Three Studies Point to an Improving Market for Wind Power
Source: GreenMarketReport.com

It’s a good time to be in the business of turning the breeze into kilowatts. Costs are down, political support is rising and technology has improved. At the same time, a trio of recent studies forecast a bright future for this age-old energy generation technology. By Avery Yale Kamila


Navigant Consulting recently made public the results of a renewable energy study they conducted on behalf of U.S. and Canadian utility companies. Their research forecasts a doubling of renewable energy in the U.S. over the next decade. Wind and biomass are projected to make up 85% of this new capacity. Currently, the U.S. has 4,700 megawatts of wind power, which will increase to 6,000 megawatts by the end of 2003.

"Wind is clearly the most economic of renewable energy technologies," observes Lisa Frantzis, Navigant’s director of renewable and distributed energy and a lead researcher for the consulting firm’s study. Today the cost of electricity generated from wind averages 3 to 3.5 cents per kilowatt hour, which compares favorably with traditional energy generation.

New research form Stanford University has quantified wind’s potential as a domestic energy source. Researchers Mark Jacobson and Christina Archer published the first measurements of wind speed at the height of modern turbines (262 feet versus 164 feet), in the May 13 Journal of Geophysical Research.

Their data revealed that of the 1,300 U.S. sites monitored in the study, 24% experience regular gusts that are fast enough to make wind power competitive with coal and natural gas. According to Jacobson, these fast winds average 15 to 16 miles per hour, or seven to seven and a half meters per second. At monitoring sites that were offshore or on the coast, 37% experienced fast winds. Previous studies have mapped fast winds at the height of old turbines, but no study had determined the percentage of U.S. sites that experience such gusts. The Stanford study identified new sites that are ideally suited for wind farm construction along the southern and southeastern coasts.

"Another thing this study shows is that if you link wind farms together, the average energy output is a little more smooth," says Jacobson, who has conducted numerical modeling of climate and weather for over a decade and has studied wind turbines for the past three years. Since the release of the research, he has been busy taking phone calls from developers interested in the study’s implications for their land.

Earlier this year, the Renewable Energy Policy Project completed the first study that investigated the impact of commercial wind farm construction on surrounding property values. "In looking at sales data, we found no evidence that these wind farms had a negative impact on the sale prices of homes," reports Fred Beck, the author of the study. These findings refute the common claim made by wind farm opponents that the presence of commercial wind turbines cause property values to decline.

The study identified 27 wind farms that were installed between 1998 and 2001 with a generating capacity of at least 10 megawatts. Many of these sites had few surrounding property sales, so those wind farms were eliminated and the list was narrowed to 10. A five-mile radius was drawn around each site and the property transactions within this view shed were analyzed. Real estate sales prices were benchmarked against a comparable community and the researchers interviewed local assessors and reviewed census data. In many cases, the study found that properties within the view shed actually increased in value faster than prices in the surrounding community.

Sensing growth potential, large corporations have invested in the market. Most notable is General Electric’s acquisition of Enron’s wind assets, a move that Kathy Belyeu, an analyst for the American Wind Energy Association, estimates has allowed General Electric to "capture 40% or 50% of the market so far this year." Other big players include ABB, FPL Energy and Shell Wind.

The Importance of Policy Incentives

Driving much of the growth in the wind power market is the presence of the federal Production Tax Credit and the growing number of states that have renewable portfolio standards. The PTC offers a tax credit to commercial producers of renewable energy for 10 years. The credit is set to expire at the end of this year.

"This is an incentive for developers to get their project on line by this year," says Belyeu and adds that the American Wind Energy Association is lobbying to have the credit extended. Its future remains uncertain because the PTC is part of the politically controversial Energy Policy Bill. The PTC last expired on December 31, 2001, but it was extended retroactively for another two years as part of the economic stimulus plan signed into law in 2002.

"The PTC ensures that developers can get financing," explains Frantzis. "If you look at what happened in 2002 versus 2001, you see a 73% reduction in new capacity additions in one year. Most of this reduction is a result of uncertainty surrounding the PTC. Uncertainty does more harm than good."

At present, 12 states have renewable portfolio standards that mandate a minimum amount of energy that must be generated from renewable sources. An additional three states have goals for renewable generation and another six are considering adopting standards. Each state has different criteria for what qualifies as renewable energy, however, wind and solar are included in all. The Navigant study notes that the 15 states that have enacted standards or goals are expected to invest up to $4.37 billion in renewable energy development by 2012. The report cautions that some of this funding could be appropriated by state legislatures struggling to eliminate budget deficits.

Green pricing programs are another stimulus for the growth of renewable energy. These programs ask utility consumers to pay a voluntary premium for renewable energy generation. According to the National Renewable Energy Laboratory, more than 300 utilities in 32 states offer these programs.

Political sentiment is also fueling support for renewable power. Consumers are demanding cleaner energy sources, scientists are demanding reduced air emissions and security experts are demanding domestic energy generation. Despite the uncertainty of the PTC, political support coupled with recent research can only mean that an ever increasing percentage of our power will flow from wind.

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Avery Yale Kamila is the founding editor of GreenMarketReport.com, an online magazine that publishes book reviews and feature stories for sustainable business leaders. This article first appeared in the July 2003 edition of that publication.