Wind Energy UpdateWind Energy Update

Larry Flowers Larry Flowers National Renewable Energy Laboratory National Renewable Energy Laboratory

November 2007November 2007

Capacity & Cost TrendsCapacity & Cost Trends

Increased Turbine Size - R&D Advances - Manufacturing Improvements

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Cost of Energy and Cumulative Domestic Capacity

*Year 2000 dollars

Increased Turbine Size - R&D Advances - Manufacturing Improvements

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Cost of Energy and Cumulative Domestic Capacity

*Year 2000 dollars

People Want Renewable Energy!People Want Renewable Energy!

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Cap

acity

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United States Europe Rest of World

1. Germany: 21283 MW2. Spain: 13400 MW3. United States: 12925 MW4. India: 7000 MW5. Denmark: 3134 MW

Source: WindPower Monthly

World total October 2007: 81957 MW

Total Installed Wind CapacityTotal Installed Wind Capacity

U.S. Leads World in Annual Wind U.S. Leads World in Annual Wind Capacity Additions; Third in Cumulative CapacityCapacity Additions; Third in Cumulative Capacity

U.S Lagging Other Countries for U.S Lagging Other Countries for Wind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity Consumption

Installed Wind Capacities Installed Wind Capacities (‘99 (‘99 –– Sept 07)Sept 07)

Drivers for Wind PowerDrivers for Wind Power

• Declining Wind Costs• Fuel Price Uncertainty• Federal and State

Policies• Economic Development• Public Support• Green Power• Energy Security• Carbon Risk

Wind Cost of EnergyWind Cost of Energy

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Low wind speed sites

High windspeed sites

Depreciated CoalDepreciated Wind

New Coal Power Competitive Price Band

2007: New Wind

Natural Gas (fuel only)

Natural Gas Natural Gas –– Historic PricesHistoric Prices

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Source: LBNL

NYMEXnatural gas futures strip

from 07/21/2006

Daily price history of 1st-nearbyNYMEX natural gas futures contract

Historical Coal PricesHistorical Coal Prices

Source: EIA

Nationally, Wind Has Been Competitive Nationally, Wind Has Been Competitive with Wholesale Power Prices in Recent Yearswith Wholesale Power Prices in Recent Years

In 2006, Wind Projects Built Since 1997 Were In 2006, Wind Projects Built Since 1997 Were Competitive with Wholesale Power Prices in Most RegionsCompetitive with Wholesale Power Prices in Most Regions

Renewables Portfolio StandardsRenewables Portfolio Standards

☼ Minimum solar or customer-sited RE requirement* Increased credit for solar or customer-sited RE

¹PA: 8% Tier I / 10% Tier II (includes non-renewables); SWH is a Tier II resource

DSIRE: www.dsireusa.org September 2007

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020

MA: 4% by 2009 +1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

TX: 5,880 MW by 2015

☼ AZ: 15% by 2025

CA: 20% by 2010

☼ *NV: 20% by 2015

ME: 30% by 200010% by 2017 - new RE

HI: 20% by 2020

RI: 16% by 2020

☼ CO: 20% by 2020 (IOUs)*10% by 2020 (co-ops & large munis)

☼ DC: 11% by 2022

☼ NY: 24% by 2013

MT: 15% by 2015

IL: 25% by 2025

VT: RE meets load growth by 2012*WA: 15% by 2020

☼ MD: 9.5% in 2022

☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)

*VA: 12% by 2022

MO: 11% by 2020

☼ *DE: 20% by 2019

☼ NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

☼ NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops & munis)

ND: 10% by 2015

State Goal

State RPS

Solar water heating eligible

Wind Energy InvestorsWind Energy Investors

Windy Rural Areas Need Windy Rural Areas Need Economic DevelopmentEconomic Development

Economic Development ImpactsEconomic Development Impacts

• Land Lease Payments: 2-3% of gross revenue $2500-4000/MW/year

• Local property tax revenue: ranges widely -$300K-1700K/yr per 100MW

• 100-200 jobs/100MW during construction

• 6-10 permanent O&M jobs per 100 MW

• Local construction and service industry: concrete, towers usually done locally

Case Study: Texas Case Study: Texas

Utilities and wind companies invested $1B in 2001 to build 912 MW of new wind power, resulting in:

• 2,500 quality jobs with a payroll of $75M

• $13.3M in tax revenues for schools and counties

• $2.5M in 2002 royalty income to landowners

• Another 2,900 indirect jobs as a result of the multiplier effect

• $4.6M increase in Pecos County property tax revenue in 2002

Case Study: MinnesotaCase Study: Minnesota

107-MW Minnesota wind project

• $500,000/yr in lease payments to farmers

• $611,000 in property taxes in 2000 = 13% of total county taxes

• 31 long-term local jobs and $909,000 in income from O&M (includes multiplier effect)

