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United States

Busy and buoyant under big shadows

Development activity on the US wind front is greater today than at any time since the California wind rush of the early eighties. But at this year's industry conference there was no getting away from the huge uncertainties overshadowing the industry: the unknowns of electricity market deregulation, the scepticism with which green pricing--or "Gucci power"--is being viewed, and the looming expiry date for the all important production tax credit.

The largest wind conference in the Americas was very much an insiders event for the second year running, a reflection that the current "action" is in Europe and not North America. Windpower '98, from April 27 to May 1 in Bakersfield, California, seemed to draw markedly few representatives from outside the wind industry's core. There were few present from the financial industry and electric utilities, except for the usual wind friendly stalwarts, though among the few new faces were those starting to offer green pricing and those that are moving aggressively into wind development.

The event was also highly regional in world terms, although perhaps a little less so than last year's conference in Austin, the state capital of Texas. This year more participants came from outside the US, including a sizeable contingent from the Dominican Republic. It was the local wind industry which dominated, however. Because of the conference's proximity to Tehachapi, it drew more hands-on wind plant workers than a big city conference. The insider atmosphere was bolstered by the sessions, which focused a great deal on complex domestic issues such as the green market, legislation and California's slow-to-start deregulation. But several topics -- some of them technical -- also sparked genuine enthusiasm. There was talk, for example, of the necessity and fairness of certification. In addition Zond's new turbine generated much interest and positive comment.

Windpower '98, the 28th annual US wind conference, was co-sponsored by the American Wind Energy Association (AWEA), the US Department of Energy (DOE) and the National Renewable Energy Laboratory (NREL). But unlike last year's, Texas, it was not co-sponsored by a utility.

Big and friendly

The mood seemed more buoyant than at last year's Texas conference for a number of reasons. Attendance was not only higher than expected, it represented an increase over 1997. A total of slightly more than 500 people signed up for Windpower '98, significantly higher than last year's attendance of 425 and about the same as the 1996 draw of 510 in Denver. Forty-five participants were from AWEA's international "WEATS" program, its Wind Energy Applications Training Symposium.

The high attendance was despite the event's location in Bakersfield, a small oil and gas city in the flat Central Valley of California and hardly a draw in itself. In fact, some long time industry members had expected the location to go against Windpower '98 and were pleasantly surprised by the final attendance level.

Bakersfield was chosen because it is less than an hour from one of the cradles of the modern wind industry and the world's single largest resource area, Tehachapi Pass. With some 650 MW in installed capacity, Tehachapi is the home of a number of wind companies including the large Enron Wind Corp and Cannon Energy Corp. The age of many of its wind farms and smallness of its turbines is also a startling reminder, according to one European, of how far the industry has come. Others who took part in the four day conference's Tehachapi tour on the final day enthused afterwards that the new Enron manufacturing facility is as state-of-the-art as anything in Europe.

The conference was notably friendly, in large part because of the small town feel of Bakersfield. Meals were cheap and copious -- and the popular free lunches in the exhibit hall were a welcome and successful device for drawing people there. Entertainment -- fireworks, loud music and a video about wind -- was laid on before the opening reception and a special night out for conference goers, organised by the Kern Wind Energy Association, emphasised how much wind turbines have become the local scenery in parts of California. Participants were whisked to a country music night spot, Buck Owen's Crystal Palace, a place with a national reputation, where they heard their industry immortalised by a (surprisingly good) singer from Tehachapi, Tracy Barns, who did excerpts from her new CD "Windmills and Trains."

Clearly, Windpower '98's cautiously upbeat mood was also because of the volume of activity in the near term in the US, including the repowering of the Altamont Pass and other sizeable wind plants in southern California. The week before the conference, the third phase of the mammoth Buffalo Ridge project moved one step farther. A power purchase contract was signed between Northern States Power and Enron for the 103 MW plant. And by the end of December, planned new projects are set to add up to more than 400 MW to the US total, although it seems unlikely all will be developed: one large shadow over the conference was Enron's announcement that it would pull out of the residential market in California -- just three weeks after restructuring officially started and a few days before the conference. Because of that, many were wondering not just about the wisdom of restructuring as being practised in California, but also about the specific status of Enron's two planned merchant wind plants, to total 49 MW, the only wind projects announced in connection with the California experiment (story page 12). It seemed the only free lunch in California would be the one in the wind exhibit hall.

