Windbiz

US, Germany, India, Spain, Portugal Top '05

Not much time to post lately while the year-end '05 figures roll in.  US came in a solid first with over 2, 400 MW, while Germany managed to keep its lead on Spain.  Germany turned in a nice rally at 1,800 MW considering the political uncertainty and shift of funding model, along with weak wind sites.  Spain was expected to slow a bit this year with a grid bottleneck, no surprise there.  Portugal saw a huge spurt of projects - with government sources claiming 500 MW. That is to say, half of Portugal's entire wind MW installed was activated in 2005.  While my specific predictions will lie here, I will say '06 country rankings will see continued shifts to South Europe behind the US, and on the whole things look pretty upbeat around Europe.

UPDATE

My bad, I neglected India's solid 1,430 MW according to GWEC, which makes them number three worldwide for MW added in 2005.  As I said before, India's regulatory model is spurring on sector growth to emerge as the clear star of the Asia-Pacific region. 

Spain Year End Wind Numbers

This Spanish consultancy is first out of the box with a year end figure of 1,680 MW added for Spain, which looks suspect to me.  Their sources are Spain's regional governments (known for chalking up MW installed before fully activated), the grid company REE, and wind farm operators.  The most questionable figures to me are Castilla La Mancha and Galicia adding over 500 MW apiece, and the chart of each player's installed base.  Molinos del Ebro is absent from the list and DERSA Gas Natural owns over 300 MW at least.  Final figures from IDAE won't be out until late March probably - but I'd say the smart money's in the 1400-1550 MW range.   

US Hogs Up Turbines for '05 MW Add Leadership

It's nearly mid-December and the rush is on to activate farms before year-end so they show up in the '05 MW add count, which is a politically-influenced guestimation in many markets. There are three countries vying for the title of most MW added this year: Spain, the US, and Germany. 

Germany can probably be ruled out already as it added only 511 MW through June, even though Q4 is usually when many come on line.  Spain, Europe's main motor, will fall significantly below its showing of 1,931 last year, probably around 1,400 MW - it's added 600 MW through June.  This leaves the US, which is set for 2,500 MW.  But alas, it's a marathon, not a sprint - and without a PTC after 2008, the US will return to its yo-yo cycle with a big drop in activations.

Another downside to the schizo growth of the US: the US boom is the UK's bust.  According to the BWEA, UK wind is constricted by US demand that diverts turbine components from its market, along with others. Damn Yanks!      

Volvo Uses Wind to Cut Vehicle CO2

They're not doing hydrogen cars, nor are they making flex-fuel cars,  but  Volvo is using wind to power their truck manufacturing plant in Sweden.  It's a five turbine project to cover their electricity demand complemented by biomass for hot water.                                                                                                                    

This is a segment that should be tapped more. While oil firms are putting up wind turbines to power their refineries, a good many other companies could tap this form of energy.  The advantages are clear: cover power demand, sell the excess back to the grid, improve sustainability credentials.  Having a site with strong demand and grid access, the case for many a factory, makes it all the easier to put up the turbines. 

photo: © BP p.l.c.

UK Hits Energy Panic Button

Blair's reaching for the red phone as the UK is up in arms over its energy supply situation.  The country is floundering for a clear path forward.  The nukes vs. renewables debate, in my opinion a bad argument from both sides, rages on while old BP's set to spend $1.8 billion on clean energy.  Meanwhile, part of the solution, a huge 700 MW wind farm on Lewis Island (to name one of many) is continually being struck down by environmentalists. 

Sadly, in a crisis situation the environment starts to sound like a luxury as power supply of any sort becomes a necessity for economic activity, and heating in the cold winter expected for this year.  What is also unfortunate is that permitting and grid connection challenges facing renewables boosts the argument for nuclear power.  Well-lobbied nuclear is set up as a quick fix. 

Crisis conditions call for crisis solutions--but this does not sound like the right approach, as taxpayers and the environment (nuclear waste vs. CO2 vs. bird nesting/visual impact) pay in the long term.  But then again, I have the luxury of not living in the UK.   

