Environmental Law

Wind Up, Wind Down, Wind Over There

By Dennis Pfaff and Kevin Livingston, Editors

A series of recent reports and business developments serves to illustrate both the promise and turbulent nature of the renewable energy industry in today's challenging economy.

First, for the promise. The American Wind Energy Association this week reported that the United States is on track to install about 7,500 megawatts worth of new turbines this year. That, according to a statement from the trade association, would be a record significantly surpassing 2007's installations of 5,249 MW.

The wind group also asserted that the industry "is also aggressively expanding its manufacturing base" in the nation even in what it called "a difficult financial climate." The association found eight new turbine component plants had been opened during the year and nine expanded, with announcements of an additional 19 facilities. The expansions mean that about half the components in the new turbines are domestically produced, the association said. 

But at the same time, there were some less-positive signs.

A Connecticut project developer sold out of both phases of a planned 159 MW wind project in Michigan, apparently in an effort to raise cash and reduce costs, according to a New Energy Finance report carried by Clean Edge News. Then, the Wall Street Journal's Environmental Capital blog noted a big plunge in stocks for the Spanish turbine maker Gamesa, despite a tripling of profits, apparently because the company also said it would temporarily halt production at some of its plants.

Then, the ongoing concern over transmission capacity again emerged, this time in a new report from the North American Electric Reliability Corporation, which oversees the reliability of the continent's bulk power system. The report found a slight increase in transmission lines since 2007 but predicted that additions to generation, such as from wind farms, would significantly outpace the development of new transmission facilities.

Even there, however, there were somewhat mixed signals.  There was a report from the Rocky Mountain News that Colorado's two biggest power suppliers have teamed up to spend hundreds of millions of dollars on new transmission lines, which the paper said could serve wind, solar or coal generation.

The reliability report report projected as much as a 750 percent growth in wind generation by 2017, driven by environmental regulation in the United States and Canada, particularly in such regions as the West, the mid-Atlantic states, the Midwest and Texas. In a statement accompanying the report, Rick Sergel, president of the NERC, said:

“We need more transmission resources to maintain reliability and achieve environmental goals. Transmission lines are the critical link between new generation and customers, yet we continue to see transmission development lag behind generation additions. Faster siting, permitting, and construction of transmission resources will be vital to keeping the lights on in the coming years.”  

The transmission issue, of course, has drawn attention from both state and federal officials, as Climate Law Update has reported. And some groups have raised objections to plans to try to streamline the process of stringing the new high-voltage lines.

The wind energy association's quarterly report also singled out Texas for particular attention, noting that it added the most capacity of any state in the period. The state's its wind generation placed among the ranks of world wind leaders, including Germany, India and Spain, according to the association.

Wind by any measure has had a remarkable year. Not long ago, the trade group celebrated a significant milestone in the development of the energy source, the passing of 20,000 MW of capacity in the United States. Wind also received a boost from Congress not long ago when it was included in the big economic bailout bill that extended renewable energy tax credits.

The association said that the new capacity installed just this year, if it meets projections, would be enough to power 2.2 million homes.

--Dennis Pfaff of Thelen LLP 

Photo: Texas wind ranch; courtesy of U.S. Department of Energy-National Renewable Energy Laboratory; credit D.A. Black  

Full post as published by Climate Law Update on October 23, 2008 (boomark / email).