Gucci power no panacea

Indeed some conference-goers, especially from farther afield, questioned openly whether America's gold rush of projects is only a blip -- a brief uptick of domestic activity before the federal Production Tax Credit (PTC) expires -- coupled with a flurry of excitement over green pricing that will in the end lead to too few projects. The scathing term "Gucci power," meaning green power and mentioned in passing in a presentation, gave a clue of the depth of some of the scepticism associated with expecting a market for wind to be created by affluent consumers electing to pay more for electricity from renewables. The importance of extending the PTC, a $0.015/kWh-plus-inflation credit, beyond mid 1999 was highlighted by the cheer-leading optimism of the conference organiser, AWEA, which assured that it would most likely win what it has considered a legislative priority both this year and last.

AWEA's legislative man, Jaime Steve, said the number of supporters of the PTC extension in Congress had doubled since February. Yet AWEA says the uncertainty over the PTC is already drying up investments and future project planning, a statement with a large ring of truth and perhaps the reason for why AWEA is being so overly upbeat -- to keep the ball rolling. There was one not-so-veiled criticism of the picture being painted for the wind industry. Chuck Linderman of the Edison Electric Institute, who is based in Washington and who chaired a utility session at the conference, noted pointedly in his closing comments that people are not getting the whole story about the PTC extension.

Zond turbine a smash hit

Despite the uncertainty about policy questions, there was a collective sigh of relief after the long awaited showcasing in the US of Enron Wind Corp's Zond Z-750 series. The state-of-the-art turbine dominated the exhibit because of its size, its newness, because so many are being installed right now in the Midwest, and because so few people outside Zond-Enron had seen it up close, unless they were at the Hannover Trade Fair in Germany earlier in the month. Reaction was almost euphoric. Even some of the most sceptical people in the US industry were unexpectedly complimentary, describing the turbine as a serious world class contender, although they also noted that rolling out so many turbines in such a short time is always risky.

It seemed significant too that the most popular and exciting session of the entire four day conference was the one on large turbine development, especially the presentation on the Z-750 series. For the first time in years, the US has what may be a commercially viable large wind turbine that is actually being installed -- and in great numbers. The reaction was tinged with relief too, as many remember the widespread damage to the industry when Kenetech Windpower went under after overselling its technology. As one long time critic noted over lunch, "It looks like an extremely well put together machine√Č It's the best to come out of the US program in 25 years." Other presentations were by well known Dutch manufacturer Nedwind, and the lesser-known Wind Turbine Co of Washington state.

Two other two manufacturers active in the US were at the exhibit, the Danish companies NEG Micon and Vestas. Only Vestas displayed a turbine, however, presumably as it still sells its machines on the open market whereas NEG Micon is doing more project development itself. In contrast, at Windpower '97 only one turbine, the Cannon Wind Eagle 300, was displayed, a reflection of the unsure state of US manufacturing at the time.

The consolidation in the industry was highly apparent. An industry round table drew only two executives, Ken Karas of Enron Wind Power and Dino Pionzio of SeaWest. In his presentation, Karas used a startling graphic to illustrate how many mergers and takeovers have occurred recently in the industry. The graphic depicted two major conglomerates: listed under NEG Micon, were Micon, Nordtank, and DanControl of Denmark and the Wind Energy Group blade manufacturer Taywood Aerolaminates of the UK; under the second heading, Enron Renewable Energy Corp, were listed Zond and Tacke.

SeaWest split

Despite the consolidation, the biggest industry news at Windpower '98 was the upcoming split of SeaWest Power Systems Inc. Management of the San Diego company had agreed the week before the conference to split it into two operating units because of differences in philosophy, confirmed Pionzio. SeaWest employs 200 people in California and Europe, mostly Barcelona, Spain, and is developing a 41.4 MW project in Wyoming at Foote Creek Rim using Mitsubishi turbines. The Iberian unit will be run by Pionzio, and the US unit by Chuck Davenport. Whatever the implications, it was not the sort of news that has dominated AWEA conferences in the recent past. For the last two years, the bankruptcies of FloWind and Kenetech Windpower -- and the final death of Kenetech -- had been the main talk in the corridors of the annual US wind conferences.

Technical matters also seemed more at the forefront of this year's event, perhaps an indication that the worst of the shake-out is over and that attention can return to the technology. The new academic international magazine, Wind Energy, a peer-reviewed forum for scientific and engineering knowledge, was launched with a pilot issue; initial comments described it as excellent in content. The issue had been printed only a few days earlier and free copies were snapped up like hot cakes. Chief editor Bob Thresher, of NREL, bemoaned the fact, however, that submission of articles for the international publication from the United States is so far disappointing. At first Wind Energy will be twice-yearly, but it is eventually intended that it be published quarterly.

