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Confident and focussed

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The days of blunt confrontation with the power industry establishment are passing into wind power history. Serious collaboration on the problems in need of fixing was a dominant theme of the American Wind Energy

Association's annual conference this year. Yesterday's power system and market frameworks must be rebuilt for tomorrow's clean energy supplies-and the wind industry has an important role to play in getting the details right.

The American wind industry celebrated a year of growth and newly-gained political clout at the 2000 American Wind Energy Association conference in Palm Springs, California. It was a sign of the industry's maturity that it could celebrate its gains at the same time as it looked seriously at issues that are holding the industry back. The conference balanced the industry's optimism with a realistic look at barriers that could slow future growth. With 825 participants it was a record breaking conference, held April 30 to May 4. Delegates were greeted by 90 degree weather and afternoon winds at the Wyndham Palm Springs Hotel, all in a California setting where hundreds of turbines stand on white desert sands just north of town.

It was clear from the conference opener by AWEA's Randy Swisher that in America wind is on a comeback from its lull of the late-1980s and its sluggish progress early in the last decade. Wind turbines fill and will continue to fill a growing and important role in providing energy, in curtailing pollution and in meeting a growing demand for green products in America over the next 20 years.

That optimism is built on a year in which large project construction boomed, at least until wind's federal Production Tax Credit came to an end in June 1999. The rest of the year consisted of a smattering of smaller projects largely driven by consumer demand. Although the industry since June has fallen into a PTC wind shadow of sorts, rumours running through the conference of large new projects, such as an FPL Energy expansion of its Vansycle Ridge project by up to 200 MW and an expansion at Foote Creek by SeaWest, are again swelling confidence.

American wind power fits into the worldwide growth trend, where, according to Dan Reicher, assistant secretary at the US Department of Energy (DOE), 1999 was the first year in history that more wind power was developed than nuclear power. By the close of the conference, Charlie Smith of Electrotek Concepts took that fact one step farther, predicting that, at the rate wind turbines are going in today, overall wind energy production in the world would actually exceed total nuclear capacity by 2010.

Reicher promised the federal government would do its part to keep wind power growing. As its goal, DOE wants the number of states that have 20 MW or more of installed wind doubled to 16 by 2005 and to have 24 states reach that pinnacle by 2010. He pledged that the largest consumer of energy in the world-the US government-would get at least 5%, or about 1000 MW, of its energy from wind power by the same deadline.

An indicator of the American wind industry's health was the number of exhibitors from support industries. While major turbine manufacturers were there with dominant stands-Enron Wind, Vestas, Nordex and NEG Micon-so too were financiers (still, most investment in American wind projects is by foreign companies), wind developers like FPL Energy and SeaWest, researchers, software developers, instrument and measuring suppliers.

Absent from the event as a whole were electric utilities, particularly some who own large wind farms. Northern States Power and most California utilities (Southern California Edison, which serves Palm Springs, being the exception) were not present. The utilities that did show-Platte River Power Authority, Fort Collins Utilities, and a few others-were there to tout their green marketing projects or to offer delegates a glimpse of utility thinking on electric transmission policy and integrating wind into the transmission grid, as did Ed Weber of the federal Western States Power Authority (WAPA).

Rising Stars

Two of the industry's recent success stories were being told by Northern Alternative Energy (NAE) of Minnesota and by policy makers in the state of Texas. Just prior to the conference NAE had won a trail blazing power supply contract with a previously untried mixture of wind and gas (Windpower Monthly, May 2000). Clearly a star of the conference, NAE's Greg Jaunich had overturned the conventional story line that natural gas is a market competitor to wind, by making gas wind's ally instead.

Meantime, a lawmaker and representatives from the big state of Texas rode into the conference in cowboy hats and boots to receive an award for passing into law a Texas-sized renewables portfolio standard (RPS) mandating 2000 MW of new wind in the state's electricity portfolio by 2009 (Windpower Monthly, April 2000). Swisher indicated that Texans not only passed a whopper of an RPS, but they did it right by avoiding potential conflicts about who is responsible for building how much. They also ensured that the Texas Public Utility Commission has some say in how the regional transmission organisation will integrate the wind into its grid.

