1

Technical Advancements and Public Policies Affecting Wind Power’s Role in a Low Carbon Future

Photo Source: GE Energy

Climate Decision Making Center NSF SES-034578

Costa SamarasDecember 1, 2005

2

Problem Statement Wind power is poised to be serious player in the

electricity generation portfolio and play a role in a low carbon future.

• What was the relative role played by governmental R&D, incremental innovations, and advances in and transfers from industries outside of wind energy in bringing wind to its current status?

• How have different approaches in wind energy public policy affected the cost and adoption of wind generated electricity?

3

Agenda

• Introduction and research relevance• Data and methods• Capital costs and competition• Wind energy R&D and public

policies affecting wind power• Technological transfers• Summary and policy implications

Photo Source: GE Energy

4

Research Relevance

TechnologyDevelopment

(Supply & Demand)

ElectricityIndustry

Climatepolicy and

decisionmakers

Future Climate System

This work is the first step in a broader effort to try to understand which strategies work best for different technologies

5

Wind energy worldwide growth

Sources:

NREL, BTM Consult Aps, March 2003, Windpower Monthly, January 2005, AWEA, IEA

0

5000

10000

15000

20000

25000

30000

35000

40000

45000

50000

1986 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 01 02 03 04

Year

Inst

alle

d C

apac

ity

(MW

)

Rest of the World North America Europe

Europe

U.S.

Other

2004 Cumulative MW ≅ 46,000• Europe - 34,600 MW• U.S. - 6,700 MW• Rest of World – 5,100 MW• 28% avg. annual growth since 1995

6

Changes in Regional Share of Installed Wind Capacity

Sources: NREL, BTM Consult Aps, March 2003

Windpower Monthly, January 2005, AWEA

0%

20%

40%

60%

80%

100%

Year

Reg

ion

al S

har

e (

% o

f In

stal

led

MW

)

Rest of the World North America Europe

Europe

U.S.

Other

7

Comparative Costs of Generating Options

30

40

50

60

70

80

90

100

0 10 20 30 40 50

Cost of CO2, $/metric ton

Le

veliz

ed

Co

st

of

Ele

ctri

cit

y, $

/MW

h

Wind@29% Capacity Factor, $1200/kW Capital Cost

Coal w/o CSS

IGCC w/o CSS

NGCC@$13

Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

8

Comparative Costs of Generating Optionswith Production Tax Credits (PTC)

30

40

50

60

70

80

90

100

0 10 20 30 40 50

Cost of CO2, $/metric ton

Le

veliz

ed

Co

st

of

Ele

ctri

cit

y, $

/MW

h

Coal w/o CSS

IGCC w/o CSS

NGCC@$13

Wind@29% Capacity Factor,$1200/kW

PTC

Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

9

Sensitivity of wind power costs to capital cost

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Coal w/o CSS

IGCC w/o CSS

NGCC@$13

$800/kW

Le

veliz

ed

Co

st

of

Ele

ctri

cit

y, $

/MW

h

$1200/kW

$1600/kW

Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

10

Sensitivity of wind power costs to capacity factor

30

40

50

60

70

80

90

100

0 10 20 30 40 50Cost of CO2, $/metric ton

Coal w/o CSS

IGCC w/o CSS

NGCC@$13

40% CF

Le

veliz

ed

Co

st

of

Ele

ctri

cit

y, $

/MW

h

29% CF

20% CF

Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

11

Data and Methods

• Data– Installed capacity, generation and capital cost data– Capital cost breakdown by components over time– Federal Wind R&D expenditures by country– Patent data, US and abroad– Policy timeline in U.S. and E.U.– Academic, government, and trade literature,

government and industry interviews• Methods

– Quantitative and qualitative cost and policy analyses• Comparing governmental expenditures to expected outcomes

– Technology tracing case studies

12

Cost of Wind Energy Declining38.00

15.00

10.008.00

6.004.00 4.00

0

1,000

2,000

3,000

4,000

5,000

6,000

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

U.S

. In

stal

led

Cap

acit

y (M

W)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Co

st o

f E

lect

rici

ty

($20

02 c

ents

/kW

h)

