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Wind Energy UpdateWind Energy Updategy pgy p
Larry Flowers Larry Flowers National Renewable Energy Laboratory National Renewable Energy Laboratory
January 23, 2008January 23, 2008
2
Capacity & Cost TrendsCapacity & Cost Trends
18000100Cost of Energy and Cumulative Domestic Capacity
18000100Cost of Energy and Cumulative Domestic Capacity
12000
14000
16000
708090
W)/kW
h*)
12000
14000
16000
708090
W)/kW
h*)
8000
10000
12000
40506070
paci
ty (M
W
rgy
(cen
ts/
8000
10000
12000
40506070
paci
ty (M
W
rgy
(cen
ts/
4000
6000
203040
Cap
ost o
f Ene
r
4000
6000
203040
Cap
ost o
f Ene
r
0
2000
1980 1985 1990 1995 2000 20050
10Co
0
2000
1980 1985 1990 1995 2000 20050
10Co
Increased Turbine Size - R&D Advances - Manufacturing Improvements
*Year 2000 dollars
Increased Turbine Size - R&D Advances - Manufacturing Improvements
*Year 2000 dollars
People Want Renewable Energy!People Want Renewable Energy!
9000095000
Total Installed Wind CapacityTotal Installed Wind Capacity
7000075000800008500090000
1. Germany: 21800 MW2. United States: 16842 MW
4500050000550006000065000
acity
(MW
) 3. Spain: 13915 MW4. India: 7720 MW5. China: 5000 MW
2000025000300003500040000
Cap
a 5. China: 5000 MW
World total Jan 2008: 90,521 MW
05000
1000015000
2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8
198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008
United States Europe Rest of WorldSource: WindPower Monthly
U.S. Leads World in Annual Wind U.S. Leads World in Annual Wind Capacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative Capacity
International Rankings of Wind Power Capacity
Cumulative Capacity(end of 2007, MW)
Germany 21 800
Incremental Capacity(2007, MW)
United States 5 144Germany 21,800United States 16,842
Spain 13,915
United States 5,144China 2,406Spain 2,300
India 7,720China 5,000
Denmark 3 132
India 1,450Germany 1,178France 1 155Denmark 3,132
France 2,624Rest of World 19,488
France 1,155Portugal 494
Rest of World 5,248Total 90,521
Data source: Windpower Monthly Windicator, January 2008
Total 19,375
U.S Lagging Other Countries for U.S Lagging Other Countries for Wind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity Consumption
Installed Wind Capacities Installed Wind Capacities (‘99(‘99 –– Dec ’07*)Dec ’07*)( 99 ( 99 Dec 07 )Dec 07 )
*Preliminary data
Drivers for Wind PowerDrivers for Wind Power
D li i Wi d C t• Declining Wind Costs• Fuel Price Uncertainty• Federal and State• Federal and State
Policies• Economic Development• Public Support• Green Power• Energy Security• Carbon Risk
Comparative Generation CostsComparative Generation Costs5$
/MW
h5$
/MW
h20
0520
05
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
Wind Cost of EnergyWind Cost of Energy
14
10
12
14
2006
$])
6
8
10
cons
tant
2
Low wind speed sites
New Coal
Natural Gas (fuel only)
2
4
6
E (¢
/kW
h [c
High windspeed sites 2006: New Wind
2007: New Wind
0
2
1990 1995 2000 2005 2010 2015 2020
CO
E
Depreciated Coal Depreciated Wind
Wind CostWind CostWind Cost Wind Cost DriversDrivers
Copper & Steel Price Source: World Bank, Commodity Price Data
Natural Gas Natural Gas –– Historic PricesHistoric Prices
16 16
12
14
ry H
ub)
12
14
ry H
ub)
Daily price history of 1st-nearbyNYMEX natural gas futures contract
8
10
MBt
u (H
enr
8
10
MBt
u (H
enrg
4
6
omin
al $
/M
4
6
omin
al $
/MNYMEXnatural gas futures strip
from 07/21/2006
0
2
990
991
992
993
994
995
996
997
998
999
000
001
002
003
004
005
006
007
008
009
010
011
N
0
2 Nfrom 07/21/2006
19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20
Source: LBNL
Historical Coal PricesHistorical Coal Prices
Source: EIA
COCO22 prices significantly prices significantly increase the cost of coalincrease the cost of coalincrease the cost of coalincrease the cost of coal
Levelized Cost of Electricity (2010) vs. CO2 Price140
120
130
140
Coal PC
100
110
$/M
Wh
Coal PCCoal IGCCCoal IGCC w/CCSGas CCN l
70
80
90
2006
$ NuclearWind Class 6Wind Class 4Wind Offshore Class 6
50
60
70
0 10 20 30 40 50
