And for the first time, a US Energy Secretary not only attended America's annual wind conference, Bill Richardson chose it as the venue for announcing a major White House action plan that could lead to 80,000 MW of wind power by 2020 (page 16). If anybody was in doubt about the symbolic significance of this government wind pledge, the press coverage made it clear: the announcement was picked up by top news organisations, the New York Times, CNN, ABC News and the Wall Street Journal. It even made the front pages of the business pages in Denmark.
The Clinton Administration's goal, said Richardson in a theme picked up by other speakers, is filling in the map of America's wind development, so far concentrated in California, Minnesota, Iowa and Texas. Despite real questions about the opposition Clinton's plan will face, the attention afforded wind was surely a litmus test of the thinking of a moderate, somewhat green-friendly White House at the close of the millennium. "We want wind to be a major commercial generating technology by 2010," Richardson told the opening session.
Buoyant and all American
The conference mood was understandably buoyant, given the government announcement-which came on the summer solstice-and despite the frenetic rush to meet the end of tax credit eligibility on June 30. Some had feared attendance at Windpower '99 would be down, since so many developers were putting last minute touches to projects. But the final count was higher than last year, when just over 500 came to Bakersfield, California. Again though, this year's conference participants were largely from the Americas and other parts of the Pacific Rim such as Japan, China, South America and the Philippines.
The European presence seemed less prominent, though there was a clear trend of more collaboration across the Atlantic, as well as a sense that the US industry has become far more robust and broad-based even compared with one year ago. Two large scale turbine makers-Enron Wind, which also owns Tacke Windenergie GmbH of Germany, and Denmark's NEG Micon-are now prominent in making turbines in the US. Danish blade manufacturer LM Glasfiber also has a US manufacturing base. In contrast, at Windpower '98, the excitement was Enron displaying its Z-750 on the exhibition floor, at that time the only large US made turbine in production. This year small wind turbine companies also made their presence felt, with more attention given to them than in some time and a whole session devoted to small wind systems.
Even though there were still only a handful of financial companies present, as has been the case for some years, talk of jobs and investment, of Enron Wind's 16.5 MW merchant project to supply premium power to green minded customers in California and the new 25 MW plant in Colorado's rate base (Windpower Monthly, May 1999), gave a solid base to the optimistic mood. Also prominent was talk of various positive wind friendly state actions, such the Texas law with a Renewables Portfolio Standard (RPS) that could lead to 2000 MW of new renewables by 2009 (page 17), the New York state campaign (Windpower Monthly, June 1999) and Illinois' new $250 million clean energy trust fund (page 12).
Hard core issues
Most prominent in presentations was discussion about electricity restructuring, at the federal and state level, and how crucial the precise details for the success of wind are. Speakers seemed to agree there is no single "silver bullet" and that arguments over one policy versus another do more harm than good once there is competition. One theme that seemed to resonate was that state policies should be harmonised so money and effort targeted for wind development is not squandered on variations between policies and criteria in each state.
The mantra of the conference was that wind advocates and companies must become more involved-in policy making, decisions, lobbying on Capitol Hill, at the state level and in the new agencies that are being set up to organise and oversee the day-to-day workings of a competitive electricity market place. Again and again speakers told the conference that wind's future depends upon involvement, a plea that seemed to square with how much notice has been given in recent months to the results of public opinion polls and green pricing.
Rudd Mayer of Colorado's Land and Water Fund, which launched a grass roots campaign, presented one fascinating lesson. She told the audience how "wind chicks" were sent into targeted areas-and managed to sign up 40% of residents for green pricing. The campaign was a key part of Denver utility PSCo building 18 MW of wind, she said. The cost of such campaigning, given the hours clocked up by the street team, was about $0.024/kWh, estimated Mayer, who received an AWEA award for wind advocacy at the conference. So although "The Grassroots are Greener,"-the name of a new draft report circulated at the conference and co-authored by Mayer for the Renewable Energy Policy Project-such campaigning represents a financial challenge for environmental, green energy and clean power retailers.
Technical issues were less to the forefront than policy. Even so, distributed generation emerged as the topic du jour, providing one of the most dynamic sessions of the conference. The technical pros and cons of distributed generation, and whether it holds a market for wind or not, were aired both during a packed and lively session dedicated to the topic and at a lunchtime overview meeting. Industry members grappled with the issue at a level of detail not seen before.
Windpower '99, held 25 years after the founding of AWEA, indeed seemed to mark a coming of age of the US wind industry. The event was co-sponsored by local firm NRG Systems, the US Department of Energy (DOE) and Vermont power marketer Green Mountain Power Corp, owner of the Searsburg wind farm, the largest in the eastern US and consisting of 11 of Enron Wind's Z-40 turbines that have been registering a more than 90% availability record. It is also a spin-off of the utility, Greenmountain.com, which has become the most prominent green retailer in the $200 billion US electricity market.