Installed Capacity Cost of Wind Power

Source: American Wind Energy Association, 2002 and NREL Renewable Electric Plant Information System (REPiS)

5.0

13

Growth of Commercial Wind Turbines

Sources: European Wind Energy Association (EWEA), Technology Factsheet, NRELImages: wikipedia.com, WQED

Rot

or D

iam

eter

(m

)

14Source: IEA R&D Database

0

15

30

45

60

75

90

105

120

135

150

1974 1980 1986 1992 1998 2004 2010

Year

Win

d E

ner

gy

R&

D

(2

003

$Mill

ion

)

Denmark Germany Netherlands Spain United States

United States

Germany

Netherlands

Denmark

Spain

DOE / NASA MOD Program

NREL NWTC formed

Public Wind Energy R&D 1974-2003

15

Wind Energy Cumulative R&D By Country 1974-2003

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1300

1970 1975 1980 1985 1990 1995 2000 2005

Year

Win

d E

ner

gy

Cu

mu

lati

ve R

&D

(200

3 $M

illio

n)

Public Wind Energy R&D 1974-2003

Source: IEA R&D Database

United States $1200M

Germany $550M

Netherlands $310M

Denmark $170M

Spain $85M

16

Installed MW per $Million Wind R&D 1974-2003

Sources: IEA R&D Database, IEA - Electricity Information - 2004 European Wind Energy Association American Wind Energy Association NREL (REPiS)

Cumulative Installed Capacity per Cumulative $M Wind R&D

0

5

10

15

20

25

30

1980 1985 1990 1995 2000 2005

Year

Cu

mu

lati

ve

MW

/C

um

ula

tiv

e 2

00

3 $

Mill

ion

Win

d

R&

D

United States

Germany

Netherlands

Denmark

Spain $75MW/$M

2003 Installed Capacity • Germany – 14,609 MW• U.S. - 6,700 MW• Spain – 6,203 MW • Denmark -3115 MW• Netherlands - 910 MW

17

Carbon Abatement Efficiency of R&D Expenditures

U.S.

Germany

Denmark

Netherlands

Spain

0

20,000

40,000

60,000

80,000

100,000

120,000

$0 $20 $40 $60 $80 $100

$2003 Wind R&D per ton CO2 Avoided

To

tal

Win

d E

ner

gy

Gen

erat

ed

1982

-200

3 (G

Wh

)

Data Source: IEA, EuroStat, EIA, California Energy Commission, Danish Wind Energy Association, Lewis and Wiser (2005)

2003 Major Wind Manufacturers • Germany – 4• U.S. - 1• Spain – 2• Denmark -3• Netherlands - 0

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U.S. Demand Pull Public Policies

38.00

15.00

10.008.00

6.004.00 4.00

0

1,000

2,000

3,000

4,000

5,000

6,000

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

Year

U.S

. In

stal

led

Cap

acit

y (M

W)

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Co

st o

f E

lect

rici

ty

($20

02 c

ents

/kW

h)

Installed Capacity Cost of Wind Power

Source: American Wind Energy Association, 2002 and NREL Renewable Electric Plant Information System (REPiS)

Investment tax credit

PTC

PTC set to expire

RPS

Accelerated depreciation

5.0

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Renewable Portfolio StandardsNevada: 20% by 2015, solar 5% of annual

Hawaii: 20% by 2020

Texas: 5,880 MW (~4.2%) by 2015

California: 20% by 2017

Colorado: 10% by 2015

New Mexico: 10% by 2011

Arizona: 1.1% by 2007, 60% solar

Iowa: 2% by 1999

Minnesota: 19% by 2015*

Wisconsin:2.2% by 2011

New York:24% by 2013

Maine: 30%by 2000

MA: 4%by 2009

CT: 10% by 2010

RI: 16%by 2019

Pennsylvania:8% by 2020

NJ: 6.5% by 2008

Maryland:7.5% by 2019

21 States + D.C.

*Includes requirements adopted in 1994 and 2003 for one utility, Xcel Energy.

