Wind Energy UpdateWind Energy Updategy pgy p

Larry Flowers Larry Flowers National Renewable Energy Laboratory National Renewable Energy Laboratory

January 23, 2008January 23, 2008

2

Capacity & Cost TrendsCapacity & Cost Trends

18000100Cost of Energy and Cumulative Domestic Capacity

18000100Cost of Energy and Cumulative Domestic Capacity

12000

14000

16000

708090

W)/kW

h*)

12000

14000

16000

708090

W)/kW

h*)

8000

10000

12000

40506070

paci

ty (M

W

rgy

(cen

ts/

8000

10000

12000

40506070

paci

ty (M

W

rgy

(cen

ts/

4000

6000

203040

Cap

ost o

f Ene

r

4000

6000

203040

Cap

ost o

f Ene

r

0

2000

1980 1985 1990 1995 2000 20050

10Co

0

2000

1980 1985 1990 1995 2000 20050

10Co

Increased Turbine Size - R&D Advances - Manufacturing Improvements

*Year 2000 dollars

Increased Turbine Size - R&D Advances - Manufacturing Improvements

*Year 2000 dollars

People Want Renewable Energy!People Want Renewable Energy!

9000095000

Total Installed Wind CapacityTotal Installed Wind Capacity

7000075000800008500090000

1. Germany: 21800 MW2. United States: 16842 MW

4500050000550006000065000

acity

(MW

) 3. Spain: 13915 MW4. India: 7720 MW5. China: 5000 MW

2000025000300003500040000

Cap

a 5. China: 5000 MW

World total Jan 2008: 90,521 MW

05000

1000015000

2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8 9 0 1 2 3 4 5 6 7 8

198219831984198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620072008

United States Europe Rest of WorldSource: WindPower Monthly

U.S. Leads World in Annual Wind U.S. Leads World in Annual Wind Capacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative CapacityCapacity Additions; Second in Cumulative Capacity

International Rankings of Wind Power Capacity

Cumulative Capacity(end of 2007, MW)

Germany 21 800

Incremental Capacity(2007, MW)

United States 5 144Germany 21,800United States 16,842

Spain 13,915

United States 5,144China 2,406Spain 2,300

India 7,720China 5,000

Denmark 3 132

India 1,450Germany 1,178France 1 155Denmark 3,132

France 2,624Rest of World 19,488

France 1,155Portugal 494

Rest of World 5,248Total 90,521

Data source: Windpower Monthly Windicator, January 2008

Total 19,375

U.S Lagging Other Countries for U.S Lagging Other Countries for Wind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity ConsumptionWind As a Percentage of Electricity Consumption

Installed Wind Capacities Installed Wind Capacities (‘99(‘99 –– Dec ’07*)Dec ’07*)( 99 ( 99 Dec 07 )Dec 07 )

*Preliminary data

Drivers for Wind PowerDrivers for Wind Power

D li i Wi d C t• Declining Wind Costs• Fuel Price Uncertainty• Federal and State• Federal and State

Policies• Economic Development• Public Support• Green Power• Energy Security• Carbon Risk

Comparative Generation CostsComparative Generation Costs5$

/MW

h5$

/MW

h20

0520

05

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Wind Cost of EnergyWind Cost of Energy

14

10

12

14

2006

$])

6

8

10

cons

tant

2

Low wind speed sites

New Coal

Natural Gas (fuel only)

2

4

6

E (¢

/kW

h [c

High windspeed sites 2006: New Wind

2007: New Wind

0

2

1990 1995 2000 2005 2010 2015 2020

CO

E

Depreciated Coal Depreciated Wind

Wind CostWind CostWind Cost Wind Cost DriversDrivers

Copper & Steel Price Source: World Bank, Commodity Price Data

Natural Gas Natural Gas –– Historic PricesHistoric Prices

16 16

12

14

ry H

ub)

12

14

ry H

ub)

Daily price history of 1st-nearbyNYMEX natural gas futures contract

8

10

MBt

u (H

enr

8

10

MBt

u (H

enrg

4

6

omin

al $

/M

4

6

omin

al $

/MNYMEXnatural gas futures strip

from 07/21/2006

0

2

990

991

992

993

994

995

996

997

998

999

000

001

002

003

004

005

006

007

008

009

010

011

N

0

2 Nfrom 07/21/2006

19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20

Source: LBNL

Historical Coal PricesHistorical Coal Prices

Source: EIA

COCO22 prices significantly prices significantly increase the cost of coalincrease the cost of coalincrease the cost of coalincrease the cost of coal

