by Malinda Geisler, content specialist, AgMRC, Iowa State University,
malindag@iastate.edu.
Profile updated April 2008.
Overview
According to the U.S. Department of Energy, wind energy is the world’s fastest-growing energy technology. The United States currently has 16,818 megawatts of wind generating capacity.
Wind energy has been used since the earliest recorded history to move ships, grind grain and pump water. During the late 19th century, windmills were commonly erected in the United States to pump water on farms and ranches. By 1900, small electric wind systems were developed to generate direct current. These systems were abandoned by the 1950s when the extension of the central power grid system, through the Rural Electrification Administration, provided an economic form of electricity. Interest in alternative energy sources reemerged during the oil shortages of the 1970s. Wind energy received more attention by the mid 1980s.
According to the U.S. Department of Energy, the terms wind energy or wind power, “describe the process by which the wind is used to generate mechanical power or electricity.” Kinetic energy from the wind is converted by wind turbines into mechanical power.
Wind energy is classified by wind speed. The cost-effectiveness of wind energy is determined by wind speed in addition to the value of the energy a turbine is producing.
Available wind power is a function of the cube of the wind speed. If all other factors are equal, a turbine located at a site with 5 meters per second (m/s) winds will produce nearly twice as much power as a turbine located where the wind blows at 4 m/s, according to data from the American Wind Energy Association.
Geographic location in the United States is a critical factor when considering wind energy. The top 10 states in wind resources are: North Dakota, Texas, Kansas, South Dakota, Montana, Nebraska, Wyoming, Oklahoma, Minnesota and Iowa. There is also growing interest in locating wind farms on offshore locations along coastal states.
At one time, the United States led the world in wind energy, producing 90 percent of the world’s wind-blown electricity. By 1996, that number had dropped to 30 percent. Wind-powered energy grew slowly in the United States during the 1990s due to electricity deregulation. Utility companies did not know how deregulation would affect new technologies or if the U.S. government would encourage investment into renewable energy projects.
World wind capacity totaled 94,112 megawatts in 2007, up from 74,223 in 2006. Germany, Spain and the United States lead the world in installed wind energy capacity.
Recent wind projects are being developed by private producers and by electric utility companies. One reason for the increased interest in wind power is because of the availability of federal tax credits and incentive payments.
In many states, electric utilities are required to produce a percentage of power from renewable energy resources, such as wind. Another benefit to utilities is being able to sell wind-generated electricity to customers at a premium because it is classified as clean or green power.
Wind turbines can be owned as stand-alone units or connected to a utility power grid. Stand-alone units are typically used for water pumping and for communications or to generate electricity for self use.
Utility companies are installing multiple wind turbines in groups to form wind plants or wind farms. The utilities use the wind-generated electricity to supply their customers. A growing number of utility companies are buying wind power or owning wind turbines such as Xcel Energy and Florida Power & Light (owner of FPL Energy).
Demand
Increasingly, utility companies throughout the United States and around the world give customers the choice of voluntarily paying a premium of 2 cents to 3 cents for wind-generated electricity. Green power is the term used for electricity supplied entirely or in part from renewable energy.
The median premium for green pricing in 2006 was between 1 cent and 2.5 cents per kilowatt. More than 600 utilities in 38 states now offer green pricing for renewable resources. At the end of 2006, utilities sold green power to more than 480,000 customers.
Another driver is a federal wind energy production tax credit. In 2002, President Bush signed into law a measure (Public Law No: 107-147) that extended the wind production tax credit of 1.8 cents per kilowatt (adjusted for inflation) for two years. The tax credit was for the first 10 years of a project that was online by Dec. 31, 2003. The tax credit expired on Dec. 31, 2003.
In October 2004, President Bush signed into law a tax bill that extended the federal tax credit for wind energy production (Public Law No: 108-311). The production tax credit provided a 1.8 cent-per-kilowatt-hour tax credit for electricity generated with wind turbines. In December 2006, President Bush signed into law an extension of the production tax credit that extends through 2008. The wind industry regards this tax credit as a critical factor in financing new wind power installations.
Supply
Wind energy capacity in the United States is 16,818 megawatts, according to December 2007 figures from the American Wind Energy Association. Utility-scale wind turbines are installed in 34 states. In 2007, 5,244 megawatts of wind energy capacity were installed, expanding the total U.S. capacity by 45 percent. The supply of wind energy totals 1 percent of the nation’s power. United States wind power generates enough electricity to power the equivlent of more than 4.5 million homes.
California produces more electricity from the wind than any other state followed by Texas, Iowa and Minnesota. About 1.5 percent of California’s electricity is produced by wind generators, which is about half as much electricity as is produced by one nuclear power plant. Based on current expansion, it is possible for wind turbines to produce five percent of California’s electricity in the next 15 years.
The U.S. Department of Energy’s goal is to power at least 5 percent of the nation’s electricity with wind by 2020. The north-south corridor of the United States--Minnesota, Iowa, Nebraska, Kansas and Texas--offers great potential for wind energy generation.
Disadvantages
Wind energy is highly capital-intensive for the equipment and plant construction. Costs can range from $3,000 to $80,000 for a small wind turbine depending on the location, application and service agreement. A large tower and utility-scale turbine can cost $1 million. Other negative aspects to wind energy include concern over the noise generated by the rotor blades, visual impacts of the towers on the landscape and bird deaths caused by the rotor.
Two other drawbacks to wind power: wind does not always blow when electricity is needed and wind power cannot be stored. The amount of electricity generated varies depending on the wind speed. According to the American Wind Energy Association, a typical wind turbine at a wind farm operates 60 to 80 percent of the time, usually at less than full capacity because the wind speed is not at optimum levels. Many times, optimum locations for producing wind energy are located in remote areas, away from electric power customers.
