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Advancements in Wind Power: Economic Benefits and Policy Implications for the 21st Century

The clean wind power sector is experiencing rapid growth driven by decreasing costs and technological advancements. Key drivers include taller towers capturing faster winds, economies of scale, and improved blade materials. Wind energy promotes rural economic development through stable lease income and significant job creation. This renewable energy source plays a critical role in stabilizing fuel costs and aligns with climate policies such as the Kyoto Protocol. As global awareness of climate change increases, investing in wind power proves to be a low-risk option for sustainable energy.

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Advancements in Wind Power: Economic Benefits and Policy Implications for the 21st Century

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  1. Clean Wind Power

  2. Political Fundamentals • Cost of wind is decreasing • Kyoto • Ozone annex of Clean Air Treaty • Cost stabilization • Rural economic development – lease income not agriculture subsidies • Cost of wind is decreasing

  3. Cost Drivers • Swept areas • Tower Heights (faster winds) • Economies of scale • Improved siting

  4. Technology Cost Reductions 40 500 kW 1800 kW 35 30 1300 kW 25 750 kW Radius of rotor (metres) 20 500 kW 15 10 250 kW 5 50 kW Source : AWEA

  5. Technology Cost Reductions Tower Sizes 40M 50M 65M 80M Taller towers capture faster winds

  6. Technology: Cost Reductions • Cost driver for larger blades, is stronger light weight blade materials • Cost driver for taller towers is, improved tower and foundation designs

  7. Worldwide Wind Capacity MW Compound 5-Year Growth 32% Source:BTM Consult and EWEA

  8. Wind Economics • No fuel cost • Stable fuel cost • Strong correlation to load requirement • More production in winter • More production on windy days • More production during the day

  9. Correlation between Supply & Demand Gaspé/Québec 14 12 10 8 % of annual total 6 4 2 Demand Supply 0 Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Months Source: GP CO Inc.

  10. Wind Economics What about calm days? • Wind complimentary to water based storage • When wind is blowing, store the water behind the dam • When calm, run water through turbine Canada is > 60% water power

  11. Gaspé

  12. Wind Investment Fundamentals • More capital intensive than fossil fuel • Stable cost has public policy benefit by eliminating fuel cost risk • Will never have to buy carbon credits • Will never have to buy Nox or Sox credits • Distributed benefits – can decrease line losses if well located • Jobs in rural areas

  13. Impact of Capital Intensity • Property tax – 20X coal plant in Ontario • The capital crunch in EPG makes this more challenging • Capital tax distorts investment to low capital, high operating cost investment – fossil fuel • Capital will tend to be provided for the least capital intensive project

  14. Kyoto Process • Kyoto 2nd round starts 2005 • Evidence of human caused climate change will become stronger • What if 25% reductions are needed? • What if 50%?

  15. Result? • Wind is THE low risk investment (and water) • Fossil plants will become more costly to operate (carbon credits) • Your regulator may not accept the argument that this was not forseeable

  16. Federal Incentive 1.2 ¢/KWH 2003 1.0 ¢/KWH 2004 1.0 ¢/KWH 2005 1.0 ¢/KWH 2006 .8 ¢/KWH 2007 Payable for 10 years Taxable Limited to 1000 MW

  17. Provincial Options RPS – renewable portfolio standard - require retailers to buy a percentage from renewables Green Power Procurement Match Federal incentive Systems Benefit Charge

  18. Other Provincial Issues • Rules on interconnection and transmission • Property taxes, sales tax, capital tax • Can the power be sold? Price paid? • Emissions – are there caps? • Crown land policies

  19. Other Support • Resource assessment, wind atlas • Net metering • Streamlined approvals • Electricity labeling

  20. Gaspé

  21. Wind Energy Truly Sustainable Energy for the 21st Century

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