Levelized Cost of Electricity (2010) vs. CO2 Price140

120

130

140

Coal PC

100

110

$/M

Wh

Coal PCCoal IGCCCoal IGCC w/CCSGas CCN l

70

80

90

2006

$ NuclearWind Class 6Wind Class 4Wind Offshore Class 6

50

60

70

0 10 20 30 40 50

Carbon Price ($/ton CO2)Source: UCS/Black & Veatch

Major Market Distortion: External Costs Major Market Distortion: External Costs of Fossil Fuels not Reflected in Pricingof Fossil Fuels not Reflected in Pricing

(The PTCs are a bargain)(The PTCs are a bargain)(The PTCs are a bargain)(The PTCs are a bargain)

Nationally, Wind Has Been Competitive Nationally, Wind Has Been Competitive with Wholesale Power Prices in Recent Yearswith Wholesale Power Prices in Recent Years

In 2006, Wind Projects Built Since 1997 Were In 2006, Wind Projects Built Since 1997 Were Competitive with Wholesale Power Prices in Most RegionsCompetitive with Wholesale Power Prices in Most RegionsCompetitive with Wholesale Power Prices in Most RegionsCompetitive with Wholesale Power Prices in Most Regions

Renewables Portfolio StandardsRenewables Portfolio Standards

MN: 25% by 2025(Xcel: 30% by 2020)

ME: 30% by 200010% by 2017 - new REVT: RE meets load

growth by 2012*WA: 15% by 2020

CT: 23% by 2020

MA: 4% by 2009 +1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

RI: 16% by 2020

MT: 15% by 2015

g yWA: 15% by 2020 ☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)

ND: 10% by 2015

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020IA: 105 MW

CA: 20% by 2010

☼ *NV: 20% by 2015

☼ CO: 20% by 2020 (IOUs)*10% by 2020 (co-ops & large munis)

☼ NY: 24% by 2013

IL: 25% by 2025

☼ MD 9 5% i 2022MO: 11% by 2020

☼ AZ: 15% by 2025

☼ DC: 11% by 2022

☼ MD: 9.5% in 2022

*VA: 12% by 2022

☼ *DE: 20% by 2019

☼ NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

☼ NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops & munis)

State Goal

State RPS

Solar water

TX: 5,880 MW by 2015

HI: 20% by 2020

☼ Minimum solar or customer-sited RE requirement* Increased credit for solar or customer-sited RE

¹PA: 8% Tier I / 10% Tier II (includes non-renewables)

DSIRE: www.dsireusa.org January 2008

Solar water heating eligible

Public Benefit Funds for RenewablesPublic Benefit Funds for Renewables

Cumulative 1998 – 2017 (Million $)

$111

$95

$10

MA: $383VT: $36

$127

$85

$80

$22 $95

$20

RI: $10MA: $383

NJ: $279 DE: $11

CT: $338 $1,122

$

$2,048

DE: $11 DC: $10.5

d d b l ib i

15 State Funds + DC$4 B by 2017

Funded by Voluntary Contributions

www.dsireusa.orgJuly 2007

States with Green Power ProgramsStates with Green Power Programs

20

11 193

3

27

64 30

5

58

138

6

5

112

53

520

2

7

105

27

29

5

14

11 14

17

49 42

2 5

3

1

1

5 14

15

27

293 34 16

1

Green Power Products Available

Restructured Electricity Market

2

12

No Green Power Activity

Indicates Number of Green Power Products Offered by Utilities and CompaniesSource: National Renewable Energy Laboratory (October 2007)

#

Wind Energy InvestorsWind Energy Investors

Economic Development ImpactsEconomic Development Impacts

• Land Lease Payments: 2-3% of gross revenue $2500-4000/MW/year

• Local property tax revenue: ranges widely -Local property tax revenue: ranges widely $300K-1700K/yr per 100MW

• 100-200 jobs/100MW during construction

• 6-10 permanent O&M jobs per 100 MW

• Local construction and service industry: concrete towers usually done locallyconcrete, towers usually done locally

