Wind Power Finance and Investment Summit, Feb. 7, 2008, San Diego, Calif.
Session: Independent Wind Developers' Perspectives on Wind Financing and Development
Moderator:
Lee Goodwin, Partner and Co-Chair, Energy, Utility and Infrastructure, Thelen Reid Brown Raysman & Steiner LLP
Panelists:
John Calaway, Chief Development Officer, Wind North America, Babcock & Brown
Doug Carter, Vice President of Development, Invenergy
Craig Mataczynski, President, Renewable Energy Systems
Jan Paulin, President and CEO, Padoma Wind Power, LLC/an NRG Energy, Inc. company
Niels Rydder, Chairman and CEO, Oak Creek Energy Systems, Inc.
Florian Zerhusen, Managing Director, Windkraft Nord USA, Inc.
The U.S. has 200,000 MWs of potential wind energy. Within ten years we will reach 100,000 MW of development "as long as there are adequate policies in place". The industry is consolidating at light speed. Major capital risk is being spread out over large portfolios. It is all about the economies of scale. The dominant players will be the bigger guys. Transition to utility ownership is just starting.
As the technology advances and taller turbines become available sites in Ohio and Indiana will become more desirable. No breakthroughs in technology are anticipated, just incremental advances.
Up until now the industry has done everything by tax incentives. How do we think long term? We copy the Spanish model and price in external costs of burning coal to make wind look better. We need both an RPS and a PTC.
One panelist said that they have established minimum setbacks; they want to be a long-term owner on good terms with their communities. They will not 'flip' their projects (like some he could mention). They advocate responsible development. He advises not to try to put too many turbines in a project at the expense of neighbors.
More states are developing guidelines for wildlife protection.
Is the FAA another hump to overcome? "One guy out of Pennsylvania is now in charge of all the work with turbines at the FAA. He is reasonable and easy to work with." The Department of Defense is another story.
An audience member asked whether turbines built in waterfowl flyways were causing fatalities. A panelist answered saying that, "it was not a problem in Iowa because waterfowl are daytime flyers and they don't get into trouble." "A few nocturnal migrants will get clipped." As towers get higher this could become a problem.
Another question from the audience was if the oil industry felt threatened by the wind industry. There was a murmur of laughter and apparently the answer was "no". A panelist said that real estate agents and well heeled neighbors were a bigger problem.
Another question, "was the uncertainty of the PTC affecting business?" The answer, "It affects my sleep more than the business, we need some other value driver or we will be looking for work. We will start loosing qualified people if we don't see some change soon. People will move to other industries."
A panelist said that the PTC was "getting old" and another questioned "the prudence of continuing with a one trick pony". Cap and trade, carbon tax, federal RPS, being able to trade across state lines were all mentioned as ways to get away from the PTC. The problem is "all or nothing".
On the financial side, new players are now bound by the bottom line of quarterly reports not the long-term view. The risk is now on the balance sheet. Equity must now sponsor the risk not turbine manufacturers. Turbines for 2011 must be ordered now with a capital outlay, while projects may not be firmly set.
Florian Zerhusen said that his company has determined it isn't feasible to propose projects east of the Mississippi River. In reference to all the talk about getting beyond the PTC, he said that the industry must put their costs on consumers; they must pay to make wind projects work. He pointed to the fact that in Italy wind receives 12 cents per KW. He said that state RPSs are driving the market at the moment.
The cost of raw materials (copper, steel, transformers etc.) for turbines has increased substantially.
Transportation is now 10% to 15% of the total cost of a project.
Oklahoma is building a turbine manufacturing facility. No one wants to invest in manufacturing because of the uncertainty of the industry.
"Wind will never become competitive unless it is recognized that coal has other costs -- it's not possible."
Turbine warranties have been cut because it is a sellers' market. "We can only hope that there will not be massive failures as in the past." Machines are new and have not been tested in the field. Will they perform for twenty years? Most warranties are for two to five years.
Manufacturers are walking off site sooner and sooner. No one knows how much maintenance will cost over twenty years. Consumers must assume these risks.
wind power, wind energy, wind turbines, wind farms
March 1, 2008
Lessons from Europe
Denmark produces 20% of its electric power from wind, but is able to use less than 20% of it, exporting most of it to larger neighbors that can absorb it. Plans to double that figure over the next few decades are already running into fierce opposition from potential host communities. Denmark hasn't added new wind capacity since 2004. Off-shore projects have proven to be prohibitively expensive and technically problematic.