The Texas RPS illustrated one of the conference's overarching themes: for now efforts to win government approval for more wind projects will only happen at the state level, not in Washington DC. Swisher said that while AWEA and the industry continue to lobby Congress to place the Production Tax Credit on a more stable footing (one the industry can count on enough so it can begin to plan long term projects), a federal electric utility restructuring bill-especially one that would include a nationwide RPS-is still a couple of years off. Unfortunately, he said, at the state level political action requires a great deal of individual work and sacrifice that tends to fragment and stress the overall efforts of the wind community.

Nonetheless, the number of states passing restructuring laws that include some type of RPS is on the rise, even though there are still disappointments, such as this year's failure in Iowa (Windpower Monthly, May 2000). Despite the backing of the governor and a strong wind advocacy, the Iowa bill died for the second year running due to stiff labour opposition and because, as Swisher described it, the utilities "simply overplayed their hand and did not reach a compromise."

Confidence returning

There was a sense at the conference that the financial community is coming back to wind in the US. While much of the financing still comes from Europe, American investors may again be seeing wind projects as a more acceptable risk. "The US financial community got beat up pretty badly in the late 1980s, but they're starting to come back," said Bob Gates, president of Enron Wind Development, referring to the collapse in bankruptcy of Kenetech Windpower and its trail of unfinished projects.

"The projects just have to work. There is still an institutional memory that goes on, so little hiccups can still hurt you." He said the great benefit in borrowing from US institutions is the lower cost. Consultant Ed DeMeo added that if financing for wind projects in the Midwest came from Midwest banks, it would do more for the communities and for the farmers.

While investors may be coming back to wind projects, another risk is emerging that could hold them off a little longer. Smith of Electrotek said the quality and availability of transmission is an emerging risk for investors that they need to consider when looking at a new wind project. According to one financier, however, the value of a wind project has to be in the project alone. The long term tax credits Swisher is seeking from Congress may not be as attractive to project financing supplied by institutional investors. Stephen Probyn of Probyn & Co of Toronto pointed out that many US institutional investors have a tax-free status and so would not benefit from the PTC.

Green is growing

One area where momentum is building and driving wind development is green marketing. Programs are popping up in various forms across the nation. Several sessions were devoted to a wide variety of these programs and, by the last night's banquet, their value to the wind power cause had begun to emerge. "Every state is trying a slightly different approach or a different model for customer choice," said Rachel Shimshack of the Renewable Northwest Project. "There are partnerships between advocates and utilities in Colorado and progress in an open market in Pennsylvania. All are releasing a pent up demand for wind."

Swisher, however, cautioned that wind as a niche green product would always have a limited market. It was also pointed out that more has been achieved so far by government mandates than any amount of green sales pitch. But the concept of applying education and market forces to sign people up for a wind product is taking hold. Green marketers in Colorado and Pennsylvania, the Midwest and Northwest, in California and Texas are all finding that there is a demand for a clean renewable energy product. According to Jan Pepper of Automated Power Exchange, wind is worth a premium over even other renewable products.

Although most green programs are intended to develop a green market and get more wind turbines spinning, there may be an unintended side benefit. David Freeman, energy advisor to the president in the 1970s, suggested that such efforts could also build a political constituency that supports and demands state and national policies which could snowball towards more wind development. He told the crowded banquet room on the last night of the conference that the technical improvements of wind turbines since the early 1980s borders on the miraculous, but the marketing efforts to tell the American people about the product have been minimal.

"You build wind projects in remote areas and people don't see what you do," he said. Without a sizeable marketing effort and a more visible product, he continued, the wind industry will not build the constituency of support it will need to gain political clout.

Green marketing like that done in Colorado by the Land and Water Fund of the Rockies or in Pennsylvania by Community Energy, a spin-off of the LAW Fund's program, are finding success. Pennsylvania utilities have restructured, but so has the California electric market where the penetration of customers who have switched to a green product is lower.

"When Pennsylvania restructured, there were almost no renewables in the restructuring plan," Swisher pointed out. "But they did it right by establishing a truly competitive market and we're seeing good results, not like in California. Did we make a mistake by not paying enough attention to the value of that truly competitive market? If we don't from now on, renewables will lose."

