The bill's signing into law came just a few days later and coincided with the opening day of the conference as wind aficionados caught up with the fast-changing and surprisingly good news. "Certainly, the Minnesota legislature couldn't have given us a nicer present," said Randy Swisher of the American Wind Energy Association (AWEA), commenting on the timing of the conference.
Also in an unusual coincidence, the first 25 MW of wind power in Minnesota, on Buffalo Ridge, came on line just before the conference, bringing with it the birth of the Midwest wind industry and -- according to wind lobbyists -- leading to jobs and new economic development opportunities in the state. The wind power plant was expected to be officially dedicated later during May or in June.
At the conference, the mood was decidedly good. Even Minneapolis, a Midwestern city, was able to pull a high attendance of 750, despite its location in the heartland more than a thousand miles from the California wind farm industry or the halls of the Department of Energy (DOE) in Washington DC. Utility and financial people were particularly noticeable at Windpower '94, although there was perhaps a paucity of European developers sniffing around the opening US market, said observers. A seminar on the fundamentals of wind energy on the day before the opening of Windpower '94 and a wind characteristics and advanced siting workshop drew 50 and almost 100, respectively. Last year's annual conference, Windpower '93 in San Francisco, had about the same participation, the highest ever at a US wind event. The conferences two and three years ago in Seattle and Palm Springs attracted nearly 600 and about 500.
In addition to the excitement about the opening market in Minnesota at Windpower '94, there was a sense, too, of coming to grips with reality, that the ebullience so prevalent last year had come down to earth and that the industry is ready to forge ahead sensibly and face tough issues such as financing, regulation in an increasingly competitive industry, and -- more than any other environmental issue -- bird deaths. There was a distinct sense that projects are actually going ahead and will come to fruition in contrast with the "lot of smoke with no fire" atmosphere prevalent at last year's conference.
Windpower '94, held May 10-13, was the 24th annual US industry conference. There were 21 exhibitors, including companies from as far afield as Japan and the Netherlands. More than 100 papers were presented by speakers from China, Brazil and the Philippines to Uzbekistan and Israel. Attendance and papers were considered especially high-quality given that it was just ten months after last year's national wind conference, held in July.
In a sign of the expectancy of the US market, on the night before Windpower '94 a major launching of a new turbine was held. Zond Systems Inc's Z-40 was dramatically -- and literally -- unveiled to a roll of drums at an upscale reception at the Minneapolis sculpture garden, where a brightly-painted white Z-40 nacelle rested on a podium in the outdoor exhibit. A number of attendees said the unveiling was like something from an auto exposition in Detroit -- and a measure of the maturity of the industry.
The unveiling was clearly significant. It was the most dramatic ever in the US wind industry which has had a paucity of wind turbines under development, especially larger models of around 500 kW, now becoming the standard size in Europe. The Zond turbine, not unlike the Danish-design known to Zond as an operator, is the largest to be made to date in the US. Randy Swisher of AWEA described the unveiling as a "very significant event." Jim Howard of Northern States Power (NSP) also described it as important. "It sure does look good," he said during a press briefing at the outdoor display on the opening day of the conference. "It's an indication of how far this industry has come."
Windpower '94 opened the next day, just four days after the passage in the Minnesota legislature of the so-called "NSP bill" mandating several hundred megawatts of wind power. "There does seem to be a lot coming together at this time," said Swisher at the conference opening. "The Upper Midwest is interested, engaged and involved in this technology," he added. "In 1994, we clearly emerged as the renewable technology that will produce most capacity in coming decades." Howard agreed: "Welcome to Minnesota. You represent a technology as old as the world itself and as new as tomorrow." NSP and the Department of Energy (DOE) were conference co-sponsors. Christine Ervin, new Assistant Secretary for Energy Efficiency and Renewable Energy at the DOE, also talked about the propitiousness of the moment for wind. "This is an important time, a real window of opportunity," she told the conference. "We want renewable energy and efficiency to capture more of a market share."