In Germany, more than 22,000 MW of wind turbines cover the country, generating 5% of its electricity. Yet 26 new coal plants are still planned, and 8 are on a fast track. Emissions continue to grow, because the grid has to continue operating as if the wind turbines aren't there -- because more often than not, they aren't generating electricity when there is an actual need.
In Britain, the Dept. of Business, Enterprise and Regulatory Reform reports that fossil fuel use for electricity increased -- not decreased -- 1.5 times more than the production from wind turbines from 2002 to 2006. (That's after accounting for reductions in nuclear, hydro, and imports during that period and for increased consumption.)
The modern wind industry was created by Enron in the 1990s, and it remains a harmful tax avoidance scheme, industrializing our few remaining open spaces and mountain forests and siphoning public funds away from real solutions.
[This was written in reply to Cape Wind propagandist Wendy Williams' article in the March 2 Parade magazine. See later post for references (click here).]
wind power, wind energy, wind turbines, wind farms, environment, environmentalism, human rights, animal rights, vegetarianism
In Germany, more than 22,000 MW of wind turbines cover the country, generating 5% of its electricity. Yet 26 new coal plants are still planned, and 8 are on a fast track. Emissions continue to grow, because the grid has to continue operating as if the wind turbines aren't there -- because more often than not, they aren't generating electricity when there is an actual need.
In Britain, the Dept. of Business, Enterprise and Regulatory Reform reports that fossil fuel use for electricity increased -- not decreased -- 1.5 times more than the production from wind turbines from 2002 to 2006. (That's after accounting for reductions in nuclear, hydro, and imports during that period and for increased consumption.)
The modern wind industry was created by Enron in the 1990s, and it remains a harmful tax avoidance scheme, industrializing our few remaining open spaces and mountain forests and siphoning public funds away from real solutions.
[This was written in reply to Cape Wind propagandist Wendy Williams' article in the March 2 Parade magazine. See later post for references (click here).]
wind power, wind energy, wind turbines, wind farms, environment, environmentalism, human rights, animal rights, vegetarianism
February 23, 2008
U.K. fossil fuel use for electricity, 2002-2006
From 2002 to 2006, fossil fuel (coal, natural gas, and oil) use for the generation of electricity in the U.K. increased 4.664 mtoe (million tonnes oil equivalent). But electricity generation increased only 0.73 mtoe. This is according to data provided in the 2007 Digest of U.K. Energy Statistics from the Dept. for Business, Enterprise and Regulatory Reform [BERR (formerly DTI, Dept. of Trade and Industry)].
Part of the increase in fossil fuels was due to a decline in nuclear, hydro, and imported sources totaling 2.363 mtoe. That still leaves an increase of 2.301 mtoe in fossil fuel use for an increased electricity supply of only 0.73 mtoe.
That increase of fossil fuels of more than three times the increase of electricity is even more surprising because nonhydro renewables (primarily wind energy) increased 1.655 mtoe in the same period, and other fuels (e.g., burning trash) increased 0.468.
In other words, despite (or because of) building thousands of new wind turbines, the U.K. uses more fossil fuel to generate electricity.
wind power, wind energy, environment, environmentalism
Part of the increase in fossil fuels was due to a decline in nuclear, hydro, and imported sources totaling 2.363 mtoe. That still leaves an increase of 2.301 mtoe in fossil fuel use for an increased electricity supply of only 0.73 mtoe.
That increase of fossil fuels of more than three times the increase of electricity is even more surprising because nonhydro renewables (primarily wind energy) increased 1.655 mtoe in the same period, and other fuels (e.g., burning trash) increased 0.468.
In other words, despite (or because of) building thousands of new wind turbines, the U.K. uses more fossil fuel to generate electricity.
wind power, wind energy, environment, environmentalism
February 7, 2008
Let's Make Cape Wind History!
Click here (or the title of this post) to use an automatic form to write the Minerals Management Services. Change the content provided in that form to the text below (or something of your own).
I am writing to comment on the Cape Wind Project Draft Environmental Impact Statement (Project ID number: PLN-GOM-0003). Offshore wind promises but is unlikely to deliver an immediate, clean, safe and effective answer to either global warming or energy security. America’s first offshore wind farm, Cape Wind, will generate electricity equivalent to 75% of Cape Cod’s energy needs but without measurably affecting the fuel use of conventional generation plants -- because it is intermittent, highly variable, and to a significant degree unpredictable.