Carbon Price ($/ton CO2)Source: UCS/Black & Veatch
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)(The PTCs are a bargain)(The PTCs are a bargain)
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 RegionsCompetitive with Wholesale Power Prices in Most RegionsCompetitive with Wholesale Power Prices in Most Regions
Renewables Portfolio StandardsRenewables Portfolio Standards
MN: 25% by 2025(Xcel: 30% by 2020)
ME: 30% by 200010% by 2017 - new REVT: RE meets load
growth by 2012*WA: 15% by 2020
CT: 23% by 2020
MA: 4% by 2009 +1% annual increase
WI: requirement varies by utility; 10% by 2015 goal
RI: 16% by 2020
MT: 15% by 2015
g yWA: 15% by 2020 ☼ NH: 23.8% in 2025
OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)
ND: 10% by 2015
☼ PA: 18%¹ by 2020
☼ NJ: 22.5% by 2021
CT: 23% by 2020IA: 105 MW
CA: 20% by 2010
☼ *NV: 20% by 2015
☼ CO: 20% by 2020 (IOUs)*10% by 2020 (co-ops & large munis)
☼ NY: 24% by 2013
IL: 25% by 2025
☼ MD 9 5% i 2022MO: 11% by 2020
☼ AZ: 15% by 2025
☼ DC: 11% by 2022
☼ MD: 9.5% in 2022
*VA: 12% by 2022
☼ *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)
State Goal
State RPS
Solar water
TX: 5,880 MW by 2015
HI: 20% by 2020
☼ 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)
DSIRE: www.dsireusa.org January 2008
Solar water heating eligible
Public Benefit Funds for RenewablesPublic Benefit Funds for Renewables
Cumulative 1998 – 2017 (Million $)
$111
$95
$10
MA: $383VT: $36
$127
$85
$80
$22 $95
$20
RI: $10MA: $383
NJ: $279 DE: $11
CT: $338 $1,122
$
$2,048
DE: $11 DC: $10.5
d d b l ib i
15 State Funds + DC$4 B by 2017
Funded by Voluntary Contributions
www.dsireusa.orgJuly 2007
States with Green Power ProgramsStates with Green Power Programs
20
11 193
3
27
64 30
5
58
138
6
5
112
53
520
2
7
105
27
29
5
14
11 14
17
49 42
2 5
3
1
1
5 14
15
27
293 34 16
1
Green Power Products Available
Restructured Electricity Market
2
12
No Green Power Activity
Indicates Number of Green Power Products Offered by Utilities and CompaniesSource: National Renewable Energy Laboratory (October 2007)
#
Wind Energy InvestorsWind Energy Investors
Economic Development ImpactsEconomic Development Impacts
• Land Lease Payments: 2-3% of gross revenue $2500-4000/MW/year
• Local property tax revenue: ranges widely -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 locallyconcrete, towers usually done locally
Windy Rural Areas Need Windy Rural Areas Need Economic DevelopmentEconomic DevelopmentEconomic DevelopmentEconomic Development
Case Study: Texas Case Study: Texas
Utilities and wind companies invested $1B in 2001 to buildinvested $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 i 2002 lt• $2.5M in 2002 royalty income to landowners
• Another 2,900 indirect jobs as a result of thejobs as a result of the multiplier effect
• $4.6M increase in Pecos County property tax y p p yrevenue in 2002
Case Study: MinnesotaCase Study: Minnesota
107-MW Minnesota wind projectproject
• $500,000/yr in lease payments to farmers
• $611,000 in property taxes in 2000 = 13% of total county taxesy
• 31 long-term local jobs and $909,000 in income from O&M (includes multiplierO&M (includes multiplier effect)
Case Study: IowaCase Study: Iowa
240-MW Iowa wind projectproject
• $640,000/yr in lease payments to farmers ($2 000/turbine/yr)($2,000/turbine/yr)
• $2M/yr in property taxes• $5.5M/yr in O&M income• 40 long-term O&M jobs• 40 long-term O&M jobs• 200 short-term
construction jobs• Doesn’t include multiplierDoesn 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 $ , y p ylieu 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 Dakotay y yy y y
40-MW wind project in South Dakota creates $400,000 - $450,000/yr forcreates $400,000 $450,000/yr for Hyde County, including:
• More than $100,000/yr in annual lease payments to farmerslease payments to farmers ($3,000 - $4,000/turbine/yr)
• $250,000/yr in property taxes (25% of Highmore’s education(25% of Highmore s education budget)
• 75 -100 construction jobs for 6 monthso t s