"The wind industry is no longer the poor relation of energy options," outgoing AWEA president Karen Conover of Global Energy Concepts told the opening session. "It is no longer just a tax shelter or demonstration technology [and] this industry isn't going away any time soon." Randy Swisher, AWEA's executive director, sounded a similar theme. "After the doldrums of the early 1990s, we're seeing the rebirth of the US industry," he said. "The future certainly looks bright." He stressed the importance of getting a PTC again. Green pricing remains a young market and is no panacea-because there is a real-world limit to how much extra people will pay. Still, of the 1000 MW that has come on-line in America in the last year, 165 MW is because of green pricing, said Swisher. But the key for a stable future, he stressed, is restructuring and ensuring that it works for wind.
A standing ovation greeted Senator Jim Jeffords from Vermont, one of the industry's most ardent backers in the US Congress. He is leading the fight to extend the PTC, while his federal restructuring bill-strongly backed by AWEA-would require an RPS of 10% by 2010 and 20% by 2020. "Wind energy is the future of our nation," he said as photos were projected onto a large screen showing children playing in front of a wind turbine at Spirit Lake in the Midwest, an image that he had shown members of the US Senate the week before. "Few of us want our sons and daughters fighting to protect oil supplies in the Middle East, but we are happy to have our children playing in the wind."
Denis Hayes, a leading environmental activist, gave the conference a different perspective. He doubted whether America's political leaders will face the issues of global warming and fossil fuels head on, as long as they are so dependant on financial contributions from industries with vested interests in the status quo. "We need a critical mass of people to rise up and demand change," he said. "The industrial world runs on late 19th Century technology, but renewable energy could catapult it into the 21st Century."
Restructuring and restructuring
At the state level, restructuring is opening sizeable doors. Renewables Portfolio Standards and systems benefits charges (SBC) currently in the works in 13 states could lead to new demand for 4000 MW of renewables by 2010, said Ryan Wiser of the Lawrence Berkeley Laboratory. Most promising are Texas, California, Connecticut, Massachusetts and New Jersey. Again and again, Wiser and other speakers reiterated that it is the precise details of how restructuring legislation is written that matter.
A year ago at Windpower '98 the same topic, restructuring, was analysed endlessly, but there was little real world experience to go on. This year, there was more than a year of deregulation experience supplied by California, with Pennsylvania contributing significantly too. Some lessons are already clear. Customers have been signing up far more quickly in Pennsylvania than in California-because of how the rules are written. The latest research indicates that 6.9% of Pennsylvania residential customers have chosen green power, compared with less than 1% in California. (Windpower Monthly, June 1999)
"Nothing is as important as getting the deregulation details properly-then renewables can compete head on with other technologies," said Lewis Milford of the Clean Energy Group in Vermont. And that can only be achieved if renewables advocates become engaged in the political and decision making process, said several speakers. That is very true in Pennsylvania, said Roger Clark of the Pennsylvania Environmental Resources Council. "In Pennsylvania we had foundations that funded us-and we were in the trenches for two years [fighting] and got respect for that."
Plea for harmonisation
It was Mike Davies, head of the London-based energy finance group at Mees Pierson, the largest lender to the wind industry worldwide, who cautioned that the industry should try and ensure that state electricity and renewables policies are harmonised so that investors have more faith in the market. He noted that only about two banks were represented at the conference. "Who's going to finance the future of the wind industry?" he asked, noting that especially US banks still perceive wind negatively, a view that was galvanised by the bankruptcy of US market leader Kenetech Windpower. "The sector is going to run headlong into a lack of liquidity," he warned. Different rules in different states-and in different countries-all push up the cost of due diligence and thus the cost of financing and the price of wind kilowatt hours produced.
Tax credits for the first ten years of a project necessarily attract larger companies with a longer term view of profitability, although their involvement also gives the industry more credibility. Merchant plants are risky because of the uncertainty of deregulation-and lenders generally do not want more risk. The key to merchant deals, he said, is good long term forecasts from reputable sources. Green marketing is not yet proven and in the short term it is an equity risk. "It's an interesting idea for the future though, perhaps ten years away," he said.
For budding independent wind power developers, utilities can become allies once they learn that a local source of generation can benefit their business, noted several speakers in the distributed generation session. But today utilities have an economic interest to discourage self generation-and this is true for regulated and deregulated markets, said Tom Starrs of Kelso Starrs & Associates. "It's up to wind advocates to educate utilities about why it's in everyone's interests," he added.
Another key to helping wind is at the level of federal regulation-the Federal Electricity Regulatory Commission (FERC)-because it controls interconnection and transmission issues. Once the rules take account of wind's needs, another barrier will fall. Currently there is passive discrimination against wind's intermittency because it is not catered for in the details," warned David Wooley of the Pace Energy Project of Albany, New York. The solution is to get involved with entities such as ISOs, the Independent System Operators who oversee the grid in a deregulated state. If it is only utilities represented on their boards, they will be biased against independent producers, warned Wooley. "You must ensure the independence of the ISO's, or the 'I' will become very small," he said.
Others cautioned that utilities should not be pushed out of the game. "We are dealing with people who have never really dealt with putting generation on their system," said Dale Osborn of Distributed Generation Systems Inc. "There is no substitution for educating utilities about how you're going to interconnect," he added. "Engage on an educational front and not on a confrontational front."