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United States

United States

A clearing of the air for a new approach

The market in America for smaller and more geographically distributed wind projects--and how best to sell wind power in a deregulated market--were main topics at this year's surprisingly upbeat Windpower '96 conference in Denver, Colorado. Many were clearly relieved that the shadow cast by the misery of Kenetech Windpower's long fall from grace had been blown away by its bankruptcy filing. There was a new determination among industry members to pull together to get wind on the road to full commercialisation.

North America's largest wind conference was unexpectedly upbeat with a higher attendance than anticipated. Indeed the scope of discussions and presentations at Windpower '96, held last month in Denver, suggests a wind industry that is more truly international than ever and a clearing of the airÐin the short-term at least -- following the recent bankruptcy of Kenetech Windpower.

The event drew 510 people to the upscale Marriott hotel in downtown Denver, Colorado. The major city is the nearest to the government run National Renewable Energy Laboratory (NREL) in Golden, once again a co-sponsor of the annual conference. Although the meeting's size was about the same as last year's US wind conference in Washington DC, the slow-down in the domestic market has been so severe and protracted that no-one had seemed quite sure what to expect.

The four-day event, preceded for the first time by the World Renewable Energy Congress, was by far the most global yet for America. That was appropriate given the official and almost inevitable focus of the conference -- international markets. The US market slump is forcing American firms to look abroad more than ever.

The wind conference, whose primary sponsor is the American Wind Energy Association (AWEA) was from June 23-27. Other co-sponsors were the US Department of Energy (DOE) and the wind-friendly utility, PacifiCorp of Portland, Oregon. Presentations and panels spanned three days of sessions, organised into parallel tracks that kept the entire conference compact and manageable for attendees. Some have said that at previous conferences they have faced burn-out on the fourth day of sessions in a hotel. The final day and meeting highlight was the industry's first-ever tour of the National Wind Technology Centre (NWTC), opened almost two years ago at the junction of the Great Plains and lower slopes of the Rockies, snow-streaked even in late June.

During the week before the wind conference, the World Renewable Energy Congress had drawn some 700 people from 106 countries, many of them in the developing world. It was the fourth congress but only the first outside the United Kingdom. Speakers included US Energy Secretary Hazel O'Leary, Jeremy Leggett, the London based director of Greenpeace's solar initiative, and representatives from the United Nations and International Energy Agency.

Taking root

But it was at Windpower '96 that the content of papers and focus of business seemed to indicate most clearly that it is wind -- more so than other renewable technologies -- that is taking root in all corners of the globe and thus becoming less vulnerable to political obstacles in any single place. Despite the US doldrums, the worldwide market is growing, said AWEA executive director Randy Swisher at the opening session. Chris Flavin of Worldwatch Institute, well-known to the US industry, talked too of the globalisation of wind, saying there is much to learn from markets developing from Germany to India.

"In the US, we have been much less successful than some of the US's competitors," Flavin told the conference. He said Europe in parts has a higher degree of environmental literacy, more public subsidy available for energy, more awareness of global warming because of its population density, and smaller projects in which local people may well be investors. "That allows new industry to be sustained in a way in which we've had difficulty," he said.

Indeed one consistent theme of the US wind future, resurfacing throughout Windpower '96, was the concept of clusters of distributed wind development (Windpower Monthly, June 1996). America's industry leaders said, perhaps for the first time publicly, that clusters are the way ahead for the next few years at least. "This model could be extraordinarily successful in many parts of the United States," said Flavin.

It was also significant that some of wind's highest-profile Americans were advocating an approach to development they conceded is not American. For example, Jamie Chapman of OEM Development, the outgoing AWEA president, talked of the Danish model of owner-investors. And Ed de Meo of the US utilities' Electric Power Research Institute (EPRI) displayed a photograph in one session of a German turbine with ploughed furrows up to the base of the tower, illustrating how they are fast becoming a feature of the European agricultural landscape.

Great news

From developing countries such as China, India, Brazil and other parts of Latin America the news was superb. Shi Pengfei of China's Ministry of Electric Power said 20 wind farms will be developed in his country in the next three years, on top of the existing 13 projects. AWEA's Kevin Rackstraw noted a slew of possibilities in Latin America, some now under serious negotiation. By the year 2005, he predicted 2340 MW in Central and South America and the Caribbean. In Brazil alone, he anticipated 940 MW.

The World Bank, conservative in its economic thinking, is turning more to non-hydro renewables at long last because its officials see the threat of global warming as enough to offset their unease about newer, smaller-scale energy technologies. In fact, a presentation that prompted considerable interest was on the theme that the risk of global warming will start changing even the most conventional-seeming attitudes towards energy as entire industries start hedging their bets because the bottom line -- their money -- is threatened.

