After installing a record 8,600 MW of wind energy capacity in 2008, 2009 will look like a letdown in comparison. Most of the projects that did go online this year were started under a different economic climate, where credit was plentiful. These are some of the factors shaping the industry in 2009:
Electricity Demand Down
Total US electricity consumption declined by 3.5% in 2009, representing the largest drop in the last decade. Electricity use by the industrial sector was down a staggering 12% from January to September of 2009. Although decreased demand is positive when considering the environmental implications, it does temporarily reduce the interest slightly in increasing green power sources. This tend is likely to last only as long as the slow economic climate, although increased emphasis on energy efficiency under the Obama administration may help mitigate the trend of electric demand increasing nearly every year.
Coal Power in Decline
Despite widespread concern for global warming, between 2000 and 2006, more than 150 coal plants were proposed to electric utilities. A majority of those plants were later canceled or postponed and by 2008 only 35 plant of the proposed plants were either completed or under construction. The trend continued in 2009, as 29 more proposed coal plants were canceled.
In addition, there were numerous announcements in 2009 to phase-out existing coal plants. For example, Ontario Power Generation announced that it will close 4 coal power plants in late 2010, representing 2000 MW of generating capacity. Combined with other recent closures, Ontario will experience an anticipated 40% reduction in the use of coal once the plants have been phased-out.
Such closures will help boost the need and demand for new and existing wind farms. Thankfully, there was a 12% drop in electricity generated from coal in the first 9 months of 2009, due to decreased demand coupled with increased generation from hydropower, natural gas, and wind energy.
Stimulus Money Funds Research:
The US has been falling behind in wind energy research. Money from the American Recovery and Reinvestment Act was designated for research facilities that will help boost America’s role in clean energy technology development. A large wind turbine drivetrain facility in South Carolina for example will receive a total of $98 million in funding ($48 million from the Department of Energy and $53 million in matching funds). Clemson University Restoration Institute is partnering with the Charleston Naval Complex Redevelopment Authority, the South Carolina Department of Commerce, the State of South Carolina, South Carolina Public Railways, the South Carolina State Ports Authority and private partners to form this first-of-its-kind facility in the world.
The research facility will test a new generation of giant wind turbines from 5 to 15-megawatts, for use in offshore generation. Due to the tremendous size of the turbines that will be tested, the power producing implications are huge. A single 15-megawatt turbine can produce enough power for 7,500 homes. Offshore wind farms, although currently costly, could draw on strong, reliable winds at sea. This additional wind capacity would be valuable in reducing America’s dependence on fossil fuels.
Stimulus Money Incentives for Wind Power
The stimulus package has generous provisions for wind energy development.
- An immediate 30% cash reimbursement for project costs (must forgo future tax credits)
- 3-year extension of the production tax credit (a $.021- per kilowatt-hour benefit for the first ten years of production)
- A 30% investment tax credit can be applied instead of the production tax credit, an option previously only available for solar installations
Although these incentives will certainly help fuel further development over the next few years, liquidity and financing hurdles remain great. Until these challenge is overcome, the wind industry, like most others will not thrive.
Photo credit: Wes Slaymaker of WES Engineering (upper photo)
Sarah Lozanova is passionate about the new green economy and is a regular contributor to environmental and energy publications and websites, including Energy International Quarterly, ThinkGreen.com, Triple Pundit, Green Business Quarterly, Renewable Energy World, and Green Business Quarterly. Her experience includes work with small-scale solar energy installations and utility-scale wind farms. She earned an MBA in sustainable management from the Presidio Graduate School and is a co-founder of Trees Across the Miles, an urban reforestation initiative.