January 23, 2006
Wind Turbine Sales Growth Rapid In United States For 2005

The wind power market is growing rapidly in the United States

With wind farms popping up from New York to Texas to California, wind power is riding high in the saddle again. Explosive growth of more than 40 percent this year - 3,400 megawatts of new generation is expected - could make the United States the world's largest wind-power market, a new report shows.

State government mandates are a big reason why wind power equipment sales are hitting new records.

Among the biggest factors spurring growth are states taking the reins of leadership from the federal government on energy mandates. Eager to cut air pollution, global warming, and rising electric rates, at least 22 states have approved "renewable portfolio standards" - legislation requiring utilities to include renewable sources like wind, solar, hydro, and biomass in their energy mix.

At the rate wind power is being installed on the ridges and plains of North America - US and Canada - wind power will grow by 4,250 megawatts this year, compared with about 2,600 megawatts last year. If Congress renews the tax credit in 2007, the industry could be installing 6,000 megawatts a year by 2010, according to a new study by Mr. Chua.

Another source claims a 35% increase in wind power for 2005.

The industry added about 2,500 megawatts of wind power last year, a record 35 percent increase, according to the American Wind Energy Association, an industry trade group. The country's wind capacity is more than 9,200 megawatts in 30 states, enough for 2.4 million average U.S homes.

Wind power still makes up less than 1 percent of the nation's electricity, but experts expect wind to generate at least 5 percent by 2020.

Whenever I see claims about wind capacity I always wonder whether the numbers represent maximum output in high winds (I suspect the answer is Yes). If so, what the average operating output is for most wind farms? 35%? 40%? I also wonder what percentage of the time each wind farm generates little or no electricity.

Suppose wind does supply 5% of US electricity by 2020. Sound like much? Not really. First of all, US electricity demand will rise by a lot more than 5% by 2020. So wind power will not prevent an increase in fossil fuels burned for electric generation. Given the high cost of natural gas and declining US natural gas production expect the fossil fuel of choice for electricity generation to continue to be coal.

Electric power demand in the United States grew 1.7% in 2004 or about a third of expected electric power supply increase from wind by 2020.

The electric power industry continued growing in 2004. Electricity generation and sales rose for the third straight year to record levels, growing by 2.3 percent and 1.7 percent, respectively, over the 2003 levels, as the U.S. economy continued to grow.

3 years times 1.7% equals about 5%. So wind might supply 3 years or 20% of the electric power production growth that will occur in the next 15 years in the United States. Maybe wind could really take off and supply half of the future growth in demand. Yet even that rosier scenario would not prevent a big growth in fossil fuel (mostly coal) burning for electric power generation.

Wind power is not making gains due to falling equipment prices. The surge in demand for new wind turbine equipment was so strong that prices rose for 2006 deliveries.

The North American wind turbine market saw record growth in 2005; installations surpassed record levels seen in 2001 and 2003, with the majority of them onshore. From an industry that finally broke US$3 billion in 2005, the market is expected to more than double to just under US$7.5 billion in 2010. These figures, detailed in the EER study, factor significant price increases implemented for projects in 2006 and beyond, but also take into consideration greater vendor competition that will arise as local manufacturing capacity and new turbine models are introduced in the coming years. Improved competition will, however, not be sufficient to reduce prices to the extent they have risen for 2006.

Simply put, market share in 2005 was determined more by manufacturing capacity than by competitive strategies or items such as cost and product positions. All wind turbine vendors active in North America in 2005 sold-out of available capacity and therefore market share has been determined by how many turbines could be manufactured and delivered. The demand was even stronger than anticipated, and as a consequence, a turbine shortage transpired and availability became an important criterion for selection.

The oil price rise has driven up prices for a wide range of competing energy sources. The price of coal has doubled. In many parts of the country wood pellets have doubled in price. Natural gas is way up on declining domestic production and growing demand.

The price of coal will fall as more mines open in response to higher coal prices. Wind turbine prices will fall as factories ramp up production capacity.