Greenpeace's Jeremy Leggett thrilled the meeting with hard hitting comments. Public concern about greenhouse gases may not yet be high enough, governments are running out of steam, and there is a quasi-institutional process of denial by what he called the carbon club. "To my knowledge, the first dollar has still to be stopped from the Mississippi of capital flowing dysfunctionally to conventional technologies," he said. Instead strategic thinking requires that activists understand the extent of the threat of long-term debt and equity on the insurance and banking industries. The focus should be on the fact that banks' assets and low-lying global property are highly exposed by the possibility of rising sea levels and other consequences.

One comment that hit home, drawing vehement applause, was by Johannes Poulsen of Vestas Wind Systems A/S. In a session on Europe during the first day, he struck a powerful chord after mentioning the need for leadership and political decisiveness, and of how short-term profits can actually inhibit longer-term goals. "I hear more about birds being killed by turbines than about human beings being killed by coal mining accidents," he said to applause.

Politician out of puff

Lack of enthusiasm about US political leadership can hardly have been helped by the opening session's political comments by Republican Dan Schaeffer, chairman of the House Energy and Power Subcommittee. During a long speech he offered the idea that competition is beneficial, virtually ignoring how important are the rules of competition. He pointed out that he planned to introduce legislation to hasten deregulation. "A year ago the administration was saying there was no reason to consider [electricity deregulation] until after the election," he said, noting rumours that the White House is now itself drafting a bill.

Indeed after 20 sessions on a diverse range of topics there seemed little respite for the US wind market, beset by indecision amongst utilities facing deregulation and a US Congress caught up in election-year thinking that is even more short term than usual. "The US is dead," said one exhibitor, Bob Fox of Energy Insurance Brokers of Palm Springs, which is now offering a warranty programme for global wind players through a major European insurance company. "We're just doing more international work."

The lack of interest from utilities was palpable -- very few of their representatives had thought it worthwhile to attend. Gail Miller of PacifiCorp, the utility's manager for several projects including the two stalled Kenetech ones in its region, said she was disappointed by the utility turn-out. She noted the tension between environmental groups and utilities and said: "I think utilities need to hear both sides.. we need to merge the viewpoints." On the likelihood of the two projects proposed by Kenetech going ahead, she described Wyoming as still "very likely" and Columbia Hills, Washington, as "less likely" given that the permitting is not so advanced and the site is less windy. But apparently she sees the unravelling of the tangle of Kenetech Windpower's bankruptcy as a lengthy process. "My hope is, something will become definite in a year," she said.

Deregulation of the energy market and utilities remained a major and frustrating topic, with argument on the merits of green pricing, renewables portfolio standards or other policy approaches. The importance of marketing was emphasised, particularly by Jeff Ackermannof the utility Public Service Company of Colorado. He conceded that teaching utilities how to market is as tough as "teaching a moose how to dance." The sell to customers must be persuasive but can take several forms -- bolstering commitment to the utility, portraying a product as a contribution, appealing to the vanity of potential customers by portraying them as "innovators" or "early adopters," or using an emotional sell that suggests the product will help one's family, or children's children.

Some raised the idea that green pricing reinforces the notion that wind is a higher-priced option, which is AWEA's position. But it was Carl Weinberg, a utility man turned consultant, who broached the prickly subject that green pricing could lead to "customer fraud" perpetrated by utilities. Weinberg said it is not at all clear that renewables can be dispatched under the current set of federal rules even if a customer chooses that option. "There is no silver bullet," he added, referring to market options. "There is only silver buckshot."

Much talk was of the price, cost and value of wind -- and how each is determined -- and the relative importance of each one. Is cost of energy still most crucial? Or as one sceptic put it, does an obsession with cost per kilowatt-hour muddy the fact that America's energy is under-priced and over-consumed? The latter was emphasised particularly by Jim Udall of the Community Office for Resource Efficiency in Colorado. He contended that electricity is so under-priced, especially in the US, a kWh should instead be known as a "sherpa-week" as it is the equivalent of sherpas carrying two 90-pound rucksacks from sea level to the top of Mount Everest.

Udall noted that historically electricity was once priced at the equivalent of $3/kWh and that obsession with low-cost power is a disservice to clean power -- and a tired perspective. "When your horse dies, it's best to dismount," he said with apparent Colorado wisdom. Indeed Udall, by far the conference's funniest speaker, offered several captivating perspectives. "Giving human beings cheap energy is the equivalent of giving a kindergartner a submachine gun," he told the wind enthusiasts. And a carbon tax in the near future in America with conservative House Speaker Newt Gingrich is less likely than a carbon subsidy. The needed paradigm shift to a proper valuing of green electricity may take two or three decades, added Udall, but green pricing has tremendous educational value and can almost be seen as a voluntary carbon tax.

In the conference keynote speech, Andrew Garrad of Garrad Hassan & Partners of England looked at the issue of how wind in various countries, noting the differences in social, physical and political issues. Optimistically he suggested the current range of turbine design is actually very good news. "We really don't have the faintest idea of what the best turbine isÉ we have such variety, it's extremely positive as it means we are nowhere near the optimum."

