects.

That’s spurred Bachelet to announcing a series of measures designed to alleviate the power crunch, including plans for a third liquefied natural gas terminal to import fuel from U.S. shale fields. Chile already has a law in place that requires industrial energy users including mining companies to procure 20 percent of their power from renewable sources by 2025.

Mining companies including Anglo, BHP and the state-owned Codelco are considering investing more than $100 billion in a new generation of copper mines, and must ensure reliable energy supplies.

“Codelco considers renewables fundamentally important,” the company said in an e-mailed response to questions. Wind and solar will “allow the entry of new installed capacity amid scarcity of new generation projects, they reduce greenhouse gas emissions and they help the national energy grid depend less on petroleum, coal and LNG.”

Solar Projects

Solarpack Corp. Tecnologica began operating in September a 25-megawatt solar project that will supply the Collahuasi copper mine owned by Anglo American and Glencore Plc.

SunEdison Inc. completed in June the 100-megawatt Amanecer project, the largest in the Atacama, to supply iron ore mines owned by Cap SA. The St Peters, Missouri-based company may spend as much as $1 billion on photovoltaic projects in the region. It announced Sept. 3 a contract to sell power from the 69.5 megawatt Javiera solar farm to Antofagasta’s Los Pelambres copper mine.

“Despite being a small market we attracted all of the players because we have significant growth rates,” Finat said. “We have clear economic rules and political stability. And there is a gigantic amount of untapped renewable energy resources.”

Copyright 2014 Bloomberg

Lead image: Chile flag and outline via Shutterstock

The Big and Booming Business of Keeping Wind Turbines Spinning

True, operations maintenance (OM) may not sound like a sexy industry. But when it comes to industry growth and trends, wind OM is an exciting space right now.

Why? Consider the numbers.

  • Worldwide wind installations grew by a cumulative 26.2 percent over 18 years, with a particularly strong uptick since 2009 (Global Wind Energy Council).
  • Manufacturer warranties usually run from only two to five years of the typical 20-year lifespan of a wind farm.
  • Those warranties have expired on more than half of the wind megawatts now operating, (Navigant Research’s “World Market Update 2013.”)

With warranties ending, wind farm owners are left to figure out what to do about OM. Voila — a huge market opportunity for those who can maintain and fix turbine gear boxes, generators, rotors, brakes and other parts of the wind turbine.

Further, the OM market for onshore wind will continue to grow by a whopping 40 GW per year, creating a 355 GW market by 2018 and 555 GW market by 2023, according to Navigant.

(Above: Duke energy maintains a fleet of 15 wind farms, which have an installed capacity of 1,700 MW. Credit: Duke Energy.)

This offers a new revenue stream for an industry whose manufacturing and development sectors suffered a setback with the world economic downturn.

“The market for OM actually provides more stable margins compared with turbine manufacturing,” said Feng Zhao, research director for BTM Consult, a part of Navigant.  “40 GW is a lot of business opportunity.”

Growth of Global Onshore Wind Market for OM, in Warranty and off Warranty: 2013-2023. Credit: Navigant.

Indeed, Navigant forecasts an €11.6 billion [US $15.5 billion] worldwide market for onshore wind OM by 2023, up from 3.3 billion in 2013.

Competition Fierce

A few different OM business models have emerged. Wind farms nearing the end of their warranties must decide which model will serve them best.

In some cases, utilities and wind farm owners re-sign contracts with the original equipment manufacturers (OEMs). In other cases, they develop in-house OM operations. Still others contract with the growing number of independent service providers forming around the new industry.

Many familiar names in wind equipment manufacturing are trying to capture pieces of the OM market. Among them are Enercon, Gamesa, GE Wind, Goldwind, Nordex, Siemens, Suzlon Group, United Power and Vestas, according to Navigant.

Meanwhile, wind development companies like EDF Renewable Energy have set up independent service providers.

“The OM market is hot right now,” said Dalen Copeland, director of business development for EDF Renewable Services. “There have been, and there will be, at least through the end of 2015 when the PTC is no longer available, a lot of assets installed in the U.S. and the rest of the North America.  And there has been significant growth over the last few years in the renewable assets installed and therefore coming out of warranty soon.”

Copeland described the competition as “fierce” with turbine manufacturers facing slowing turbine sales globally and therefore refocusing their businesses on OM services.

EDF Renewable Services operates in North America and plans to expand into South America. The company has been in the OM business for more than 25 years, initially because turbine manufacturers weren’t interested or able to perform OM on all of the turbines they sold, according to Copeland.

“We’ve stayed in the business because we think we offer a unique alternatives to owners who want OEM level stability and sophistication of service, but with the transparency that comes from a company that isn’t married to a particular technology. In other words, we can tell an owner when we think a machine is underperforming because of a design or installation issue,” Copeland said.

