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Wind Energy Industry Ramps Back Up 

wind energy no. 2 annual focus

By Rachel Duran

Wind farms move forward thanks to an upsurge in power purchase agreements.

The second half of 2013 finds wind energy developers rebuilding their project pipelines, bouncing back from a slowdown in the first half of the year, where only 1.6 megawatts of wind power were commissioned, with none commissioned in the second quarter, according to the U.S. Wind Energy Second Quarter 2013 Market Report, published by the American Wind Energy Association (AWEA), which represents the interests of industry stakeholders. The third quarter report was to be released on October 31.

An example of the increase in projects can be seen in Ford County, Kan., where two wind farms will begin construction next year. Norvento will install a wind farm south of Dodge City in the Bucklin region; and Infinity Wind Energy will build another wind farm in the area, in between Spearville and Bellefonte. Ford County is currently home to four wind farm operations in Spearville. Economic development officials expect more wind farms will be built in the county in the future.

The wind energy industry will be further interested in the area thanks to the expansion of transmission lines, says Joann Knight, executive director, Dodge City-Ford County Development Corp. ICT Great Plains has completed a transmission line from Spearville to Axtell, Neb., and is building a line from Medicine Lodge, Kan., to Spearville, which will be connected in the spring of 2014. What’s more, Ford County officials are supportive of a project called Clean Line Energy Partners, which plans to install a DC voltage project that would span from the county to Indiana, Knight adds.

The escalation of the wind energy industry nationwide also means suppliers are once again increasing production to meet demand. Wind energy is also benefitting from its cost competitiveness with traditional fossil fuel energy resources, which wasn’t the case a few years ago.

And what about when the wind doesn’t blow? Utility companies are coming up with predictive models to achieve optimal performance for the wind energy generation in their portfolios by mitigating the intermittence factor. The wind energy resource must be used as it is generated (as is true with other forms of generation). A key to the future of the wind energy industry will be finding an economically feasible way to store wind energy.

In other industry trends, wind energy is a critical player in achieving long lasting results in reducing carbon pollution, according to data released by the EPA in October. They found that power plant carbon dioxide emissions declined 10 percent between 2010 and 2012, a period in which U.S. wind energy production increased 48 percent. Wind energy was found to reduce carbon dioxide emissions by nearly 100 million tons per year, or just less than 5 percent of total electric sector emissions in 2012.

Stutz says that if the U.S. Congress doesn’t extend the PTC, the business model for wind farms becomes much more problematic because the credits really do make a difference in the development of wind farms.

Why the Slowdown?

Why has the industry experienced a turnaround in the second half of the year? Wind energy developers had been reluctant to move forward with projects in the United States due to last year’s delay in the extension of the federal Renewable Energy Production Tax Credit (PTC), which hampered decision making and planning as project timelines range from 18 months to 24 months. The extension of the PTC took effect January 1, 2013; however, the delay hindered the industry.

“No industry can contribute what it’s capable of giving America without stable policy, and wind energy is Exhibit A of that reality,” said Tom Kiernan, CEO, AWEA, in a public statement made in July. “The industry is hard at work getting geared up to meet the strong demand for more wind energy, but if it’s going to generate more jobs and clean energy for America in the future, it simply must have the same kind of policy certainty under which other industries operate.”

However, at the end of this year, the industry once again finds itself in the same place, as the current PTC is set to expire at year’s end. “The difference is you just have to have your wind farm started, about 5 percent invested, and it has to be up by the end of 2014 or early 2015,” says Mark Stutz, a spokesperson for Xcel Energy Inc.

“The key is that those wind farms really don’t get built without the local utilities signing a long-term contract to add wind,” Stutz says. “Very few people in this part of the world have ever built a wind farm on spec.”

Stutz says that if the U.S. Congress doesn’t extend the PTC, the business model for wind farms becomes much more problematic because the credits really do make a difference in the development of wind farms.

Where We Stand

AWEA says the increases in wind energy activities in the second half of this year include an increase in requests for proposals, and power purchase agreements, where utilities are increasingly purchasing additional megawatts of wind power from independent power producers, for example. “What we are seeing now is a testament to the willingness of utilities to sign long-term contracts for wind energy offered at competitive prices,” Kiernan says.

An example is Xcel Energy, which is based in Minneapolis, Minn. The electric and natural gas company has annual revenues of $10.1 billion, and has operating companies servicing eight Midwestern and western states. Subsidiaries of Xcel Energy are: Northern States Power Co.-Minnesota; Northern States Power Co.-Wisconsin; Public Service Co. of Colorado, and Southwestern Public Service Co.

Xcel Energy intends to expand its wind energy portfolio by 30 percent in the near future. In Colorado, the company has 2,172 megawatts of wind energy on its network, which were purchased through long-term power purchase agreements with wind farm operators.

Xcel Energy was recently approved by regulators to add another 450 megawatts of wind energy in Colorado, which will come from two wind farms. The Colorado wind energy portfolio will increase to 2,600 megawatts, Stutz says. In other Xcel Energy developments, the company will add 750 megawatts of wind energy in the upper Midwest, and an additional 700 megawatts in Texas and New Mexico.

“By 2015 we should be up to 6,800 megawatts of wind energy with our current plan,” Stutz says. “A lot of them are owned by independent power producers, particularly here in Colorado.”

“Wind energy is a valuable, low-cost substitute for natural gas and other fuels right now,” said Ben Fowke, chairman, president and CEO of Xcel Energy earlier this year in a public announcement.  “These projects will lower customer costs by at least $800 million over their lives and will provide a valuable hedge to rising and volatile fuel prices for well into the future.”

Stutz concurs that the cost competitiveness of wind energy has been a factor in moving forward with the initiatives. “One of the things we see in Colorado, especially with this recent 450 megawatts, is we are getting this wind at a price that is competitive with or sometimes less than fossil fuels, which is quite a change from the way things were 10 years ago,” Stutz says.

For complete details on the organizations featured in this article, visit:

American Wind Energy Association

Dodge City-Ford County (Kan.) Development Corp.

Xcel Energy Inc.

Illustration by Dan at Free Digital Photos.net

 

 

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About the author: Rachel Duran

Rachel Duran is the editor in chief for Global Corporate Xpansion. Contact her at rduran@latitude3.com.

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