Wind power has caught on as the next wave for electricity generation, but there are limits to what it can do
A new crop has sprung up in the rolling steppes of the inland Northwest. Thanks to a volatile energy market and support from the federal government, the wind turbine is often the tallest structure in many areas graced with a bountiful and free supply of moving air.
In many ways, the turbine stands as a 200-foot-tall monument to the arrival of the 21st century, an ecologically safe alternative to the carbon-burning, pollution-spewing plants of yesteryear.
While the technology has evolved to become economical and even profitable to operate, there are limits to what it can do, and there are constraints on the resource ranging from the hard law of supply and demand to the fickleness of the wind and of national politics.
A federal tax credit for wind power production is expiring at the end of 2007, and Congress, when it has renewed it, has only done so in two-year periods. “It creates a ridiculous incentive in the market,” says Tony Usabelli, director of the Energy Policy Division of the Washington state Department of Community, Trade and Economic Development. With companies worried about missing out on the tax credit, “you get a huge rush of people trying to build those projects, driving up the cost,” he says.
That’s what is happening now. “If someone were trying to buy turbines right now, he’d be paying through the nose, because everyone knows that date’s coming,” says Tim Stearns, a senior energy policy analyst with the Energy Policy Division. Yet despite cost increases, utilities are investing heavily in wind, so much so that the ports of Longview and Vancouver, Wash., report significant increases in traffic bearing new wind turbines and towers for developing projects in Washington and Oregon. In some cases, there’s even a waiting list of up to two years for new turbines. That’s because there are few other viable alternatives for generating electricity from a renewable source: both solar power and biomass (the burning of agricultural or logging waste) have yet to catch on with the buzz that wind is generating.
Raising the stakes is Washington’s Initiative 937, which will require the largest utilities in the state to have 15 percent of their new energy come from renewable sources by 2020. Notably, I-937, which was narrowly passing as Washington CEO went to press, does not consider hydro power to be renewable, so if the law of supply and demand has anything to say about it, utilities could find themselves facing higher costs as they all rush to meet the targets set out by the initiative.
While some utilities are concerned that the mandates will push electricity prices up in the short term by raising costs, the Northwest Power and Conservation Council, a regional planning agency, thinks that over time prices will come down. An October report outlining the role of renewables over the next two decades says mandates would not create a seller’s market with high prices, but rather the opposite, because “sustained demand would create more competition among suppliers,” eventually lowering prices.
Sustained demand so far has made the United States the world’s third-largest producer of wind power, with about half the capacity of Germany, which has 20,000 megawatts (MW), and just a little less than Spain, according to the American Wind Energy Association, an industry trade group. The U.S.’s 10,000 MW of generating capacity is only enough to power a little more than 2.5 million homes for a day. (Each megawatt of power can serve 225-300 homes per day.)
Washington state’s 405 MW of installed wind generation capacity ranks seventh nationally, with the amount of energy generated by wind turbines in 2005 accounting for just 0.5 percent of our total energy use. By comparison, hydro power, the largest source of energy in the state, accounted for 68 percent of all energy consumed in 2005.
Whatever the fate of the initiative, the clear trend is for wind power to become a greater part of the mix for the four northwest states of Washington, Oregon, Idaho and Montana. The Fifth Northwest Electric Power and Conservation Plan, a 20-year planning document issued by the Council in 2005, calls for a significant increase in the amount of electricity available for consumption to keep up with regional growth. The target is more than 8,500 MW of new generating capacity by 2025, about 70 percent of which will be wind power, with lesser amounts of natural gas and gasified coal picking up the rest. The goal is to combine the added generating capacity with an aggressive conservation effort and contracts with larger business users to reduce consumption during periods of peak usage.