Many were optimistic after the conference. "It continues to evolve into a more business related conference," said Dale Osborn of Kenetech Windpower. "In the last couple of years, it's been clear everyone exhibiting is focusing on business." He added: "In the US, utilities now recognise [wind] is a voluntary step forward or they will have to do it under threat of regulatory action." Real Reid of Hydro Quebec said, "It's like coming to a pep talk. It's upbeat -- things are happening larger scale." Carl Weinberg, the new president of AWEA, said: "It's good to see as many utilities as there are here. There are so many about. It's an expression of how much wind is moving out of California."
At the conference Swisher talked of the projects going in the ground in the Northwest, Texas, New England and the Upper Midwest. "The projects are really only the tip of the iceberg," he said, noting the trend towards a more competitive market place (a constant theme at the conference) and that the attitude of utilities has changed fundamentally towards wind in the last few years. "As a least cost renewable technology, wind brings a formidable advantage -- cost competitiveness and portfolio diversity," he said.
On a more sombre note, Swisher also noted what is perhaps the industry's most contentious and conspicuous issue. "The avian issue stands squarely between the industry and its objectives. The issue must not be minimised or explained away. We must rise to the challenge," he said.
Minnesota as a model
Howard of NSP reminded the conference that the first 25 MW of wind in Minnesota will be dedicated soon and that another 225 MW will be installed by 1997 (see story page 21) "When people start to talk about wind power anywhere in the world, we want Minnesota to be a model -- 'Go and see how NSP's done it,'" he said. Hubert Humphrey III, Attorney General of Minnesota and son of the former presidential candidate, stressed that wind has to be cheaper and competitive for consumers. He said questions still unanswered are: how to best integrate wind into a total utility system; the matter of transmission constraints; how bidding should be used to get a fair price for consumers and developers; and how to best develop an industry in Minnesota while using all of the region's resources in the best way possible.
At a press conference, Minnesota Senator Janet Johnson, a strong backer of wind, spoke: "The debate is centering not on whether we should have wind but on how much," she said. "I want to see Minnesota become the hub for renewables in the Midwest -- the goal is strong economic development in our state." Howard said NSP, the state's largest utility, will need some 2000 MW of capacity between now and 2008 and that wind should get a "major proportion" of that. The next 100 MW will probably be in the "same general area" as the first 25 MW on Buffalo Ridge. "The transmission issue has to be dealt with," he said. "There will be problems with new transmission."
Mike Bergey, outgoing president of AWEA, talked of the "new triad" emerging in priorities at the DOE -- gas, efficiency and renewables -- and the emergence of the National Climate Action Plan. "For at least the next two decades, wind will be the lowest cost, most competitive renewable technology," he said. Operating costs have plummeted from five cents to one cent a kilowatt hour, reliability is up from 60% to 90%, installation costs are down from $3,000 to $950 per kilowatt. "We believe strongly that wind power is the near term renewable technology." He added that wind means 66% more jobs than natural gas and 27% more than advanced coal, and that components are made in more than 40 states. "Watt for watt, it means more jobs than other technologies," he said. "Wind power pays for people, not fuel." He talked, too, of the growing symbiosis between wind and natural gas, as gas power is highly dispatchable and because a hybrid provides a real alternative to coal. With the new federal credit tax, and with wind projects going in the ground, he said "wind is indeed on a roll."
Serious impediments to the industry are its youth, the low cost of gas, and regional over capacity. An industry should be created capable of installing 10,000 MW by 2000 and of creating 70,000 skilled long term jobs -- that means 3000 MW per year in installed capacity. Bergey predicted that: by 1995 the DOE will discover wind is the best investment opportunity in renewables; wind power operating lives will exceed 60 years, with partial refurbishment, at a life cycle cost of energy of $0.03/kWh; within ten years the country will be closing fully functional coal plants; distributed generation will account for 10-15% of the total wind market; by 2005 wind will be a $15 billion industry in the US; by 2030 it will be supplying 30% of the nation's electricity. "I call for everyone to help support the vision," he said.
A competitive world with retail wheeling
The session on competing in a changing electric power market was well attended. In an era of widening competition, the market will increasingly set price, said Glenn Wattley, Utilities Practice Leader of Arthur D Little Inc. Risk avoidance is becoming risk management, he said. Unbundling is occurring, with a separation of companies that perform generation, transmission and distribution. The trend could hurt wind, although with storage technologies it would benefit it. "The structure of the utility industry will be sculpted in large part by advancements in technology," he said.
