Wind Energyand Missouri

Steve Gaw

Missouri

• Wind Projects in Missouri• Installed Wind Capacity: 459 megawatts

(MW). State Rank: Missouri ranks 24th for total MW installed

• Number of Wind Turbines: 252 turbines• Wind Projects Online: 6 wind projects

Missouri

• Current Wind Generation• Percentage of Missouri's electricity provided

by wind in 2013: 1.3 percent• Equivalent number of homes- Missouri wind

farms now power: over 100,000 average American homes

Missouri

• Wind Generation Potential• According to data from the National Renewable

Energy Laboratory, Missouri's onshore wind potential at 80 meters hub height is 810,619 GWh and 1,267,920 GWh at 100 meters. State Rank: Missouri has the 14th best wind resource in the U.S with greater potential than Illinois.

• This means that wind power is capable of meeting more than 9 times the state's current electricity needs.

Missouri

• Jobs & Economic Benefits• An investment in wind power is an investment in jobs,

including jobs in operations and maintenance, construction, manufacturing, and many support sectors. In addition, wind power projects produce lease payments for landowners and increase the tax base of communities.

• Total direct and indirect jobs supported in 2013: 501-1000. State Rank: Missouri ranks 20th for number of wind-related jobs

• Capital investment: over $960 million dollars • Annual land lease payments: over $1,200,000

Manufacturing

• Wind-Related Manufacturing• The wind industry has over 550 manufacturing

facilities producing products for the wind industry that range from blade, tower and turbine nacelle assembly facilities to raw component suppliers including fiberglass and steel.

• Number of manufacturing facilities in Missouri: 12 facilities

Wind-Related ManufacturingNumber of manufacturing facilities in Missouri: 12 facilities

U.S. Annual and Cumulative Wind Power Capacity Growth (Utility-Scale Wind)

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on state level installations, see pp. 24-25

• 61,110 MW, with 1,087 MW installed during 2013• 19.5% Annual Growth Rate• Nearly 20% of all global wind capacity

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Rebound in Wind Installations in 2014 and 2015: Uncertainty Returns in 2016

• AWEA: 12 GW of wind under construction• BNEF expects 15 GW in 2014-2015• EIA expects 16.7 GW in 2014-2015• Navigant expects 12.3 GW in 2014-2015

2014-15 expected to be strong as developers commission projects

that began construction in 2013 to receive PTC

• Lack of clarity about federal tax incentives • Low natural gas & wholesale electric prices• Modest electricity demand growth• Limited near-term demand from RPS policies

2016 and beyond are uncertain: aggressive

wind pricing may support higher

growth, but multiple headwinds

Wind Capacity Installations, by State• The 61,110 MW

installed in the U.S. is spread across 39 states and Puerto Rico.

• 16 states now have more than 1,000 MW installed.

• TX #1 with 12,354 MW

• CA #2 with 5,829 MW

• IA #3 with 5,177 MW

• IL #4 with 3,568 MW

• OR #5 with 3,153 MW

• OK #6 with 3,134 MW

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on state level installations, see pp. 24-25

Wind Energy Share of Electricity Generation, by State

• A record-breaking 4.1% of U.S. electricity came from wind power during 2013.

• Wind energy generated more than 25% of the electricity in IA and SD.

• In total, the generation in nine states was more than 10%

ERCOT: 9.9%

Source: AWEA U.S. Wind Industry Annual Market Report 2013, Energy Information Administration

For more information on wind energy generation, see pp. 18-19 and 26-28

Wind as Leading New Energy Source

• Wind energy was the primary choice for new power in wind-rich regions between 2011 and 2013, delivering approx. 60% or more of all new electric generating capacity in the Pacific Northwest, Plains states and the Midwest.

• In the upper Midwest, wind delivered over 80% of all new capacity.

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on generating capacity additions, see pp. 15-17

Electric Utilities Pursue Wind Energy

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on utilities and PPAs, see pp. 38-43, 103-105

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on wind investments, see pp. 48-49 and 70-71

Investment into the U.S. Economy

Estimated Land Lease Payments

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information, see pp. 46 and 67-73

U.S. Manufacturing Sector Growth• 560 wind-related

manufacturing facilities - spread across 43 states.

• Annual U.S. production capacity of wind turbine nacelles stands at more than 12 GW.

• The domestic content of wind turbines has grown from less than 25% prior to 2005 to approximately 72% at the end of 2012.

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on wind-related manufacturing, see pp. 62-65 and 106-125

Why Wind? Public Policy Hedge: Wind energy contracts can be used as a long-term hedge

against volatility in fossil fuel prices and environmental regulations. Environment: Wind is a zero polluting and non-carbon emitting

energy resource that uses no water to produce power. Diversity-Security: Enhancing energy security and diversifying the

electric generation portfolio. Price: Wind energy is providing prices that are competitive with

other new generation options, and has been shown to reduce prices to consumers.

