energy in the u.s. - why wind? financing wind power: the future of energy institute for professional...
TRANSCRIPT
Energy in the U.S. - Why Wind?
Financing Wind Power:
The Future of Energy
Institute for Professional and Executive Development
Scottsdale, Arizona
May 7, 2008
Overview
• Market Progress
• Market Drivers
Market Progress – Installed Wind Capacity
U.S.: 1999 – 2,500 MW
2007 – 16,800 MW
5,244 MW installed in 2007
Source: NREL, AWEA, Global Wind Energy Council
Market Progress – Installed Wind Capacity
Worldwide: 1999 – 13,600 MW
2007 – 94,123 MW
20,076 MW installed in 2007
Source: Global Wind Energy Council
Market Progress - $
2007 Value of Global Wind Capacity additions:
$37 Billion
Source: Global Wind Energy Council
Market Progress – U.S. Projections
• Projections vary:
- Many consider 45,000 MW of installed capacity by 2015 to be realistic
- Other estimates project up to 100,000 MW by 2015
• Dollar investment projected to range from $81 Billion to $180 Billion over that range
Drivers for Growth of Wind Capacity
• Technology advances
• Cost competitiveness
• Fossil fuel cost increases
• Environmental issues/climate change
• Renewable Portfolio Standards (RPSs)
Drivers for Growth of Wind Capacity - 2
• Production tax credit
• Economic development
• Energy demand growth
• Energy Security
Technology Advances
• Larger wind turbines developed and proven
1995: 500 kW
2007: 2.5 - 3 MW
• With larger turbines, greater efficiency
- Improved materials
- Improved gearboxes
- Larger blades
- Less overall land area needed to produce more MW
Technology Advances - 2
• Greater efficiency results in lower cost of generation
1990: average cost of 7.5 to 11 cents/kWh
2006: average cost of 4 to 6 cents/kWh for new capacity
Cost Competitiveness
• Wind vs. other sources of generation ($/MWh)
Coal 25 – 45
Natural gas 50 – 55
Oil 100
Solar 200 – 500
Wind 40 – 70 (depending on wind resource)
Cost Competitiveness
• Natural gas prices doubled from 2000 - 2005
Environmental Considerations/Climate Change
• No emissions from wind
• Clean Air Act requirements tightly regulate emissions from fossil fuel-fired plants – S02, PM, NOx, Mercury
• Climate change policies are developing, focusing on carbon emissions – Cal., RGGI, Kyoto Protocol
• Wind uses no fossil fuel – therefore no impacts from fuel cycle
• No water intake or discharge – at the same time that CWA requirements are tightening for fossil plants
RPSs
• RPS is a policy which either requires or encourages that utilities supply a stated percentage of their power from renewable resources
States with RPSs
Source: NREL
RPSs
• 25 States and DC have RPSs in one form or another
• Percentage goals vary from 2% (Iowa) to 40% (Maine) with varying target years
• Some have fixed requirements, others are aspirational
• Three states, Illinois, Virginia and Vermont, have non-binding goals
• National RPS is under consideration in Congress
RPSs/Renewable Energy Credits
• RPSs stimulate the development of markets for RECs
• A REC is a credit equal to a unit of production of renewable energy (e.g., a MWh)
• RECS may be used to satisfy RPS requirements, instead of actual generation
RPSs/Renewable Energy Credits - 2• RECs have economic value that can approach the
avoided cost of generation
• Prices for RECS vary geographically, and there is not yet an active market in many areas
- in some places, e.g., MA and CT, can be in the $40 – 50/MW range
• REC sales can provide a revenue stream to support wind energy projects
Production Tax Credit
• Federal income tax credit for production of energy by wind and other renewable resources
• Currently 1.9 cents/kWh, for 10 years
• Provides significant economic support for wind energy projects
• Much more about PTC later
• Short term renewals have produced stop/start development cycles
Economic Development
• Revenue source for host communities
• Revenue source for landowners, especially rural
• Spin-off local revenues from construction
• Construction jobs
• A few good local jobs during operation
Energy Demand Growth
• Electric energy demand in the US continues to increase
• Most projections are for continued increase
• New generation is needed to meet increased demand
- although wind is not a base load resource, it contributes to meeting load
Energy Security
• Foreign oil
• Foreign policy
Wind uses no oil
Why Wind?
It’s the $, stupid
For more information contact:
Ruth E. Leistensnider, Esq.Nixon Peabody LLP
Omni PlazaAlbany, New York 12207
518-427-2655
www.nixonpeabody.com