Jeffrey Watkiss of Bracewell & Patterson said wind, coming of age in a competitive era, must ensure federal legislation on equal access to transmission services is faithfully implemented; pricing should be distance sensitive; interconnection should be on a region-wide basis; and there should be flexibility in transmission pricing. He said that regional transmission groups are in the process of emerging. And despite green set-asides, price is still the driver.
Scott Hempling, an attorney who represents independent power producers, said public utility commissioners are largely unprepared for the emerging market place. He stressed however that retail wheeling is not pro-competitive but a subsidy for large industrials who want to be able to return to the system with utilities holding their capacity available -- but they do not want to have to pay for it. "It's not competition, it's a subsidy," he said.
"Retail wheeling is the bogey-man under the bed," said Howard. He noted the California retail wheeling proposal (Windpower Monthly, May 1994) and that a spot market in energy might be emerging. "There's a brave new world of open access, retail competition and increasing competition," he said.
Karl Rabago of the Texas Public Utility Commission (PUC), and a nominee for an appointment at the DOE, commented on the decreasing role of regulators. In Texas, he said, the regulatory process is too inefficient and serves as a tax on utility decision making; the process is constrained by entrenched political interests; and economic and industrial conditions are outmoded. However, he added that regulation usefully provides a longer term temporal forum, so that considerations other than the next rate increase are taken into account. He suggested that the wind lobby should continue its strong support for integrated resource planning; and utilities should continue to focus on keeping rates low, as wind minimises fuel price risk and has modularity.
Jan Smutny-Jones of the Independent Energy Producers of Sacramento commented on the stalling of the Biennial Resource Plan Update (BRPU) process by the California Public Utilities Commission (CPUC) in which $1.5 billion of new investment is at stake. "The first step down the road to competition, and the Commission has tripped," he said. He commented too on the CPUC's retail wheeling proposal, released on April 20. "It shouldn't be something you should be scared of talking about," he said. "I'm not sure if the conventional wisdom is true -- we don't know if retail wheeling is good or bad." He added, "Is it a progressive policy tool, or a market gimmick?"
Is retail wheeling inevitable? Hempling said this is the case only if regulators react to the loudest yells from the groups with the most political clout. What is inevitable, he said, is a debate about restructuring. Watkiss said that it is not inevitable in the short term, and is substantially unfair. But Smutny-Jones said, "We will see something that resembles retail wheeling coming out of this (CPUC) process. It will mean all things to all people until the details are worked out. But it looks like retail wheeling, it smells like retail wheelingÉ"
Mike Jacobs of the Massachusetts Department of Public Utilities said that the California Energy Commission studies done so far on birds and wind turbines are inadequate for predicting avian mortality as the issue depends upon site-specific issues not yet identified.
On the same theme, Charles Wolcott of Cornell University said that preliminary research indicates that it may be young, adolescent eagles that are killed by turbines -- they are not so closely tied to a nesting and hunting territory as mating pairs. "I think so much has to be research to do with the siting of wind turbines," he added. "If you put [a wind plant] next to an area of sea birds, you might see sea bird deaths. It's common sense. But there's not much information."
Delivering the goods
Dale Osborn of Kenetech said the wind industry, which has built up a considerable head of steam in the last three years, now needs to be very focused on performing. "We want to see more commercialisation activities from the Department of Energy," he said. "For example, how do you motivate the construction of transmission lines?" Bob Thresher, of the National Renewable Energy Laboratory (NREL), agreed that the industry needs now to perform. "There have been a lot of words under the bridge and now it's time for the industry to step up and take centre-stage," he said. He also noted the number of utilities at the conference. "It's transitioning from an R&D industry into a viable one," he said. "We've made it, we're becoming commercial -- without the euphoria of San Francisco and Seattle." He said the industry is starting to engage in business problems -- birds, funding, permitting -- that is, the business of putting wind in the ground. "It's much more realistic. There's a whole different flavour to it. It's what we'd all hoped for -- that it would become a real world business." Don Bain of the Oregon Department of Energy seemed to agree that the industry is becoming more down to earth. "It's sort of subdued. Perhaps they're facing reality. There weren't any hospitality suites," he said.