The company now provides OM for 8 GW, not just wind but also solar, biomass, and biogas.  With 500 technicians, EDF Renewable Services performs a range of services from pre-commissioning support through end-of-asset-life care, including scheduled and unscheduled turbine maintenance, balance of plant maintenance, remote monitoring and resets from its operations and control center, engineering and SCADA support, and asset administration.

Several independent service providers also can be found in Europe and Asia, among them the Netherlands’ Bettink Service Team and Green Energy Services; Spain’s General Power Services and Weir, YES and Greece’s EN.TE.KA, according to Navigant.

How to Choose?

Navigant points out pros and cons for wind farms to consider in deciding whether to go it alone, or contract with a manufacturer or independent.

Going it alone allows the wind farm to maintain control of the asset and fully understand its OM costs, which could lead to savings. On the other hand, performing OM means that the wind farm’s business operation is now more complex.

Equipment manufacturers are a good choice because they have access to spare parts and proprietary data. But their services can be expensive over the long term. Independents tend to price competitively and are drawing experienced employees, but they often do not have the same access to data and supplies as the manufacturer, and they may be small and undercapitalized, according to Navigant.

Is an «Irrational Phobia» Hampering the UK Onshore Wind Industry?

“We have a problem and it’s a political problem: For reasons I don’t fully understand, our coalition partners have a pathological aversion to onshore wind,” Cable said late yesterday at a meeting on the sidelines of the Liberal Democrat party convention in Glasgow, Scotland. “It is making this hard. Lying behind it there is some really irrational phobia.”

With the U.K.’s traditional third party languishing fourth in the polls before national elections in May next year, the Liberal Democrats are striving to emphasize their differences to Prime Minister David Cameron’s Conservatives after more than four years of joint government. Energy Secretary Ed Davey, also a Liberal, told the BBC today that his party pledged to phase out coal-fired power stations within a decade.

“If we’re part of the next government, we’re going to ban electricity generation from coal by 2025,” Davey told Radio 4’s “Today” program. That’s “the most ambitious policy to protect our climate because coal is the climate destroyer.”

Slowing Wind

Davey has pushed for the expansion of renewables in government, fighting to preserve wind subsidies in the face of demands for bigger cuts by the Conservatives. An anti-wind junior minister in his department, John Hayes, was in the post for less than year after they clashed over the technology.

That hasn’t stopped the Conservatives from slowing down the installation of onshore wind farms. Communities Secretary Eric Pickles, a Tory, has intervened in 50 wind-farm applications since June 2013, sidelining projects that would have added 520 megawatts of wind turbines, the RenewableUK industry group said on Sept. 24.

Cable said it’s not just Conservative lawmakers who oppose onshore wind, citing “irrational” opposition to wind farms on aesthetic grounds by people in parts of Yorkshire, northern England, where the skyline is already dominated by electricity pylons connected to coal-fired power stations.

Even so, about 70 percent of U.K. voters support the technology, according to Gordon MacDougall, U.K. managing director at Renewable Energy Systems Ltd., a wind-farm developer. He said with continued support, onshore wind could become cost-competitive with new gas plants within three or four years.

Airport Expansion

Davey also said he favors changing his party’s current opposition to airport expansion in southeast England to allow for a new runway to be built at Gatwick, south of London, so long as criteria are met on air quality, noise pollution and traffic congestion. He still opposes expansion at Heathrow, he said.

The environmental criteria “clearly can’t be met at Heathrow, that’s obvious to everybody,” Davey said. “If they can be met elsewhere, we’re not against flying, we’re not against people using their cars, we’re not against people enjoying life and the economy growing — we just want to do that in a low-carbon way.”

Even so, the conference voted today to maintain the current policy, rejecting changes that would have allowed expansion away from Heathrow.

Copyright 2014 Bloomberg

Lead image: Wind turbines via Shutterstock

Local, Lower Prices, 33 Percent Renewable — Sonoma Clean (Community) Power Has Launched

Starting this May, 20,000 Sonoma County, CA, electricity customers are getting renewable power at a lower cost than from their previous electric utility, Pacific Gas Electric. The portion of renewable electricity (“CleanStart”) for the average customer will rise by 50 percent. For those so motivated — 3 percent of customers already — it’s also possible to purchase 100 percent renewable energy (“EverGreen”) at a 20 percent premium to regular rates. And with more power procured locally, more of the $180 million in the community’s energy expenses will stay in the local economy.

