The wind sector is a product of politicians reacting to external events out of their control. In the 1970s, far sighted politicians in California recognised that high oil prices alone would not ignite wind development. Through a wind energy support program, they massively accelerated the technical and economic growth of a pioneering technology. In some ways history is repeating itself, but the situation today is dramatically different. Unlike the supply disruptions of 1973 and 1979, the current energy crisis is demand driven and cannot be solved by "convincing" a few nations to increase output. What's more, market liberalisation has transformed the power industry landscape, which is unrecognisable from 25 years ago. The changes are ongoing and will significantly influence the ability of wind energy to deliver electricity in the same order of magnitude achieved by conventional power sources today.
In the old days of vertical integrated utility monopolies, excess generation capacity was the norm. Hapless captive customers had no choice but to pay up or be cut off -- the utilities could build as they saw fit. As a result, wind spent its first 25 years fighting to get into already glutted markets. That it succeeded is telling. It must go on battling to survive in a market for conventional power still fraught with distortions that discriminate against renewables: massive conventional energy subsidies, market dominance, inefficient wholesale markets, lack of cross-border transmission and effective unbundling of generation and supply, and the power markets' ignorance of environmental costs. Times are changing, however. Ongoing liberalisation has reduced spare capacity in Europe and elsewhere. Glimmerings of effective competition in the markets for conventional power are being seen in a few countries. In Germany, the electricity price on the power exchange recently increased above the level of the fixed tariff for wind power, indicating a "negative subsidy." In Denmark, wind turbine owners still operating under the old tariff system are often in the same situation.
A world in which new capacity must be built to meet growing electricity demand will have dramatic consequences for wind power. To rise to the challenge and opportunities of the new order, the sector must embark upon a massive and necessary shift in its entire approach. No longer will we be measured against the cost of shovelling ever more fuel into existing plant that have been depreciated and paid for by taxpayers or consumers. We will be judged against what it costs to plan, finance, insure, build, fuel, operate, maintain and eventually decommission a new conventional power plant.
The implications for our sector of this change cannot be overestimated. In the first three decades of this millennium, 365 GW of electricity generating capacity will be retired in Europe and an additional 400 GW will be needed to meet growing demand. That exceeds Europe's total capacity today. The outlook is similar all over the developed world and growing prosperity in developing countries is driving up their demand too.
To go mainstream on a global scale we must engage with those that came before us; we must demonstrate the huge benefits to them of letting us into the party. That goes for power companies, financiers, transmission system operators (TSOs), regulators and policy makers. We can already begin to see the contours of that approach, not least in Spain and America, where visionary incumbent power producers and TSOs view wind as a tool to diversify assets, and a hedge against rising fuel costs and stricter environmental regulation.
Europe's great chance
Technically and economically, wind could meet the entire demand for new capacity over the next 25 years. Few have the vision to see that far, but Europe and other regions can certainly go a long way towards an energy supply that is superior to the business-as-usual scenario in terms of energy independence, energy costs, risk reductions, optimal diversification, available resources and the health of macro-economies -- especially if combined with serious efforts to promote other renewables and energy efficiency measures.
In Europe the energy debate is heating in the run-up to a new policy paper, Towards an Energy Policy in Europe, to be released next month (page 54). While it seems obvious that the European Union needs a common energy policy, it is still not apparent whether the community will seize the opportunity created by the large turnover in generating capacity in the next two decades to secure a truly indigenous energy supply while dealing with a looming energy crisis and the threat of global warming.
By winning its way into the conventional energy sector's club, wind will go a long way to reassuring politicians that it can deliver on its great potential. And if politicians in Europe are serious about a community energy policy, basing it on renewables is one sure way of winning the support of citizens, who only recently demonstrated their might in rejecting the European constitution.