Restructuring blues

Yet despite the excitement over technology and AWEA's upbeat stance, electricity restructuring cast a huge pall over the conference -- and not just because of Enron turning its back on the California free market. It had been clear for weeks, if not months, that California's restructuring seemed too complex not just for consumers, but also for suppliers. And wind also has to compete with low cost entrenched hydrocarbons, a fact that seemed especially poignant since those who arrived at the conference via Bakersfield airport -- rather than driving two hours north from Los Angeles -- were rudely reminded of the town's most prominent energy industry. At the airport, passengers were greeted by a large advert for Oil & Gas weekly. It appears that Kern County, which encompasses the Tehachapi Pass wind farms, is the single largest producer of onshore oil and gas in the United States. That may be a little misleading, since much of America's oil is now produced offshore. It certainly was a reality check for those having to compete with the Goliath industry in an open market place.

Frustration about restructuring is such that there was talk at the conference about attempts to get a popular "initiative" on the state ballot, so voters can decide whether to repeal the current restructuring legislation. The initiative being promoted, by consumer activist Harvey Rosenfeld, would overturn the current set-up on the basis that it is too favourable to the former monopoly utilities and does not do enough for residential users or to promote the use of renewables, contend its backers.

Be that as it may, sessions on California's new four year transitional market, launched April 1, drew a relatively large audience. What was most startling was the confusion and lack of knowledge amongst participants about the rules, say, of how green electricity is now sold in California. Highly significant in the longer term were comments from the new and respected California Energy Commission (CEC) chairman Bill Keese. He said he expected financial support for renewables to continue at a level similar to today's, even after the four year transition to a restructured market is complete. That is substantial: currently, the state has a $135 million a year Renewables Program, totalling $540 million during the transition, while public interest energy research (PIER) gets $62 million each year for the four years.

Keese's talk was long and informative and nobody seemed to want to cut him off, an indication of how aware the industry is of the sizeable subsidies starting to flow from state coffers, and of how necessary that money will be ultimately. If Enron had to pull out of the California residential market, green pricing and the "open marketplace" cannot yet be much of a panacea. Keese also revealed he wished that the CEC had decided to push green electricity during this transitional phase, rather than have consumers saving money with lowered costs. It was the wrong message, he said (box).

The DOE too

Similarly, Dan Reicher, Assistant Secretary of Energy Efficiency and Renewable Energy at the Department of Energy (DOE), spoke of some specific ways that the federal government might lead the way, for example on the issue of the government buying green power for its own facilities. The federal government spends $8 billion annually on electricity, of which the DOE's portion is $217 million. He said that, most realistically, the government itself could commit to procuring green power in the same way that it once made a commitment to recycling. Most palatable, politically, might be using money saved from reducing energy consumption in the nation's 500,000 federal buildings, amounting to $800,000 to $1 billion yearly. A small percentage of the savings could then go towards buying renewable energy. "We have support for [the idea] at increasingly high levels of the government," he said.

The two key drivers behind the future of the US wind industry, Reicher continued, will be climate change and restructuring. Also important, but not so crucial, will be the issue of air emissions, America's energy security, and wind's financial competitiveness. And although he did not pick wind's competitiveness as top priority, he did point out that one of the federal wind program's achievable goals is lowering the cost of wind power to $0.025/kWh by the year 2002 in winds of 15 mph or greater. By 2005, the US industry should have cornered one-quarter of the world wind market. And by 2010, there should be another 10,000 MW of domestic installed capacity. But most near term, he said, is establishing a US certifying body -- and that should be achieved by 1999. "It is a drag on the US industry not to have one," he said.

There was a sense, in how often Reicher's name was mentioned favourably by other speakers, of just how aware the industry is that it must keep the best relationship possible with government if it is to thrive in the next few years. This way of thinking, so keenly evident at Windpower '98, seemed a far cry from the free market "Chicago School" economics of some top industry people several years ago who said they wanted to go it alone.

Certification hot topic

Certification also became something of a hot topic at the conference. During the industry round table, Enron's Ken Karas said turbine certification should be eliminated. "You don't need it for jet engines, " he said. The issue was then raised again during the session on large turbine development, which was packed with 80-100 people. Tehachapi-based wind consultant Paul Gipe publicly challenged Enron's Craig Christianson, who gave a paper on the Z-750 that itemised 400-550 MW of the turbines to be installed this year or early next year. "Isn't this an even more aggressive roll-out than Kenetech attempted?" asked Gipe, known as a critic of industry practices and alluding to the widespread -- indeed fatal -- technical problems that Kenetech encountered by rushing out its product.

