From the tightly choreographed opening assembly and throughout three days of debate and discussion, the push was on to encourage the US Congress to act on the long-awaited policy needed to lay a course for the sector's sustained growth in the face of new market realities.
"The wind industry is in the midst of a reset. It will likely be changed forever, and we as leaders in this industry must recognise it and take action now," Steve Bolze, CEO of GE's power and water division, told delegates in Dallas, Texas.
That reset can be traced to a number of factors. The US has had, for the first time since 1949, two consecutive years of falling power demand. Natural gas prices, which had been as high as $12-13 per million British thermal units, have plunged to $3-4 - and taken wholesale power prices with them. At the same time, according to figures from the US Department of Energy's Lawrence Berkeley National Laboratory, both the cost of building wind farms and power purchase prices have been rising. Ryan Wiser, a staff scientist at the laboratory, said that over the last five years, wind's installed cost has risen by around $800/kW to an average $2,100/kW. Its average power purchase price just last year was about $60/MWh, and that is twice what it was at its lowest point in 2003. While much of the wind sector's growth in the US in the past several years has been driven by its cost competitiveness with gas and coal generation, Wiser told delegates: "That strong economic position has eroded and eroded rather substantially."
This is causing the market to take another look at the technology, said Tyler Tringas, a wind analyst with Bloomberg New Energy Finance. "For the most part, developers, manufacturers, bankers and policy makers are re-evaluating the economics of wind," he said. " The market as a whole is trying to digest this new perspective on just how attractive is wind."
Closing the price gap between wind and conventional sources of energy is something that will be vital to creating demand and moving forward, said Mike O'Sullivan, senior vice-president for NextEra Energy Resources, the leading developer of wind in the US with more than 7.5GW in operation. "I think we have to get more cost competitive," he told delegates during a panel discussion among industry leaders. "Customers are telling us our product is too expensive relative to other choices out there."
Finding new sources of capital to bring down the cost of financing projects will be key to reducing the price of wind, said Tringas. Another part of the equation lies with the turbine itself. Delegates heard near-unanimous agreement among wind turbine manufacturers about the need for research and development (R&D) in technology and materials, along with operations and maintenance. "We have to get the cost of energy down. We have to do that through R&D investments, but also through volume," said Jens-Peter Saul, CEO of Siemens Wind Power.
"It is important that we have a market that feeds the R&D," he continued. "Look at the achievement of this industry in the last years, how the cost has gone down - that was only possible because we had a big market and could invest money into R&D to make the turbines more efficient, make them more reliable, make them bigger."
Bringing costs down also requires long-term investment in new domestic supply-chain capacity. Although turbine makers have invested significantly in the US market in recent years, with at least 15 original equipment manufacturers either establishing domestic manufacturing facilities or planning to, their component suppliers are hesitant to follow suit. "As we make those investments we notice our supply chain is not following us because of a lack of confidence," said Saul.
Delegates were told that building confidence across the wind industry will take policy that pushes for more renewable power. That means the enactment of a federal renewable electricity standard (RES) requiring 25% of the nation's electricity to come from renewable sources by 2025.
"We're standing at the edge of a cliff. We can fall - or it is our time to fly," said AWEA chief executive Denise Bode. "For us to take off, Congress must, I repeat must, enact a national renewable electricity standard to send a long-term signal to the industry."
Bolze agreed. "Without a strong national policy to drive demand, US wind installations could drop as much as 50% from 2009 levels, with an accompanying loss of manufacturing and industry-related jobs," he said. In contrast, China and Europe are anticipating annual capacity additions over the next decade of more than 10GW.
"From 2005 to 2008, the US led the world in wind installations, but was eclipsed in 2009 by China, which has line of sight to continue leadership in 2010 and beyond," he said. "With a strong domestic market comes investment, technology leadership and economic growth. The US must not cede that ground to other regions of the world."
The call for a national RES was repeated over and over, not just by wind company executives, but also by state governors and even a member of the Obama administration. "The continued growth of wind energy will take sustained investment underpinned by, as we know, strong policy at all levels," said Cathy Zoi, the assistant secretary in charge of the Department of Energy's renewable energy programme. "For us, this strong policy means an economy-wide energy and climate bill that includes measures like an RES to give the private sector long-term predictability so that clean energy investments in the US can continue."
The US House of Representatives passed comprehensive climate and energy legislation in May 2009, setting a cap on carbon and establishing an RES requiring 20% by 2020. But the debate stalled in the Senate in the wake of concerns over a projected multi-billion-dollar budget deficit, bitter divisions over healthcare reform, and the failure to reach an internationally binding agreement at climate change talks in Copenhagen, Denmark, late last year.
Another bill - which aimed to restart the process, was floated in May by senators John Kerry, a Democrat from Massachusetts, and independent Joe Lieberman of Connecticut - is likely to form the basis of a Senate effort to move on climate legislation this year. But, although the bill calls for cuts in greenhouse gas emissions of 17% by 2020 and 83% by 2050, it makes no mention of an RES.