Share |      Randall Parker, 2006 January 23 09:25 PM  Energy Wind


Comments
Engineer-Poet said at January 24, 2006 7:07 AM:

So long as natural gas supplies remain tight (and it will take a lot of other capacity to reverse that), it will pay very well to install wind capacity.

This is probably what the industry has been waiting for.  The profitability of wind used to depend on the production tax credit, which was periodically held for ransom in Congress; each time the credit expired, the industry went on hold.  No more.  The industry is set to take off like a rocket.

Anthony Kendall said at January 24, 2006 7:37 AM:

Just because the price of natural gas has risen does not mean that wind will necessarily become the most attractive option. If the price of coal stays low and the government continues to encourage new coal plant installation, wind may continue to increase only due to tax credits and government mandates, as we're seeing here.

Jake said at January 24, 2006 8:46 AM:

Denmark’s experience is instructive to the rest of the world on wind power. Even though the coast of Demark is one of the windest places on earth, they found that turbines only run an average of one day a month at the rated potential generating capacity. They were also surprised at the number of hours where the turbines generated no electricity at all because the wind speed was too high or too low. Overall their wind farms had a capacity to give Denmark over 30% of their power requirements but over a months time they only averaged half of that.

But was what worse was the variability of the power from hour to hour. It made power management of the electrical grid an impossible task.

Engineer-Poet said at January 24, 2006 10:58 AM:

Did Denmark even look at DSM?  If they used e.g. water heaters as dump loads (overheating them when excess power was available), they could use more of what's available.

The problem of wind being too high to generate sounds like someone didn't analyze the resource and picked the wrong turbines for the job.

Nick said at January 24, 2006 12:33 PM:

An important thing to know about wind generation is that focusing too much on rated capacity, and utilization will lead you astray. Wind generators have a rated capacity (e.g., 3 Megawatts) which is designed to be substantially higher than the normal operating range, in order to maximize energy capture. A reasonably well placed windfarm might have a capacity of 3 MW, and utilization of 33% (offshore might be 40%), or an expected average production of 1 MW. A coal or nuclear plant would be considered to be not meeting it's design goals at 33%, but a wind farm very likely would be. Overall utilization in the US is about 45%.

The challenge of managing wind output does not come from the 33% utilization, but from the variation around the 33% average: output could be 3x the average, or zero. Coal and nuclear plants have a much smaller random variation, although it is important to note that it is definitely not zero: baseload plants can and do have unexpected outages.

Now, the best way to deal with random variation in an input is to have a large number of inputs, whose variation is not related to each other. So, a large of number of turbines in a windfarm doesn't reduce variation, because they're close together, and experiencing the same wind. On the other hand, in a large geographic area there is a great deal of independence between wind conditions. In fact, though I have not researched this, I suspect there is an inverse relationship: that is, that when wind is low in one area it will be high in another. This is because there are underlying physical causes to wind (warming of the earth, and the rotation of the earth) which ensure that wind WILL be blowing somewhere, in order to handle the transfer of heat in the atmosphere.

This means that with sufficient transmission between adjacent areas, and sufficiently widespread windfarms, that the variation in output around the average will be very low. In fact, a recent study of wind conditions in the UK confirmed this.

All of the above means that as wind generation grows, it may actually become easier to handle, not more difficult, and that the standby generation (or storage) may actually become less necessary. Grid instability around the 20% limit in Germany and Denmark has been due to too much power (due to regulations requiring the system operator to accept all wind power inputs during periods of minimum power demand, due in turn to the subsidy structure), and a transmission system not designed for the task. These are temporary problems, not fundamental problems with handling wind input. Other areas, such as Ireland and Spain which are still somewhat early in their growth in wind market share (Spain is 7%) are worrying about limits in the range of 15-20%, in large part because they are not well connected to larger transmission networks.

Jake said at January 24, 2006 12:45 PM:

Engineer poet:

No, Denmark did not use a dump load. My idea would be to pump water up a mountain into a reservoir during excess wind load times and then use a water turbine to generate electricity.

