What are the issues being faced today?
1. Power Purchase Agreements/Off-Taker Arrangements
2. Lack of strong Federal Renewable Energy Standards
3. Undeveloped Transmission Infrastructure
4. Interconnection/Queue Process
6. Access to Capital
7. Questions Regarding Long-Term Competitiveness of Wind Energy
8. Siting Practices and Complaints from Nearby Neighbors
Among these, wind developers and owners identified three main issues that create the greatest obstacles both at the present time and moving into the future. Each of these issues is significant on its own, and their combination creates a very difficult investment environment for new wind projects.
Difficulty in negotiating viable wind energy power purchase and off-taker agreements
was identified by owners and developers as the biggest challenge facing the industry today. According to owners and developers, the current economy and abundance of cheap energy— such as natural gas—has created an unfavorable pricing environment that makes the successful negotiation of purchase contracts difficult. Therefore, it is difficult to secure the long-term revenue streams needed to fund new investments.
Lack of strong Federal Renewable Energy Standards was also rated as a major issue facing the industry. Without strong Federal Standards, wind owners and developers have no clear assurance there will be a viable and growing market for wind energy in the future.
Undeveloped transmission infrastructure remains a significant industry challenge. Robust regional planning and effective transmission policies are urgently needed to address the significant transmission investments required to support new generation projects.
Challenges When Executing New Projects
Once a new wind project is approved, there are several key problems that occur one-quarter to one-third of the time during project execution.
For example, about one-third of respondents reported difficulty with either a builder’s capacity to meet project bonding or with interconnection issues, and 25 percent experienced financial failure of a general contractor or subcontractor firm on their project.
During our research, several participants also mentioned the importance of a project’s initial cost estimate to the overall success of the project. This estimate often becomes the number that must be delivered on, and significant problems arise if the estimate is not accurate.
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This article is the work of the author(s) indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.
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