Thursday, May 8, 2008

Basics of a Power Purchase Agreement

What is PPA?

A Power Purchase Agreement (“PPA”) is a long-term agreement between the seller of wind energy and the purchaser. Negotiating and signing a PPA is an important step in the development of any wind energy project because it secures a long-term revenue stream through the sale of energy from the project and provides evidence that the energy is needed by the purchaser. Power may be sold through a PPA to a local utility or electric cooperative, a more distant utility, or to a different wholesale or retail customer.

While price terms are often thought of as the most important element of a PPA, typical PPAs include many vital provisions addressing issues such as the length of the agreement, commissioning process, “take-or-pay” or curtailment agreements, early termination rights, construction milestones, defaults and penalties, and ownership of credit flowing to the project owner and power purchaser. Securing a good PPA is often one of the most challenging elements of wind project development.


For more details please download a PDF version by clicking here.

Wednesday, May 7, 2008

RD Wind Power Video

NPTC to invest $1.5 billion in renewable energy

New Delhi: Biggest coal-based power generator NTPC Ltd plans an investment of Rs 6000 crore ($1.5 billion) to capacity of 1,000 MW of renewable energy in 10 years, said a senior company official.

This will include 650 MW of wind power, the official said.

The company has decided to foray into renewable power generation with a 100 MW wind power project, he added.

In a recent meeting, NTPC’s board of directors granted approval for going ahead with the project. The company is now preparing a project feasibility report.

NTPC might set up the project in the country’s western or southern coastal regions, which are considered to be well suited for wind power plants, the official said.

China aims for 100 gigawatts of wind power by 2020

May 1, 2008

China aims to expand its wind power generating capacity to 100,000 megawatts by 2020, more than doubling the current world’s installed capacity.

The plan – which is five times the previous target – was set forth by the National Development and Reform Commission (NDRC), China’s top industry planning body.

“ The NDRC has just recently completed an internal meeting to discuss the possibility of increasing wind power capacity to 100,000MW,” Shi Pengfei, vice president of Chinese Wind Energy Association, said. “It’s not 20,000MW or 30,000MW as previously targeted.”


The Shanghai Daily reported that China’s wind capacity could reach as high as 120,000MW (120 gigawatts) by 2020 “if the state reforms a subsidy system to give wind power larger premiums over coal.”

China presently has 5,600MW of installed wind capacity. Global wind power currently stands at 94 gigawatts (94,000MW).

China hopes to have 15% of its electricity generation coming from renewable sources by 2020. Most of this is expected to come from hydropower and wind since solar energy is still too costly, Anil Kane, president of the World Wind Energy Association, told the Shanghai Daily.

© Mongabay.com

Chinese City Counts on Wind

The northwest Chinese city of Jiuquan, famous as the nation’s satellite launch center, has been busy with a new mission to exploit its rich wind energy resources in the hopes of becoming a global giant in the field of renewable energy.

Altogether 28 new wind farms, with a combined installed capacity of 10.65 million kilowatts, will be built around Jiuquan, a far-flung Gobi desert city by the year 2015.

Wang Jianxin, chief of the development and reform commission of Jiuquan City, said the city’s plan to construct a wind power base of more than 10 million KW had just passed scrutiny by China Hydropower and Water Resource Designing Institute.

“We hope to accomplish a new Three Gorges Project on land,” said Wand, “for long term development, the Jiuquan wind power base could be expanded to have a combined installed capacity of 35.65 million KW.”

Jiuquan is a region rich in potential wind energy resources. Latest statistics given by the meteorological departments show wind energy reserve in Jiuquan is placed at 150 million KW, of which, 40 million KW is exploitable. And the applicable land covers nearly 10,000 sq km.

Liu Shengping, deputy chief with the energy affairs office of the development and reform commission of Jiwquan City, estimated that the massive wind power development would need a budget of some 120 billion yuan (about 17.14 billion US dollars).

“More than 20 large Chinese enterprises have made investments or sent representatives to make inspection tours,” said Liu, who declined to give an exact amount of investment his city had attracted for the wind power development.

To ensure a stable operation of the local power grid, the city will have to construct new thermal power projects, with the generating capacity totaling 13.6 million KW, by the year 2020 intandem with the wind power base’s generating capacity, according to Wang.