The next great hurdle

It seems that wind is gaining access to the hearts, minds and pocketbooks of environmentally-conscious Americans through green marketing programs. Perhaps that groundswell of public support Freeman called for to change public actions is now building. But there has to be a way of getting the green power to the people. Gaining access to the thousands of miles of transmission lines in the country is proving to be a daunting task.

Both wind and the US transmission system have inherent problems that could continue to act as barriers to wind's acceptance unless certain changes are made. One problem, according to Chris Ellison, an attorney who is working with AWEA's transmission initiative, is that wind power lacks siting flexibility. Turbines must be sited where the wind resource is at its best, which is often in remote locations far away from the transmission grid. It is also inherently intermittent and non-dispatchable. It cannot be called on when needed. All of these characteristics of wind generation make it difficult to integrate into nearly any American transmission system, at least in the way transmission organisations are structured today.

The other problem is the transmission system itself. Despite continued growth in most markets, overall the system has not been upgraded to meet that growth. The result is a transmission system that is nearly at its capacity, so reliability has become an issue (next story).

An additional problem for wind development is that the transmission system reflects the needs of the traditional transmission and power system. Ellison said this is not a conspiracy. It is simply a system that favours large-scale central generators already on the transmission system and that deliver a firm amount of power, not the often small-scale intermittent resource characterised by wind.

In the old transmission system, it did not matter very much if the resource was non-dispatchable, said David Wooley of AWEA's Northeast State Advocacy Project. He said an older study by Pacific Gas & Electric found that there was little or no cost to the system until wind exceeds 15-20% of the supply and more recent European studies agree (Windpower Monthly, May 2000).

Wooley takes transmission issues seriously. "Transmission can kill you with fatal delays due to interconnection rules, with imbalance penalties, unfair curtailments, congestion pricing and crippling access charges," he warned. He said much of this is now being reshaped by Federal Energy Regulatory Commission open access tariffs and FERC Order 2000, which calls for the development of regional transmission organisations. RTOs will be the entity in a position to make the new rules. "How that comes out depends on the RTO's governance structure," Wooley said. "Will it be one that works for wind or will it be the equivalent of the World Trade Organisation and be unapproachable?"

Ellison said that RTO policy is supposed to be applied in a non-discriminatory fashion, but that does not mean its policies will have the same impact on all resources. He also said that some in the utility industry perceive that the wind industry is asking for special consideration or a special subsidy. "That's not true. The technical constraints of other resources already integrated into the transmission system have been taken into account," Ellison said. "I'm saying that these same types of considerations for technical constraints made in the past for other resources needs to be given to wind. That is not special treatment."

Ed Weber of WAPA gave the conference a glimpse of how the established transmission industry thinks when he said that the system does not have well defined criteria for wind projects and it has no way of modelling wind differently than any other resource already on the WAPA grid. On the other hand, it was clear that many in the wind power business do not understand the problems or language of transmission. AWEA is clearly focused on closing that gap in understanding. Indeed, the conference dealt with the transmission barrier in a forthright and positive manner. In Palm Springs, few problems seemed beyond fixing.

Informed optimism

"There have been some years when we've been wildly confident and, in retrospect, that was unrealistic," Gates, outgoing AWEA president, told the audience during a conference wrap-up. "The optimism of this conference understands the constraints and challenges we have-and that they will take a lot of effort and policy work to overcome."

To judge by the weight of attention devoted to the issue, transmission will be one of the challenges for future wind development and one of the places to influence transmission is getting in on the ground floor of forming the regional groups. According to Smith, it is clear that RTOs will set the stage for the future of transmission systems and that wind advocates need to sit in these forums to help form the rules of the road.

Gates said he also feels a sense of caution. "There are so many processes in play now in a lot of states and the challenge for us is to pull together enough people to be at all those tables," he said. "It's happening now and we're not doing a good enough job at being there."

Ellison, Wooley, Swisher, Gates, and others all concluded that solutions for wind power's challenges will involve more and more political action. Most of that will have to be at the state level where wind advocates will be scattered and outnumbered, but also needs to be at the national level. At both levels, wind advocates must take the time to get involved in technical problems as well as policy issues.

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