**No specific enforcement measures, but utility regulatory intent and authority appears sufficient.

Washington D.C:11% by 2022

Montana:15% by 2015

DE: 10% by 2019

Illinois: 8%by 2013**

Source: Original slide prepared by Union of Concerned Scientists, www.ucsusa.org/clean_energy/clean_energy_policies

20

Distribution of Capital Costs

Rotor

Nacelle

Tower

BOS

Photo Source: GE Energy

21

Wind power cost of energy ($/kWh)

AEP

O&MLRCBOSTCCFCR

)( )(COE

• Decreased capital and BOS costs• Longer lived capital in place

• Favorable financing and ownership• Decreased O&M costs

• Larger rotors• Improved capacity factor

• Improved specific yield (kWh/m2) • Improved reliability

Source: NREL, EPRI

22

Power from the wind: Increasing annual energy production

pCΑV 3 ½ Power Higher towers

Larger rotors

Better turbine siting

Variable speed operation

Advanced airfoilsand blade sections

23

Innovations and impactsInnovation Increases

AEPReduces

O&MDecreases loads and

failures

Reduces capital cost

Composite blades ● ● ●Variable speed drive ● ●SCADA/sensors ● ●Power electronics ● ●Direct drive gearboxes ● ●Fiberglass manufacturing techniques

●

24

Transfers from Other Industries

Photo Source: GE Energy

• Fiberglass application• Carbon fiber

• Boatbuilding• Pipe manufacturing

• Variable speed operation• Permanent magnet generators• Direct Drive gearboxes

• Tubular steel, high strength alloys• “Soft” towers

• Steel and materials for high mast utility & light poles• Pipe manufacturing • Power

electronics• Foundations• Logistics

• Utilities• IT• Traction power

• AC motor control

• Hard disk industry

25

Larger Rotors – increased area

•Tapered and twisted blades• Composite materials• Pitch control• Dynamic braking• Advanced airfoils• Advanced manufacturing

• Structural integrity• Load Shedding• Lighter

Larger Rotors &Rotor Swept

Area

Higher rated capacity / greater kWhs

Photo Sources: NREL

Composite Industry, Robotics, Power Electronics, Boatbuilding, pipe manufacturing

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Higher capacity factors

• Variable speed drives• Advanced power electronics• Direct drive• SCADA

• Greater efficiencies• Greater energy capture in low speed areas• Turbine health monitoring

• Greater availability• Lower O&M Costs• Higher capacity Factors

More kWhs per project,Lower COE,

Photo Sources: NREL

AC motor control, Traction power industry Utility industries, Telemetry and oil and gas

27

Borrowed Technology

Material Science

Composites

Aerodynamics

Computer science,Data collection and

testing

Power Electronics

Source: Manwell, McGowan, Rogers (2002), Loiter and Norberg-Bohm (1999)

High strength alloys

CFD and advancedDesign models

SCADA andRemote sensors

Permanent magnets

Variable speed power conversion

Dynamic braking

Soft-starting

AC Motor control

Boatbuilding

Steel industry

Aviation and helicopter design

IT and hard disk

Oil and gas industry

Utilities

Power semiconductors

Fans and motors

28

Components

Capital Cost

Logisticsand

Installation

Learning byDoing and Economies

of scale

Intra-industry advances

Transfers from

other industries

Demand pullPublic policies

Federal R&D

Manufacturing

Capital Cost Influence Diagram

29

Initial Findings

• Only 30% of wind turbine components were traditionally manufactured solely for the wind industry1; blades are the primary component in this value

• Wind power has evolved into commercial viability largely independent of governmental R&D

• Previous literature2 and industry interviews offer similar conclusion

1 Neij (1999), NREL (1995), WindForce10 (1999)2 Loiter and Norberg-Bohm (1999 &1997) Gipe (1995), Heymann (1998), Van Est (1999)

30

Policy Implications

• Why is it that this technology has evolved and did it largely independently of governmental R&D?

• Which technology policies caused either direct or indirect advances in wind power?

• When does it make sense to offer demand-pull polices versus supply push policies in low carbon energy technologies?

31

Research Goals and Summary• We are attempting to gain insights about

attributes of successful low carbon technologies– What can lead to path dependencies?– How do current climate models account for this?

• In the long run we intend to compare other technologies

• What portfolio of R&D, subsidies, taxes, or regulations are most appropriate for different technologies?

32Photo Sources: GE Energy

Questions and Comments