Not surprisingly, warnings about the possible slashing of the wind budget were loud and clear to the point that one high ranking DOE official lambasted such attempts in unusually strong terms. Proposed renewable energy funding cuts by the US Congress are nothing less than a "sneak attack on the environment," Christine Ervin, Assistant Secretary for Energy Efficiency and Renewable Energy told the packed opening session.

Absent faces

Both the conference and exhibition were thin on the ground as far as US manufacturers and developers went. Entirely absent were Kenetech and SeaWest Energy Systems, although there were several former Kenetech men present including one-time US Windpower president Dale Osborn, who is now a consultant. New World Power Corp was also virtually absent, a testament, too, to its financial troubles. In contrast, most visible was Zond Corp, the heir apparent on the American domestic scene, and US government representatives from both DOE and NREL.

Yet throughout the conference, the fabled elephant in the middle of the room that few wanted to mention -- at first at least -- was Kenetech and its wind division bankruptcy. The issue was raised, though, by the politically-savvy Randy Swisher of AWEA in his opening remarks. "There will be a price we all have to pay in the wind industry for the bankruptcyÉ we will all have to work a bit for that perception," he said. His approach may have worked too -- it seemed the subject was barely broached afterwards by the general media.

But after that the subject seemed to fall off the conference radar screen, unless the comments were in response to specific questions or made informally at social events. Former Kenetech people were understandably tight-lipped given the legal mire surrounding the company. Other participants seemed keen for any information on the bankruptcy and swapped titbits whenever possible.

Industry members -- sometimes quietly, sometimes guiltily, and very occasionally more openly -- expressed relief that the Kenetech downward spiral had finally hit rock-bottom, when the company that had once been the world's largest had sought Chapter 11 protection three and a half weeks earlier in the federal courts at the end of May. Some wind representatives were clearly overjoyed by Kenetech's demise. Others just talked more obliquely of being able to "be real" and of not having to live up to false expectations, or of a newly mature industry that can hold its own in the world markets.

The visibility of Lev Dunlev, deputy general director of Windenergo of Kiev, was one of the more tangible reminders however. Windenergo, the Kenetech Ukrainian joint venture, has installed 50 Model 56-100 turbines, most of them assembled in the Ukraine. Dunlev made the rounds of manufacturers at the conference exhibit, seeking partners for a next-generation turbine, he said. Windenergo would like a design to develop in the Ukraine in about two years. He also said the ownership and operation of the wind plant is uncertain, as is Windenergo's license to build the Model 56-100. "We survived," he commented happily. "Our joint venture works independently." Windenergo is no longer sending parts to Kenetech in the US.

"I came to dance on the grave of Kenetech," said one 18-year industry member, who requested anonymity. "The mood was upbeat wasn't it!" But it was really not until the final day, a summer morning when some 145 people toured the National Wind Technology Centre, that most people opened up. The mood had been buoyant for three full days. Bob Thresher of NREL offered a characteristically jolly pep-talk. "We're all here for one purpose -- to commercialise wind energy," he said, speaking in a tent erected for the tour. Introducing Randy Swisher of AWEA, Thresher described the AWEA director's leadership role in wind as like "trying to herd cats into a canoe."

Tour stops followed at the centre's turbines and at seven indoor demonstrations in the main building. The strong breeze had finally picked up after a deadly still when people first arrived. "My thinking is, we're no longer under the cloud of Kenetech," commented Don Bain, a long-time industry member with the Oregon Dept of Energy. "We no longer have to deal with all the stuff they've thrown out there."

Carcasses removed

Margo Guda of Fundashon Antiyano Pa Energia in the Netherlands Antilles was thoughtful: "I find the conference particularly upbeat, but I'm sorry nobody talked about what is on everyone's minds -- the Kenetech situation. There are probably victims all around the world." Others were more circumspect. "The industry has maturedÉ the carcasses have all been removed now, all the investment things of the early days are out of the way," said Norm Terreri of Green Mountain Power. "Despite the uncertainty with Kenetech, it did not result in diminishing the optimism of the industry." Even references to Zond were sometimes most illuminating about past experience with Kenetech. "I hope the new leader in the industry, Zond, maintains their open friendly interactive style," said Bob Thresher when asked about the conference and the impact of Kenetech's bankruptcy.

Newcomers to an AWEA conference had more varied views. Paul Vu of the Southern California Federation of Scientists, working to bring wind to Vietnam, said the conference was highly useful. "It's an opportunity to meet and establish contacts," he said. He will send a report on the conference to officials in Ho Chi Minh City emphasising that there are no short cuts, that the resource must be assessed thoroughly and planning must be careful.

And one of the very few negative comments was from, perhaps not surprisingly, an oil man. Rick Ansari of Saudi Arabia Oil Co said he attended the meeting with colleague M.H. Al-Sultan seeking 20-30 kW turbines for oil platforms in the Persian Gulf. The technical discussions, he said, lacked substance.

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