Jiuquan city began to build wind farms for catching energy in 1996, but the progress has been slow. It is now home to give large wind power farms, with an installed capacity totaling 410,000KW.

© China View

NTR Invests $150M in Wind Capital Group

NTR plc, an international developer and operator in renewable energy and sustainable waste management, has invested $150 million in Wind Capital Group (WCG). NTR also singed an agreement for the supply of 150 megawatts (MW) of GE wind turbines on behalf of WCG for delivery in 2010 to accelerate the build out of WCG’s portfolio of development projects.

NTR said the investment will take WCG from being a regional developer to a major national player in wind energy development in North America.

Jim Barry, CEO of NTR plc said: “In re-entering the wind energy business in the US, NTR is delighted to partner with Wind Capital Group with their unique business model, focusing on local partnerships in rural communities. Their rapid growth and early success is a testament to the strength of their business model.”

WCG is currently developing with farm projects in eight states across the central United States with a development pipeline of over 2,000 MW of which the first will be coming on stream by 2010.
NTR’s wind development subsidiary, Airtricity, was recently sold to a combination of E.On and Scottish and Southern Energy for €1.9 billion ($2.7 billion). The company has a market capitalization in excess of €1.3 billion. NTR has operations in Ireland, the UK and the US.

© Sustainable Business

Tuesday, May 6, 2008

Wind Energy Production Tax Credit (PTC)

An income tax credit of 2.0 cents/kilowatt-hour is allowed for the production of electricity from qualified wind energy facilities and other sources of renewable energy. The tax credit was created under the Energy Policy Act of 1992. The credit applies to electricity produced by a qualified wind facility placed in service between January 1, 1993, and December 31, 2008, and is adjusted annually for inflation. It applies for the first 10 years of production. The tax credit is useful only for utility-scale wind turbines, not smaller turbines used to power individual homes or businesses.

Support an immediate full-value, long-term extension of the PTC.
Status:
  • 2007 – The PTC deadline remained at December 31, 2008, when Congress was unable to pass a package of energy tax incentives – including a PTC extension—as part of broad-ranging energy policy legislation.
  • 2008 – The industry is already experiencing a slow-down which threatens 76,000 jobs and $11.5 billion in economic investments by the end of 2009.
  • December 31, 2008 - The PTC is scheduled to expire on this date.
Why a full-value, long-term extension is critical:

  • The wind industry seeks a 5-year extension of the tax credit at full value to ensure certainty and stability. While the industry was fortunate to gain short-term extensions in the past, these shorter time periods create uncertainty and a “boom-and-bust” cycle of short-term planning, near annual job layoffs and higher cost projects. Without a long-term policy, manufacturers are discouraged from investing in and expanding manufacturing facilities in the U.S.
  • At least six to eight months before the tax credit expires, financial lenders hesitate in providing capital for wind projects because of the uncertainty created by the impending expiration of the credit.
  • As the PTC nears expiration, developers rush to complete projects before the deadline, leading to smaller projects and added costs, which result in higher electricity prices.

Wind energy delivers REAL ECONOMIC BENEFITS

  • In 2007, new tower, blade, turbine and assembly plants opened in Illinois, Iowa, South Dakota, Texas and Wisconsin. In the same year, seven other facilities were announced in Arkansas, Colorado, Iowa, North Carolina, New York, and Oklahoma. Altogether, the new and announced facilities are expected to create some 6,000 jobs. Investment in manufacturing capability signals confidence in the market and lays the groundwork for expanded growth.
  • New York’s 322-MW Maple Ridge Wind Farm, which began operating in September 2006, provides $8 million annually in local property tax revenue, pays landowners $1.65 million each year in lease payments, and created 163 new local long-term jobs.
  • In Washington State, 1,000 MW of installed wind capacity is estimated to create 2,650 new local jobs during construction, an additional 400 new local long-term jobs during the operational years of the wind farms, and a $1.1 billion total economic benefit over the lifetime of the wind projects.
  • One large (108-turbine, 162-MW) project in rural Prowers County, Colorado, increased the county’s tax base by 29%, adding annual payments of about $917,000 to the general school fund, $203,000 to the school bond fund, $189,000 to a county medical center, and $764,000 in new county revenues, as well as 15-20 permanent and well-paying full-time jobs at the wind farm.
  • In 2007, an analysis from global energy consulting firm Wood Mackenzie found that providing 15% electricity from renewable energy resources by 2020 [through a Federal renewable electric standard] could lower consumer expenditures by nearly $100 billion, reducing both natural gas prices and electricity prices.