• 5 permanent O&M jobs• Sales taxes up more than 40%• Doesn’t include multiplier effect• Doesn t include multiplier effect
Case Study: Prowers County, ColoradoCase Study: Prowers County, Colorado
• 162-MW Colorado Green Wind Farm (108 turbines)
• $200M+ investment
• 400 construction workers
• 14-20 full-time jobs14 20 full time jobs
• Land lease payments $3000-$6000 per turbine
• Prowers County 2002 assessed valueProwers County 2002 assessed value $94M; 2004 assessed value +33% (+$32M)
• Local district will receive 12 mil tax d ti
“Converting the wind into a much needed commodity while providing good jobs
reduction
• Piggyback model
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
Colorado Colorado –– Economic Impacts Economic Impacts from 1000 MW of new wind developmentfrom 1000 MW of new wind development
Wind energy’s economic “ripple effect”
Direct Impacts Indirect & Induced Impacts
Totals (construction + 20yrs)
Payments to Landowners: • $2.7 Million/yrLocal Property Tax Revenue:• $11 Million/yrC t ti Ph
Construction Phase:• 1,250 new jobs• $130 M to local economiesOperational Phase:
Total economic benefit = $1.1 billion
New local jobs during construction = 2 650
p ( y )
Construction Phase:• 1,400 new jobs• $189 M to local economiesOperational Phase:• 200 new long-term jobs
Operational Phase:• 200 local jobs• $20 M/yr to local
economies
construction 2,650New local long-term jobs
= 400
200 new long term jobs• $21 M/yr to local economies
Construction Phase = 1-2 yearsOperational Phase = 20+ years
All jobs rounded to the nearest 50 jobs; All values greater than $10 million are rounded to the nearest million
Local Ownership ModelsLocal Ownership Models
• Minnesota farmer cooperative (Minwind)
• FLIP structure
• Farmer-owned small wind
F d i l l• Farmer-owned commercial-scale
© L. Kennedy
Environmental BenefitsEnvironmental Benefits
• No SOx or NOxNo SOx or NOx • No particulates
No mercury• No mercury• No CO2• No water
Sustainable Withdrawal Of Freshwater Sustainable Withdrawal Of Freshwater Is National IssueIs National IssueIs National IssueIs 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 • Operational impacts:Policy Uncertainty• Siting and Permitting: avian,
noise, visual, federal land • Transmission: FERC rules
Operational impacts: intermittency, ancillary services, allocation of costs
• Accounting for non-monetary• Transmission: FERC rules, access, new lines
Accounting for non monetary value: green power, no fuel price risk, reduced emissions
Transmission GrowthTransmission Growth
Load GrowthLoad Growth
Electricity Generation and Consumption in the West
250
300
Total Consumption Coal fired
200
250
Wh
Coal-firedNatural-gas firedNuclear Hydroelectric
150
ons
of M
W Hydroelectric Non-hydro Renewables
100Mill
i
0
50
0
Arizona
Californi
a
Colorad
o
Idaho
Montan
a
Nevada
New Mexic
o
Oregon
Utah
Washing
ton
Wyoming
Source: EIA, 2005 data
Integrating Wind into Power SystemsIntegrating Wind into Power Systemsg g yg g y
“The future ain’t what it used to be.”- Yogi Berrag
A New VisionA New VisionFor Wind Energy in the U.S.For Wind Energy in the U.S.
State of the Union Address
For Wind Energy in the U.S.For Wind Energy in the U.S.
“…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 thepotential to supply up to 20% of the electricity consumption of the United States.”
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 anreliable, clean energy technology. As an inexhaustible and affordable domestic resource, wind strengthens our energy security, improveswind strengthens our energy security, improves the quality of the air we breathe, slows climate
change, and revitalizes rural communities.
140Onshore Offshore
120
/MW
h Class 6
Class 4
Class 7
Class 5
Class 6
Class 4
Class 7
Class 5
10% Available 10% Available TransmissionTransmission
80
100
Ener
gy, $
/
Class 3 Class 3
60
d C
ost o
f E
20
40
Leve
lized
- 200 400 600 800 1 0000
20
- 200 400 600 800 1,000Quantity Available, GW
2010 Costs w/ PTC, $1,600/MW-mile, w/o Integration costs 43
What does 20% Wind look like?What does 20% Wind look like?
