Forces Driving Wind Power Development

Pat WalshUW-Madison/Extension

Focus on Energy Program

Drivers for Wind Power

Fuel Price Uncertainty

Energy Security Federal and State

Policies Economic

Development Green Power Declining Wind Costs

US Escalating Energy Use

CHINARECENT ENERGY FACTS China accounts for at least 40% of the growth

in global oil demand.

In 2004 China will use 830,000 barrels a day more than last year which is about a third of world demand growth, which may soon be fifty percent.

Chinese energy consumption will more than double in the next twenty years.

Source: US Energy Information Administration

Energy Security Issues Are Growing

Three quarters of the world’s known petroleum reserves are in the Middle East

Most of these are in three countries Saudi Arabia Iran Iraq

Natural Gas

Source: Community Office of Resource Efficiency

Natural Gas Price VolatilityNatural Gas Price Volatility

Carbon Growth Highest in Developing Countries

0

2

4

6

8

10

1990 2000 2010 2020

GT/yr

DevelopingDeveloping

IndustrializedIndustrialized

Annual Carbon Emissions

0

1

2

3

4GT

Emissions Growth(1990-2020)

Transport 27%

Power Generation 47%

Res/Comm 4%

Ind.Ind.

Economies Sectors

Developing75%

Developing75%

Industrialized25%

Industrialized25%

Dev.Dev.

Industrial 22%

2.2%

2.4%2.3%

1.2%

0.8%

0.7%

Developing Share 50% 52 56 60

                           

NASA photograph

Extent of Arctic summer ice in 1979 (top satellite image) and in

2003 (lower satellite image).

Shrinking Polar Ice

The Energy Policy Act of 2005Public Law 109-58

Renewable Depreciation Deductions

Businesses can recover investments in solar, wind and geothermal property through depreciation deductions under the Modified Accelerated Cost-Recovery System (MACRS)

For solar, wind and geothermal property placed in service after 1986, the terms are five years.

Renewable Electricity Production Tax Credit Provides a business tax credit of 1.5

cents/kWh, adjusted annually for inflation, for electricity generated by wind, closed-loop biomass and geothermal (1.9 cents/kWh adjusted for 2005)

Electricity generated from open-loop biomass, small irrigation hydroelectric, landfill gas, municipal solid waste resources and hydropower receive half that rate (currently 0.9 cents/kWh).

Available through December 31, 2007 for renewables

Renewable Energy Production Incentive New qualifying renewable energy generation

facilities eligible for annual incentive payments of 1.5 cents/kWh for the first 10 years of operation.

Qualifying facilities must use Solar Wind Geothermal Biomass Landfill gas Livestock refuse Ocean generation technologies (tidal, wave, current and

thermal) Fuel cells using hydrogen derived from eligible biomass

facilities

2005 Wisconsin Act 141

Renewable Portfolio Standard- requires utilities to generate 10% of their power from renewable energy by 2015

Requires state government to use renewable energy 10% by 2007 20% by 2012

Wind Energy:Cost of Wind-Generated Electricity1980 to 2005 Levelized Cents/kWh

Cen

ts p

er k

Wh

'80 '84 ‘85 '88 '89 '91 '92 '95 '97 ''00 2005

1510 8 6 4 2.5- 3.5*

38 cents

0

5

10

15

20

25

30

35

40

'80 '84 '88 '89 '91 '92 '95 '97 ‘00 2005

* Assumptions: Levelized cost at excellent wind sites, large project size, not including PTC (post 1994)

Wind Cost of EnergyWind Cost of Energy

0

2

4

6

8

10

12

1990

CO

E (

¢/kW

h [c

onst

ant

2000

$])

Low wind speed sites

1995 2000 2005 2010 2015 2020

High windspeed sites

Bulk Power Competitive Price Band

Growth of Wind Energy Capacity Worldwide

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

MW

Ins

talle

d

Year

Jan 2003 Cumulative MW

Rest of World = 2,803

North America = 5,018

Europe = 21,319

Sources: BTM Consult Aps, March 2001

Windpower Monthly, January 2003

Actual Projected

Rest of World Rest of World

North America North America

Europe Europe

Fastest Growing EnergySource in the World

Global Growth by Energy Source, Annual Average,1990-98

25.7

16.8

3 2.1 1.6 1.4 1.2 0.60

5

10

15

20

25

30

Source: REPP,Worldwatch 1998/99

Nuclear

WindSolar PV

GeothermalNat. GasHydroOilCoal

Wisconsin Wind Profile

Conclusion

Many forces driving wind development

Some areas of Northwest Wisconsin may be a good places for wind development

Now is a good time for communities and citizens to learn about this technology