Wind energy offers REAL ENVIRONMENTAL BENEFITS

Wind energy offsets other, more polluting sources of energy. That is important because electricity generation is the largest industrial source of air pollution in the U.S. When wind projects generate electricity, fuel at other power plants is not consumed.

  • To generate the same amount of electricity as today’s U.S. wind turbine fleet (16,818 MW) would require burning 23 million tons of coal (a line of 10-ton trucks over 9,000 miles long) or 75 million barrels of oil each year
  • In 2007, the clean generation provided by wind prevented the emissions of approximately 28 million tons of carbon dioxide. A 2007 report estimates that wind power alone could lower emissions by 150 million tons of carbon dioxide in the year 2020, avoiding nearly 33% of expected emission increases in the electric sector.
  • Wind power requires no mining, drilling, transportation of fuel, or water usage, and does not generate radioactive or other hazardous or polluting waste.
  • Emissions from the manufacture and installation of wind turbines are negligible. The “energy payback time” (a measure of how long a power plant must operate to generate the amount of electricity required for its manufacture and construction) of a wind project is 3 to 8 months, depending on the wind speed at the site – one of the shortest of any generation technology.
  • A study by the Midwest Independent System Operator (ISO) showed that 16,000 MW of additional wind capacity would avoid 43 million tons of CO2, or approximately 1,300 pounds of CO2 for every megawatt-hour of wind generation.
© AWEA

Monday, May 5, 2008

Market forecast for 2008-2012

GWEC is predicting the global wind market to grow by over 155% from its current size to reach 240 GW of total installed capacity by the year 2012. This would represent an addition of 146 GW in 5 years, equaling an investment of over 180bn EUR (277 bn US$, both in 2007 value). The electricity produced by wind energy will reach over 500 TWh in 2012 (up from 200 TWh in 2007), accounting for around 3% of global electricity production (up from just over 1% in 2007).

The main areas of growth during this period will be North America and Asia, and more specifically the US and China.

This forecast exceeds previous estimates by GWEC, and the total installed capacity for 2010 has been corrected upwards to reach 171.9 GW (from 149.5 GW). These figures also lie above GWEC’s most ambitious scenario as outlined in the Global Wind Energy Outlook in 2006, which forecast a total global installed capacity of 221 GW in 2012, i.e. 19.3 GW below the current estimate.

The reasons for this adjustment are twofold: Firstly, both the US and the Chinese market have been growing and will continue to grow at a much faster rate than expected even a year ago. Secondly, the emergence of significant manufacturing capacity in China will have a more important impact on the growth of the global markets than originally thought. While tight production capacity is going to remain the main limiting factor of further market growth, machines ‘made in China’ will help take some of the strain out of the current supply situation.

The average growth rates during this five year period in terms of total installed capacity are expected to be 20.6%, compared with 23.4% during 2003-2007. In 2012, Europe will continue to host the largest wind energy capacity, with the total reaching 102 GW, followed by Asia with 66 GW and North America with 61.3 GW.

The additions in installed capacity every year are predicted to grow from 20 GW in 2007 to 36.1 MW in 2012, with an average growth rate of 12.4%. Considering that annual markets have been increasing by an average of 24.7% over the last 5 year, growth could be much stronger also in the future, were it not for continuing supply chain difficulties which considerably limit the growth of annual markets for the next two years. This problem should be overcome by 2010, and along with the development of the offshore market, growth rates are expected to recover in the next decade.

Asia is predicted to overtake Europe as the biggest annual market, with as much as 12.5 GW of new wind generating capacity installed during the year 2012, up from 5.4 GW in 2007. This growth will be mainly led by China, which has since 2004 doubled its total capacity every year, thereby consistently exceeding even the most optimistic predictions.

By 2010, China is expected to be the biggest national annual market globally. This development is underpinned by a rapidly growing number of domestic manufacturers operating in the Chinese market, delivering home made turbines to large scale wind energy projects. Already in 2007, 40 domestic suppliers supplied 56% of the new installations in the domestic market, up from 41% in 2006.

