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Energy in the U.S. - Why Wind?

Energy in the U.S. - Why Wind?. Financing Wind Power: The Future of Energy Institute for Professional and Executive Development Scottsdale, Arizona May 7, 2008. Overview. Market Progress Market Drivers. Market Progress – Installed Wind Capacity. U.S.: 1999 – 2,500 MW

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Energy in the U.S. - Why Wind?

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  1. Energy in the U.S. - Why Wind? Financing Wind Power: The Future of Energy Institute for Professional and Executive Development Scottsdale, Arizona May 7, 2008

  2. Overview • Market Progress • Market Drivers

  3. Market Progress – Installed Wind Capacity U.S.: 1999 – 2,500 MW 2007 – 16,800 MW 5,244 MW installed in 2007 Source: NREL, AWEA, Global Wind Energy Council

  4. Market Progress – Installed Wind Capacity Worldwide: 1999 – 13,600 MW 2007 – 94,123 MW 20,076 MW installed in 2007 Source: Global Wind Energy Council

  5. Market Progress - $ 2007 Value of Global Wind Capacity additions: $37 Billion Source: Global Wind Energy Council

  6. Market Progress – U.S. Projections • Projections vary: - Many consider 45,000 MW of installed capacity by 2015 to be realistic - Other estimates project up to 100,000 MW by 2015 • Dollar investment projected to range from $81 Billion to $180 Billion over that range

  7. Drivers for Growth of Wind Capacity • Technology advances • Cost competitiveness • Fossil fuel cost increases • Environmental issues/climate change • Renewable Portfolio Standards (RPSs)

  8. Drivers for Growth of Wind Capacity - 2 • Production tax credit • Economic development • Energy demand growth • Energy Security

  9. Technology Advances • Larger wind turbines developed and proven 1995: 500 kW 2007: 2.5 - 3 MW • With larger turbines, greater efficiency - Improved materials - Improved gearboxes - Larger blades - Less overall land area needed to produce more MW

  10. Technology Advances - 2 • Greater efficiency results in lower cost of generation 1990: average cost of 7.5 to 11 cents/kWh 2006: average cost of 4 to 6 cents/kWh for new capacity

  11. Cost Competitiveness • Wind vs. other sources of generation ($/MWh) Coal 25 – 45 Natural gas 50 – 55 Oil 100 Solar 200 – 500 Wind 40 – 70 (depending on wind resource)

  12. Cost Competitiveness • Natural gas prices doubled from 2000 - 2005

  13. Environmental Considerations/Climate Change • No emissions from wind • Clean Air Act requirements tightly regulate emissions from fossil fuel-fired plants – S02, PM, NOx, Mercury • Climate change policies are developing, focusing on carbon emissions – Cal., RGGI, Kyoto Protocol • Wind uses no fossil fuel – therefore no impacts from fuel cycle • No water intake or discharge – at the same time that CWA requirements are tightening for fossil plants

  14. RPSs • RPS is a policy which either requires or encourages that utilities supply a stated percentage of their power from renewable resources

  15. States with RPSs Source: NREL

  16. RPSs • 25 States and DC have RPSs in one form or another • Percentage goals vary from 2% (Iowa) to 40% (Maine) with varying target years • Some have fixed requirements, others are aspirational • Three states, Illinois, Virginia and Vermont, have non-binding goals • National RPS is under consideration in Congress

  17. RPSs/Renewable Energy Credits • RPSs stimulate the development of markets for RECs • A REC is a credit equal to a unit of production of renewable energy (e.g., a MWh) • RECS may be used to satisfy RPS requirements, instead of actual generation

  18. RPSs/Renewable Energy Credits - 2 • RECs have economic value that can approach the avoided cost of generation • Prices for RECS vary geographically, and there is not yet an active market in many areas - in some places, e.g., MA and CT, can be in the $40 – 50/MW range • REC sales can provide a revenue stream to support wind energy projects

  19. Production Tax Credit • Federal income tax credit for production of energy by wind and other renewable resources • Currently 1.9 cents/kWh, for 10 years • Provides significant economic support for wind energy projects • Much more about PTC later • Short term renewals have produced stop/start development cycles

  20. Economic Development • Revenue source for host communities • Revenue source for landowners, especially rural • Spin-off local revenues from construction • Construction jobs • A few good local jobs during operation

  21. Energy Demand Growth • Electric energy demand in the US continues to increase • Most projections are for continued increase • New generation is needed to meet increased demand - although wind is not a base load resource, it contributes to meeting load

  22. Energy Security • Foreign oil • Foreign policy Wind uses no oil

  23. Why Wind? It’s the $, stupid

  24. For more information contact: Ruth E. Leistensnider, Esq. Nixon Peabody LLP Omni Plaza Albany, New York 12207 518-427-2655 rleistensnider@nixonpeabody.com www.nixonpeabody.com

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