This new power provider is called Sonoma Clean Power, a nonprofit, locally controlled utility. It delivers power to a collection («aggregation») of cities and towns within Sonoma County. It’s the second example of “community choice aggregation” to go live in California, following Marin Clean Energy‘s launch in 2010.

The concept gives more local control over the supply of energy to a community, but without requiring the city or county to purchase the poles and wires from the incumbent utility (as happens when the city creates a municipal utility). The following graphic (adapted from Sonoma Clean Power) explains the policy, available in six U.S. states:

illustration of community choice aggregation (CCA)

More Renewable

Sonoma County and Marin County in California join many local aggregations buying electricity across the country, but few with as strong a focus on local, renewable power. Locally produced geothermal energy will provide 15 percent of Sonoma’s electricity mix, and the utility is offering a 1¢ per kilowatt-hour bonus payment to net metering customers who provide excess power to the grid. A feed-in tariff program to encourage more local renewable energy production will launch soon. Sonoma Clean Power is able to offer all these benefits along with rates 4-5 percent lower than the incumbent, Pacific Gas Electric.

Clean, local power is not always the top issue for aggregations. The largest of them serve several hundred thousand customers in Ohio and Massachusetts, saving customers on their bills but including an electricity mix little different from the larger grid. Many recently launched aggregations operate in the Midwest, including Cleveland, Cincinnati, Chicago and hundreds of other Illinois towns. A fair number of these Midwestern local utilities have advertised 100 percent renewable energy, but with a catch. The electricity mix is mostly the same as the incumbent utility, but the towns have purchased renewable energy credits from existing wind power plants to “green” the supply. It’s an open question whether this process represents greening or greenwashing.

Sonoma Clean Power openly addresses this issue on their website:

For CleanStart, we keep costs competitive by buying about 15% of our renewable power in the form of renewable energy credits. The state’s system of credits is used by virtually all California electric utilities and allows us to reduce greenhouse gas emissions by buying power from the lowest cost producers in the Western U.S. without having to send the power over hundreds of miles of wires. It’s the industry standard for supporting climate benefits, but we recognize that it doesn’t do much to help our local economy. You can read more about renewable energy credits here, but our plan is to use them sparingly so we can support a clean and local energy economy.

More Local

The power aggregation also advertises local control, noting that its customers spend $180 million per year on electricity that otherwise would leave the community.

In the past, electric rates were set without any input from Sonoma County. SCP takes back control and gives us a voice.

In addition, the power agency will be able to exert more authority over the $12 million in energy efficiency dollars set aside by state programs for their customers.

$12 million is collected from Sonoma County ratepayers every year to use for energy efficiency programs, but ratepayers have no say about what programs are implemented—or where in the state they’re implemented. SCP will get a portion of that money to develop new programs that are customized for our local needs.

Under Fire, Again

California CCAs have led the movement in innovation around clean energy, but also in overcoming opposition. The Marin aggregation took nearly a decade to launch in the face of a massive, $46 million spending campaign by Pacific Gas Electric to pass Proposition 16, which would have raised the voter threshold for forming local aggregations from a majority to two-thirds. The proposition failed and Marin and Sonoma have succeeded, but Pacific Gas Electric hasn’t let up. Despite a 2011 state law prohibiting such activity, Pacific Gas Electric has allegedly been spending ratepayer money to support a new bill that would undercut the formation of new aggregations by requiring customers to opt-in, rather than opt-out.

Of the six states with CCA laws, only New Jersey had such a provision and until it was changed several years ago, there were no successful community power providers. 

state cca laws 2014

The battles over local control in California highlight one important political issue for community choice aggregation (CCA): whether the existing market is a regulated monopoly or allows retail competition. No CCA law has been adopted in a state where monopoly utilities hold sway, and California is the only state to have the program in the presence of monopoly regulation because it re-regulated its utility sector after a corporate-induced energy crisis.

Fortunately, the advocates of local control have proven stronger than the incumbent utilities so far. And the price and environmental benefits of Sonoma Clean Power, notwithstanding the localizing of energy dollars, shows that investing in local authority over energy means good things for electricity customers.

Further reading:

  • ILSR’s 2009 report, Community Choice Aggregation – An Update
  • ILSR’s story on Marin Clean Energy’s launch, and our recent interview with its Executive Director, Dawn Weisz
  • ILSR’s investigation into the use of renewable energy credits for green power programs in Illinois
  • The Community Choice section of ILSR’s 2013 report, City Power Play

This article originally posted at ilsr.org. For timely updates, follow John Farrell on Twitter or get the Democratic Energy weekly update.