It’s an aggressive approach, says Jeffrey King, senior resource analyst at the Power Conservation Council, and there are a number of important factors that are shaping it ““ the production tax credit, the rising cost of natural gas, the cost of building turbines, and the likelihood that some kind of global warming or greenhouse gas control policy will be adopted by the federal government, either a “carbon tax” or some sort of cap and trade system that might involve buying pollution credits or similar measures. “Utilities are preparing themselves for what they see is the likely political future,” says King.
So far, strong demand for wind energy equipment, wind power, growing costs of raw materials such as steel and copper, and the weakening buying power of the dollar have all combined to push up prices. The Fifth Power Plan assumed 2006 costs for wind energy would range from $42 to $53 per megawatt-hour, but the actual “at- the-pump” cost for new wind power is now nearly double that ““ in the range of $72-$98/MWh.
Avista Corp., a Spokane-based utility that serves 340,000 electricity customers and 298,000 natural gas customers in three western states, is responding to these conditions by aggressively shopping around for a good rate. Avista spokesman Hugh Imhof said the utility buys power from the mammoth Stateline Wind Energy Center, near Touchet, Wash., under a 20-year contract with a locked-in rate of 4-5 cents per kilowatt. Yet that contract was signed two or three years ago, and Avista is now finding, as it seeks out more wind power (it doesn’t own its own wind farms), that the going rate is closer to 9.8 cents per kilowatt. “Frankly, that’s what’s holding us up right now in getting more wind,” Imhof says. “We’re trying to get us a partner that will get us the best price.”
Avista gets about 1 percent of its energy from wind, purchasing about 35 MW from Stateline’s 454 turbines. It hopes to increase wind’s percentage in its portfolio to 5 percent by the end of the year, and overall hopes to add 400 MW by 2010. Hydro power remains the largest source in Avista’s mix, constituting 54 percent of its portfolio. And indeed, the plentiful hydro power in the Northwest is part of what makes wind power viable, because hydro is the ideal quick backup power for when the wind drops off. Traditional “thermal” forms of energy, such as coal, natural gas and nuclear plants, can’t be fired up in a microsecond to make up for a sudden drop in the wind. And just as surely as the wind blows, it surely will stop.
So the strength of wind power ““ abundant free fuel in the form of currents that roam the planet ““ is also its drawback. A wind turbine with a maximum capacity of 100 MW will only generate on average 30-35 MW over a year. Since it’s impossible to predict what the wind will do, a backup system must be ready to be switched on in an instant to keep the electricity flowing.
The ideal solution is hydro power. Utilities can manage the flow of electricity from dams down to a micro second to make up for any load lost from wind farms. Since the Northwest has a generous supply of hydro power, Washington is also an ideal place for wind power. But as intermittent wind power becomes a larger percentage of the mix, more variability is introduced into the power generation network, and consequently, more sources of reliable hydro power will be needed to back it up. If wind power is too large a part of the mix, or the backup source is too small or not reliable enough, then you can get into a situation where the network will periodically fail when the wind dies. “How much variable supply can be added without compromising the entire network?” asks the Council’s information officer, John Harrison. “The answer is a lot, but we don’t know how much.”
Estimates vary. Higher percentages of wind require even more backup sources, which raises costs. Some studies that have been done outside the Northwest indicate it might be feasible to get up to 20 percent wind power into a fuel mix, says the Council’s Jeffrey King. But it’s still unclear just how much wind could be added to the Northwest system without undermining the stability of the grid.
One way to decrease the need for backup sources is to have a good geographical dispersion of wind farms. PPM Energy, a Portland energy wholesaler, for example, operates wind farms in California, Colorado, Kansas, Minnesota, Iowa and New York in addition to the Northwest, for an installed capacity of nearly 2,000 MW. Because of the geographical dispersion of the wind farms, the company is able to hedge against changes in the presence of wind. “Wind patterns in upstate New York with the lake effect from Lake Ontario are very different from wind patterns in southern California,” says Jan Johnson, a PPM spokeswoman.