Case Study: IowaCase Study: Iowa

240-MW Iowa wind project

• $640,000/yr in lease payments to farmers ($2,000/turbine/yr)

• $2M/yr in property taxes• $5.5M/yr in O&M income• 40 long-term O&M jobs• 200 short-term

construction jobs• Doesn’t include multiplier

effect

Case Study: New MexicoCase Study: New Mexico

• 204-MW wind project built in 2003 in DeBaca and Quay counties for PNM

• 150 construction jobs• 12 permanent jobs and

$550,000/yr in salaries for operation and maintenance

• $550,000/year in lease payments to landowners

• $450,000/year in payments in lieu of taxes to county and school districts

• Over $40M in economic benefits for area over 25 years

Source: PNM, New Mexico Wind Energy Center Quick Facts, 2003.

Photo: PNM

Case Study: Hyde County, South DakotaCase Study: Hyde County, South Dakota

40-MW wind project in South Dakota creates $400,000 - $450,000/yr for Hyde County, including:

• More than $100,000/yr in annual lease payments to farmers ($3,000 - $4,000/turbine/yr)

• $250,000/yr in property taxes (25% of Highmore’s education budget)

• 75 -100 construction jobs for 6 months

• 5 permanent O&M jobs• Sales taxes up more than 40%• Doesn’t include multiplier effect

Case Study: Prowers County, ColoradoCase Study: Prowers County, Colorado

“Converting the wind into a much-needed commodity while providing good jobs, the Colorado Green Wind Farm is a boost to our local economy and tax base.”

John Stulp, county commissioner, Prowers County, Colorado

• 162-MW Colorado Green Wind Farm (108 turbines)

• $200M+ investment

• 400 construction workers

• 14-20 full-time jobs

• Land lease payments $3000-$6000 per turbine

• Prowers County 2002 assessed value $94M; 2004 assessed value +33% (+$32M)

• Local district will receive 12 mil tax reduction

• Piggyback model

Colorado – Economic Impacts from 1000 MW of new wind development

Payments to Landowners: • $2.7 million/yearLocal Property Tax Revenue:• $11 million/yearConstruction Phase:• 1405 new OH construction jobs• $188.5 M to local economiesOperational Phase:• 223 new long-term jobs• $21.2 M/yr to local economies

Construction Phase:• 1225 new jobs• $130.2 M to local

economiesOperational Phase:• 181 local jobs• $20.1 M/yr to local

economies

Wind energy’s economic “ripple effect”

Construction Phase = 1-2 yearsOperational Phase = 20+ years

Total economic benefit = $1.14 billion

New local jobs during construction = 2630

New local long-term jobs= 404

Direct Impacts Indirect & Induced Impacts

Totals (construction + 20yrs)

• Minnesota farmer cooperative (Minwind)

• FLIP structure

• Farmer-owned small wind

• Farmer-owned commercial-scale

Local Ownership ModelsLocal Ownership Models

© L. Kennedy

Economic Impacts of Economic Impacts of Alternative GenerationAlternative Generation

Economic impacts of wind vs. coal in Colorado (construction + 20 yrs of operation)

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Wind (607 MW) Coal (250 MW fromPRB)

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Coal mining & transportOperations

Construction

Colorado uses mostly out-of-state coal. But even with in-state coal…

Environmental BenefitsEnvironmental Benefits

• No SOx or NOx• No particulates• No mercury• No CO2• No water

Sustainable Withdrawal of Sustainable Withdrawal of Freshwater is National IssueFreshwater is National Issue

Source: EPRI 2003

Source: NOAA

Source: NOAA

EnergyEnergy--Water NexusWater Nexus

Key Issues for Wind Power Key Issues for Wind Power

• Policy Uncertainty• Siting and Permitting: avian,

noise, visual, federal land • Transmission: FERC rules,

access, new lines

• Operational impacts: intermittency, ancillary services, allocation of costs

• Accounting for non-monetary value: green power, no fuel price risk, reduced emissions

State of the Union Address“…We will invest more in … revolutionary and…wind

technologies”

Advanced Energy Initiative“Areas with good wind resources have the potential to supply up to 20% of the electricity consumption of the United States.”

A New VisionA New VisionFor Wind Energy in the U.S.For Wind Energy in the U.S.

