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America's major annual wind conference was more than a little depressed as the extent of the unravelling of the US market continued to make itself known over the course of the four day event. Even the industry's main champions dwelled on the dire challenges facing wind in opening speeches at Windpower '95 in Washington DC. Such pessimism is not a usual trait in America.

The extent to which the down-side was stressed was notable, though perhaps the doom mongering was partially a tactic to prod battle weary delegates to walk the halls of the US Congress later that week, lobbying for the survival of a diverse domestic wind industry as the "rules of the game" are rewritten. It was certainly ironic that the event, held March 27-30, took place at the heart of US politics even as America's public policy undergoes more flux than it has in years. It was apparent, too, that US and other companies in the American wind market are having to re-think strategy. Even the American Wind Energy Association (AWEA) conceded that it was "very unclear" whether its goal of 10,000 MW of wind by the year 2000 will be fulfilled, although the goal had always seemed unrealistic for many observers of the industry.

Along with the uncertainty of today's utility restructuring, two further challenges were emphasised -- the attack on the Public Utility Regulatory Policies Act (PURPA) by an insistent but small coalition of utilities, and the assault on the federal research and development budget, after five years of slow rebuilding following the disastrous cuts of the 1980s.

Attendance at the conference was one of the lowest this decade -- a total of 534 delegates by the week's end, compared with the all-time high of 750 a year ago in Minneapolis, probably the most-exciting region in wind in the United States in terms of upcoming development. In contrast, Washington DC is distant from development areas. In 1993, California's large wind industry had helped boost attendance at the annual conference in San Francisco to 600, while the events in Seattle and Palm Springs one and two years earlier had drawn about 600 and 500, respectively.

Windpower '95 was sponsored by AWEA, along with the US Department of Energy (DOE), the National Renewable Energy Laboratory (NREL) and Edison Electric Institute, which represents US utilities.

Domestic depression

Announcements of new, firm projects in the US were virtually non-existent at the March conference, although there was much talk of the markets in India, China and other less-immediate areas for wind potential such as Russia and Ukraine, Mexico, and Central and South America. For the next two or three years, most development activity, even by US-based companies, will be overseas.

A press conference in the National Press Club did not seem to draw general reporters, only those working for specialised trade journals. Partly to blame is that there is no scarcity of stunning news these days in Washington, with policy changes proposed for a range of areas under the Republicans' conservative "Contract with America." But when planning the wind conference, the organisers were not to know that the Republicans would sweep the board in the November elections, pushing environmental issues onto the back-burner across the country. Renewables research and development budgets are already facing cuts, or will just scrape even. Meanwhile, electricity markets are starting to be reshaped, not by actual deregulation as yet, but by fears of uncertainty and more competition.

The Washington location and timing might otherwise have been victorious. After three years of a Democratic president, a vice president keenly aware of renewables issues, a sympathetic Secretary of Energy -- Hazel O'Leary, formerly employed by wind-friendly Northern States Power (NSP) in Minnesota -- and the coming of age of the technology as a competitor against conventional sources, the mood should have been jubilant, not anxious.

Still, a strong sense of resilience was evident at Windpower '95 that did not exist when the US industry hit bottom in the late 1980s, sending just 175 delegates to Windpower '86 in Boston. Several equipment suppliers were optimistic that the market will indeed pick up, although the improvement will take time. Others said they detected a sense of seriousness despite many recent disappointments for wind -- those who did attend were not just survivors but winners in the longer run.

The approximately 80 papers and talks concentrated on utilities, project experience, the issue of wind technology's possible impact on birds, international markets and some technical matters. Early sessions -- the opening one on Monday, keynote speeches, the utility forum and federal initiatives -- were packed. But attention seemed to fall off unusually rapidly as the week wore on, possibly because of the gruelling legislative lobbying on two afternoons. By late Thursday, attendance was so sparse it must have been infuriating and disappointing for those giving papers.

Dynamic O'Leary

This year the most dynamic speaker by far was Energy Secretary Hazel O'Leary who came across as a genuine friend of wind, even though there are threats that the entire DOE could be axed. During her speech, she immediately stepped down from the podium to move closer to delegates, riveting her audience for the next few minutes as she walked to and fro, boosting wind. "It is a magic momentÉ we need to begin by recognising what there is to celebrate," she said on the opening morning. She pointed to 25 years of changing winds, such as the breakthrough on bringing down the price of wind technology and the opening of the US National Wind Technology Center last year. This, she stressed, will lead to jobs for Colorado, rescued from the dwindling defence industry.

Wind's second phase starts this year, she said, recalling her successful trips to India and China recently, accompanied by several wind companies. "So, it's happening outside the United States," she conceded, adding that China's five year plan includes renewables and referring to the DOE's potential role in these "global winds." That same day, O'Leary noted, she was to meet with 30 ambassadors from Africa regarding a strategic plan for the continent.