While China will emerge as the continental leader in Asia, sustained growth is also foreseen in India, while other markets such as Japan, South Korea and Taiwan will also contribute to the development of wind energy on the continent.

The European market will by 2012 have fallen to third place in terms of annual installations (10.3 GW), behind North America (10.5 GW). Overall, this means that over 71% of new installations will occur outside of Europe in 2012, up from 28% in 2004 and 57% in 2007. While in terms of total installed capacity, Europe will continue to be the biggest regional market, its share will have fallen to 42.4%.

The large scale development of offshore wind energy is further delayed and will only start to have a significant impact on European market growth towards the end of the time period under consideration. However, it is expected that offshore development will lend new momentum to growth in Europe during the next decade.

In Europe, Germany and Spain will remain the leading markets, but their relative weight will decrease as a larger number of national markets emerge on the scene. While the spectacular growth of the Spanish market in 2007 with over 3.5 GW of new installations will not be sustained, a stable pace of 2-2.5 GW per year on average can be expected, enabling Spain to reach the government’s 2010 target of 20 GW. The size of the German annual market will continue to decrease, but it will remain the second strongest European market for the 2008-2012 period, and the biggest in terms of total installed capacity. By 2010, offshore developments will give new impetus to the German market, resulting in stronger growth. Other important markets in Europe will be France and the United Kingdom, each increasing by an average of 1 GW per year.

The North American market will grow even stronger than previously thought, led by significant growth in the US, as well as sustained development of the Canadian market. In total, North America will see an addition of 42.6 GW in the next five years, reaching 61.3 GW of total capacity in 2012. This represents an average of 8.5 GW of new capacity added every year, the bulk of which will be in the US.

These figures assume that the US Production Tax Credit (PTC) will continue to be renewed in time for the current strong growth to continue. Moreover, high level engagement of an increasing number of US states, 24 of which have already introduced Renewable Portfolio Standards, will also assure sustained growth. A change in US administration may further underpin this development.

Latin America is expected to contribute to the global total in a more substantial way in the future, mainly driven by Brazil, Mexico and Chile. By 2012, the total installed capacity in Latin America and the Caribbean will increase 8-fold to reach 4.5 GW, with an annual market of 1.4 GW. However, despite its tremendous potential, Latin America is likely to remain a small market until the end of the period under consideration, progressing towards more significant development in the next decade.

The Pacific region will see around 2.3 GW of new installations in 2008-2012, bringing the total up to 3.5 GW. While in Australia, wind energy development slowed down considerably in 2006 and 2007, the outlook for the future is more optimistic, mainly thanks to the change in federal government at the end of 2007, the ratification of the Kyoto Protocol and the pledge to implement a new target for 20% of electricity to come from renewables by 2020. New Zealand, however, got new impetus with 151 MW of new installations, and many more projects are at various stages of development.

Africa and the Middle East will remain the region with the smallest wind energy development, with a total installed capacity of 3 GW by 2012, up from 500 MW in 2007. However, it is expected that market growth will pick up in the coming five years, with annual additions, reaching around 800 MW by 2012. This development will be driven by Egypt and Morocco, with some development also predicted in other North African and Middle Eastern countries.




© GWEC

The status of global wind power in 2007

US, China & Spain lead world market

In its best year yet, the global wind industry installed over 20,000 MW in 2007. This development was lead by the US, China and Spain, and it brought the world-wide installed capacity to 94,123 MW. This is an increase of 31% compared with the 2006 market, and represents an overall increase in global installed capacity of about 27%.

"The growth rates we are experiencing in wind energy continue to exceed our most optimistic expectations,” said GWEC Secretary General Steve Sawyer. “Globally, wind energy has become a mainstream energy source and an important player in the world’s energy markets, and it now contributes to the energy mix in more than 70 countries across the globe.

The top five countries in terms of installed capacity are Germany (22.3 GW), the US (16.8 GW), Spain (15.1 GW), India (8 GW) and China (6.1 GW). In terms of economic value, the global wind market in 2007 was worth about 25bn EUR or 37bn US$ in new generating equipment.

US market continues its boom

The US reported a record 5,244 MW installed in 2007, more than double the 2006 figure, accounting for about 30% of the country’s new power-production capacity in 2007. Overall US wind power generating capacity grew by 45% in 2007, with total installed capacity now standing at 16.8 GW.

