Not Just Tilting Anymore
Higher Fuel Costs, Tax Credits, Better Technology Whip Up Hopes for Wind Power Again
October 14, 2004
Wall Street Journal
By Rebecca Smith
Arden and Muriel Bergan watched intently as workmen installed wind turbines on their Iowa farm two years ago, as a whipping wind makes it difficult to align the 87-foot blades with bolt holes at the top of a 327-foot tower. “It was a regular circus act,” Mr. Bergan says.
Getting circumstances to line up for the wind industry has been equally daunting over the years. With bigger, better turbines that produce electricity at competitive prices, the industry should be enjoying an unprecedented boom. Yet each time it gains momentum, something comes along to thwart progress, with the most recent hiccup being the expiration of a federal tax credit at the end of 2003 that stalled $2 billion of projects.
A bill re-establishing the tax credit passed both houses of Congress in late September, however, and President Bush signed the measure earlier this month, providing a 1.8-cent credit for each kilowatt hour of electricity produced by qualifying turbines built by the end of 2005 for a 10-year period. Many industry watchers believe the tax credit could stimulate the growth that’s been predicted, for years, but never fulfilled.
Better technology and government stimulus, along with high prices for competing types of power generation, are driving renewed optimism about wind power. With prices for the fossil fuels used in conventional power plants hovering near record levels, wind power in the cheapest source of energy that can be built now. Newly built wind farms are “beating the socks off of any other new source of generation,” says Ryan Wiser, an energy economist at the Department of Energy’s Lawrence Berkely National Laboratory in California.
A modern wind turbine can product electricity for about 2.5 cents to four cents a kilowatt hour, including government subsidies, so the biggest turbines can compete effectively against modern natural-gas-fired power plants, though they won’t run as many hours of the day due to the variability of wind. Assuming natural gas at $6 per million British thermal units, a kilowatt hour of electricity from a newly built gas-fired plant costs at least 5.5 cents a kilowatt hour, including both fuel and capital costs. Natural-gas plants have led the sector in recent years because they can be constructed quickly, are clean burning and operate reliably.
Costs have come down for wind power while they have been pushed up for gas-fired plants by higher natural-gas prices. High oil prices have had less effect on the power industry than in the past because many generators shifted to other fuels as a result of the oil shocks of the 1970s.
Demand for wind power also is being driven by state laws that require utilities to obtain set percentages of their electricity from renewable sources by certain target dates. The amounts and deadlines vary, but 17 states now have such laws in place, with New York being the latest addition. Some states, like Wisconsin, already have met their initial targets and are considering raising the goals.
If the states achieve their targets, as much as 22,000 megawatts of renewable energy would be created in the next decade, doubling today’s installed base from such things as solar, wind, biomass and small hydroelectric projects. Windpower capacity has tripled since 1998 to about 6,400 megawatts and the cost of its electric output has fallen about 90% since the early 1980s. Lawrence Berkeley’s Mr. Wiser says that if the nation eventually garners 15% to 20% of its power from renewable sources, up from about 2% today, “it might produce a 10% reduction in the price of natural gas” as demand for gas moderates, saving consumers billions of dollars a year.
The price-hedging potential of renewable power is a plus that is cited by promoters of a contentious wind project on Massachusetts’ Nantucket Sound. The Cape Wind Project, the first offshore U.S. project, would be capable of generating more than 400 megawatts of electricity from 130 turbines, or enough to meet most of Cape Cod’s electricity needs. It would take pressure off natural-gas usage, which has become a worry in New England since the region now relies on the fuel for 40% of its power generation, up from less than 2% in 1980.
But in Massachusetts, as in some other places, resistance to wind turbines has surface. One reason is that the turbines have gotten so big – some as tall as 30-story building – that they dominate the horizon, creating conflict with those who dislike the visual impact.
Another potential hitch is that the best places for turbines are where the sustained winds are greatest, and that is often far from cities in sparsely populated parts of the Great Plains or in coastal areas that frequently are poorly served by high-voltage transmission lines. So getting the electricity to users poses a challenge, as well.
Nevertheless, several utilities are pressing ahead. Early wind turbines were inefficient and susceptible to breakdowns. Today’s machines have advanced fiberglass composite blades that harness more energy, plus sophisticated computer controls that let them operate at variable speeds, increasing power production. “We’ve also gotten better at measuring the wind and figuring out where to put the turbines,” adds James Johnson, a senior engineer at the National Wind Technology Center in Golden, Colo.
Another plus: Because the machines stand higher off the ground, blades can be longer and spin in a higher arc. That means the tips appear to move more slowly and are easier to see, allowing birds to take evasive action. The problem of killing birds plagued the industry in its early days.
Utilities are ramping up their windpower efforts. In Oregon, Scottish Power PLC’s PacifiCorp utility recently was swamped with bids for 6,000 megawatts of renewable- energy capacity, most of it for wind and geothermal projects. PPM Energy, an affiliate of PacifiCorp. and the second-biggest windpower developer in the U.S., now has contracts with 18 utilities to supply them with wind power.
In Washington, Puget Energy Inc.’s Puget Sound Energy in September said it intends to buy the entire output of a new wind farm that Zilkha Renewable Energy of Houston hopes to build on range-land near Ellensburg in eastern Washington. The Wild Horse project is expected to include more than 100 turbines producing 165 megawatts of power, enough to power 40,000 homes. If built, it would be Kittitas County’s biggest taxpayer, contributing more revenue than the next 10 biggest taxpayers combined.
Wayne Brunetti, chief executive of Xcel Energy Inc. of Minneapolis, says the company is a strong believer in wind power, with more than 800 megawatts under contract now and plan to boost that amount to 2,500 megawatts within the next 10 years. He wants to use wind power to take pressure off fossil-fuel plants, cutting the multistate utility companys’ emissions of pollutants.
In many rural areas, wind power is regarded as an unabashed windfall. The four turbines on the Bergan farm in Iowa, for example, produce a total of $9,600 a year in profit for the couple. That’s a lot of money in community where the median household income in 2000 was $35,000 and where the median-price home sold for $45,000.
Mr. Bergan’s neighbor, Eliot Evans, has five turbines on his farm and says it “pencils out a lot better to have turbines than soybeans or corn,” especially with row-crop prices “pretty low lately.” Passersby sometimes pull off the nearby interstate highway and admire the community’s cluster of 89 turbines “spinning like crazy, minting money for us,” he says.
In southeastern Colorado, ranchers are coming to rely on income from turbines to make up for the fact that they have been forced to cull their cattle herds because of a four-year drought. The Emick family – parents Robert and Helen and their eight grown children – signed a deal with Scottish Power’s PPM unit about a year ago and now have 98 turbines scattered across 12,000 acres of rangeland near the county seat of Lamar. Greg Emick, the oldest son, says that “income from turbines will be as much as from cattle this year.” He says the clan lost 65 acres to the turbine pads “or about as much land as it takes to support a cow and a calf out here,” but it expects to receive royalty payments of $200,000 to $500,000 a year from the turbines.
Prowers County Assessor Andy Wyatt says wind turbines have boosted property-tax receipts by 35%. Adds Cheryl Sanchez, president of the Lamar Chamber of Commerce, “Ladies out here were always upset because the wind messed up their hair, but now we’re getting something good from the wind.” |
