By Malinda Geisler, content specialist, AgMRC, Iowa State University,  malindag@iastate.edu.

Profile updated April 2009.


Overview
According to the U.S. Department of Energy, wind energy is the world’s fastest-growing energy technology. The United States currently has 25,369 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.
 
Globally, wind energy capacity grew by nearly 29 percent in 2008. World wind capacity totaled more than 120,000 megawatts in 2008, up from 94,112 in 2007. In 2008, the United States passed Germany to become the number one country in wind power installations. 

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 MidAmerican Energy (including PacifiCorp) and Puget Sound 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 2007 was 1.5 cents per kilowatt. More than 850 utilities, or about 25 percent of utilities nationally, now offer green pricing for renewable resources. At the end of 2007, utilities sold green power to more than 540,000 customers. Wind energy represented 55 percent of total green power sales.

On February 17, 2009, the American Recovery and Reinvestment Act of 2009 was signed by President Obama. The legislation includes a three-year extension of the production tax credit and a new program that allows renewable energy developers the option of forgoing the production tax credit and securing a grant from the U.S. Treasury in the amount of a 30 percent investment tax credit. 

For small wind systems, the recovery bill removed the $4,000 cap on the small wind investment tax credit. Small wind investors are now allowed to claim a 30 percent investment tax credit for qualified small wind energy property. 

The American Recovery and Reinvestment Act authorizes an additional $1.6 billion of new clean renewable energy bonds to be distributed to tribal governments, public power providers and electric cooperatives to finance facilities that generate electricity from renewable resources.

Supply
Wind energy capacity in the United States is 25,369 megawatts, according to December 2008 figures from the American Wind Energy Association. Utility-scale wind turbines are installed in 36 states. In 2008, 8,545 megawatts of wind energy capacity were installed, expanding the total U.S. capacity by 50 percent. The supply of wind energy totals 1.25 percent of the nation’s electricity. United States wind power generates enough electricity to power the equivalent to close to 7 million homes.

Minnesota and Iowa now produce more than 7 percent of their power needs from wind energy. Other top states generating their own electricity from wind were Colorado, North Dakota and New Mexico.
 
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 2007 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 – 21.5 percent; hydroelectrical – 6 percent; and petroleum – 1.6 percent. Other renewables accounted for 2.5 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 7 cents to 9 cents per kilowatt, wind-generated energy costs are competitive to other energy sources.
 
Coal-produced energy costs range from 4.8 to 5.5 cents per kilowatt. Electricity from nuclear power costs 12 to 15 cents per kilowatt. The cost of natural gas ranges from 5 to 7.5 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 tradeable 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 12/31/2008

States with most wind energy installed, by capacity (MW)
#1 Texas - 7,118MW
#2 Iowa - 2,791 MW
#3 California - 2,517 MW
#4 Minnesota - 1,754 MW
#5 Washington - 1,447 MW

Manufacturers' installed capacity, 2008 (MW sold), # of turbines
#1 GE Energy - 3,657 MW,  2,438 turbines
#2 Vestas - 1,120 MW,  569 turbines
#3 Siemens - 791 MW, 344 turbines
#4 Gamesa - 616 MW,  308 turbines
#5 Clipper  - 595 MW,  238 turbines

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.

Green Pricing, Energy Efficiency and Renewable Energy.

Green Power Marketing in the United States: A Status Report, Energy Efficiency and Renewable Energy, 2008.

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.

U.S. and China in Race to the Top of Global Wind Industry, Global Wind Energy Council, February 2, 2009.

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.