PPM Energy brokers the power from the Stateline Wind Project, the largest wind farm in the Northwest, which straddles the Washington-Oregon border. Stateline, owned by Florida Power & Light, was put in that remote corner of the region to take advantage of the strong winds that blow across the landscape surrounding the Columbia Gorge, one of the richest accessible sources of wind in the state. However, the best wind resources in the state ““ the North Cascades ““ are far from the transmission grid and rather inaccessible, and the state is only beginning to look at how to access it.
“Our wind regime is reasonably okay,” says Tony Usabelli of the state Energy Policy Division. “We could see several thousands of megawatts of capacity in accessible sites in Washington. But we’re not the Midwest or Montana, where you’re looking at wind regimes of several hundred thousand megawatts. Washington is not the Saudi Arabia of wind.”
Indeed, in July 2005, a hot spell across the Northwest lasting several days led to record peak usage and rising spot market prices. Power reserves in the region dropped from a 39-percent margin to just 12 percent, and wind turbines were largely becalmed in the still air. The state’s utilities were able to handle the drop-off without having to resort to emergency measures. However, it served as a wake-up call for the state, says the Energy Policy Division’s Tim Stearns. Had it been a drought year like 2001, there could have been shortages, and the prospect of low water in the future has many people concerned.
Still, if you head out Interstate 90 east of Ellensburg, you’ll see the latest evidence of the embrace of wind power ““ the Wild Horse Wind Project owned by Puget Sound Energy (PSE). With 127 turbines, it’s the second wind farm the Bellevue utility has purchased in recent years. It also owns the 83-turbine Hopkins Ridge Wind Farm in Columbia County. When Wild Horse starts operation in December, the two farms combined will be able to produce 380 MW, enough for 125,000 homes annually, about 12 percent of the utility’s 1 million customers.
The two farms mean wind power will make up 5 percent of Puget Sound Energy’s mix, compared with the 30 percent derived from hydro, 20 percent from coal, another 40 percent from contracts with electricity wholesalers or other utilities, and a little bit of natural gas to round it out. However, the utility’s resource plan predicts that by 2013, PSE will need an additional 1,500 average MW to meet the rising demand for power, says Roger Garratt, the utility’s director of resource acquisition. Some of that new capacity will be in renewables, which largely means wind, and by that time, wind will constitute 10 percent of PSE’s electricity production.
But the rise of wind is no energy panacea, and the uncertainties of the technology mean developers are looking at long-term alternatives. Hydro may be a good hedge against the variability of wind power, but there isn’t much more hydro power to be developed in the Northwest, and hydro producers have to figure environmental issues into their plans, such as the protection of threatened or endangered salmon species. In addition, global warming, which is partially responsible for those disappearing snow packs, also has climatologists worried about future water supplies. “We’re going to have less hydro if the Cascade snow pack continues to recede,” says Mark Krasnowsky of the Northwest Energy Coalition, an environmental and conservation think tank.
As a renewable resource that doesn’t require fuel, however, wind power seems a safe bet for the moment, even with the specter of another high-tech gold rush lurking behind it. And with most regional planning anticipating rapid population growth in the Northwest, the demand placed on the power suppliers, to say nothing of a power grid badly in need of upgrading, means all the players are looking for the best way to generate enough electricity at an affordable cost to both their customers and the environment. “Basically, we’re going to need enough additional power to feed five more Seattles over the next 20 years,” Krasnowsky says.
Krasnowsky thinks solar, geothermal and biomass will be filling some of that need, but that doesn’t address the issue of the nation’s aging energy infrastructure. Tim Stearns, a senior policy analyst with the state Energy Policy Division, likes the future of wind, but is realistic about its place in the mix. “There’s a huge opening to capture wind potential around the country,” he says. “But it is not going to replace all the coal and nuclear we rely on. Those are going to be with us for a long time.”
By: Chris Winters
Chris Winters is senior associate editor at Washington CEO.
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