Wind spins its way into the energy equation High fuel costs add to the allure of a nonpolluting power

Once barely enough to stir the surface of the energy industry, wind power is gathering intensity, evolving from local origins and drawing in major international investors like electricity utilities, oil producers and equipment manufacturers.

The rise of commercial wind power started in the 1990s in Europe, driven by opposition to nuclear power after the Chernobyl disaster, the closing of power plants in Eastern Germany that had caused a lot of pollution, worries about oil supplies after the Gulf war, and the belief that northern Europe was better suited to wind power, rather than solar power.

The speed of development recently reflects favorable political and technological factors and a surge in conventional energy costs, say industry analysts like Rick Sellers, head of renewable energy at the International Energy Agency in Paris. The agency coordinates energy policy for the major industrial nations.

The industry is also expanding because of commitments to reduce emissions of greenhouse gases and other forms of air pollution, said Corin Millais, chief executive officer of the European Wind Energy Association, a trade organization. These include the Kyoto Protocol and a European Union directive that aims to get 22.1 percent of EU electricity from renewable sources by 2010.

High oil prices are spurring interest in wind. Although only a little electricity is produced from oil, Sellers said, there is an indirect effect from oil prices on the prices of widely used fuels for making electricity, like natural gas and coal.

"You're going from three or four or five countries to 15 or 20 countries," Sellers said, referring to countries that use wind power extensively. The industry is in "a major transitional moment."

Millais agreed, saying that "whereas previously you had serious wind energy markets in three or four countries, you're now seeing quite rapid growth from a small base in a number of countries."

As the market widens, traditional manufacturers of power generating equipment, like Mitsubishi Heavy Industries of Japan, Siemens of Germany and General Electric of the United States, have started to make large wind-power turbines. "They bring a whole different set of skills" as well as expertise in materials sciences that can be applied to turbine blades, said Sellers of the energy agency.

General Electric said on June 28 that its revenue from wind power equipment in 2005, its third year in the wind power sector, would exceed $2 billion, based on orders and commitments through the first six months. "Wind power continues to be the fastest-growing segment of the global energy industry," General Electric said in a statement.

In June, an international consortium led by Royal Dutch/Shell Group announced a project to build a l1.5 billion, or $2.7 billion, wind farm in the estuary of the Thames River off the British coast.

The project, called the London Array, involving up to 270 turbines, could generate as much as 1,000 megawatts, enough to supply 25 percent of London's residential electricity and cut greenhouse gas carbon dioxide emissions by up to 1.9 million tons a year, Shell said. Shell got involved because of expected shifts in energy production, said Robert Kleiburg, vice president for strategy and planning at Shell Renewables, the unit handling wind, hydrogen, biofuels and solar power activities.

"If you look at the energy mix anticipated in 2050, we estimate that between a quarter and a third of the world's energy will be satisfied with renewable technologies, which will mean that there will be significant business opportunities for a company like Shell," Kleiburg said.

He said Shell expected to invest $500 million to $1 billion in the next five years in new energy technology, mostly in the wind segment.

Shell's partners in the London Array include two European electric power utilities with increasingly international operations, E.ON Group of Germany and Energi E2 of Denmark, and a specialized British wind power company, Farm Energy. Kleiburg said the project, borrowing heavily from offshore oil field technology, could start supplying electricity as early as 2008 and be completed by 2011. If approved by British authorities, the London Array would be the largest wind plant yet. About 50,000 megawatts of wind power are now installed around the world, of which 34,000 megawatts are in Europe, said Millais of the European Wind Energy Association.

With the industry's projected growth, he said, "you're looking at in excess of 100,000 megawatts by 2010," involving tens of billions of dollars in investment.

Although Europe has dominated wind power production so far, that is changing, Millais said. "What we're seeing in terms of the global shift is positive growth in places like Asia, especially China and India. The U.S. market is probably going to be the biggest market this year," he said.

Commercial wind farms can require large investments and take up to 10 years to break even.

"I wouldn't say there's a huge amount of profit in the sector, but the potential to have a secure portfolio in wind is very possible," Millais said. "You need to work out how to put the package together correctly."

The London Array would be located offshore to respond to another problem the industry faces big, noisy machines that need a lot of space. "A solar panel on the roof of a house is almost invisible, but 30 wind machines on top of a ridge are quite visible," said Sellers of the International Energy Agency. "Contrast that to coal and other fossil-fuel plants in the 500- to 1,000-megawatt range. Those systems are much more compact you dig ore in one part of the world and burn it in another part of the world. The trains are already there, and there's no imposition on the population."

The London Array risks opposition from some British conservationists who are already fighting other, land-based wind farms in the country. In response to public concern, legislation was introduced recently in the U.S. Congress to restrict the locations of wind farms that are eligible for government subsidies and to give local authorities more time to determine if wind farms should be built in their areas. "These wind turbines are not your grandmother's windmills, gently pumping water from the farm well," Senator Lamar Alexander, a Republican from Tennessee, said while introducing the bill.

"These things are huge," Millais said. "You see them in the outdoor landscape. In general, public opinion is very strong for wind farms, but every technology has its opponents."

The easiest places to build commercial wind farms are in countries like Germany, Denmark and Spain, where the industry got its start. According to the European Commission, Sweden's regulations have become more onerous, while France is the most difficult EU country for wind operators, requiring many types of approvals.

Still, companies are scrambling to get into a business that promises rapid growth. "I get phone calls all the time from companies that want information," Millais said. "The underlying trends are very strong. There are a lot of people looking to enter the market."

Worldwide sales of wind turbines totaled $8 billion in 2004, he said. "My sense is that the rate of growth we've seen, 20 to 25 percent for the last seven or eight years and maybe more, this trend will continue," said Sellers of the energy agency.

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Michael J. Strauss reports from Paris on finance, raw materials and energy.

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