Windy Rural Areas Need Windy Rural Areas Need Economic DevelopmentEconomic DevelopmentEconomic DevelopmentEconomic Development

Case Study: Texas Case Study: Texas

Utilities and wind companies invested $1B in 2001 to buildinvested $1B in 2001 to build 912 MW of new wind power, resulting in:

• 2,500 quality jobs with a payroll of $75M

• $13.3M in tax revenues for schools and counties$2 5M i 2002 lt• $2.5M in 2002 royalty income to landowners

• Another 2,900 indirect jobs as a result of thejobs as a result of the multiplier effect

• $4.6M increase in Pecos County property tax y p p yrevenue in 2002

Case Study: MinnesotaCase Study: Minnesota

107-MW Minnesota wind projectproject

• $500,000/yr in lease payments to farmers

• $611,000 in property taxes in 2000 = 13% of total county taxesy

• 31 long-term local jobs and $909,000 in income from O&M (includes multiplierO&M (includes multiplier effect)

Case Study: IowaCase Study: Iowa

240-MW Iowa wind projectproject

• $640,000/yr in lease payments to farmers ($2 000/turbine/yr)($2,000/turbine/yr)

• $2M/yr in property taxes• $5.5M/yr in O&M income• 40 long-term O&M jobs• 40 long-term O&M jobs• 200 short-term

construction jobs• Doesn’t include multiplierDoesn t include multiplier

effect

Case Study: New MexicoCase Study: New Mexico

• 204-MW wind project built in 2003 in DeBaca and Quay counties for PNM

• 150 construction jobs• 12 permanent jobs and

$550,000/yr in salaries for operation and maintenance

• $550,000/year in lease payments to landowners

• $450,000/year in payments in $ , y p ylieu of taxes to county and school districts

• Over $40M in economic benefits for area over 25 years

Source: PNM, New Mexico Wind Energy Center Quick Facts, 2003.

Photo: PNM

Case Study: Hyde County, South DakotaCase Study: Hyde County, South Dakotay y yy y y

40-MW wind project in South Dakota creates $400,000 - $450,000/yr forcreates $400,000 $450,000/yr for Hyde County, including:

• More than $100,000/yr in annual lease payments to farmerslease payments to farmers ($3,000 - $4,000/turbine/yr)

• $250,000/yr in property taxes (25% of Highmore’s education(25% of Highmore s education budget)

• 75 -100 construction jobs for 6 monthso t s

• 5 permanent O&M jobs• Sales taxes up more than 40%• Doesn’t include multiplier effect• Doesn t include multiplier effect

Case Study: Prowers County, ColoradoCase Study: Prowers County, Colorado

• 162-MW Colorado Green Wind Farm (108 turbines)

• $200M+ investment

• 400 construction workers

• 14-20 full-time jobs14 20 full time jobs

• Land lease payments $3000-$6000 per turbine

• Prowers County 2002 assessed valueProwers County 2002 assessed value $94M; 2004 assessed value +33% (+$32M)

• Local district will receive 12 mil tax d ti

“Converting the wind into a much needed commodity while providing good jobs

reduction

• Piggyback model

Converting the wind into a much-needed commodity while providing good jobs, the Colorado Green Wind Farm is a boost to our local economy and tax base.”

John Stulp, county commissioner, Prowers County, Colorado

Colorado Colorado –– Economic Impacts Economic Impacts from 1000 MW of new wind developmentfrom 1000 MW of new wind development

Wind energy’s economic “ripple effect”

Direct Impacts Indirect & Induced Impacts

Totals (construction + 20yrs)

Payments to Landowners: • $2.7 Million/yrLocal Property Tax Revenue:• $11 Million/yrC t ti Ph

Construction Phase:• 1,250 new jobs• $130 M to local economiesOperational Phase:

Total economic benefit = $1.1 billion

New local jobs during construction = 2 650

p ( y )

Construction Phase:• 1,400 new jobs• $189 M to local economiesOperational Phase:• 200 new long-term jobs

Operational Phase:• 200 local jobs• $20 M/yr to local

economies

construction 2,650New local long-term jobs

= 400

200 new long term jobs• $21 M/yr to local economies

Construction Phase = 1-2 yearsOperational Phase = 20+ years

All jobs rounded to the nearest 50 jobs; All values greater than $10 million are rounded to the nearest million

Local Ownership ModelsLocal Ownership Models

• Minnesota farmer cooperative (Minwind)