The environmental impacts caused by installing these turbines are undeniable, and they are particularly unjustified when considering the lack of real benefit. From local jobs to clean energy, this project is a harmful boondoggle.
I urge Minerals Management Services to avoid further delay and deny the Cape Wind project in a timely manner.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
I am writing to comment on the Cape Wind Project Draft Environmental Impact Statement (Project ID number: PLN-GOM-0003). Offshore wind promises but is unlikely to deliver an immediate, clean, safe and effective answer to either global warming or energy security. America’s first offshore wind farm, Cape Wind, will generate electricity equivalent to 75% of Cape Cod’s energy needs but without measurably affecting the fuel use of conventional generation plants -- because it is intermittent, highly variable, and to a significant degree unpredictable.
The environmental impacts caused by installing these turbines are undeniable, and they are particularly unjustified when considering the lack of real benefit. From local jobs to clean energy, this project is a harmful boondoggle.
I urge Minerals Management Services to avoid further delay and deny the Cape Wind project in a timely manner.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
Less than one-fourth of projected fuel savings from wind on Falklands
It is a simple concept that if wind energy is pushed into the electrical grid, then electricity from another source must be reduced. Wind industry promoters ignore the many factors that complicate the concept and claim that wind-generated electricity equals an equivalent reduction of the displaced source's fuel use.
They ignore the fuel used if a source is simply switched to standby, extra fuel used in ramping up and down in response to wind, and extra fuel burned when a plant operates at lower efficiency because of wind.
They also ignore the significant line loss in transporting wind energy from the remote locations where sprawling facilities are possible. And they ignore the likelihood that in large grid systems, the unpredictable and highly variable wind production is small enough to be simply ignored -- tolerated as a slight rise in line voltage -- especially in the remote areas where wind energy facilities are typically sited -- and allowed to dissipate as heat.
Skeptics point to these factors to try to explain the utter lack of data showing actual reductions of other fuels due to wind on the grid.
But at last -- with no help from wind promoters -- I have found some evidence of fuel savings in a closed island system, where the effect of wind would be most clearly seen.
According to the 2007 issue 4 of Wind Blatt, the Enercon magazine for wind energy, three Enercon E-33/330 kW wind turbines were installed at Sand Bay on East Falkland (Islas Malvinas), where they were expected to provide 20% of the electricity and thus projected to reduce fuel use at the island's diesel-fired plant by 20%. The diesel plant was burning about 4,000,000 liters per year, or about 11,000 liters per day. It provided a maximum load of 3.2 MW in winter and a minimum load of 1.1 MW in summer, with a total annual production of 15,000 MWh (average load 1.7 MW).
In other cases, that's usually the last one reads about fuel savings, but in this case there is a brief follow-up report with actual data.
According to the Falklands government, the wind turbines were officially opened June 29, 2007. On Sept. 20, 2007, they noted that the Sand Bay wind turbines were saving 800-1,000 liters of diesel fuel per day. Wind energy was providing 23% of the electricity at night and 13% during the day (an average of 18%).
But 900 liters is only 8.2% of the previous annual daily fuel use of 11,000 liters. And it is only 4.3% of the daily winter fuel use.
From this admittedly scant information, it appears that although these fast-responding diesel generators may generate 18% less electricity because of wind, they burn only 4-8% less fuel.
Using the winter estimates (the Falklands are in the southern hemisphere), that's a savings of less than one-fourth the amount projected.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
They ignore the fuel used if a source is simply switched to standby, extra fuel used in ramping up and down in response to wind, and extra fuel burned when a plant operates at lower efficiency because of wind.
They also ignore the significant line loss in transporting wind energy from the remote locations where sprawling facilities are possible. And they ignore the likelihood that in large grid systems, the unpredictable and highly variable wind production is small enough to be simply ignored -- tolerated as a slight rise in line voltage -- especially in the remote areas where wind energy facilities are typically sited -- and allowed to dissipate as heat.
Skeptics point to these factors to try to explain the utter lack of data showing actual reductions of other fuels due to wind on the grid.
But at last -- with no help from wind promoters -- I have found some evidence of fuel savings in a closed island system, where the effect of wind would be most clearly seen.
According to the 2007 issue 4 of Wind Blatt, the Enercon magazine for wind energy, three Enercon E-33/330 kW wind turbines were installed at Sand Bay on East Falkland (Islas Malvinas), where they were expected to provide 20% of the electricity and thus projected to reduce fuel use at the island's diesel-fired plant by 20%. The diesel plant was burning about 4,000,000 liters per year, or about 11,000 liters per day. It provided a maximum load of 3.2 MW in winter and a minimum load of 1.1 MW in summer, with a total annual production of 15,000 MWh (average load 1.7 MW).
