Wind Energy Profile

AgMRC, Iowa State University.  agmrc@iastate.edu


Profile updated May 2015.

Overview

According to the U.S. Department of Energy (DOE), wind energy is the world’s fastest-growing energy technology. The United States currently has 65,879 megawatts of wind-generating capacity. According to the American Wind Energy Association, by the end of 2014 America had over 48,000 utility-scale wind-turbines.

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. DOE, 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 (AWEA).
  
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 increased more than 16 times between 2000 and 2012. Wind installations in 2011 totaled 41,000 MW. Total world wind capacity was 282,000 MW in 2012.   

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.

At the end of 2010, utilities sold green power to an estimated 1.8 million electricity customers. In 2013 the price of wind energy hit an all-time low at 2.5 cents per kilowatt hour. Wind energy represented nearly 83 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 65,879 megawatts, according to 2014 figures from the AWEA. Utility-scale wind turbines are installed in 39 states. The supply of wind energy in 2013 totals 4.1 percent of the nation’s electricity, with up to 25 percent of energy coming from wind in certain states such as Iowa and South Dakota. United States wind power generates enough electricity to power the equivalent of more than 15.5 million homes.

The goal of the United States Department of Energy is to power at least 20 percent of the nation’s electricity with wind by 2030. 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 AWEA, 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 U.S. DOE 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 AWEA, 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 2011 data from the Energy Information Administration, 42 percent of the total net generation of U.S. electricity originates from coal. Natural gas-generated electricity accounts for 25 percent followed by nuclear-generated electricity at 19 percent of total electric production; hydroelectrical – 8 percent; and petroleum – 1.0 percent. Other renewables accounted for 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. Onshore wind energy has a levelized cost of energy ranging from 6 cents to 12 cents per kilowatt. The weighted average price of wind power, when factoring in the production tax credit, was 4.4 cents per kilowatt hour in 2009, a price that competes with fossil fuel-generated electricity.
  
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 $3,000 to $5,000 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

States with most wind energy installed, by capacity (MW), as of January 2012
#1 Texas - 10,394 MW
#2 Iowa - 4,322 MW
#3 California - 3,917 MW 
#4 Illinois - 2,742 MW
#5 Minnesota - 2,718 MW

Total turbine Installations by manufacturer, as of 2009
#1 GE Wind - 40.3 percent
#2 Vestas - 15 percent
#3 Siemens - 11.7 percent 
#4 Mitsubishi - 8.2 percent 
#5 Suzion - 7.1 percent 

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.

Global Wind Power Boom Continues Despite Economic Woes, Global Wind Energy Council, 2010.

Green Pricing, Energy Efficiency and Renewable Energy.

Green Power Marketing in the United States: A Status Report, Energy Efficiency and Renewable Energy, 2010.

Haman, William, Iowa Energy Center, 2004.

National Wind Coordinating Committee.

On-Farm Renewable Energ  Production Survey (2009), 2007 Census of Agriculture, National Ag Statistics Service, USDA.

Renewables in Electricity, Energy Information Administration, U.S. Department of Energy (DOE).

Small Wind Electric Systems, A U.S. Consumer’s Guide, Energy Efficiency and Renewable Energy, 2005.

What is Wind?, Energy Information Administration, U.S. DOE.

Wind, Energy Information Administration, U.S. DOE.
 

 Links checked August 2013.

Other Links

Marketing

  • Community Wind, Windustry - This site has tools and resources for use in developing a community wind project.
  • Database of State Incentives for Renewable Energy; Interstate Renewable Energy Council, North Carolina Solar Center and U.S. Department of Energy (DOE).
  • Federal Incentives/Policies for Renewables and Efficiency; Database of State Incentives for Renewables and Efficiency; Interstate Renewable Energy Council, North Carolina Solar Center and U.S. DOE - Provides an overview of the 30 percent federal tax credit for homeowners who install wind turbines.
  • Global Wind Energy, Global Wind Energy Council - This site provides global wind statistics.
  • Harvesting Clean Energy - This site provides resources for rural landowners in Washington, Oregon, Montana and Idaho.
  • Harvesting the Wind, University of North Dakota, 2003 - A landowners’ guide to wind energy development in the Great Plains.
  • International Wind Energy Marketplace - This commercial site provides information and marketplace information for wind systems.
  • Landowner Wind Associations, Rocky Mountain Farmers Union - This is a cooperative development model for large industrial energy development.
  • The Law of Wind: A Guide to Business and Legal Issues, Stoel Rives Wind Team, 2009.
  • National Wind Coordinating Committee - Publications, resources and technical assistance are available from this site.
  • On-Farm Renewable Energy Production Survey (2009), 2007 Census of Agriculture, National Ag Statistics Service, USDA, 2011 - This energy survey was the first on-farm renewable energy production survey conducted at the national level. The survey provides additional information on energy produced by wind turbines, solar panels and methane digesters that were in operation on farms in 2009. Detailed data includes the installation cost, percent of cost from outside funding, year installed and total amount of utility savings from the use of on-farm renewable energy production.
  • Renewable Energy. Wind Power’s Contribution to Electric Power Generation and Impact on Farms and Rural Communities, GAO Report, 2004.
  • Small Wind Electric Systems. A U.S. Consumer’s Guide, U.S. DOE - This 27-page guide provides wind energy information to help consumers decide if it will work for them.
  • Small Wind Makes a Comeback In Rural America, Market to Market, Iowa Public Television, 2009 - According to the American Wind Energy Association, the U.S. wind industry accounted for 42 percent of new electricity generation installed in 2008.
  • Small Wind Turbine Global Market Study 2007, American Wind Energy Association - This study looks at the growth and challenges facing wind-powered electric systems with 100 kilowatts or less.
  • State and Territory Energy Offices, National Association of State Energy Officials - This site links to individual state department of energy offices. 
  • Wind Assessment Study, Iowa Energy Center - This Center created an online wind assessment tool for Iowans to use to learn of potential electricity production at a given site and to determine the proper size of wind turbine.
  • Wind Energy Research and Development Businesses in the World - This commercial site has searches available for wind energy products by type, by location and by name.
  • Wind Energy Resource Atlas of the United States, U.S. DOE - This online atlas estimates wind energy for the United States.
  • Wind Program, Energy Efficiency and Renewable Energy, U.S. DOE - This site links to state wind maps and installed wind capacity.
  • Wind Farmers Network, Windustry's - This is a discussion forum for those interested in wind energy to share information and ideas about resources, economics, technology and project development.
  • Wind Powering America, Energy Efficiency and Renewable Energy, U.S. DOE - This site offers state wind maps and small wind consumer’s guides.
  • Wind Web Tutorial, American Wind Energy Association.
  • Wind Wisdom, Corn and Soybean Digest, 2012 - Five questions to ask before you sign a wind-energy lease.

Processing/Manufacturing

Businesses/Case Studies


Links checked August 2013.