American wind farms will generate around 48 bn kWh of electricity in 2008, just over 1% of U.S. electricity supply, powering the equivalent of over 4.5 million homes.

In 2007, 34 US states were producing electricity with wind power. The states with the most cumulative installed wind power capacity are: Texas (4,356 MW), California (2,439 MW), Minnesota (1,299 MW), Iowa (1,273 MW) and Washington (1,163 MW).

It is expected that the US will overtake Germany as the leader on wind energy by the end of 2009. AWEA’s initial estimates indicate that another 5GW of new wind capacity will be installed in 2008. Developers report that with strong demand for wind power across the country, wind turbines are sold out for the year. However, AWEA projects that with more companies entering the market, more turbines will become available. The pace of growth in 2008 and beyond is expected to largely depend, not on turbine availability, but on the timing and duration of an extension of the federal production tax credit (PTC), which is due to expire at the end of 2008.

"This is the third consecutive year of record-setting growth, establishing wind power as one of the largest sources of new electricity supply for the country,” said AWEA Executive Director Randall Swisher. “This remarkable and accelerating growth is driven by strong demand, favorable economics, and a period of welcome relief from the on-again, off-again, boom-and-bust cycle of the federal production tax credit (PTC) for wind power.”

"The extension of the production tax credit (PTC) is urgently needed to protect tens of thousands of U.S. manufacturing and construction jobs and create tens of thousands more, and to keep investment flowing into one of the fastestgrowing and brightest sectors of our economy: renewable electricity," he adds.

China sees doubling of annual market - again

China added 3,449 MW of wind energy capacity during 2007, representing market growth of 156% over 2006, and now ranks fifth in total installed wind energy capacity with over 6,000 MW at the end of 2007. However, experts estimate that this is just the beginning, and that the real growth in China is yet to come. Based on current growth rates, the Chinese Renewable Energy Industry Association (CREIA)forecasts a capacity of around 50,000 MW by 2015. The regions with the best wind regimes are located mainly along the South-East coast and Inner Mongolia, Xinjiang, Gansu Province’s Hexi Corridor and in some parts of North-East China, North-West China, Northern China and the Qinghai-Tibetan Plateau.

The wind manufacturing industry in China is booming. While in the past, imported wind turbines dominated the Chinese market, this is changing rapidly as the growing wind power market and the clear policy direction have encouraged domestic production.

At the end of 2007, they were 40 Chinese manufacturers involved in wind energy, accounting for about 56% of the equipment installed during the year, up from 41% in 2006.

“This percentage is expected to increase substantially in the future. Total domestic manufacturing capacity is now about 5,000 MW, and is expected to reach 10-12 GW by 2010,”
predicts GWEC President Prof. Arthouros Zervos. Established major Chinese manufacturers are Goldwind, Sinovel Windtec, Windey and Dongfeng Electrical.

While in 2006, only about 400 MW of new capacity was manufactured by Chinese manufacturers, in 2007, the top two Chinese companies (Gold Wind and Sinovel) alone accounted for 1,460 MW of the new installed capacity,representing about 42% of the annual market. This compares to only 37% provided by the top three foreign manufacturers (Gamesa, Vestas and GE).

National growth inconsistent in Europe, Spain leading the way

The capacity of new wind turbines brought on line across Europe last year was 8,662 MW. Total wind power capacity installed by the end of 2007 reached 57,135 MW, which will avoid about 90 million tonnes of CO2 annually and produce 119 TWh in an average wind year. Wind energy is now increasing more than any other power technology in Europe, making up 40% of total new power installations in 2007, according to EWEA.

The big surprise in the European market was Spain with 3,522 MW of new capacity installed in 2007, the highest amount of any European country ever, earning it second place globally after the US. Total installed wind energy capacity now stands at over 15 GW in Spain. There was also sustained growth in France with 888 MW of added capacity to reach 2,454 MW and Italy, with 603 MW added for a total of 2,726 MW. The new Member States performed well and increased installed capacity by 60%, with Poland, the most successful, reaching a total of 276 MW. The Czech Republic installed 63 MW, its best year ever, and Bulgaria 34 MW.

