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Wind Energy Industry's $25 Billion Impact on US Economy

In a record-setting year, the U.S. wind industry’s 28 percent growth boosted its job count back to 80,000 and had a discernible impact on the U.S. gross domestic product (GDP) by putting $25 billion in private investment to work, according to the industry’s newly released Annual Market Report.

When the U.S. Department of Commerce revised its estimate of Q4 2012 GDP growth up from 0.1 percent to 0.4 percent, it noted as significant the increase in its estimate for nonresidential structures growth to 16.7 percent, up from 5.8 percent, according to IHS Global Insight (NYSE:IHS) economists and verified by the Commerce Department’s Bureau of Economic Analysis (BEA).

Electricity power sector spending alone, according to BEA statistics, accounted for almost 37 percent of Q4’s increase in nonresidential structure spending. And that sector’s numbers included the 8,385 megawatts of wind added in Q4, which was almost 64 percent of the year’s total of 13,131 megawatts of new installed capacity and which IHS economists called “massive.”

It was, therefore, reasonable for IHS economists to identify the wind industry’s fourth quarter as a major boost to U.S. GDP.

The U.S. wind industry’s 45,125 operational utility-scale turbines represent an installed nameplate capacity of 60,007 megawatts, according to the new American Wind Energy Association (AWEA) industry report. That is about equivalent to 60 nuclear power plants.

The over 13 gigawatts of new capacity made wind the year’s leading builder of new U.S. generation capacity with a 42 percent share. It took leadership away from natural gas and become the only renewable to ever rank first.  

The Q4 burst of new development, driven by uncertainty about the fate of the industry’s vital $0.022 per kilowatt-hour production tax credit (PTC), pushed the U.S. past even China and back into first place internationally for new wind construction.

A PTC extension was finally approved by Congress on January 1. It included new language that will allow the benefit to apply into 2014. 

There are 74 U.S. utilities now purchasing wind-generated electricity through PPAs or direct ownership, AWEA Senior Policy Analyst Emily Williams noted in a briefing. More significantly, 43 percent of all electricity providers now have wind-generated electricity in their systems through various agreements.

The top twenty investor-owned utilities account for roughly 26,500 megawatts, 44 percent, of wind’s installed capacity, Williams added.

 

GE (NYSE:GE) was once again the U.S. market turbine manufacturing leader, with a 38.2 percent share. Siemens (NYSE:SI) captured a 20.1 percent share to move from its third place standing last year to second, and Vestas, at 13.8 percent, dropped a notch to third. Gamesa jumped up from ninth to fourth place and Acciona made the top ten this year at ninth place. Suzlon fell to tenth but REpower, its subsidiary, moved up from eighth to fifth.

Active U.S. manufacturers grew to 28, a 57 percent increase over 2010. The sector was so busy, Williams noted, that developers were getting turbines wherever they could.

The average size of the 6,751 turbines built during 2012 was 1.95 megawatts, down slightly from 2011’s 1.97-megawatt average size.

The dip was indicative of a shift in industry preference toward turbines that take advantage of technology breakthroughs in electronics, mechanics and materials to incorporate taller towers and/or bigger rotors and longer blades, Williams noted. Such turbines can achieve higher capacity factors and harvest winds that are slower and/or higher up, in places where wind projects have not been built before.

GE’s 1.6-megawatt machine, considered among the best in the world for low-wind regions, led the 1.5- to 1.6-megawatt platform that constituted almost 40 percent of turbines installed.

The new turbine technologies and advances in siting evaluation “have enabled most wind project owners to achieve capacity factors in the range of 30 percent to 40 percent,” the report added.

There were 559 U.S. wind-related manufacturing facilities in 44 states producing 67 percent of the 8,000 component content of turbines installed in the U.S. last year. There were thirteen utility-scale blade facilities, twelve tower facilities, and twelve turbine nacelle assembly facilities. Combined, they have a 13-gigawatt capacity.

Here’s the catch: Most of the 1,400 megawatts of wind turbine orders in 2011 were for 2012, but the bulk of the 1,500 megawatts of turbines ordered in 2012 were for, and were installed, in 2012. “The lack of 2013 certainty over federal tax credits precluded developers from placing orders for wind turbines during 2012 for future development,” AWEA’s report observed.