Economic Development: Billions have been invested as a result of wind development producing jobs, increased tax base for schools and local communities.

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Missouri

• State Policy • A 2008 ballot initiative replaced the existing

state targets with a mandatory renewable electricity standard (RES) requiring 15 percent of 2021 generation of the state’s investor-owned utilities to come from renewable resources.

Insuring the Risk

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• “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.” Donald Rumsfeld

Wind Energy and Diversification: Insuring against the known unknowns

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• Fuel Price Volatility• Fuel Transportation Risk• Water Shortages• Environmental Policies

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Wind Power Price Trends

Source: NREL Cost Curve, in Black & Veatch Report, October 2007

Historical Cost of Wind Energy

• Wind cost per kwhr has declined 90% since the early 1980’s

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Why have costs decreased?

• Capital Costs • Improved energy production

–Technological advancements–Better understanding of siting–Transmission access

Advances in Turbine Technology

Source: AWEA U.S. Wind Industry Annual Market Report 2013 For more information on turbine trends, see pp. 57-60

• Industry continues to advance technology in several areas, from improved siting techniques to larger rotor diameters and taller towers that are increasing energy production across the country.

• Taller wind turbine towers and hub heights as well as larger rotor diameters capture more energy, allowing better wind energy resources to be tapped.

• With new technology, new regions for development have rapidly emerged in recent years, with states including Indiana, Ohio, Michigan, and New England states such as Maine seeing wind project installations as a result of both new state policies that foster such development as well as improved industry technology.

Lower Costs and Better Capacity FactorsEnable Aggressive Recent PPA Pricing

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Interior (16,840 MW, 184 contracts) West (6,885 MW, 69 contracts) Great Lakes (2,364 MW, 33 contracts) Northeast (855 MW, 20 contracts) Southeast (268 MW, 6 contracts)

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• Lowest prices we have ever seen in the U.S. market, despite the trend towards lower-quality wind resource sites in general

Wind Prices: Below the Current & Expected Future Cost of Burning Fuel in Natural Gas Plants

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Range of AEO14 gas price projections AEO14 reference case gas price projection Wind 2011 PPA execution (3,533 MW, 34 contracts) Wind 2012 PPA execution (721 MW, 9 contracts) Wind 2013 PPA execution (1,788 MW, 10 contracts)

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Consumers Price Benefits– Flat Ridge 2 wind power could lower SWEPCO

customer bills in 2013 by roughly $.05 per monthly bill for customers using 1,000 kilowatt hours and $.11 per monthly bill in 2014.” – SWEPCO

– Alabama Power, a subsidiary of Southern Company, is “absolutely looking for more wind power” to import from Midwestern states. Noting that Alabama does not have good wind resource. “Wind energy is cost-effective for the utility’s customers and helps diversify its fuel mix.” - Michael Sznajderman of Alabama Power.29

Utilities on WindMidwest

“We’ve found a way to meet the state of Minnesota’s renewable energy standard early and reduce costs at the same time ... Expanding Bison will add to our renewable energy supply, resulting in the lowest cost resource over time by capturing the benefits of the extended production tax credit and a competitive turbine market”

- Al Hodnik, chairman and CEO of ALLETE after announcing the expansion of their Bison Wind Energy Center

Interior West"It works out to a very good levelized cost for our customers,…These prices are so compelling, the energy [cost] associated with it is less than you can do locking in a 20-year gas strip.“

- Xcel Energy, Ben Fowke, Xcel President and CEO. The Colorado and Minnesota public utility commissions approved wind PPAs totaling 850 MW. Xcel Energy expects to pay about $25/MWh to $35/MWh over 20 years for the recently approved wind power purchase agreements

Source: AWEA U.S. Wind Industry Third Quarter 2013 Market Report

Water Consumption Savings from Wind Energy

• Water is used for cooling at thermal (i.e., natural gas, coal, and nuclear) power plants. • By directly reducing the use of fossil-fuel generation, wind energy can dramatically reduce

electric-industry water consumption.• In 2013, wind energy generation led to water consumption savings of 36.5 billion gallons -

equivalent of roughly 116 gallons per person in the U.S. or conserving the equivalent of 276 billion bottles of water.

Source: Forthcoming AWEA U.S. Wind Industry Annual Market Report Year Ending 2013

Avoided CO2 Emissions from Wind Energy

• In 2013, wind generation avoided an estimated 95.6 million metric tons of carbon dioxide (CO2)— the equivalent of reducing power-sector CO2 emissions by 4.4%, or taking over 16.9 million cars off the road.

• The 12,000 MW of wind power capacity under construction at the end of 2013 would reduce another 20 million metric tons of carbon dioxide (CO2) when it is operational — the equivalent of reducing power sector CO2 emissions by another 1%.

Source: Forthcoming AWEA U.S. Wind Industry Annual Market Report Year Ending 2013

Thank You!

Steve Gaw