• FLIP structure

• Farmer-owned small wind

F d i l l• Farmer-owned commercial-scale

© L. Kennedy

Environmental BenefitsEnvironmental Benefits

• No SOx or NOxNo SOx or NOx • No particulates

No mercury• No mercury• No CO2• No water

Sustainable Withdrawal Of Freshwater Sustainable Withdrawal Of Freshwater Is National IssueIs National IssueIs National IssueIs National Issue

Source: EPRI 2003

Source: NOAA

Source: NOAA

EnergyEnergy--Water NexusWater Nexus

Key Issues for Wind Power Key Issues for Wind Power

• Policy Uncertainty • Operational impacts:Policy Uncertainty• Siting and Permitting: avian,

noise, visual, federal land • Transmission: FERC rules

Operational impacts: intermittency, ancillary services, allocation of costs

• Accounting for non-monetary• Transmission: FERC rules, access, new lines

Accounting for non monetary value: green power, no fuel price risk, reduced emissions

Transmission GrowthTransmission Growth

Load GrowthLoad Growth

Electricity Generation and Consumption in the West

250

300

Total Consumption Coal fired

200

250

Wh

Coal-firedNatural-gas firedNuclear Hydroelectric

150

ons

of M

W Hydroelectric Non-hydro Renewables

100Mill

i

0

50

0

Arizona

Californi

a

Colorad

o

Idaho

Montan

a

Nevada

New Mexic

o

Oregon

Utah

Washing

ton

Wyoming

Source: EIA, 2005 data

Integrating Wind into Power SystemsIntegrating Wind into Power Systemsg g yg g y

“The future ain’t what it used to be.”- Yogi Berrag

A New VisionA New VisionFor Wind Energy in the U.S.For Wind Energy in the U.S.

State of the Union Address

For Wind Energy in the U.S.For Wind Energy in the U.S.

“…We will invest more in … revolutionary and…wind

technologies”

Advanced Energy Initiative“Areas with good wind resources have the potential to supply up to 20% of thepotential to supply up to 20% of the electricity consumption of the United States.”

20% Wind20% Wind--Electricity VisionElectricity Vision

Wind energy will provide 20% of U.S. electricity needs by 2030, securing America’s leadership in

reliable clean energy technology As anreliable, clean energy technology. As an inexhaustible and affordable domestic resource, wind strengthens our energy security, improveswind strengthens our energy security, improves the quality of the air we breathe, slows climate

change, and revitalizes rural communities.

140Onshore Offshore

120

/MW

h Class 6

Class 4

Class 7

Class 5

Class 6

Class 4

Class 7

Class 5

10% Available 10% Available TransmissionTransmission

80

100

Ener

gy, $

/

Class 3 Class 3

60

d C

ost o

f E

20

40

Leve

lized

- 200 400 600 800 1 0000

20

- 200 400 600 800 1,000Quantity Available, GW

2010 Costs w/ PTC, $1,600/MW-mile, w/o Integration costs 43

What does 20% Wind look like?What does 20% Wind look like?

500 18Cumulative Capacity (left scale)

350

400

450

acity

(GW

)

14

16

ty (G

W)

Cumulative Capacity (left scale)

Annual Capacity (right scale)

250

300

350

alle

d C

apa

8

10

12

ed C

apac

it

100

150

200

ulat

ive

Inst

a

4

6

8

nual

Inst

all

0

50

100

Cum

u

0

2

4

Ann

Source: AWEA 20% Vision

2000 2006 2012 2018 2024 2030

Colorado Colorado –– Economic Impacts Economic Impacts From the 20% Scenario From the 20% Scenario

2,507 MW new development2,507 MW new development

Wind energy’s economic “ripple effect”

Indirect & Induced Impacts

Totals (construction + 20yrs)

Direct Impacts

Construction Phase:• 3,100 new jobs• $325 M to local

economies

Total economic benefit = $2.9 B

New local jobs during construction = 6 600

p ( y )Payments to Landowners: • $7 Million/yrLocal Property Tax Revenue:• $30 Million/yrC t ti Ph economies

Operational Phase:• 500 local jobs• $50 M/yr to local

economies

construction 6,600New local long-term jobs

= 1,000

Construction Phase:• 3,500 new jobs• $475 M to local economiesOperational Phase:• 600 new long-term jobs600 new long term jobs• $55 M/yr to local economies