In the winter, Denmark does get a lot of storms so the turbines were shut down during those storms for safety reasons.

Nick said at January 24, 2006 12:48 PM:

"Overall utilization in the US is about 45%."

For all power sources. This is helpful context which reminds us that utilization lower than base load plants isn't necessarily bad. Actually, I wish there was a better measurement than nameplate rating, as it is indeed misleading. Perhaps "expected average production" - EAP. Of course, that would be misleading for solar in the other direction, as it's production is during peak, and is more valuable. Perhaps you could devise a measure which compares production to the demand curve. There's no easy answer.

Randall Parker said at January 24, 2006 4:05 PM:

Nick,

Overall utilization is low because the peak demand is so much lower than the trough. So natural burners turn on in afternoon and run into the early evening. But wind does not do that. One can't schedule the winds to blow when demand is highest.

Wind can't provide power for peak demand. Wind can't provide for much of base load. That really limits its potential - absent far better mechanisms for storing power.

Dynamic pricing would make wind moderately more viable.

BTW, what's your source for 45% overall utilization? And do you have a source for average wind farm output as a percentage of rated max capacity?

Jim said at January 25, 2006 6:47 AM:

by forcing utilities to deal with the variability of wind power (managing supply, demand, transmission, and storage) now that wind is relatively cost efficient will make the introduction of solar power that much easier in the future, because solar will suffer from similar variability problems. and of course solar and wind variability will be de-coupled and therefore complimentary.

jimcrack said at January 25, 2006 12:04 PM:

Wind would be a lot better off if we can solve the DC to AC conversion problem. Wind needs DC to combine the varying loads of many turbine sources. Conversion loses about 20% of the electrical energy. Energy storage loses more, if you consider that pneumatic storage and hydropumping need electrical pumps and new gas-type turbines to retransmit the energy.

One way to solve the problem is to dedicate entire economic sectors to DC consumption. LAN lines (correct me if I'm wrong) are already DC powered, and telephone wires should have enough capacity to handle load variations -- outside the traditional grid. Phone and internet cos. should be interested. The approach would promote DSSS and other technologies to transmit information over high voltage lines. And home PC's could themselves act as batteries and energy load managers, instructed via internet communication on how to handle energy demand.

Would any EE's out there like to add to this?

Nick said at January 25, 2006 1:34 PM:

"Wind can't provide power for peak demand."

No question. As wind capacity rises above baseload there will a growing % of it's generation that isn't needed, at least currently.

Wind power is surprisingly similar to coal and nuclear in it's distribution. That is to say, wind is around the clock. Like coal, and even more so nuclear, wind is capital intensive and low cost to operate (almost zero), so that ideally it would operate constantly. This creates a problem during low demand, with nighttime being the biggest problem, as generation above the base load will be wasted (or create problems for the transmission system operator, if they are forced to accept all generation whether it is needed or not).

Now, there are two ways to deal with this: demand management, and storage.

Demand management has been used to some extent for a long time for commercial/industrial facilities. They may have different rates per KWH for different times of day, or they may have "demand" charges, which price the overall power usage based on the peak demand (which gives an incentive to smooth out demand, and help utilities with day-time peaks). For this reason, steel mills may run certain operations almost exclusively at night, when power is cheap. Demand management historically has not been used for residential customers, but this is changing. The best example may be PG&E, the large california utility which is converting all residential electric meters to "smart" meters, which can price by time of day. Another form of demand management is active: the utility establishes communications with customers whose power use at any given time is optional, and pays the customer for the right to turn off some of their equipment during peak demand periods. This method is not unusual (though not really heavily used) at the industrial/commercial level, and just starting at the residential level - CommEd in Illinois uses it for residential.

