A FAVORABLE FORECAST
FOR WIND ENERGY

1999 was a record year for wind generation capacity in the United States, as consumer demand, government incentives, and improved technology drove the market

BY PETE LEWIS

WASHINGTON-If 1999 is any indication, the future looks very bright for the wind-power industry.

It was a record year for wind power, the fastest-growing energy technology of the decade. More than 3,600 megawatts (MW) of wind-energy generating capacity was installed in 1999, bringing the total worldwide capacity to about 13,400 MW.

To put that in context: One MW can power about 250 average American homes; 3,600 MW is about the capacity of three larger nuclear power plants; and 13,400 MW is almost enough to power New Jersey.

Worldwide wind-energy production has increased 22 percent annually since 1990, when capacity was less than 2,000 MW. The increased capacity in 1999 represents more than $3 billion invested in windgenerating equipment last year, this compared to $2 billion spent in 1998 for the installation of about 2,100 MW. In the United States, about $1 billion was spent in 1999, adding 905 MW of wind power.

This surge in development is due to three factors: decreased cost of windenergy due to technological improvements, government policies favorable to wind-energy development, and increased consumer demand for clean energy, says Christine Real de Azua, director of communications for the Washington-based American Wind Energy Association (AWEA).

"In the last two years the cost of wind power has come down from 20 cents per kilowatt hour (kWh) to about 4 cents," says Randy Udall of the Community Office for Resource Efficiency, a nonprofit energy office in Aspen, Colo.

Today's bigger wind turbines generate 56 times more electricity at about nine times the cost as turbines produced in 1981, according to Enron Wind Corp., the largest wind-turbine manufacturer in the United States. The cost of wind power has dropped 80 percent since the early 1980s.

Wind power ranges from 4 cents to 6 cents per kWh, compared to electricity from coal power at 4.8 cents to 5.5 cents per kWh, gas at 3.5 cents to 4.4 cents per kWh, hydro at 5.1 cents to 11.3 cents per kWh, biomass at 5.8 cents to 11.6 cents per kWh, and nuclear at 11.1 cents to 14.5 cents per kWh. And compared to solar power, wind generation produces twice the energy per dollar invested, according to AWEA. The association predicts a breezy future for the industry: Technology advances will drive the price of wind energy below 3 cents/kWh by 2013 and to 2.5 cents/kWh by 2020.

The political climate has helped spawn wind-power development in the United States and abroad. It's no coincidence the world's wind-power leaders-Germany, the United States and Denmark-have incentives and policies that encourage wind-power development. Last year's record amount of U.S. wind-power development was due in large part to the looming June 1999 expiration of the wind energy tax credit. However, the industry I s sails were filled again when President Clinton extended the 1.5 cents per kWh tax credit until Dec. 31, 2001.

Eighty percent of the new wind energy in 1999 came online in Germany, Denmark, Spain and the United States. More than half of the U.S. wind projects completed last year were in Minnesota and Iowa, two states with policies that encourage clean energy production.

Although 1999 was a record year for wind generation capacity in the United States, only about 0.1 percent of the power in this country is currently produced from wind. Clinton and Energy Secretary Bill Richardson recently announced a nonbinding initiative to have 5 percent of the nation's energy produced by wind by 2020. Udall estimates it would require an investment of about $100 billion. AWEA projects that the plan would create 80,000 jobs and stimulate an investment of $60 billion in rural America.

There is no question that many consumers want clean energy and that demand is driving the market. In the United States, about 60 utilities have greenpower programs that enable consumers to voluntarily pay a premium for wind power. Many of these programs have waiting fists.

"It's the first time we've ever had a choice," says Rudd Mayer of the Land and Water Fund (LAW), a nonprofit environmental advocacy organization that has helped market the green program in Colorado.

Colorado's green program gives consumers the option of purchasing 100 MW blocks of wind energy for $2.50 per block. About 17,000 households have signed up for the program. Mayer says most buy two blocks per month, increasing their utility bill by $5 per month.

"For $5 a month they can leave 1,200 pounds of coal in the ground and 2,400 pounds of C02 out of the air," Mayer says. "That's the same as not driving your car 2,400 miles a year or planting a half an acre of trees."

Much of the U.S. demand for wind power, and clean power in general, has come from commercial users. Ventura, Califbased Patagonia uses 100 percent wind energy to power its headquarters and all its outdoor clothing stores in Cagornia. About one of every six small businesses contacted by LAW was willing to pay the 2.5 cents per kWh premium in Colorado.

The 99 employee-owners of New Belgium Brewing Company in Fort Collins, Colo., voted unanimously last year to purchase all of the company's electricity from wind. "It was pretty inspirational because it increased our energy costs by 30 percent, and we're an energy-intensive business," says founder and CEO Kim Jordan. "We run the company with an openbook management style, so everyone knew what effect it would have on their bonuses. Yet everyone enthusiastically supported it.