With the one-year PTC extension and its new in-construction language in place, the industry is getting back to building. But by the end of 2013, uncertainty could again become an imposition on growth and fiscal conservatives and wind opponents could move to do away with federal support.

This figure from AWEA’s report suggests that though wind may again be a political football, the industry will keep its PTC: “Some 70 percent of all U.S. congressional districts have an operating wind project, a wind-related manufacturing facility, or both.”

 

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

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Lund's picture
Lund on Apr 14, 2013 5:51 pm GMT

@Willem Post,

You are right when you say windpower is intermittent and the capacity factor is lower than nuclear – but – as you claim:

“60,006 MW x 8760 hr/yr x 0.8 = 420,522,048 MWh/yr; this is steady, near-100% CO2-free, near-100% “On-Demand” dispatch value energy, i.e., high quality energy, that does not require other generators for balancing.”

As the Engineers we are, both of us should be the first to know that this claim is totally erroneous!

The only way nuclear power can keep high capacity factors, is to allow them to generate at full power (= continous non-varying power) all the time, except from the time the power is shut down to zero, because it has to be refuelled, or shut down unexpectedly due to anything from technical issues to natural events.

Due to economic requirements, every new nuclear power station in the world, requires – but does not guarentee – to market at least 90% of its capacity – which means a continous non-varying power – until broken by refuelling or technical failures – no matter the demand or variation of the power consumption!

Of course, this means the nuclear capacity factor is 2-3 times higher than windpower – which is needed due to the simple fact that nuclear capacity is 5-8 times more costly to install and decommission than windpower!

The power output from a nuclear power station can possibly be adjusted to (some level of) follow the demand – but it is then anything else but efficient, and it cannot meet its own economic requirements this way!

So, neither when nuclear power generates steady and non-varying, nor when it is shut down for refuelling or unexpected reasons, it is no way an “”On-Demand” dispatch value energy, i.e., high quality energy, that does not require other generators for balancing”!

Nuclear power is a non-dispatchable source, which requires not only to be balanced by dispatchable peak-load generators, but also requires a considerable amount of expensive non utilized permanently-ready-to-start, backup capacity. Ask e.g. the swedes….or the japanese!

Just like the intermittent sources, non-dispatchable sources like nuclear cannot stand alone in a country’s electricity supply. They BOTH require nimble dispatchable sources, to fill the gab every time the demand changes, if they does not have access to a large capacity of energy storage.

If this means that your dispatchable generators needs to operate in unefficient modes, it only proves that your supply system consists of too many too large too unflexible coal fired units.

In Denmark (as you like to mention), where the windpower penetration is now over 30%, growing towards 50% in 2020, such coal fired stations are right now being decommisioned GW by GW on the simple market conditions, because they are not able to fit into the gab between the intermittent sources and the varying demand.

So the total Danish coal consumption is now more than halved, and it declined more than 20%! just last year!

By 2020, we expect no need of coal fired power plants in our electricity supply anymore, but we will probably keep a few of them, converted for wood pellets in stead of coal, to provide a reserve capacity for the general north european electricity market, to raise the supply in dry years, when the hydro supply is limited.

The balancing is done with our existing peak load genators on natural gas and bio fuels and by exchanging electricity with norwegian and swedish hydro power.

In other words, the windpower replaces the most CO2 emitting plants first, and leave the peak load plants for what they are meant for; filling the gab between non dispatchable power and varying demand.

The dispatchable power plants are not less efficient this way. They are actually more efficiently utilized than they was before, and we need less unutilized permanently-ready-to-start-capacity to backup large units!

As your country has granted you such an important education, you know you should stick pragmaticaly to such facts and be less religious in your choise of “favorite sources”, if you intent to make a future with sufficient and sustainable energy resources for your coming generations!

In Denmark we will meet our targets of around 7 metric tonnes of annual CO2 emissions per capita in 2020, and completely eliminating our reliance to fossil fuels and volatile fuel prices before 2050.

What is your target, Willem?

Best Regards, Søren Lund

 

Lund's picture
Lund on Apr 15, 2013 12:19 am GMT

Willem says:

“The US nuclear industry CF = 0.90, the highest of any nation in the world; google it

Vermont Yankee 0.92″

Thank you for underlining my point, Willem! – I have no doubt about this, and it only proves that Nuclear power is not dispatched – which is especially clear by the US nuclear Capacity Factor.