Nevertheless, a handful of markets pulled in the opposite direction, including Germany, whose annual market shrank by 25% compared to 2006. Portugal and the UK also slumped. As a result, the overall annual market growth in Europe in 2007 of 11% was not what the industry had hoped for.

Majority of new installations in 2007 outside of Europe

While Europe remains the leading market for wind energy, new installations represented just 43% of the global total, down from nearly 75% in 2004. For the first time in decades, more than 50% of the annual wind market was outside Europe, and this trend is likely to continue into the future.

While Europe, North America and Asia continue to see the most important additions to their wind energy capacity, the Middle East/North Africa region increased its wind power installations by 42%, reaching 538 MW at the end of 2007. New capacity was added in Egypt, Morocco and Iran.

Growth in the Pacific region was led by New Zealand with 151 MW in new capacity, which nearly doubled the country’s total installations, reaching 322 MW. While Australia had an exceptionally weak year with only 7 MW of new installations, the change in government at the end of 2007 spurs hopes for a brighter future for wind energy. Within hours of being sworn in to office, the new Labour Prime Minister Kevin Rudd signed the ratification of the Kyoto Protocol, and the new government is now making good on its promise of a target of 20% power production by renewables by 2020. This is likely to have positive long-term impacts for wind energy development on the continent.




© GWEC

Friday, May 2, 2008

Wind Power Today

Wind Power

Wind power is much more than the gentle breeze that causes the trees to sway or the waves tomove across a lake. The power in the wind can blow a semitrailer truck off the road and flatten buildings. And it can be harnessed to be a non-polluting, never-ending source of energy to meet electric power needs around the world.

Wind power is a form of renewable energy – energy that is replenished daily by the sun. As portions of the earth are heated by the sun, air rushes to fill the low pressure areas, creating wind power. But the wind's characteristics may conceal its true power. The wind is slowed dramatically by friction as it brushes the ground and vegetation, it may not feel very windy at ground level. Yet the power in the wind may be five times greater at the height of a 40-story building (the height of the blade tip on a large, modern wind turbine) than the breeze on your face. Furthermore, the wind is accelerated by major land forms, so that entire areas of the country may be very windy while other areas are relatively calm. Since our country’s founders tended to build our cities and towns where the wind doesn’t blow strongly, the vast majority of people don’t live in high-wind areas. Yet, when wind power is converted to electricity, it can be sent long distances to serve the needs of the cities and towns where we do live.

Creating Electricity

Wind power is converted to electricity by a wind turbine. In a typical, modern, large-scale wind turbine, the kinetic energy in the wind (the energy of moving air molecules) is converted to rotational motion by the rotor – typically a three-bladed assembly at the front of the wind turbine. The rotor turns a shaft which transfers the motion into the nacelle (the large housing at the top of a wind turbine tower). Inside the nacelle, the slowly rotating shaft enters a gearbox that greatly increases the rotational shaft speed. The output (high-speed) shaft is connected to a generator that converts the rotational movement into electricity at medium voltage (a few hundred volts). The electricity flows down heavy electric cables inside the tower to a transformer, which increases the voltage of the electric power to the distribution voltage (a few thousand volts). (Higher voltage electricity flows more easily through electric lines, generating less heat and fewer power losses.) The distribution-voltage power flows through underground lines to a collection point where the power may be combined with other turbines. In many cases, the electricity is sent to nearby farms, residences and towns where it is used. Otherwise, the distribution-voltage power is sent to a substation where the voltage is increased dramatically to transmission-voltage power (a few hundred thousand volts) and sent through very tall transmission lines many miles to distant cities and factories.

Applications

Wind turbines come in a variety of sizes, depending upon the use of the electricity. The large, utility-scale turbine described above may have blades over 40 meters long, meaning the diameter of the rotor is over 80 meters – nearly the length of a football field. The turbines might be mounted on towers 80 meters tall (one blade would extend about half way down the tower), produce 1.8 megawatts of power (1.8 MW or 1800 kilowatts, 1800 kW), supply enough electricity for 600 homes, and cost over a million and a half dollars!

Wind turbines designed to supply part of the electricity used by a home or business are much smaller and less costly. A residential- or farm-sized turbine may have a rotor up to 15 meters (50 feet) in diameter and be mounted on a metal lattice tower up to 35 meters (120 ft) tall. These turbines may cost from as little as a few thousand dollars for very small units up to perhaps $40,000-$80,000.