Another disadvantage to wind energy can be the machinery cost, depending on what type and size of turbine is installed. The technology requires a higher initial investment compared to fossil-fueled generators. The Department of Energy estimates that approximately 80 percent of the cost is the machinery; the rest of the cost is for site preparation and installation. Compared to a smaller model, a larger-sized wind turbine offers economies of scale and can generate electricity at lower costs.
Competitiveness
Wind is regarded as the fastest growing renewable energy technology in the world. Interest and investment in wind energy is increasing because production costs have decreased and because the technology to harness wind power has improved. Wind is now one of the most competitive sources of renewable energy.
Today’s new utility-scale wind projects are being built at a competitive rate approaching that of energy derived from fossil fuels. New wind projects in the United States in windy locations are generating electricity at less than 5 cents per kilowatt. In 2004, costs reached as low as 3 cents to 4.5 cents per kilowatt. In comparison, the cost of producing a utility-scale wind turbine was 30 cents per kilowatt in the early 1980s.
According to the American Wind Energy Association, if environmental costs were included in the costs of electricity generation, wind energy’s competitiveness would increase further because of its low environmental impacts. Wind energy produces no greenhouse gas emissions.
According to 2006 data from the Energy Information Administration, 49 percent of the total net generation of U.S. electricity originates from coal. Nuclear-generated electricity accounts for more than 19 percent of total electric production followed by natural gas – 20 percent; hydroelectrical – 7 percent; and petroleum – 1.6 percent. Other renewables accounted for 2.4 percent.
When comparing the life-cycle costs of wind generators to fossil-fueled systems, wind energy is more competitive because it requires no fuel and has minimal operating and maintenance expenses. Ranging from 3 cents to 5 cents per kilowatt, wind-generated energy costs are competitive to other energy sources.
Wind energy costs range from 3 to 6 cents per kilowatt hour. Coal-produced energy costs range from 4.8 to 5.5 cents per kilowatt. Electricity from nuclear power costs 11.1 to 14.5 cents per kilowatt. The cost of natural gas ranges from 3.9 to 4.4 cents.
Investment/Cost
The cost for a small turbine system ranges from $3,000 to $80,000 installed, depending on the size, application and service agreement. A large tower and utility-scale turbine can exceed $1 million. A general rule of thumb on costs is $1,000 per kilowatt for utility-scale turbines. Small, residential-scale turbines cost an estimated $2,500 to $3,000 per kilowatt. With proper installation and maintenance, a machine should last up to 25 years or longer.
Wind energy offers many benefits despite its higher cost. It is a renewable, clean energy that does not emit air pollutants or greenhouse gases. The wind is a free, domestic resource. Wind energy also benefits communities through economic development by creating jobs, tax revenues and land lease payments for rural areas.
Business Opportunities
Farmers, investors, schools, communities and utility companies own wind energy systems. A system can be stand-alone and create electricity for an individual farm. Under the Public Utilities Regulatory Policy Act of 1978, a wind system may be connected to an electrical grid and excess electricity may be sold to a local utility. Some states now permit net metering.
One way landowners are becoming involved in wind energy is by leasing their air rights to developers for the installation of wind farms. The amount of the lease varies by the location, developer and installation. Leases may last 20 to 30 years. A flat-rate lease pays a landowner a set amount per wind turbine per year. A variable-rate lease pays the landowner a smaller annual payment plus a portion of the revenues generated by the turbines. A landowner should consult with legal counsel before entering an air rights agreement.
Wind energy also has a green tag value. Unlike the green power option for energy customers, a green tag is a value assigned to wind. Green tags, also known as green certificates or renewable energy credits, are a saleable or tradable commodity representing the environmental benefits of renewable energy production. Green tags have a per kilowatt value that is separate from the energy being produced by a turbine. This value can be negotiated between the turbine owner and energy purchaser.
U.S. Wind Energy Development
As of 12/31/2007
States with most wind energy installed, by capacity (MW)
#1 Texas - 4,356 MW
#2 California - 2,439 MW
#3 Minnesota - 1,299 MW
#4 Iowa - 1,273 MW
#5 Washington - 1,163 MW
Largest wind farms operating in U.S. (MW)
# 1 House Hollow, Texas - 736 MW
# 2 Sweetwater, Texas - 585 MW
# 3 Peetz Table, Colorado - 401 MW
# 4 Capricorn Ridge, Texas - 364 MW
# 5 Buffalo Gap, Texas - 351 MW
Manufacturers' installed capacity, 2007 (MW sold):
#1 GE Energy - 2,340 MW
#2 Vestas - 953 MW
#3 Siemens - 863 MW
#4 Gamesa - 574 MW
#4 Mitsubishi - 128 MW
Source: American Wind Energy Association (AWEA).
Sources
American Wind Energy Association
Bird, Lori and Elizabeth Brown, Trends in Utility Green Pricing Programs (2005), National Renewable Energy Lab, 2006.
Database of State Incentives for Renewable Energy
Flowers, Larry, Wind Energy for Rural Economic Development, Rural Economic Development, 2005.
Green Pricing, Energy Efficiency and Renewable Energy.
Green Power Marketing in the United States: A Status Report, Energy Efficiency and Renewable Energy, 2007.
Haman, William, Iowa Energy Center, 2004.
National Wind Coordinating Committee
Renewables in Electricity, Energy Information Administration, U.S. Department of Energy.
Small Wind Electric Systems, A U.S. Consumer’s Guide, Energy Efficiency and Renewable Energy, 2005.
What are the factors in the cost of electricity from wind turbines?, American Wind Energy Association.
What is Wind?, Energy Information Administration, U.S. Department of Energy.
Wind, Energy Information Administration, U.S. Department of Energy.
Wind Energy Fact Sheets, American Wind Energy Association.