I repeat:The nuclear capacity factor is 2-3 times higher than windpower – which is needed due to the simple fact that nuclear capacity is 5-8 times more costly to install and decommission than windpower!

As nuclear power for any practical purpose is a non-dispatchable source, it requires other dispatchable sources to fit the demand.

It requires:

  • A: a source with low CF, to supply the increased demande in the day, and turn off again in the night.
  • B: a source with even lower CF, to fill the gap in the high demand season, and turn off the rest of the year.
  • C: a source with a CF near 0, to stay unutilized, but ready to supply when a nuclear reactor – or a whole cluster of them – shuts down unexpected.

These generators are not different or more running more efficiently than the generators needed to turn off when the wind blows, and on again when it doesn’t.

The windpower is not unpredictable. Wind turnines has typically 98-99% availability, as they only need a couple of service days a year.

The wind is forecasted highly accurate one day ahead, and relatively accurate one week ahead. Several satelites are already in place, only for this purpose.

A lot more unpredictable is when the next several Gw’s of nuclear power shuts down unexpectedly, and how long time it takes to bring it back online – if ever.

It is not a question about how often that happens. It is a question about whether you got the reserve power ready, when it happens.

 

 

Paul O's picture
Paul O on Apr 15, 2013 1:39 am GMT

Soren,

Is this discussion boiling down to semantics? Dispatched vs Non-Dispatched vs Base load. If the US nuclear fleet is able to provide steady output of reliable energy that the Utilities know will be available to them 24/7, I see no downside to that. 

Now the demand at anytime may fall below or above the steady baseload, but  even so this does not reduce the desirability of the steady and reliable base-load power. It is much much easier to use storage to fill in the gaps where a little more power is needed or store excess when it’s generated.

As I see it the only “dispatchable” source of power (conforming to your definition of dispatchable) would be  Fast ramping Natural Gas, not Wind, Not Solar. There is no guarantee whatsoever that the extra power needed will always coincide with a friendly and sustained gust of wind for the Wind Farms however reliable their wind forecasts may be.  Certainly It is absolute overkill to build a wind farm covering vast areas, wire them up to the grid, just so as to hopefully have them running just at the right time we need some extra electricity.

If Wind farms were to be built, they should be built with the expectation that they would contribute to the Base-Load supply, and not as a hopeful stop-gap for other base-load sources.

Lund's picture
Lund on Apr 15, 2013 1:45 am GMT

Willem,

Except from you are right, that we exchange electricity with norwegian and swedish hydro, you are completely off about the danish electricity system.

First: Wind is driven by solar energy, so the windpower generates considerably more energy in the day than in the night!

We do not typically export wind power in the night at low prices and import hydro at high prices in the day.

But because the wind resources in the west-wind belt are more than double in the winter time than in the summer time, we most typically export excessive wind power through the winther, at relatively high prices, and import hydro through the summer at lower prices.

The prices are dominatet by the fact that a lot more water runs into the reservoirs through spring and summer, than the norwegian can consume, so the reservoirs are normally full in the autumn, no matter the export. But as the precipitation is frozen in the winter, no water runs into the resorvoirs through the winter, where the demand of energy is much higher, so the norwegian imports from Denmark are highly demanded, to secure the supply until spring.

The danish household electricity prices are high, yes, but this is only because 2/3 of the price is taxes. As none of the taxes goes to pay any part of the electricity supply, including the wind turbines, only the last 1/3 is relevant to our costs of electricity.

This 1/3 includes the PSO-tariff (Public Service Obligations), of which around the half is covering the subsidies to new wind turbines.

The fact is that the relevant part of the danish household electricity prices, including the PSO, but excluding the VAT and other taxes, is cheaper than the average of the 27 countries of the EU.

We might easily aggree that the tax, charged on electricity i Denmark is horribly high, but that is a completely different case, which has nothing to do with the cost of electricity.

And the industry, who pays no VAT and taxes on electricity, and no administration costs to distributors, pay substantially lower prices than the average industrial consumer prices of EU, which you probably know, since you only mention the household.

If not, you can check these facts in Eurostat’s statistics, and know that the danish treasury dosen’t pay any subsidies to industrial consumers too.

So, if the electricity prices says anything about the costs of having a high windpower penetration, the danish prices only proves it is cheap!

 

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