500 18Cumulative Capacity (left scale)
350
400
450
acity
(GW
)
14
16
ty (G
W)
Cumulative Capacity (left scale)
Annual Capacity (right scale)
250
300
350
alle
d C
apa
8
10
12
ed C
apac
it
100
150
200
ulat
ive
Inst
a
4
6
8
nual
Inst
all
0
50
100
Cum
u
0
2
4
Ann
Source: AWEA 20% Vision
2000 2006 2012 2018 2024 2030
Colorado Colorado –– Economic Impacts Economic Impacts From the 20% Scenario From the 20% Scenario
2,507 MW new development2,507 MW new development
Wind energy’s economic “ripple effect”
Indirect & Induced Impacts
Totals (construction + 20yrs)
Direct Impacts
Construction Phase:• 3,100 new jobs• $325 M to local
economies
Total economic benefit = $2.9 B
New local jobs during construction = 6 600
p ( y )Payments to Landowners: • $7 Million/yrLocal Property Tax Revenue:• $30 Million/yrC t ti Ph economies
Operational Phase:• 500 local jobs• $50 M/yr to local
economies
construction 6,600New local long-term jobs
= 1,000
Construction Phase:• 3,500 new jobs• $475 M to local economiesOperational Phase:• 600 new long-term jobs600 new long term jobs• $55 M/yr to local economies
Construction Phase = 1-2 yearsOperational Phase = 20+ years
All jobs rounded to the nearest hundred jobs; Millions of dollars greater than 10 million are rounded to the nearest five million
47
20% Wind Vision Employment20% Wind Vision Employment
200,000
140 000
160,000
180,000
100,000
120,000
140,000
Jobs
OperationsConstructionManufacturing
60,000
80,000
J
-
20,000
40,000
2007
2009
2011
2013
2015
2017
2019
2021
2023
2025
2027
2029
49
Fuel Savings From WindFuel Savings From Wind
4.0E+10
4.5E+10
3.0E+10
3.5E+10
Gas Fuel Savings
C l F l S i
Electricity Sector Fuel Usage
1 5E+10
2.0E+10
2.5E+10
MM
Btu
Coal Fuel Savings
Gas Fuel Usage(20%wind)Coal Fuel Usage(20%wind)
5.0E+09
1.0E+10
1.5E+10
0.0E+00
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Reduction in National GasConsumption in 2030 (%)
Natural Gas Price Reduction in 2030 (2006$/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
Cumulative Carbon SavingsCumulative Carbon Savings2500
1500
2000
1000MM
TCE
500
02000 2005 2010 2015 2020 2025 2030
CumulativeCumulativeCarbon Savings
(2007-2050, MMTCE)
Present Value Benefits(billion 2006$)
Levelized Benefit of Wind($/MWh-wind)
4,182 MMTCE $ 50 - $145 $ 9.7/MWh - $ 28.2/MWh
Electric Sector COElectric Sector CO22 EmissionsEmissions
Incremental Cost of 20% WindVision
Vision
$2 000
$2,500
$3,000
Wind O&M
Wind Capital
$1,000
$1,500
$2,000
Bill
ion
2006
$
p
Transmission
Fuel
Conventional O&M
Conventional Capital
$0
$500
20% Wind No Wind
$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
Results: Results: CostsCosts & Benefits& Benefits
Incremental direct cost to society $43 billionIncremental direct cost to society $43 billionReductions in emissions of greenhouse gasses and other atmospheric pollutants
825 M tons (2030)$98 billion$
Reductions in water consumption 8% total electric17% in 2030
Jobs created and other economic benefits
140,000 direct$450 billion total
Reductions in natural gas use and price pressure
11%$150 billion
N t B fit $205B W t iNet Benefits: $205B + Water savings
“With public sentiment nothing can fail;With public sentiment nothing can fail; without it, nothing can succeed.”
A Lincoln- A. Lincoln
ConclusionsConclusions
• 20% wind energy penetration is possible• 20% penetration is not going to happen under business20% 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% goaltiming and rate of achieving a 20% goal• Key Issues: market transformation, transmission, project
diversity, technology development, policy, public tacceptance
• 20% Vision report: February 2008
Source: AWEA 20% Vision
Humanity’s Top Ten Humanity’s Top Ten Problems for next 50 yearsProblems for next 50 yearsProblems for next 50 yearsProblems for next 50 years
1. Energy
2. Water
3. Food
4. Environment
5. Poverty
6. Terrorism & War
7 Disease7. Disease
8. Education
9 Democracy 2003: 6 3 Billion people9. Democracy
10.Population
2003: 6.3 Billion people
2050: 9-10 Billion peopleSource: Nobel laureate, Richard Smalley
Carpe VentemCarpe Ventem
www.windpoweringamerica.gov