Ken Silverstein EnergyBiz Insider Editor-in-Chief

The high price of natural gas has certainly given aid to the rise in wind energy. And that phenomenon, in combination with the improvements in wind turbines to create more output at less cost along with government incentives to expand the usage of wind energy, have nudged up the fuel source's market share. President Bush says that the United States could produce 20 percent of its electricity from wind. And while he won't give any time frames, the National Energy Renewable Laboratory based in Golden, Co. says it will happen by 2030.

"Wind is so popular the costs have come down," says Brian Parsons, project manager for wind applications at the lab's National Wind Technology Center. "But, good wind sites with existing transmission assets are half gone. So, the goals are to move offshore and into low-speed wind energy areas. We are working to develop turbines that perform better at lower speeds where many population centers are based."

In a visit to the tech center, researchers there explained that wind has seven "classes." Offshore sites where the wind blows the hardest are class sevens. And states such as Montana, the Dakotas and Wyoming have regions that are class sixes. The logistical difficulties, however, associated with such sites are plentiful and namely getting the transmission built to accommodate the wind power. But, there are many class fours and fives throughout the country that are close to where the power would be used and to where transmission lines could be developed.

The cost of wind is a direct function of the wind class. The stronger the wind speed, the greater the energy created. According to Parsons, if the wind speed were to double from 12 miles per hour to 24 miles per hour, a plant could produce eight times more power. The faster a turbine spins, however, the sooner it will wear out. The tech center, however, tests for "fatigue" and examines new ways to make turbines more durable.

Two years ago, utilities were paying 5 cents a kilowatt hour, although it amounted to 3 cents per kilowatt hour with the production tax credit given to producers. Prices are now rising, largely because manufacturers can't produce enough turbines to meet demand. In any event, experts say that if the price of natural gas is above $5 per million Btus, wind is competitive. And wind is also viable with newer coal plants that use the latest technologies, although it is not with the older facilities.

"If you double the diameter of the blade, you will get four times the output," says Parsons. But the cost will not quadruple. At the same time, taller towers are able to capture more of the wind, he adds -- all research that the lab is now tackling.

The cost of production is declining while the tools to accurately predict wind sources are coming to market. Such precision -- enabled through three-dimensional modeling -- is essential if utilities are to get the best possible financing and to estimate their cash flow. By taking years of real weather data and modeling it to fit a specific location, forecasters can come within a few percentage points of what the actual results will be -- even years down the road.

Miles to Go

Wind energy in the United States has tripled from 1,600 megawatts in 1994 to about 6,700 in 2004. At the end of 2005, it stood at nearly 9,200 megawatts and it could expand another 50 percent by year's end. Wind farms are in 30 states.

And the power source could expand even faster if not for the high demand and subsequent market constraints. GE Wind Energy supplies 60 percent of the turbines and says that its plants are at capacity through 2007. Meanwhile, Clipper Windpower is gearing up and planning to produce a total of 250 wind turbines by 2007.

Today's land turbines average about 1.5 megawatts each, although the development is underway to gradually increase that power to as much as 5 megawatts each and all by 2012. GE, for example, is now working with the National Renewable Energy Laboratory to complete the design of blades that will work better and cheaper, both on land and at sea. The lab expects the price of wind to fall another 30 percent in the coming years.

With its acquisition of Enron Wind for $285 million in May 2002, GE began its foray into the wind sector. The Atlanta-based company now has more than 5,500 installations that produce a peak capacity of 3,100 megawatts -- the first steps to becoming a $1 billion operation in the coming years, it says.

Its worldwide customer base includes Florida Power & Light, American Electric Power and PacifiCorp, as well as developers in Germany, Spain, the Netherlands, Ireland, Belgium, Sweden and Japan. The enterprise's largest project is a 107 turbine system located in Texas with a total capacity of 153 MW.

"We are seeing an incredible growth in demand for wind turbines as more countries seek to expand their renewable energy production to help reduce their greenhouse gas emissions and improve their energy security," says Robert Gleitz, general manager for GE's wind business.

Some Skepticism

To be sure, some are skeptical of wind and the optimistic forecasts. The wind, for example, does not blow on demand and it generally cannot be economically stored. That's why wind farms must be backed up by conventional power plants to ensure that electricity will be available when needed.

That duplication of capacity not only diminishes the environmental benefits of wind, critics say, but it also increases the cost of wind power while adding an extra burden on the transmission system, although federal regulators have acted to make it easier for wind units to connect to the grid. Altogether, those considerations add as much as 15 percent to the cost of wind power.

"Utilities know their system can meet predictable but variable load," says Parsons. "If you think of wind as an added variable -- not something in isolation -- but in the context of running an entire portfolio, it is attractive. Look at how other generation resources can adjust. Any new generator will have issues but wind is different. It is variable. But we are displacing gas and other fuels. That's the main value."

The research into creating newer wind energy technologies continues. And with the expected growth in future energy demand along with the pressures to improve air quality, the investment makes a lot of sense. That's why the demand for wind power is on the rise and why the industry feels the wind is at its back.

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