Very small turbines may be designed to charge batteries to supply electricity to homes that are not connected to the utility system. In those systems, the batteries store the electricity until it is needed. Such systems usually include an inverter that "conditions" (modifies) the power so that it is suitable to run typical appliances. Of course, the batteries and other necessary equipment increase the cost of the system, and the quantity of electricity available is limited by the battery storage capacity.

Wind Projects

A typical large wind project involves many, many players. The main responsibility for the project lies with the developer. The developer negotiates with the landowner for the right to “harvest the wind” above the land and to place the turbine on a small plot of land – typically less than 1 acre is removed from normal use (farming, grazing, etc.) for each 50 acres of wind resource captured. (Turbines must be spaced a certain minimum distance apart to avoid "shadowing" each other and reducing power output.) Leasing the right to harvest the wind over a farm can more than double the annual net income from cultivation or grazing. The developer also must find financing, secure a contract with a utility to buy the electricity produced, purchase the equipment and contract to have it installed, and arrange for operation of the project. Recently, some landowners have become part owners of the projects on their land. This approach increases the community involvement in a project, though the legal arrangements may be quite complicated.

Wind Power Markets

Perhaps there is no “typical” wind power project. Some are built to enable utilities to comply with minimum requirements to purchase renewable energy established by state and local governments (“renewable portfolio standards” or “renewable energy standards”). Others may supply "green pricing" programs in which customers voluntarily purchase wind-generated electricity from their utility. In good wind resource areas, a new, large wind project may produce electricity at less cost (over the 25-year life of a project) than any other new power plant, regardless of the fuel source. While it is true that wind power output varies over time, utilities have learned to integrate wind power with their existing electricity generators. About 20% of Denmark's electricity is generated by wind power, yet Danish utilities report no loss of reliability and no need for expensive new equipment or energy storage.

Making an Impact

The wind resource in the United States is vast. Using today’s technology, there is theoretically enough wind power flowing across the country to supply all of our electricity needs. North Dakota alone could supply about one third of the nation’s electricity. Adequate winds for commercial power production are found at sites in 46 states. However, less than 1% of the nation’s electricity is currently supplied by wind power. Only a small portion of the country’s vast potential will likely be tapped in the near term unless there is a shift in our energy policy priorities toward long-term support for renewable energy development. President Bush has stated that wind energy can provide as much as 20% of the nation’s electricity. AWEA believes this goal is both feasible and affordable: the barriers to wind energy’s expansion on a large scale are regulatory -- not physical --and can be overcome. The choice is ours.

© AWEA

Wind Power – Clean & Reliable

Can We Rely on Wind Power ?
Yes. Wind power is currently supplying 48 billion kilowatt-hours (kWh) ofelectricity annually in the U.S., powering the equivalent of over 4.5 millionhomes. Wind power is an important part of electric utility generationportfolios.Yet some question whether wind power, being a variable resource(meaning it generates electricity when the wind is blowing) can be reliedupon as part of a system that provides reliable electricity to consumerswithout interruption. Based on a growing body of analytical and operationalexperience, the answer is a resounding “yes”.According to many utilities and reliability authorities, wind power can readilybe accommodated into electric system operations reliably and economically.

High Wind Penetration and Reliable Operation
In Europe, Denmark receives over 20% of its electricity from wind energy, and in2007 Germany received around 7% of its electricity from the wind. Both Spain andPortugal had periods in 2007 when wind energy provided over 20% of theirelectricity. In the U.S., Minnesota and Iowa both get close to 5% of their electricityfrom wind energy. These examples show that high penetrations of wind power canbe a valuable part of a utility generation mix that supplies reliable electrical serviceto consumers without interruption.

Accommodating the Variable Nature of Wind Power
When wind energy output decreases, reliable electrical service is maintained by turning up the output of other generators on the electric power system. Electric utility companies serve as “system operators” which can be thought of as air traffic controllers of the power system. System operators can control, or dispatch, generators on their system such as natural gas-fired and hydroelectric generators. They have always actively dispatched their systems in response to electrical demand, or load, which varies randomly over the course of an hour or day. Wind energy output behaves similar to load in that it is “variable,” meaning its output rises and falls within hourly and daily time periods; and it is “non-dispatchable,” meaning its output can be controlled only to a limited extent. Reliable electrical service can be maintained by system operators dispatching generators up and down in response to variation in load and wind generation. System operators also keep generation in reserve, called “operating reserves,” which can be called on in case of a shortfall.