"I'm unhappy the picture in the United States does not look as robust," she said. The federal interest in energy is that there is economic efficiency, technological development, resource diversity, and environmental protection. Tough issues facing the industry are the attack on PURPA, whether a consistent market remains, stranded losses as utilities are restructured, state planning and how that meshes with national needs, and how the costs to society of producing electricity are calculated.

She seemed to signal that the DOE will become more engaged in the recent Federal Energy Regulatory Commission (FERC) decision earlier this year blasting California's energy auction as illegal under PURPA (Windpower Monthly, April 1995). She noted the FERC is permitted "technical review," implying that she believes the regulatory board overstepped its role. O'Leary concluded by advocating a collaborative approach to the PURPA deadlock, saying that a forum might be possible whereby all parties come to the table to talk about California's failed renewable energy auction. Perhaps wind should be represented by the National Wind Co-ordinating Committee, she suggested. "It's best to use this new collaborative tool; this industry has an opportunity to thrive and flourish not just overseas but also domestically." The following day she returned for a tour of the wind exhibition.

Strategy for foundation laying

The day had been launched with dire warnings from executive director of AWEA, Randy Swisher. He talked of the serendipity of last year's Minnesota location, just as the state government was approving legislation that mandated hundreds of megawatts of wind. The Seattle conference, the previous year, had coincided with north west utilities jumping into wind and finally deciding to move forward. He extolled the overall increasing wind budget, the new collaborative approach, the national wind, and a frenzy of acquisition of new resources by utilities, but added: "During the next two to three years, we don't expect much [wind] acquisition by utilities." At issue are several questions: whether the energy future will be one of wholesale or retail competition; what will be the market structure; and the outcome of the current fight between FERC and the states over their autonomy to purchase renewables.

AWEA's domestic strategy is therefore to concentrate on state-level Integrated Resource Planning, resource portfolio diversity, building utility experience, technological development and continued cost reduction and production economics. "We expect minimal new resource commitments of any kind within the next two or three years," he said, noting that AWEA's goal of 10,000 MW in installed capacity by the end of the century is a "very unclear" vision.

His views were echoed by Ken Karas of Zond Systems who warned of the uncertainties in retail wheeling and of today's environmental backlash. He said the industry must continue to concentrate on driving down the cost of wind power from the current $0.045/kWh. On the same theme Swisher said: "If restructuring goes the wrong way, the door could be closed." It was a message clearly directed at encouraging delegates to become lobbyists and pressure their Congress members on Capitol Hill the next two days. "New members will be responsive to it." He said they should be told to think of PURPA in the context of a new market. The "rules of the game" are being rewritten. "You need to be engaged and focused." Swisher added that the real job is the near and short term. He concluded, "We're not going to get the job done this week, but we're going to lay the foundations."

In a rousing talk that often seemed aimed at a general audience rather than particularly for the wind industry, Senator Mark Hatfield talked of the country's dangerous over-dependence on oil. He said a one-and-a-half cent production payment, available for renewables projects operated by publicly owned utilities, is likely to be cut by the DOE, which would be a significant loss for utilities in the Northwest, his home region. This incentive for public utilities was introduced in 1992, at the same time as the one-and-half-cent production tax credit for independent operators of wind and other renewables, because public utilities do not pay tax. To date the only project which would have access to the $10 million appropriated for 1995 is a Kenetech wind farm operated by the Sacramento Utility District in California.

"The only sane energy does involve commercial development of renewable energy," said Hatfield. "We have such a lust for armsÉ but we don't finance the quality of lifeÉ. you put dollars into wind and solar and they keep multiplying, but you build a bomb and put it on a shelf and hope you never have to use it -- the multiplier ends there."

Lobbying priorities

AWEA's legislative representative Mike Marvin mentioned the most immediate issues that wind faces in Washington. On February 22, a House committee cut $35 million from the $388 million renewables programmes, for fiscal year 1995, which started last autumn. The bill calls for a 9% across-the-board cut, which would mean a $4.4 million axing from wind's current $38 million, he noted. He also pointed to a more positive item, tucked inside the high-profile Contract with America -- a call for abolishing the Alternative Minimum Tax, which is seen as a hurdle for the commercialisation of wind. As wind is capital intensive, it is at a disadvantage compared with technologies that produce more taxable income in the initial years of operation. He said it is likely to pass the House and be sent the Senate for debate.

Within the 72 hours before the conference, a "PURPA reform group," consisting of a small number of utilities, drafted a bill that could be disastrous for wind -- by repealing avoided costs, and giving states the power to abrogate existing contracts, Marvin warned. Wind must hone its message he said. And he recalled the words of Benjamin Franklin, "We must hang together or most assuredly we will all hang separately." He told the potential lobbyists not to "lob verbal Molotov cocktails" on Capitol Hill, as the wind industry is so significantly outgunned, out-spent and out-lobbied. "We cannot afford to present an un-unified position," he said, cautioning them not to criticise the DOE.

