Earth Policy: Wind energy demand booming
The autumn of 2005 marked a breakthrough in the U.S shift to renewable energy, as the cost of electricity from coal and natural gas overtook that of wind-generated electricity in Texas and various other communities - in large part as a result of climbing natural gas prices.
Only five years earlier, Austin Energy, a state-run energy supplier in Austin, Texas, launched its GreenChoice wind power programme. Back then, consumers had to pay a premium for green electricity, which the supplier purchases under ten year, fixed-rate contracts.
Fixed-rate stability is no doubt attractive to Austin Energy’s domestic and commercial GreenChoice customers, which include tech giants like Dell, IBM, 3M, Samsung, and Advanced Micro Devices, as well as various school districts.
Now, with the turning price tide, companies and organisations are projecting millions in savings too. Advanced Micro Devices, for example, has estimated savings of $4 million; while the Round Rock school district has projected savings of $2 million over 10 years for local taxpayers.
Booming wind power demand
With demand for wind power fast outstripping supplies, Austin Energy has taken to holding a raffle on 23 March 2006 for its remaining green electricity.
Xcel Energy, Colorado’s largest electricity supplier - whose 33,000 Windsource scheme customers were paying $6.00 more per month for wind-generated electricity over conventional electricity before the price of the latter peaked - is welcoming proposals for up to 775 megawatts of new wind power generation capacity from wind power developers to cope with demand. That is enough to power 232,000 Colorado homes.
Both Xcel Energy and Austin Energy customers were among the first to benefit from the relative decline in the price of wind power.
In the short-term, growing demand from environmentally-aware consumers, together with insufficient supplies and falling natural gas prices, may diminish the price advantages gained from late 2005. In the long run, however, the advantages of wind power are all but assured as depleting finite resources are projected to inflate natural gas prices.
Responses to wind farm projects
Public and commercial interest in wind power is on the rise as its production costs decline. Although much of the media’s coverage revolves around opposition to large-scale wind projects, such as the off-shore generation farm proposed near Cape Cod, in a great many regions of the U.S, wind farms are welcomed with enthusiasm.
Xcel Energy’s proposed 300-megawatts wind farm spanning 30 ranches in the small town of Grover, on the Wyoming border, has been embraced by the community’s ranchers.
A single advanced turbine on a quarter acre of leased ranchland would generate $100,000 of electricity a year. Ranchers leasing the land would stand to earn thousands in royalties while retaining enough land to run cattle.
At a three per cent royalty rate, and with seven turbines on average per ranch - subject to the project’s approval - 30 ranchers would earn approximately $21,000 per year in additional income. Eventually, ranchers across the country may earn more from selling electricity than selling cattle.
Similarly, dairy farmers in upstate New York have welcomed the Lewis County Maple Ridge Wind Farm with its 195 turbines and annual royalties of $5,000 to $10,000 per turbine.
In fact, many rural communities have responded positively to wind farm projects, largely because of the income generated, the skilled jobs created, the cheap electricity supply, and the tax revenue for investment in local infrastructure projects.
Expanding wind power sector
Large corporations, multinationals and conglomerates have been attracted to wind power by the sector’s profitability.
In 2002, General Electric acquired the turbine manufacturer Enron Wind; in 2005, Goldman Sachs acquired the wind farm developer Zilkha Renewable Energy - now known as Horizon Wind Energy, a wholly-owned subsidiary that is in the process of rolling out 4,000-megawatts of wind power generation capacity.
The AES electricity generation corporation got a foot in the market by acquiring the wind power developer SeaWest. It is now developing a project for wind power generation with a capacity for 1,800-megawatts.
Oil and gas giants Shell and BP have also staked their claims. Shell owns approximately 315-megawatts of wind power generation capacity in the country, while BP is planning a 2,000-megawatts wind-generation project.
By the tail end of 2005, 30 states housed commercial wind farms. The total wind power generation capacity of the United States expanded by 36 per cent to 9,149-megawatts.
Looking to the future
The sector’s potential for growth is tremendous, although curtailed by bottlenecks in the turbine supply line. Wind manufacturers are hard-pressed; General Electric, the largest U.S wind turbine supplier, is sold out until 2008. The startup supplier Clipper Windpower is projecting an output of 250 2.5-megawatts turbines in 2007.
The extension of the wind production tax credit (PTC) - a counterpoise to nuclear and fossil fuel subsidies - through to 2007, rallied investor confidence enough to engender record growth in wind farm planning.
Today’s energy economy is increasingly revolving around the emergent wind power sector. States like Kansas, Texas and North Dakota could together generate enough wind power to meet national demand.
Not only is wind-generated electricity cheap - the unit price of electricity from wind power has slumped dramatically from 38 cents per kWh in the 1980s to as low as 4 cents per kWh today - but it is also clean, endless, renewable, abundant, and carbon-neutral.