According to Paul Bonavia, Chief Operating Officer of Xcel Energy, one of the nation’s largest electric utility companies:
"Wind energy is an integral piece of our power supply portfolio. It provides a hedge against fuel price volatility associated with other forms of electric generation. Our studies and experiences show that wind energy integrates effectively and reliably into our power systems with regional market operations to mitigate the impact of wind variability. In these cases even with 25 percent of the electricity on our system from wind we forecast cost for operating system reserves of approximately $5 per megawatt-hour, or roughly ten percent of the cost of the wind energy. As we gain experience with wind we keep seeking ways to achieve low integration costs."

Wind Energy and Reliability

Is Energy Storage Needed?
No, while it is natural to think that batteries or other storage systems might be needed to supply steady power, they are not needed to integrate wind energy into electric power systems. The power system essentially already has storage in the form of hydroelectric reservoirs, gas pipelines, gas storage facilities, and coal piles that can provide energy when needed. Storing electricity is currently significantly more expensive than using dispatchable generation.
In the future, through advances in technologies such as batteries and compressed air, energy storage may become cost-effective. The prospect of plug-in hybrid electric vehicles holds great promise because the expense of their batteries would be covered by their fuel cost savings and they could provide many megawatts of storage for the overall electrical power system. This would also allow wind power and other renewable energy resources to displace consumption of foreign oil. Still, energy storage will best be used as a resource for the overall power system. It would not be cost effective or efficient to couple energy storage resources exclusively to individual wind plants.

Is wind less “reliable” than conventional generation?
No. Conventional resources occasionally shut down with no notice, and these “forced outages” require operating reserves. For example, a power system that has a 1000 Megawatt nuclear or coal plant will typically keep 1000 Megawatts of other generation available, to be ready to quickly supply electricity if a plant unexpectedly shuts down. The power system can still be operated perfectly reliably in this fashion. Thus, “reliability” is not specific to any single generation facility, rather it is measured on a system-wide basis. Because significant generation reserves are already required to accommodate unexpected changes in electricity supply and demand, in many regions large amounts of wind power can be added to the grid without increasing the total amount of reserves that are needed.

As noted by Jon Brekke, Vice President of Member Services for Great River Energy, a utility that operates in Minnesota and Wisconsin: “Wind energy is a valuable part of our diverse and growing energy portfolio. When partnered with other traditional generation resources, wind energy is an effective way to provide reliable, clean and affordable power to our member cooperatives. Geographic diversity of wind energy helps even out the variability of wind energy in the regional market. In addition, wind farms are typically made up of many individual turbines which reduce the impact of outages. For instance, there are 67 1.5 -MW turbines at our Trimont Wind Farm, so if one is down for maintenance only 1.5% of the total wind farm's generating capacity is lost.”

Changes in wind energy output are not instantaneous, as are conventional generator failures. Because of the geographic diversity inherent with large numbers of wind turbine installations, it typically takes over an hour for even a rapid change in wind speeds to shut down a large amount of wind generation. This is a significant benefit when compared with the instantaneous forced outages of conventional units. In addition, wind forecasting tools that warn system operators of upcoming wind output variations are becoming widely used and better integrated into system operations.

What is the cost of wind integration?
When large amounts of wind energy are added to the grid, modest amounts of additional generation may be required to accommodate wind energy’s variability. The exact costs of these incremental reserves depend on the mix of generation on a given system and various other factors, but they are generally quite small. In a document prepared by the Utility Wind Integration Group in coordination with the trade associations of all three utility sectors (investorowned, public, and cooperative), the studies and experiences with utility wind integration are summarized as follows:
􀀹 “Wind resources have impacts that can be managed through proper plant interconnection, integration, transmission planning and system and market operations.
􀀹 System operating cost increases arising from wind variability and uncertainty amounted to only about 10% or less of the wholesale value of the wind energy.
􀀹 A variety of means – such as commercially available wind forecasting – can be employed to reduce these costs.
􀀹 In many cases, customer payments for electricity can be decreased when wind is added to the system, because the operating-cost increases are offset by savings from displacing fossil fuel gene

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