20% Wind20% Wind--Electricity VisionElectricity Vision

Wind energy will provide 20% of U.S. electricity needs by 2030, securing

America’s leadership in reliable, clean energy technology. As an inexhaustible and

affordable domestic resource, wind strengthens our energy security, improves

the quality of the air we breathe, slows climate change, and revitalizes rural

communities.

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Class 6

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10% Available 10% Available TransmissionTransmission

2010 Costs w/ PTC, $1,600/MW-mile, w/o Integration costs

What does 20% Wind look like?What does 20% Wind look like?

Source: AWEA 20% Vision

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Annual Capacity (right scale)

Economic Impacts to Kansasfrom 7158 MW of new wind development by 2030

Direct Impacts

Payments to Landowners: • $20.8 million/yearLocal Property Tax Revenue:• $19 million/yearConstruction Phase:• 11,133 new construction jobs• $1.35B to local economiesOperational Phase:• 1805 new long-term jobs• $152M/yr to local economies

Indirect Impacts

Construction Phase:• 5,000 new jobs• $424M to local economiesOperational Phase:• 438 local jobs• $43 M/yr to local economies

Induced Impacts

Construction Phase:• 6,223 new jobs• $559 M to local economiesOperational Phase:• 850 local jobs• $76 M/yr to local economies

Wind energy’s economic “ripple effect”

Construction Phase = 1-2 yearsOperational Phase = 20+ years

Totals (construction + 20 yrs)Total economic benefit to Kansas = $7.8 billionNew local jobs during construction = over 23,000New long-term jobs for Kansans = over 3,000

20% Wind Vision Employment20% Wind Vision Employment

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Fuel Savings From WindFuel Savings From Wind

0.0E+00

5.0E+09

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Gas Fuel Savings

Coal Fuel Savings

Gas Fuel Usage(20%wind)Coal Fuel Usage(20%wind)

Reduction in National GasConsumption in 2030 (%)

Natural Gas Price Reduction in 2030 (2006$/MMBtu)

Present Value Benefits(billion 2006$)

Levelized Benefit of Wind ($/MWh)

11% 0.6 -1.1- 1.5 86 - 150 - 214 16.6 - 29 - 41.6

Electricity Sector Fuel Usage

Cumulative Carbon SavingsCumulative Carbon Savings

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TCE

$ 9.7/MWh - $ 28.2/MWh$ 50 - $1454,182 MMTCE

Levelized Benefit of Wind($/MWh-wind)

Present Value Benefits(billion 2006$)

CumulativeCarbon Savings

(2007-2050, MMTCE)

Incremental Cost of 20% WindVision

$0.5/month$0.6/MWh$8.6/MWh$43 billionVisionScenario

Impact on AverageHousehold Customer

($/month)**

Average IncrementalLevelized Rate Impact

($/MWh-Total)*

Average IncrementalLevelized Cost of Wind

($/MWh-Wind)*

Present ValueDirect Costs

(billion 2006$)*

* 7% real discount rate is used, as per OMB guidance; the time period of analysis is 2007-2050, with WinDSmodeling used through 2030, and extrapolations used for 2030-2050.** Assumes 11,000 kWh/year average consumption

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Wind Capital

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Conventional Capital

Results: Results: CostsCosts and Benefitsand Benefits• Incremental direct cost to society • Reductions in emissions of

greenhouse gases and other atmospheric pollutants

• Reductions in water consumption• Jobs created and other economic

benefits• Reductions in natural gas use and

price pressure

$43 billion

825 M tons (2030)

$98 billion

8% total electric17% in 2030

140,000 direct$450 billion total

11%$150 billion

Major Market Distortion: External Costs Major Market Distortion: External Costs of Fossil Fuels not Reflected in Pricingof Fossil Fuels not Reflected in Pricing

(The PTCs are a bargain)(The PTCs are a bargain)

“With public sentiment nothing can fail; without it, nothing can succeed.”

- A. Lincoln

ConclusionsConclusions

• 20% wind energy penetration is possible• 20% penetration is not going to happen under business

as usual scenario• Policy choices will have a large impact on assessing the

timing and rate of achieving a 20% goal• Key Issues: market transformation, transmission, project

diversity, technology development, policy, public acceptance

• 20% Vision action plan: December 2007

Source: AWEA 20% Vision

Humanity’s Top Ten Humanity’s Top Ten Problems for next 50 yearsProblems for next 50 years

1. Energy

2. Water

3. Food

4. Environment

5. Poverty

6. Terrorism & War

7. Disease

8. Education

9. Democracy

10.Population

2003: 6.3 Billion people

2050: 9-10 Billion peopleSource: Nobel laureate, Richard Smalley

Carpe Ventem

www.windpoweringamerica.gov