In other cases, that's usually the last one reads about fuel savings, but in this case there is a brief follow-up report with actual data.
According to the Falklands government, the wind turbines were officially opened June 29, 2007. On Sept. 20, 2007, they noted that the Sand Bay wind turbines were saving 800-1,000 liters of diesel fuel per day. Wind energy was providing 23% of the electricity at night and 13% during the day (an average of 18%).
But 900 liters is only 8.2% of the previous annual daily fuel use of 11,000 liters. And it is only 4.3% of the daily winter fuel use.
From this admittedly scant information, it appears that although these fast-responding diesel generators may generate 18% less electricity because of wind, they burn only 4-8% less fuel.
Using the winter estimates (the Falklands are in the southern hemisphere), that's a savings of less than one-fourth the amount projected.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
January 28, 2008
Rethinking the Meat-Guzzler
Mark Bittman writes in the "Week in Review", New York Times, Sunday, Jan. 29 (click the title of this post for the complete article):
Though some 800 million people on the planet now suffer from hunger or malnutrition, the majority of corn and soy grown in the world feeds cattle, pigs and chickens. This despite the inherent inefficiencies: about two to five times more grain is required to produce the same amount of calories through livestock as through direct grain consumption, according to Rosamond Naylor, an associate professor of economics at Stanford University. It is as much as 10 times more in the case of grain-fed beef in the United States. ...
If price spikes don’t change eating habits, perhaps the combination of deforestation, pollution, climate change, starvation, heart disease and animal cruelty will gradually encourage the simple daily act of eating more plants and fewer animals.
environment, environmentalism, human rights, animal rights, vegetarianism
Though some 800 million people on the planet now suffer from hunger or malnutrition, the majority of corn and soy grown in the world feeds cattle, pigs and chickens. This despite the inherent inefficiencies: about two to five times more grain is required to produce the same amount of calories through livestock as through direct grain consumption, according to Rosamond Naylor, an associate professor of economics at Stanford University. It is as much as 10 times more in the case of grain-fed beef in the United States. ...
If price spikes don’t change eating habits, perhaps the combination of deforestation, pollution, climate change, starvation, heart disease and animal cruelty will gradually encourage the simple daily act of eating more plants and fewer animals.
environment, environmentalism, human rights, animal rights, vegetarianism
January 24, 2008
Tell Congress NOT to extend wind energy Production Tax Credit (PTC)
Click here (or the title of this post) to use an automatic form to write your members of Congress. Change the content provided in that form to the text below (or something of your own).
DO NOT Extend the renewable energy Production Tax Credit
Wind energy facilities currently benefit from having up to 75% of their capital value paid for by taxpayers through not only the 10-year Production Tax Credit, but also 5-year double-declining balance accelerated depreciation, a variety of grants and other incentives, and state and municipal tax breaks. In addition to selling electricity, they are able to sell "renewable energy credits" to further increase their profits.
These facilities are usually developed by developers funded by private investors, increasingly from other countries, who more than welcome such largesse with the public's money. In fact, they clamor for it, pretending it is necessary to their success and that their interests is purely beneficial to all.
Besides the obvious unfairness of this funding, wherever giant wind facilities are constructed, the public has complained of serious ill effects, from loss of natural views, environmental harm, and adverse effects on wildlife and even human health.
DO NOT Extend the renewable energy Production Tax Credit.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
DO NOT Extend the renewable energy Production Tax Credit
Wind energy facilities currently benefit from having up to 75% of their capital value paid for by taxpayers through not only the 10-year Production Tax Credit, but also 5-year double-declining balance accelerated depreciation, a variety of grants and other incentives, and state and municipal tax breaks. In addition to selling electricity, they are able to sell "renewable energy credits" to further increase their profits.
These facilities are usually developed by developers funded by private investors, increasingly from other countries, who more than welcome such largesse with the public's money. In fact, they clamor for it, pretending it is necessary to their success and that their interests is purely beneficial to all.
Besides the obvious unfairness of this funding, wherever giant wind facilities are constructed, the public has complained of serious ill effects, from loss of natural views, environmental harm, and adverse effects on wildlife and even human health.
DO NOT Extend the renewable energy Production Tax Credit.
wind power, wind energy, wind turbines, wind farms, environment, environmentalism
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