Christianson, project manager for the series, said that Enron had been careful in developing the series, for example getting Germanischer Lloyd certification. "Because of extensive testing and extensive critical review, we feel comfortable with releasing it for production," he concluded. A heated interaction ensued about the fact that the turbine has "design" approval, but does not yet have "type" approval applicable to series production. NREL's Sandy Butterfield interjected, saying that only three turbines have type approval, the Z-40, E-40 and E-39. That is, design certification is the norm, he said. Upon which, well known British engineering consultant Andrew Garrad raised the general question of whether certification is an unnecessary expense and is holding back design, as Karas contends, or not. "I have some sympathy and some disagreement with that view," said Garrad, whose company is experienced in overseeing certification, "The industry should be arguing about this." Brian McNiff, of McNiff Light Industry of Maine, then asked him if certification standards are consistent. Garrad conceded that there are grey areas, but said they are necessary for flexibility in allowing different turbines to be certified.

Cost versus value

The long standing debate over the value of lowering wind's cost versus pushing its greenness also continued. The mantra of low cost seemed more dominant at Windpower '98, although it was usually mentioned in the same breath as wind's environmental benefits. "Keeping costs as low as possible becomes more important than ever," said AWEA's Randy Swisher in the opening session. "Electricity is becoming a commodity."

Enron's Ken Karas contended that wind power, by 2000 to 2002, will be as cheap as natural gas. "Environmental concerns have been the key driver and will continue to be until cost of energy is competitive," he said. In Europe, where more than half of the wind capacity going in the ground in the next few years will be installed, offshore development will be the main geographic driver. Indeed even Swisher described green pricing as "the need to differentiate the product." He said it now appears disappointing: "It is clearly a very significant trend though not as fast as we would like," said Swisher. "Restructuring is a double-edged sword." He noted Enron's recent announcement -- and that although a renewable portfolio standard (RPS) setting quotas for percentages of wind in a supply mix gives wind a huge opportunity, the idea faces great opposition, especially at the federal level.

Green market fragility

The conference's much-vaunted green marketing forum did shed some light on the fragility of green marketing, on the thinking about the issue of customer choice, and on some of the forces at work in the vast California market. Julie Blunden of Green Mountain Energy Resources noted her company had started with just $40 million in financing, and so must rely upon wholesalers to be large enough to act as financial shock absorbers. She also described the ultimate in "individual customer satisfaction" as being able to choose what power plant one buys electricity from. But such choice is probably something that too few homes could ever have the time to consider.

Rick Counihan of Edison Enterprises went farther. He said customers need the opportunity to choose, but he criticised the concept of an RPS as forcing a product down consumers' throats. He also said that a quota system reduces the distinction between his green product and a brown product -- but polarises the debate about whether renewables are good or bad. Audience questions raised a crucial issue that seemed overly ignored -- how can a wind plant be financed with such uncertainty?

It was also clear in other presentations that many are increasingly sceptical, or open about their scepticism. In the industry round-table, Dino Pinozio of SeaWest seemed to speak for many when he emphasised that the domestic market has been disappointing and that it is overly optimistic to expect green pricing to take up all the slack. "It is like expecting someone to voluntarily buy a catalytic converter or voluntarily take out a neighbour's trash," he said. The United States, he added, has never had a coherent renewables policy.

Kyoto opposition builds

The open criticism of political leaders was in contrast to the big issue at Windpower '97 -- climate change. A year ago, Kyoto was still a future hope and there was more optimism that global warming would mean more wind soon. But now it is clear that the fight will be bloody. On the eve of Windpower '98, the New York Times revealed that a large group of US industries, headed by the American Petroleum Institute, planned to battle the Kyoto climate treaty. They plan to spend millions of dollars convincing the US public that global warming is exaggerated and based upon bad science -- and that there is no need for controls on greenhouse gases.

In the climate change session, AWEA's international man, Kevin Rackstraw, noted the intricacies of the issues of carbon trading and joint implementation, but said the real issues are far broader: the developing world wonders why they should compromise their development now, after the West has benefited from the same pollution causing behaviour for decades; the transfer of technology they want represents a huge transfer of wealth; there is the debate of market versus government led solutions. He concluded that climate change is the best opportunity for wind: "If it doesn't work here, it's not going to work."

Mike Marvin of the Business Council for Sustainable Energy, of which AWEA and Enron Wind are members, concentrated on the domestic hurdles. He said there are only four ways to reduce emissions -- reduce consumption, increase efficiency of existing fuels, pay someone else to do it for you ( "effectively an international energy trading program" ) or switch fuels. He discussed the intricacies of short term issues such as credit for early action, or how credits are allocated, especially when companies can change in size.