There are a wide variety of methods of storage: pumped storage, compressed air, flow batteries, ultracapacitors, conventional electrochemical batteries (lead acid, NiMH, Li-Ion), flywheels, and more. Pumped storage has proven itself at the gigawatt level, but depends on geography. The rest are in a state of flux - for instance, there is an intriguing report in Business Week that a stationary ultracapacitor from a company called Eestor is being financed by Kleiner-Perkins (a highly reputable venture capital company) and promises storage for $20 per KWH ((http://www.businessweek.com/the_thread/ dealflow/archives/2005/09/kleiner_perkins_1.html). The drawback to ultracapacitors, unfortunately, is that in large capacities they aren't very portable. This is incredibly cheap however, and would solve utilities' storage problems. This is supposed to be at the prototype stage: more than a science project, but not proven in production. Still, it is a good example of the possibilites.

Perhaps the best combination of demand management and storage is plug-in hybrids, or Plug-in Electrical Vehicle (PHEV). Existing batteries are adequate for PHEV’s, though not ideal. The nanotech batteries that will make this really attractive are here now and in volume production (an early example: http://www.dewalt.com/36v/). They should cut the effective cost of hybrid batteries by 75%, which would in one stroke cut the cost differential between hybrids and non-hybrids, increase fuel-efficiency, and reduce charging times to the time needed for convenience.

Plug-in hybrids combined with residential time of day metering has the potential to smooth out power demand during the day. Eventually PHEV’s could raise night time demand, and even supply power for daytime peaks.

Now, I would never suggest wind could provide 100% of power. The best solution is a mix of all new and existing sources, with coal and gas being the last resort.

My point is that the current limit of 15-20% for wind is only temporary. The mix that I think would make sense, in the medium long term (30-50 years out), would be both wind and solar at 30% each.

The source for 45% is the DOE: in 03 average consumption was 443 GW (http://www.eia.doe.gov/neic/infosheets/electricgeneration.htm), and in 02 capacity was about 905 (http://www.eia.doe.gov/neic/infosheets/electriccapability.htm): that gives about 49%...the 45% was from memory consumption figures, rather than generation which includes transmission losses. On the other hand, 03 capacity was probably larger, which would reduce it again.

For wind utilization, see http://www.awea.org/faq/tutorial/wwt_statistics.html, which gives 29% overall for the US. Offshore windfarms should have substantially higher utilization than land-based, which would favor the US coasts, and the UK, but not help the germans quite as much. The largest German TSO (E.ON Netz http://www.eon-energie.de/bestellsystem/frameset_eng.php?choosenBu=eonenergie&choosenId=1725) gives 18% as their wind utilization, but I think it's fair to say that the Germans are exploiting lower quality locations than most other countries. Location, location, location.

Randall Parker said at January 25, 2006 4:17 PM:

Jim,

Wind and solar are complimentary? Not always. What happens when the wind dies down at night and neither wind or solar works?

One can put wind farms over a greater area. But some days are just not as windy over large area as compared to other days. Also, the further away the wind tower the more is lost in transmission.

Nick,

A solution that will be great 50 years from now really does not matter to me. By then I expect fusion will work. I'm more concerned with making the air I breathe in the next 20 or 30 years as clean as possible.

If the storage problem could be solved then wind would become a lot more attractive. But solar would remain unattractive because it still costs too much. We need both better batteries and cheaper photovoltaics to make solar competitive.

peter Andonian said at January 25, 2006 9:43 PM:

Nick,
I agree with your asessment about hybrid vehicles as the key to solving this problem. Since storage is the key problem in both areas (grid power management and electric power for transportation to displace liquid fuel) It seems obvious that a combination solution such as V2G is a fit. Anytime you get a "double utilization" of a capital asset, the cost effectiveness of the asset doubles. In fact, V2G would give a third benefit, greater efficiency of the transmission grid. Also, it does not require huge additional infrastructure such as would be required for hydrogen.

As for other storage schemes, since we already need storage to lessen dependency on gasoline for fuel, why build it twice?

Engineer-Poet said at January 26, 2006 5:51 AM:

Anyone who believes that DC is required to combine outputs of several generators (of ANY type) needs to study AC power generation and transmission.  It's not intuitive and requires trigonometry.

HVDC eliminates difficulties with phasing different sub-grids and reduces transmission losses.  It's all but certain to be a big part of any future with a lot of wind power.