Buffett’s MidAmerican to Invest Another $280 Million in Iowa Wind Energy

MidAmerican announced plans in May 2013 to spend as much as $1.9 billion on wind farms in Iowa. Berkshire’s energy unit is also backing wind power Wyoming and solar projects in California and Arizona. The investments have given Buffett, the company’s chairman and chief executive officer, a way to invest large amounts of money in assets with reliable rates of return.

At a utility-industry conference in June, Buffett said he wants to spend even more on clean power as the U.S. moves away from fossil-fuel power generation. Berkshire had a record $55.5 billion in cash at the end of June.

“There’s another $15 billion ready to go, as far as I’m concerned,” he said then. “It’s where the country’s going.”

By the end of 2015, MidAmerican will have developed about 3.5 gigawatts of wind-power capacity in Iowa, enough to power more than 1 million homes.

Copyright 2014 Bloomberg

Lead image: Wind turbines via Shutterstock

China Finally Acknowledges Unfair Pricing, To Sharply Lower Renewable Tariffs by 2020

All that said, let’s jump right in and look at the latest aggressive targets now being finalized by Beijing under its upcoming five-year plan for the sector between 2016 and 2020. China makes such five-year plans for all major sectors, a relic of a Soviet-era practice for centrally planned economies. Under revised figures for its current five-year plan, Beijing announced late last year it was aiming for national solar power-generating capacity of 35 gigawatts by the end of 2015, a very ambitious target for a country that had virtually no such capacity just three years earlier.

Anyone who thought that figure looked ambitious will probably think the newest plan looks even more aggressive, aiming to build up solar generating capacity to 100 gigawatts by 2020. The country has even more ambitious plans for the wind power industry, with a target of 200 gigawatts of capacity by 2020.

At the same time, officials who are leaking details of the upcoming plan are also making it clear that state support will be phased out over the next 6 years for makers of solar panels and wind generation equipment. One of the biggest forms of support comes via artificially high state-set prices for renewable energy, which force big power companies to buy such clean energy at rates that are well above the cost of power from more conventional fossil fuels. The use of such high, state-set fees is also common in the west, used as a policy tool to promote the clean energy sector’s development.

Under the new five-year plan, China’s tariffs for solar generated power will be reduced by a hefty 50 percent by 2020, falling from the current 0.9 yuan per kilowatt-hour to 0.6 yuan, according to an unnamed government energy official. Wind power tariffs will also be cut sharply, falling to 0.4 yuan per kilowatt-hour from the current 0.6 yuan. Equally interesting is a more general quote from the official saying the solar panel and wind equipment makers should improve the efficiency of their products “instead of depending on government subsidies.”

This is one of the first times I’ve seen a government official openly acknowledge what western governments have been saying all along, namely that Chinese solar panel makers like Trina (NYSE: TSL), Yingli (NYSE: YGE) and Canadian Solar (Nasdaq: CSIQ) get a big advantage over their western rivals due to extremely strong state support through a wide range of favorable policies from Beijing. Such support led Washington to slap anti-dumping tariffs on Chinese solar panels last year, and the European Union has also considered taking similar action.

So what does this flood of new information mean for the Chinese panel industry? The ambitious construction target means that Beijing will continue to push for construction of new solar power plants, even if such plants aren’t economically viable. That problem could become worse as solar power prices are lowered, leading to a bumper crop of unusable solar and wind power plants by 2020. That means that the big Chinese solar panel makers could see strong business over the next five years from a domestic building boom, but could then see a sharp slowdown if many new projects prove to be economically unviable.

Bottom line: China’s aggressive new energy power goals and determination to reduce state support could result in a building boom of economically unviable solar and wind power generation plants.

This blog was originally published on Young’s China Business Blog and was republished with permission.

Lead image: Solar and wind via Shutterstock

Norway Approves First Direct Electricity Link to Germany

“This means the way is clear for the new sea-cable link,” German Economy Minister Sigmar Gabriel said in the statement. “Nord.Link will help increase supply security on both sides.” Germany has already granted all necessary permits.

The cable would be the first direct power link between the nations and have a capacity to transmit 1.4 gigawatts starting in 2018 or 2019, the ministry said. It would allow the countries to trade hydropower from Norway and wind electricity from Germany.

Norway today also granted a license to Statnett for a 1.4- gigawatt interconnector to the U.K. that’s scheduled to be completed in 2020, London-based National Grid Plc said in an e- mailed statement. The cable would link Kvilldal in Norway to Blyth in Northumberland and may bring low-cost renewable energy to the U.K. for an investment of more than 1 billion pounds ($1.6 billion), it said.

Norway is already linked with the Netherlands through NorNed, a 700-megawatt subsea cable that began operating commercially in 2008. It also has connections with Denmark and Sweden.

Copyright 2014 Bloomberg

Lead image: Norway and Germany signs via Shutterstock