A third piece of legislation in play is a Senate energy bill, cleared last summer by the Energy and Natural Resources Committee, that does not limit greenhouse gases but does include an RES requiring 15% by 2020. How, or even if, these elements come together before Congress adjourns for November's midterm elections was far from clear when the wind industry gathered at the conference. But Byron Dorgan, a Democrat from North Dakota who helped write the Senate energy bill, told the conference's opening session that he hopes to see it brought to a vote this summer. When it comes to the Senate floor, he said, he plans to offer an amendment to boost the target to 20%. "With your help," he said, "I think we can get the votes to do that."
Getting the votes may be easier said than done. Supporters have been trying for a decade to get an RES through Congress without success, stymied largely by states in the US Southeast that argue consumers will be forced to spend more importing renewable energy from other parts of the US in order to comply. But Jeff Deyette, a senior energy analyst with the non-profit advice group Union of Concerned Scientists (UCS), said a new analysis by his organisation casts doubt on that claim. It found the Southeast states have already spent $10 billion a year importing coal from other regions, with about 12% of that going to producers as far away as South America. "At the same time, biomass pellet manufacturers in that region are currently exporting their product to Europe because they don't have a sufficient local market," he said. "Just think about that for a minute. There are large barges of coal coming into ports in the Southeast to burn in Southeast power plants, while at the same time there are barges filled with biomass pellets being shipped off to Europe. It makes no sense. It's absurd. But it's true."
Whether the UCS's findings will be enough to sway policy makers remains to be seen, but Tringas said that Bloomberg has polled all 100 senators and believes, like Dorgan, that there is a chance. "In general, we think it is going to be a very tough road, but there is at least a path to a federal RES, politically speaking," he said.
Even if a federal RES is enacted, it may take a while before new demand is created because such a policy would only gradually introduce higher requirements for renewables.
In the early years, new requirements for renewables would, in fact, fall below the total of all standards already in place in 29 states and the District of Columbia.
AWEA is pushing for strong near-term targets in any RES bill to get through that early period, said Kathy Belyeu, manager of AWEA's industry information services. But it is a tough sell. "There are obviously people who are concerned a federal RES would raise electricity prices and this is not a good environment for people to see higher electricity prices. So there are political concerns," she said. "AWEA's perspective is, let's get any RES passed first and then we'll talk about making it higher."
It is also important not to underestimate the value of defining a direction for the market, said Wiser, even if the actual targets are lower than desired. He pointed to the conference's host state of Texas, which set an RES of 2GW by 2008 and now has 9.4GW installed. This created a market environment in which wind could really begin to take off. "It is no longer a policy that individually is driving much capacity," he said. "But it did provide an important signal to the wind industry that Texas was ready to go."
Whether Congress officially decides the US is ready to go or not, the challenges facing the industry have not dimmed its optimism over the market's long-term potential. "I think we have a great path forward," said NextEra's O'Sullivan. "I think we are in a little lull right now, not quite sure where the future really is. But we have to look at it one or two years at a time and adjust our business plan accordingly. We've been in this business almost 20 years and I'm going to guess we'll be in it for 20 more, if not longer. If Darwinism shakes out a few of us corporately or individually, so be it."
YOU ARE THE LEADING EDGE FORMER PRESIDENT WELCOMED AS HE APPLAUDS PROGRESS
Technology will free the US from its addiction to oil, former president George W Bush told delegates to the American Wind Energy Association's recent annual convention in Dallas, Texas. And the government has a positive role to play in expediting that change by enacting policies that reward risk, he said.
"I believe technology is going to continue to drive how we live, continue to drive our economic and national security, and continue to drive how we become good stewards of the environment," he said. "What should be exciting about this conference is that you are just pioneers, you are on the leading edge of technological change."
Bush, who now lives in Dallas, was the keynote speaker on the second full day of the conference. The audience welcomed Bush enthusiastically, giving him standing ovations at the start and end of his speech.
The former president said that he believes the US energy sector is in a transition that will result in a day when his grandchildren will be driving electric cars powered by an electricity very unlike today's. He said he recognised the need to diversify when, as the governor of Texas, he signed the 1999 bill creating a renewable electricity standard (RES) that has propelled the state to the lead in US wind installations. A strong entrepreneurial spirit, low taxes, consumer choice and transmission access also played a role, Bush said. "I hope other planners, thinkers, policy makers take a look at what we've got. I'm not saying we're perfect. I'm just saying we happen to be in the lead."
Bush did not comment on a national RES, which the wind industry says is vital to maintaining its growth. But, as president, he opposed the measure, saying it was a policy decision that should be left to the states.
Bush's leadership was a mixed bag for wind in other ways. He first raised the prospect that the US could draw 20% of its power from wind by 2030, which launched a number of technical studies within government to try to figure how that might work. But he also pulled the US out of the Kyoto Protocol and worked against putting a price on carbon.