UPDATE

Nice column in the Guardian here taking a look at both sides of the nuclear/renewables debate - which seems to encourage more productive discussion.  He draws from UK Energy Policy to say 26,000 MW of wind can replace just 5,000 MW of fossil fuel - but not clear what kind of capacity factors you'd be using here (offshore can get up to 40%). The important thing though is talking about complementarity and a mix - and properly weighing the good and evil of both. 

American Consumers Going for Wind

This is the type of news  you'd expect in Europe, not the US, and it shows signs of a serious shift inside the world's largest fossil fuel consumer. It's not the tree-hugging arguments that are driving up wind power demand, but rather the soaring oil prices.  Bringing wind power to the US electricity consumer as Xcel has done with its Windsource product will probably become the norm among utilities in states with RPS requirements, if it's not already. 

Now, the bad news: unfortunately, the firm states in the article that it's not sure about adding more wind power to its portfolio because of soaring turbine prices.  We've heard this before - and it's the old US energy policy chicken-or-egg quandary.  Turbines are expensive because of raw material (steel) costs, yes, but also because there is a lack of competition in the market.  There is a lack of competition in the market because it's risky for European suppliers to set up shop in the US.  That risk is due to sporadic tax incentive support for wind.   

There will be more and more consumers clamoring for cheaper, cleaner renewable energy over the next 2-3 years as oil and gas remain expensive.  Turbine suppliers seeing this demand should, to some degree, factor it into their risk assessment when deciding whether or not to enter the US - popular and political momentum is building for a long term renewable incentive.  As is, wind loses out on an early opportunity here to leverage its cost advantage.

Sweden Wind, More than Current Oil Prices

Oil prices are just an eye-opener, but Sweden has been working on boosting wind for a while. Sweden's going to be a key market where alot of industry trends play out to the advantage of a larger, pan-European wind market.  You've got expanding utilities looking to build wind portfolios in a regional market with high offshore potential.  This is also happening in the UK and Germany.  The Nordic competition among E.ON, Vattenfall, DONG/Elsam/Energi E2, and Statkraft is an important example of experienced players looking to build scale in the greater Nordpool market. I wouldn't expect Sweden to put up big numbers in terms of MW installed until later in the decade when permitting gets sorted out - but it will be an important growth motor when that happens.    

Spain Wind Slows, Not to Worry

Back on 20 October Iberdrola reported it's only put up 105 MW of wind through 9 months of the year. This is a weak showing compared to the 1,000 MW it did in 2004, which made it the world's top wind farm owner.  What's going on?

Most of this has to do with the Spanish grid, which needs to accommodate new projects in less connected regions like Castilla La Mancha and Castilla Leon where at least 400 MW of Iberdrola's pipeline is bottled up.  The grid operator says Spain is a virtual island, with very little connectivity (around 5%) to Portugal and France that it needs for stability when handling heavy wind loads.      

Spain's going to see a serious drop in MW added this year - but it should not concern anyone over the long term in a market that can easily do 2,000 MW yearly to reach its goals.  The incoming PSOE party last year quickly installed a new CEO of the grid operator, and the firm's stance became markedly pro-wind.  With the right political will and a new mandate for 11,000 MW more wind, this short term slowing should give way to solid growth, both for Iberdola and the market as a whole.

Forget the Boom, Let's talk Post-2007

The AWEA has released its statement that the US wind energy market is experiencing a boom, with all the PTC strings attached to it.  No doubt the market could easily clear 3,000 MW in 2006.  Solid information on these projects is readily available.   But the post 2007 market questions are far from being answered.  Will there be a long term incentive? Can state RPS quotas hold up the industry? Will energy policymakers learn that, beyond a temporary oil price spike, wind helps wean the country off of a volatile energy source? By the time these questions are answered, wind developers are likely to be well on their way to handling merchant risk.