Construction Phase = 1-2 yearsOperational Phase = 20+ years

All jobs rounded to the nearest hundred jobs; Millions of dollars greater than 10 million are rounded to the nearest five million

47

20% Wind Vision Employment20% Wind Vision Employment

200,000

140 000

160,000

180,000

100,000

120,000

140,000

Jobs

OperationsConstructionManufacturing

60,000

80,000

J

-

20,000

40,000

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

49

Fuel Savings From WindFuel Savings From Wind

4.0E+10

4.5E+10

3.0E+10

3.5E+10

Gas Fuel Savings

C l F l S i

Electricity Sector Fuel Usage

1 5E+10

2.0E+10

2.5E+10

MM

Btu

Coal Fuel Savings

Gas Fuel Usage(20%wind)Coal Fuel Usage(20%wind)

5.0E+09

1.0E+10

1.5E+10

0.0E+00

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

2030

Reduction in National GasConsumption in 2030 (%)

Natural Gas Price Reduction in 2030 (2006$/MMBtu)

Present Value Benefits(billion 2006$)

Levelized Benefit of Wind ($/MWh)

11% 0.6 -1.1- 1.5 86 - 150 - 214 16.6 - 29 - 41.6

Cumulative Carbon SavingsCumulative Carbon Savings2500

1500

2000

1000MM

TCE

500

02000 2005 2010 2015 2020 2025 2030

CumulativeCumulativeCarbon Savings

(2007-2050, MMTCE)

Present Value Benefits(billion 2006$)

Levelized Benefit of Wind($/MWh-wind)

4,182 MMTCE $ 50 - $145 $ 9.7/MWh - $ 28.2/MWh

Electric Sector COElectric Sector CO22 EmissionsEmissions

Incremental Cost of 20% WindVision

Vision

$2 000

$2,500

$3,000

Wind O&M

Wind Capital

$1,000

$1,500

$2,000

Bill

ion

2006

$

p

Transmission

Fuel

Conventional O&M

Conventional Capital

$0

$500

20% Wind No Wind

$0.5/month$0.6/MWh$8.6/MWh$43 billionVisionScenario

Impact on AverageHousehold Customer

($/month)**

Average IncrementalLevelized Rate Impact

($/MWh-Total)*

Average IncrementalLevelized Cost of Wind

($/MWh-Wind)*

Present ValueDirect Costs

(billion 2006$)*

* 7% real discount rate is used, as per OMB guidance; the time period of analysis is 2007-2050, with WinDSmodeling used through 2030, and extrapolations used for 2030-2050.** Assumes 11,000 kWh/year average consumption

Results: Results: CostsCosts & Benefits& Benefits

Incremental direct cost to society $43 billionIncremental direct cost to society $43 billionReductions in emissions of greenhouse gasses and other atmospheric pollutants

825 M tons (2030)$98 billion$

Reductions in water consumption 8% total electric17% in 2030

Jobs created and other economic benefits

140,000 direct$450 billion total

Reductions in natural gas use and price pressure

11%$150 billion

N t B fit $205B W t iNet Benefits: $205B + Water savings

“With public sentiment nothing can fail;With public sentiment nothing can fail; without it, nothing can succeed.”

A Lincoln- A. Lincoln

ConclusionsConclusions

• 20% wind energy penetration is possible• 20% penetration is not going to happen under business20% penetration is not going to happen under business

as usual scenario• Policy choices will have a large impact on assessing the

timing and rate of achieving a 20% goaltiming and rate of achieving a 20% goal• Key Issues: market transformation, transmission, project

diversity, technology development, policy, public tacceptance

• 20% Vision report: February 2008

Source: AWEA 20% Vision

Humanity’s Top Ten Humanity’s Top Ten Problems for next 50 yearsProblems for next 50 yearsProblems for next 50 yearsProblems for next 50 years

1. Energy

2. Water

3. Food

4. Environment

5. Poverty

6. Terrorism & War

7 Disease7. Disease

8. Education

9 Democracy 2003: 6 3 Billion people9. Democracy

10.Population

2003: 6.3 Billion people

2050: 9-10 Billion peopleSource: Nobel laureate, Richard Smalley

Carpe VentemCarpe Ventem

www.windpoweringamerica.gov