From the exhibit floor
Dan Niemen of Horton Manufacturing Co Inc of Minneapolis, a brake manufacturer, said, "The interest seems to be building. We've had a good response. We seem to find new opportunities every time we come to the show." For his part, Willem van Dongen of Dutch wind turbine manufacturer NedWind applauded the fact that the exhibit was only for two days and also found the atmosphere realistic. "Because it's just two days, you get very interested people," he said. "I like it. The information everyone is giving out is not fancy stuff." He said, however, that the conference was more business-like last year, and he noted there were some companies such as Britain's Wind Energy Group not in attendance. Wind consultant Paul Gipe noted, "There's not a huge amount of interest from European developers."
"There are a lot of financial institutions at the conference, said Theo de Wolff of Nordtank Energy Group of Denmark. "That's a very positive sign as that's what we need. Money is the bottom line," he said, noting that the appearance of the exhibit showed a maturing industry. Susan Giordano of Second Wind Inc, supplier of wind measuring instruments, said, "It's been great. We've had a large number of people who seem serious about buying equipment. There's a lot of interest in our wind farm monitor which suggests growth in the industry is leading to wind farm installations." Jeff Trapnell of SD Meyers Inc said, "It takes a serious commitment to come here [to the Midwest] -- it's the upper echelons, the decision makers. "
Jim Tangler of NREL said, "There's a sense of confirmation about what direction the industry's going in. People are trying to gauge when the market will take off. At the moment it's taking off on a state-by-state not a national basis. It's more incremental and a little more difficult to get drawn into the market for the foreign manufacturers." Karl Rabago of the Texas PUC, a keynote speaker at the Windpower '93 AWEA conference, noted the pace of development. "In even the space of one short year, the context of wind has changed dramatically," he said. The fact that utilities are now confronting the issue of competition is critical for the wind industry. "They're not asking why, they're asking why not," said Rabago.
From a utility viewpoint
A utility forum pinpointed a similar theme -- the industry is facing reality. But it also suggested that a gulf still remains between independent power producers and utilities. Talk focused on how to calculate externalities and on who should pay the cost, on increasing competitiveness, the birds issue, and on who should bear the burden of risk. "The maturing wind industry faces the issue of whether the promise can become reality," said facilitator Ron Lehr, an attorney. "Utilities such as ours are willing to pay a reasonable premium for renewables," said Frank Afranji of Pacific General Electric (PGE). But given the front-end loading, there should be a proper mechanism to protect the utility, he said. Developers should be patient and persistent, he cautioned. Three factors are important, price, price and price, said Charles Jenkins of TU Electric. Some utilities are willing to pay somewhat of a premium. "But if you're not competitive on a direct cost basis, it's just not good enough," he said. "Texas has a lot of wind, but also a lot of cheap gas."
In the same forum, Bob Gates of Zond Systems Inc noted that, six years ago at the conference, the wind industry had enthusiastically bashed utilities. "We've come a long way," he said. Externalities, however, must be taken account of, he said. "How do you value the non-price issues?" he wondered. He noted that clean power does not just benefit those in the service territory of the utility buying the power. Dale Osborn of Kenetech Windpower said that a level playing field and parity of pricing is of key importance. "The rules ought to be the same if you're going to compete," he said.
PGE's Afranji, noting that carbon dioxide is not the only externality, voiced one of the main fears confronting the industry nowadays. "Should we be putting a figure on avian mortality?" he said. "Every single generating system has some externalities." He also asked rhetorically whether wind companies are willing to live with the same risks as utilities. Jenkins of TU Electric also questioned who would bear cost of externalities. "The push to externalities is inconsistent with the competitive focus," he said. "I can fall on my sword and save the industry but that's not going to help me very much," he said.
"Global threats are replacing cold war challenges" as the main focus of US foreign policy, Tim Wirth, US Under Secretary of State for Global Affairs, told the conference. The former senator also said that developing technologies such as wind are "critical" for global climate change efforts. The American wind industry can "help shape the change for the US and the entire world," he said. "The wind industry can make a major contribution to the achievement of our objectives. In fact, the future depends on it," he concluded.