Karl Rabago, Deputy Assistant Secretary at the DOE Office of Utility Technologies, said at a press luncheon that it seems possible there will be a total repeal of the ground-breaking PURPA pro-renewables law. The industry must track PURPA reform -- and be ready to consider a future without the law. "We better look at everything, because right now it looks as if anything is possible," he said. AWEA's Swisher said he expects PURPA to be amended within two years by the US Congress. "We need a new proactive type of PURPA," he said.

Giving lobbyists an environmental weapon or two, Donald Aitken of the Union of Concerned Scientists said health-related costs of Midwest power plants is an estimated $25 billion a year. Aitken is a former Stanford University physicist. "We ethically and morally have to help -- the largest cause of climate change is energy." He noted, too, that while wind power may kill some 500 birds annually in the Altamont, the Exxon Valdez oil spill killed 500,000.

At the press luncheon, Rabago was challenging in his statements. He told reporters that it is irrelevant whether wind is ready today -- the real question is, is it ready for tomorrow? He was also a little cautious about wind's likely role. "Wind is an outstanding investment É in our children's futureÉ and it will fit into that future if it is a competitive option," he said.

Back at the conference industry members were hearing a depressing view of the future yet again. Wind consultant Nancy Rader listed the so-called bombs -- PURPA, FERC, deregulation and utility resistance to investing in renewables. She reiterated the message the industry hears so often -- that if FERC means simple competition, that will mean renewables are pushed aside by gas and dirty fossil fuels. But if competition is a means to a policy end, then the market can be structured to recognise non-price values and technological characteristics. She said, however, there is increasing recognition that renewables will not fare well if the emphasis is short term.

Protection for renewables could be implemented with: emissions caps, green pricing, a renewables portfolio standard requiring utilities to buy from wind and other clean technologies; and a wires' fee. Green pricing is problematic as it assumes people will buy "public good" for others as they cannot capture the market outcome. But a portfolio standard has numerous advantages -- for example, it retains competition and does not preclude green pricing as well, she said.

The DOE's Rabago -- drawing from a science fiction cult hit, Neal Stephenson's "The Diamond Age" -- noted that as technology advances, the cultural decision becomes more important than the technological one, as technology becomes able to do more and more. He cautioned that wind will always be chasing lower prices because other prices will continue to drop too; that the benefits of competition may not be distributed to consumers; and that those with market power tend to want to keep it. That means that wind's value, not just cost, must be stressed -- benefits such as modularity and free fuel, he said.

Mixed opinions

With so many contradictory signals, the mood at the conference was highly variable, ranging from depressed, to realistic, to cautiously upbeat. Some from overseas seemed taken by surprise by the extent of the depression. "We came here expecting a blossoming of the American market, but it's over the horizon again," said Mike Anderson of wind plant developer Renewable Energy System Ltd of the UK. "I'd heard it was a bit flat, but it's exceedingly flat." David Leivesley of the UK's Wind Energy Group agreed: "After Minnesota, I thought this would be the time. I'm surprised the extent to which everything is affected." He concluded, "I think the best way you can describe this is a pause of one to three years."

Theo de Wolff, US agent for Danish wind turbine manufacturer, Nordtank, recalled the Bible's seven lean years and seven fat years. "We have a couple more lean years." And Jack Turney of American equipment supplier Enerpro commented that the exhibition was not as busy as he had expected, but that the contacts he had made seemed high-quality. He noted that visitors from India were showing a lot of interest.

Ed DeMeo of the Electric Power Research Institute (EPRI) talked of 1995-96 as a time for maintaining wind as an option, compared with the exciting last two years of a rapidly expanding market. Renewables activity by utilities is dropping off, he cautioned. "They generally don't see the risk and benefits as compatible and their traditional societal role is threatened by competition," he said. In fact EPRI now gets less support for all research, and especially for renewables.

Bob Thresher, head of NREL's wind programme, seemed philosophical: "Reality has caught up. The market has slipped away into restructuring and cost consciousnessÉ a real healthy realism is setting in. It will make us sharper and more effective." Its an American evolution, rather than a revolution, commented Ron Loose, in charge of the federal wind programme. "There's a realism in the down market." He said the industry has to be flexible and adapt to the changing market and environment. Fred Noble of Wintec of California was one of the more upbeat. He described those who attended as substantial. "This is wonderful -- it's a whole new industryÉ people who make electricity, not who do R&D." We know what works!" Dave Blittersdorf of NRG Systems Inc was also optimistic. His business supplies equipment for measuring the wind at future sites and therefore tracks the industry a few years ahead of project installation. He says the export market is busy, and that even in the US he thinks that development will remain steady. He notes there is a great deal of interest in Alaska, where village power systems based on renewable energy are catching on. He concedes he was more optimistic a year ago, but had only been expecting attendance of 400 to 450 at Windpower '95. He says that the down-time is just for two to four years. "That's why I'm optimistic -- things are moving."

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