wind energy’s claims attract careful analysis

Wind energy advocates ended 2005 with optimism and a sense of accomplishment. Installation of wind projects is at an all-time high and wind power in the generation mix could be one answer to out-of-control natural gas prices.

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“Wind power’s rapid growth provides what is potentially the quickest and best supply-side option to ease the natural gas shortage,” said American Wind Energy Association (AWEA) Executive Director Randall Swisher. AWEA said that by the end of 2005 wind power would reduce natural gas use for power generation by 4 to 5 percent.

“I will give AWEA credit for promoting the natural gas back-out point,” said Tom Hewson, a principal at Arlington, Va.-based Energy Ventures Analysis, Inc., an energy and environmental market analysis firm. “The problem is that they have likely overstated the claim that they will be lowering power sector natural gas demand by 5 percent.”

wind hopes to make a dent in high energy prices

According to AWEA’s third quarter 2005 market report, the U.S. wind energy industry was on target to install about 2,500 MW of new wind power in 2005, bringing the cumulative total of U.S. installed wind capacity to over 9,200 MW. This would “help lower skyrocketing home heating and electric bills by reducing the demand for natural gas.”

AWEA estimates that an installed capacity of 9,200 MW of wind power will save more than half a billion cubic feet of natural gas per day in 2006, alleviating a portion of the supply pressure that is now facing the natural gas industry and is driving prices upward. The association says that the U.S. currently burns about 13 Bcf/day for electricity generation, which means that by the end of 2005 wind power will be reducing natural gas use for power generation by 4 to 5 percent.

capacity factor may be too high

AWEA’s calculations assume that the average capacity factor for the U.S. wind power fleet is 32 percent and that most new wind power projects will achieve a capacity factor of 35 percent; and that, on average, 80 percent of wind generation ultimately replaces natural gas-fired electricity.

To Hewson, some of these assumptions are too aggressive. “What they are assuming is that all the plants they think will come on-line, do come on-line,” said Hewson. In his experience, that could be too optimistic. And the capacity factors could be too high. “We don’t get a 32 percent capacity factor. I wish we did,” said Hewson. “Right now, the industry is at closer to 28 percent.”

Achieving a 35 percent capacity factor with new wind projects could be even more difficult, said Hewson.

“It isn’t that turbine improvements haven’t been made, but it’s where you put the wind project that affects the capacity factors. You need high quality wind locations.” Taking all of that into account, the 5 percent claim is closer to 3 percent.

construction time is short

According to the association, every unit of electricity that is produced by a wind farm is one for which the country does not have to burn natural gas or other resources. And because prices at the margin are volatile and sensitive to supply and demand pressures, each unit of natural gas conserved by wind energy helps shave down costs even further in times of crunch.

AWEA also points to another benefit of wind power plants: that they can be permitted and built quickly, whereas the drilling of new natural gas fields and the construction of Liquefied Natural Gas terminals take longer.

“Where you put a wind farm controls how it will perform. We have cited them initially in some very good spots, but now we are putting them in places that may not be optimum,” said Hewson. “My concern is that we are going to be pushing into greater and greater marginal areas.”

Wind farms in 30 states now supply electricity to 2.5 million households. As the demand for electricity continues to increase, so will wind energy’s role as an important part of a balanced energy policy.

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