By Richard A Kessler
Friday, May 02 2014
Updated: Friday, May 02 2014
What is your assessment of US wind industry growth in 2014-15? In terms of new projects, quite promising and solid compared to 2013, when installations were very low. With the production tax credit [PTC] extension there will be some additional projects in 2016. Especially those in the most complex areas because of permitting activities, or others that may require expensive transmission infrastructure requiring more than a couple of years for completion.
What is driving wind-energy demand? Renewable portfolio standards (RPSs) in New England states, California, Colorado, Minnesota and some others. Secondly, because wind is so price-competitive, some utilities are buying well above what their state mandates require them to do. Those in Kansas and Oklahoma are great examples. Texas is booming because of the CREZ [competitive renewable energy zones] initiative to improve transmission system reliability by adding capacity into ERCOT [the local grid]. Now, the great Panhandle wind resource is being tapped to bring cheap power into the North Texas region.
Aren’t big electricity consumers and industrial clients in Texas also contracting for wind energy? Yes. This makes for a very interesting dynamic in that market, which is deregulated. They are directly entering long-term contracts with developers. We have seen Microsoft announce long-term contracts and also Google. I know there are other companies. They want sustainable energy but mainly electricity at a fixed price that’s affordable.
What are other positives going forward? The main positive is that we are a competitive energy source — there is no question — and clearly the PTC is an important element of that. The industry has proven its ability to adjust and move down the cost curve in a very demanding US market to compete face to face with other energy sources. It’s also positive that the industry is maturing.
What do you see as the main industry challenges? The biggest stem from our own successes. We are growing fast despite flat load growth. This is making many of our competitors concerned. That’s why we are seeing more attacks on the RPS in states. They know we are no longer a fly-by-night industry. We are more relevant, visible and important. Siting and getting projects permitted with all environmental approvals is becoming more challenging. Also, not every RPS is well-structured and encourages long-term off-take contracts. In the PJM Interconnection [grid on the central part of the East Coast], for example, utilities can comply with an RPS by buying or acquiring spot renewable-energy credits.
Three turbine makers dominate the US industry while some smaller suppliers have left. Does this market concentration concern a big developer such as EDPR? It is not just GE, Vestas and Siemens on the list of significant players. I would add Gamesa. We signed a 450MW agreement with them last year. It’s true that you don’t see as many companies as before in the market. This has not impeded us from securing very competitive prices for turbines in 2014-15.
The Republicans in November elections are looking to gain control of Congress by winning a Senate majority. Can the wind industry’s presence in some of the states influence elections there? Wind can be a factor, but not the factor in some of them. We’ll see if Republicans have learned the lesson of the last presidential election when Mitt Romney ran a campaign against wind in wind states like Iowa and Colorado [he lost both]. I don’t know if now they will be supportive but hopefully more neutral.
|Download the 2016 Media pack
Recharge is a must-read for anybody wanting to stay abreast of renewables and puts advertisers at the heart of current debate. Media pack 2016
NEWS FROM OTHER NHST SITES
To protect your subscription investment, we've instituted a security system to protect against the electronic redistribution of copyrighted Rechargenews content. Read more