President Clinton's "holy water" climate change package, released recently, may well lead to a political show down in Washington DC. But in an election year, politicians are more sensitive to popular reaction. "It will be interesting to see if the President is willing to veto a bill that doesn't deliver enough to renewables close to the election," said Marvin. "It gets better for renewables, the closer it gets." He also slammed the concept of "sequestration" or "carbon sinks" -- the offsetting of greenhouse gases by, for example, planting trees. He said it only is a short term solution. "It allows us to make the same wrong choices -- we do ourselves a disservice. This industry is not served well."

Birds and ignorance

Some speakers seemed notably impatient with the obstacles faced by wind, some of them self-inflicted, while the message of wind's benefits is not disseminated widely enough. Christophe Bourillon of the European Wind Energy Association (EWEA) asked the industry not to make problems for itself. Bird kills are now a non-issue in Europe, said Bourillon. "Birds are not as stupid as one would like to think. Environmentalists at first were outraged by the idea of European offshore wind farms," he said, but are now less so.

Significantly, though, Bourillon said he had discovered at a recent United Nations conference on sustainable development an unbelievable lack of knowledge about renewable energy. "We should stop preaching to the converted and, for example, send delegates to climate change conferences," said Bourillon, who used to work in coal industry promotion. In that vein, he noted that both AWEA and EWEA will be represented at the upcoming top-drawer 75th anniversary World Energy Council congress in Houston, Texas, this September. It is a conference at which Enron Corporation already plays a major role.

Similar frustration was voiced by Darryl Gray, one of three senior Alameda County planning officials in charge of the environmental impact of the repowering of the Altamont. "I want to state that the counties support clean environmental energy such as wind," he said in the opening to his presentation. "Are you listening Paul?" he added, a jab at consultant Paul Gipe, in the audience, who had been peppering speakers with questions about projects' local environmental impacts and how much the industry had contributed to the CEC's long term bird study. Gray continued: "I want to thank wind companies such as US Windpower [later Kenetech] for leadership on the birds issue."

He said the county does have concerns about noise and visuals and a "serious concern" about avian impact in the pass. "That's the paramount issue," he said of the area that has been described in local newspapers as the most concentrated nesting area anywhere for golden eagles. He described the changes being considered, such as coloured blades, no lattice towers, slower RPMs. The draft environmental impact report should be ready this month or next, he said, and the final report probably in October.

General frustration at ignorance about wind's potential contribution, especially poignant in these post-Kyoto times, was also something of a theme. It was summed up by an anecdote from out going AWEA President Brian O'Sullivan of Cannon Energy Corp. (AWEA's new president is for the first time a woman, Karen Conover of Global Energy Concepts). O'Sullivan recalled, at a White House Conference on Climate Change, listening to a story about an economist who walked right past a twenty-dollar bill lying on the pavement. The next passer-by, who happened to be a neighbour of his, also saw it, and picked it up and pocketed it. When they met later near their homes, the second man asked the economist why he ignored the money. "It wasn't a twenty dollar bill. If it had been, it wouldn't have been there," responded the economist. When O'Sullivan later met Vice President Al Gore, he was introduced as the president of the American Wind Energy Association. In response, Gore commented: "I know who you are, Brian. You're the twenty dollar bill!"

Last words

Towards the end of the conference, the mood seemed mostly positive. "I think we've turned the corner," said Ken Cohn of Second Wind Inc, which had a booth in the exhibit. "It's good to see some optimism," said Cohn, who has attended many wind conferences in the past. Greg Jaunich of Northern Alternative Energy agreed. "I sense a lot of optimism out there," he said. But he said he was concerned about being able to survive as an independent, smaller company. "What I'm seeing is a major consolidation of the industry and that the industry is moving almost towards a standard design," he said. "It's getting harder for independents like us to move forward without alliances."

Exhibitors said they were getting more serious interest than in some time. Although Geja Jansen, at the NedWind BV booth, had expected a larger exhibition, she found that most inquiries were serious. She had, however, expected more utilities to attend.

Not all were so happy though. Gustavo Cassini, an engineer with an Argentine company INVAP, SE, had found the conference too regional and wanted, for example, more information on European technology. INVAP is a technical company that has traditionally done work with the nuclear industry and is now looking in other areas. "Why isn't Enercon here?" he wondered. He had also wanted some specific information on small systems from the DOE, but had been unable to find it at the conference. He hoped to be able to glean more during the tour.

And one visiting European said he was disappointed at the technical content of much of the conference. There was too little industrial information, he said, and in the US, the industrial and academic worlds seemed overly separate. "It's clear that Europe is where the action is."

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