Ken Bascom said at January 26, 2006 6:39 AM:

I understand and agree with the above comments concerning the problems and limitations in using wind power generation. But does that mean that we shouldn't utilize it? I think we need to be very careful not to get caught up in efforts to find THE answer to our energy needs. There are a large number of ways that power can be generated - wind, solar, biomass, geothermal, etc. etc. Can any of them provide all - or even a large proportion - of our power needs? No. Can all of them together provide a significant fraction of our energy needs? I suspect so. Doesn't that suggest we should pursue all these alternatives? Even if they all together meet only - to be completely arbitrary - say 25% of our needs in 2020, that is 25% of a significantly larger pie. If we're facing issues in meeting our power needs now, doesn't it make sense that we will face a less catastrophic problem meeting 75% of our future needs using current sources than we will meeting 100% of theose needs from those sources?

To look at it another way, one of the reasons we're facing the issues we are in power generation is that we are almost completely dependent upon fossil fuels to meet our needs. Does it make sense to attempt to replace this bottleneck with another one through excessive reliance on the one "best" alternative? I seem to recall some sage traditional advice to the effect of not putting all one's eggs in one basket.

I strongly believe that we should encourage the development of every technology with the potential to provide reasonably affordable energy, no matter how limited the probably maximum output. Every barrel of oil or ton of coal that isn't required - now or in the future - is a step in the right direction.

aa2 said at January 27, 2006 2:12 PM:

Probably its true that at least in the short term no one technology is the answer to energy. Although energy production has converged before and will converge on nuclear at some point in the 21st century. The problem with wind is the scale we are talking about. Wind power is cool and has some uses, but to power a modern city for example is unthinkable with wind power. And that same modern city in 2030 will use far more energy then it does today.

What we need is more of the model that has worked so well already. Massive generation installations that burn resources that aren't being shipped from some crazed area of the world. And actually concentrating more on what works, for example factory made nuclear plants, not one offs.. having giant energy complexes with many reactors together and close to the cities.

Ken Bascom said at January 31, 2006 6:51 AM:

aa2, I will grant you that it seems unlikely that wind power will be able to supply the power for a modern city. However, if it can be applied to other needs (say, providing power to charge electric car batteries, for instance), or if it can feed into the power needs of that modern city, even if it contributes only 2 - 5% of the power needs, that reduces the consumption of fossil fuels, which can now be applied elsewhere - or simply not consumed. To dismiss it because it can't power a modern city is to completely miss the point of my previous comment. Again, my point is WHY DO WE INSIST THAT THERE BE A UNITARY ANSWER to the energy question? Doesn't it make more sense to glean a little her and a little there to contribute to the larger whole, even if no given single source amounts to essentially the entire pie? Look, if we draw energy from 100 sources it is unlikely that any single individual or group would be able to so dominate the system that they can hold us all hostage to their demands. Let's put it this way - if Iran controlled some factor of our energy needs that was on the scale of what we can generate with wind power, would we be so helpless to deal with the situation?

Or, if due to the actions of some group or some natural process one of our energy sources failed, we would be able to deal with the situation with much less dislocation and distress [if we drew our energy needs from 100 sources].

Greg said at February 7, 2006 12:39 PM:

The problem with large-scale implementations of the projects like PHEVs is this: the moment the PHEVs become as popular as their proponents want, the crude oil price drops to 10-15 USD. Thus making these vehicles comparable (or worse!) in price per mile driven with conventional all-gas vehicles.
The same result will be achieved with any gas-saving technology that gives real results in the form of reduced US oil imports.
My suggestion is to implement a Federal program which I list below.
1. Introduce a variable federal gas tax that would effectively bring the price of 1 gallon of gas to about $8. I.e., the tax for consumer would vary as the wholesale gas price fluctuates, and the pump price would remain constant.
2. The tax revenue from this measure should be divided like this: 10% goes into alternative energy research, wind farm subsidies, ethanol production subsidies, economy vehicle importer/vendor subsidies, that stuff. The remaining 90% is distributed back to the taxpayers on some 'fair' principle (e.g., equally between all taxpayers; or according to vehicle miles driven, whatever. I'm open to discussion here).
3. Protect that 90% from being used for anything else by enacting a law. This money should not be available as patches to budget shortfalls for anyone. Something like Social Security money.
4. To protect the long-haul truckers from fuel price shock, they should be subsidized in some way, with these subsidies gradually being phased out. (Example (although not a very good one): do not tax diesel fuel AND prohibit private vehicles and small trucks with diesel engines).
(If diesel fuel will be also taxed, additional measures should be taken to prevent using heating oil #2 as diesel fuel. Dying the fuel is not enough).
------------
Since an average european car is about 60% more fuel-efficient than an average american car, the above measures would save about 8M bpd in crude oil imports (out of 10.2 M bpd) if, as a result of these measures, the americans would become as cost-efficient in transportation as europeans. I don't see why they wouldn't if they will need to pay the european prices for gas.
Of course, it will take several years to phase out the gas-guzzlers that are being sold today. But it will not kill the auto industry, as some may think. All US automakers have foreign subsidiaries that build small cars today. GM has Opel, Ford has Mazda (and builds small cars for sale in Europe), DaimlerChrysler has Smart (if that's not enough, FIAT is for sale!). The only thing that's needed is to import them to the US (or roll out domestic US production). I heard they had some spare capacity in the USA :-)

Matt Brewer said at February 7, 2006 6:34 PM:

I'm surprised that no one has addressed this: What about wind energy as a means to power hydrogen production through electrolysis? Can wind energy create enough power enough of the time to make hydrogen affordable?

Randall Parker said at February 7, 2006 7:36 PM:

Matt,

Hydrogen is not affordable because a hydrogen distribution infrastructure would be very expensive and, more importantly, there's no good way as yet to store it in vehicles.

Wind is not the cheapest way to make electricity. Coal and nuclear are cheaper.

I've made posts in the past on hydrogen. Go here to see a Google search of my site for hydrogen posts and read why I'm not enthusiastic about hydrogen.

Civil Engineer said at February 21, 2006 11:41 AM:

Any idea on what it would cost, on a per turbine basis, for turbine installation on a medium to large size wind project, e.g., 50 MW? For example, what would be the cost, a range that is, for 25 1.5 or 2MW wind turbines (including construction)? I have read that one should budget 1.3 to 1.5 per MW and that roughly 75% of this cost would be dedicated to turbines. This puts the cost per turbine between 1.95 and 2.25 million per turbine. Any thoughts?

I was also wondering what the total O & M cost per year would be for a turbine. I have a good idea aboutland lease costs and property taxes, but don't have a good grasp on how much should be budgeted for repair, replacement, and genral admin. Would repair, replacement, and general admin. O & M costs in the $60,000 range be reasonable.

Any help would be appreciated.

kent beuchert said at May 15, 2007 12:32 PM:

Wind power is a big joke to those of us who
understand the numbers we're dealing with. The
biggest (and about the only) effect of big wind
turbines is to make the ignorant masses think
that something's being accomplished. It's
hilarious to watch these moron civic conservation
groups fight for years to get approval for a 100
megawatt facility that won't generate over 30 megawatts
on average and far less during peak demand, requiring
the construction of reliable power plants to
make up for wind's deficiencies. They'll make a big
deal out of telling the yokels how many tons of CO2
will be saved. The yokels can't begin to understand
what it all means. It doesn't mean squat. Totoal U.S.
wind power generation was less than 1/2 of 1 percent
and demand is increasing 2% per year for the next 10 years.
Anybody still think crappy, unreliable, uncontrollable,
expensive wind power is the answer to anything?

Nick said at May 30, 2007 4:37 PM:

Kent, wind is about 1% of electrical generation (in terms of KWH's), and growing at 40% per year, which means doubling every two years.

Wind variability is not hard to deal with - the previous posts explain that, if you'll take the time to read them.

When all costs are included, wind is the cheapest solution we have.

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