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Energy in the U.S. - Why Wind? Financing Wind Power: The Future of Energy Institute for Professional and Executive Development Santa Fe, N.M. July 25, 2007
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Overview Market Progress Market Drivers
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Market Progress – Installed Wind Capacity U.S.:1999 – 2,500 MW 2006 – 11, 605 MW 2,400 MW installed in 2006 3000 MW projected for 2007 Source: NREL
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Market Progress – Installed Wind Capacity Worldwide:1999 – 13,600 MW 2006 – 74, 225 MW 15, 200 MW installed in 2006 Source: Global Wind Energy Council
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Market Progress - $ 2006 Value of Global Wind Capacity additions: $23 Billion
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Market Progress – U.S. Projections Projections vary: - Many consider 45,000 MW of installed capacity by 2015 to be realistic - Other estimates project up to 100,000 MW by 2015 Dollar investment projected to range from $81 Billion to $180 Billion over that range
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Drivers for Growth of Wind Capacity Technology advances Cost competitiveness Fossil fuel cost increases Environmental issues/climate change Renewable Portfolio Standards (RPSs)
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Drivers for Growth of Wind Capacity - 2 Production tax credit Economic development Energy demand growth Energy Security
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Technology Advances Larger wind turbines developed and proven 1995: 500 kW 2007: 2.5 MW With larger turbines, greater efficiency - Improved materials - Improved gearboxes - Larger blades - Less overall land area needed to produce more MW
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Technology Advances - 2 Greater efficiency results in lower cost of generation 1990: average cost of 7.5 to 11 cents/kWh 2006: average cost of 4 to 6 cents/kWh for new capacity
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Cost Competitiveness Wind vs. other sources of generation ($/MWh) Coal25 – 45 Natural gas50 – 55 Oil100 Solar200 – 500 Wind40 – 70 (depending on wind resource)
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Cost Competitiveness Natural gas prices doubled from 2000 - 2005
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Environmental Considerations/Climate Change No emissions from wind Clean Air Act requirements tightly regulate emissions from fossil fuel-fired plants – S02, PM, NOx, Mercury Climate change policies are developing, focusing on carbon emissions – Cal., RGGI, Kyoto Protocol Wind uses no fossil fuel – therefore no impacts from fuel cycle No water intake or discharge – at the same time that CWA requirements are tightening for fossil plants
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RPSs RPS is a policy which either requires or encourages that utilities supply a stated percentage of their power from renewable resources
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States with RPSs Source: NREL
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RPSs Percentage goals vary from 4% to 30% with varying target years Many are mandatory; some are just aspirational National RPS is under consideration in Congress
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RPSs/Renewable Energy Credits RPSs stimulate the development of markets for RECs A REC is a credit equal to a unit of production of renewable energy (e.g., a MWh) RECS may be used to satisfy RPS requirements, instead of actual generation
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RPSs/Renewable Energy Credits - 2 RECs have economic value that can approach the avoided cost of generation Prices for RECS vary geographically, and there is not yet an active market in many areas - in some places, e.g., MA and CT, can be in the $40 – 50/MW range REC sales can provide a revenue stream to support wind energy projects
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Production Tax Credit Federal income tax credit for production of energy by wind and other renewable resources Currently 1.9 cents/kWh, for 10 years Provides significant economic support for wind energy projects Much more about PTC later Short term renewals have produced stop/start development cycles
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Economic Development Revenue source for host communities Revenue source for landowners, especially rural Spin-off local revenues from construction Construction jobs A few good local jobs during operation
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Energy Demand Growth Electric energy demand in the US continues to increase Most projections are for continued increase New generation is needed to meet increased demand - although wind is not a base load resource, it contributes to meeting load
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Energy Security Foreign oil Foreign policy Wind uses no oil
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Why Wind? Its the $, stupid
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