Wind energy leaders revealed how much the industry will rely on government incentives and standards to maintain its breakneck growth, during a May 6 press conference at Wind Power 2009.
Nearly all panelists agreed that a Renewable Energy Standard would provide the momentum to keep wind power humming.
“We need the renewable energy standard. It’s the essential element for growth,” said retired General Wesley Clark, who now is director of Emergya Wind Technologies BV.
When the wind energy portion of the economic stimulus runs out after 2010, some are predicting dire consequences for wind energy, Clark said, adding, “We need to keep incentives in place to allow big investors the time to make their investments. Large installations take time to put together.”
Michael Polsky, President and Chief Executive Officer of Invenergy, said state standards for renewable energy have been important to getting the wind industry off the ground, but national standards are necessary.
Because of the recession, he said his company will do only half the business in the U.S. in 2009 as it did in 2008.
“A lack of policy means a lack of markets,” Polsky said.
Similarly, Vestas Wind Systems A/S has been reluctant to make bigger investments in the U.S. because of fears about the long-term viability of industry growth, said Ditlev Engel, President and Chief Executive Officer of the firm.
Vic Abate, Vice President for Renewables for GE Energy, said his company saw just under $8 billion in revenues from renewables last year.
“We see tremendous opportunity. We have more than 15,000 jobs tied to the industry but we see significant changes coming,” Abate said. “While we have a backlog of orders for 2009 and 2010, we see the economy starting to drag down demand.”
Abate characterized the wind energy as being “at the end of its beginning,” meaning that it is getting ready to enter its next phase of growth.
Private equity is only recently becoming more interested in investing in wind energy, Clark said.
“But the banks and private equity funds want to know what happens after Dec. 31, 2010, when the stimulus funds run out. They are cognizant of the stop-and-start nature of government,” he said.
The higher cost of renewable energy, which can be four times the cost of some coal and nuclear options, makes a national renewable energy standard a very political issue, he said, adding, “We have to be aware that people will not want to pay more for electricity, and they will let their representatives know that.”
However, Engel noted, criticism about the cost of wind does not take into effect the future cost of water, which is predicted to dramatically decline in availability.
“Coal, natural gas and nuclear all rely on water to help make energy, and those costs are going to go up,” he said.
The fact that San Antonio signed a 15-year fixed wind energy contract makes a statement about the long-term viability of wind energy, said Declan Flanagan, CEO, E.On Climate & Renewables N.A. Inc., which is involved with the San Antonio contract.
“Only renewable energies can lock into such long-term fixed pricing contracts,” he said.
Adding wind power has some political benefits, said Don Furman, Senior Vice President, Development, Transmission and Policy for Iberdrola Renewables, and AWEA President. “One of the reason energy markets are so volatile is because we’re so dependent on imports, and many of those nations are not our friends,” he said.
Still, too much of the logistics materials for wind comes from overseas, he said. If more manufacturing can be added in the Midwest, where the best prospects for wind energy are located, it will lead to faster growth in wind energy generation.
Perhaps the interest in this year’s Wind Power convention is an indicator of the increasing emphasis that companies and governments are tying to the sector. More than 21,000 attendees are in Chicago for the May 4-7 conference, up from 13,000 attendees last year.