photo: Todd Woody
CEDAR RAPIDS, Iowa – For the past four years, the global wind industry has grown at a Google-like 30% clip as wind farm developers and turbine makers met demand for the one renewable energy source that has become competitive with fossil fuels. In the United States alone, new wind capacity will have jumped 50% in 2008.
Now the credit crunch is taking its toll – at least when it comes to forecasts for the industry’s prospects in 2009. Over the past week, analysts and industry insiders have ratcheted back growth predictions due to uncertainty over whether developers will be able to secure financing for the ever-bigger wind farms on the drawing boards.
“There is little visibility into the project finance market over the next 18 months,” wrote HSBC analysts Robert Clover, Charanjit Singh and James Magness in a report issued last week. “Thus far, company management in the wind sector continues to say that it is not experiencing a slowdown in growth, although developers say that finance is more expensive than it was. We do not believe that the long-term growth story has been undermined, but expect a period of reduced growth.”
The HSBC analysts predict the industry won’t grow at all next year. Meanwhile, the American Wind Energy Association, a Washington, D.C., trade group, also expects a slowdown in 2009.
“Clearly the market’s perception of growth for the wind industry has declined dramatically, but against a backdrop of virtually no industry data points,” the HSBC analysts acknowledged.
Ah, there’s the rub. Aside from the fear of the future that threatens to paralyze just about every industry, absent a complete collapse of capitalism the wind industry would seem poised to continue its run, albeit at a slower pace. (The nascent Big Solar business, in contrast, finds itself in a more precarious situation.)
In the U.S., state mandates that require utilities to obtain a growing percentage of electricity from renewable sources will drive growth for years into the future. That’s the reason you’re seeing plans for gigawatt-sized wind farms like the 4-gigawatt one T. Boone Pickens is building in Texas. As analysts were souring on the industry’s prospects last week, oil giant BP’s (BP) wind subsidiary finalized a deal with California turbine maker Clipper Windpower to build a five-gigawatt project – the world’s largest, sorry T. Boone – in South Dakota. (Of course, that’s little comfort to investors who have seen wind stocks take big hits in recent weeks. Nor is it good news for two U.S. startups that have filed for IPOs – First Wind and Noble Environmental.)
The wind developers and turbine makers Green Wombat has talked to in recent weeks for an upcoming Fortune magazine story say the long-term impact of the financial crisis remains unknown at this point. A large pipeline of orders for windmills – Danish turbine king Vestas’ orders spiked 52% from the first quarter to the second, according to HSBC – suggests that growth will continue unless wind farm developers start canceling projects – something that hasn’t happened to date.
The wombat happened to be at Clipper’s Cedar Rapids, Iowa, turbine factory on Tuesday and put the question to Bob Gates, the Carpinteria, Calif.-based company’s vice president of operations. Clipper is only one of two U.S. turbine makers, the other being General Electric (GE). (GE acquired its turbine operations from a bankrupt Enron, which itself had bought the business in 1997 from Clipper’s founder.)
“I think growth will be flat next year and that may continue to 2010 and then go back up,” said Gates as workers assembed gigantic drive trains for Clipper’s 2.5-megawatt Liberty turbine. “You have to put in your order for some components a year in advance, so if demand drops in 2009 you’ll have fewer turbines to bring to market in 2010.”
If the government took half the money wasted in Iraq and the rest of the Middle East, and put it toward renewable energy like wind and solar; this country would be in a much better place.
We CANNOT drill our way out of this problem. We do not have the resources for the amount we consume. The switch to an alternative source for fuel from oil needs to start today.
This is basically the story of the week in the greentech/cleantech/VC world. I don’t think short term reductions are indictative of a faltering wind sector, but rather just the state and health of the overall global economy. I read Greentech Media and wsj environmnetal capital and nytime green inc blog to stay on top on all things greentech/cleantech-y. Does any one else have any favorites ?
Yeah, but wind power doesn’t make cars go (yet). We can’t windmill our way out of our fuel problems without technology that does not yet exist.
Unfortunately, even Picken’s plan isn’t all that good (although it’s the best out there) because wind power and natural gas fill different niches on the power grid. Wind is more suited to replacing coal than gas; and wind power, being intermittent, may even require more natural gas plants to step in during periods of light production.
Our energy woes are a tough nut to crack.
I agree with Chris…we cannot drill our way OUT of the problem. Really all it will do is buy us time in the future. Drilling rigs don’t appear overnight…let’s say that it takes about 5 years to get a rig up from scratch and pumping out oil (not saying that is the time frame…just imagine), it’ll take even more time on top of that for the oil to get to us in the form of gas. By that time, what would the situation with oil and alternate fuels be?
We can wish and assume that the majority of us would be using hydrogen or electric cars by then (hybrids still use gas), but the reality of it is we’re probably won’t be entirely there yet. I’m thinking we may be close, but it won’t be as wide spread as it needs to be.
If you skipped everything else, read this.
Now, if we get electric cars by then? GREAT! But…where does the electricity come from? From the wall socket of course, but where does that come from? The power stations. How do they generate their electricity? So far, it is mostly from fossil fuels. Sure we can’t put wind turbines on our cars(or well, it wouldn’t be that effective), but the power generated by wind can be routed through power plants and then into our electric car.
We need to do something and plan for the future…definitely. Drilling for more oil will not solve our issue. We need to develop new, alternate forms of energy. We need to build solar, wind, etc facilities. However, that takes awhile to do…drilling for oil will buy us time we may need.
The problem for wind is that the PTC is only renewed year to year, so if the a client can’t secure funding soon, it’s too late for the wind farm developers to start the project and finish before the end of FY09. Customers aren’t willing to take the risk of running into the next year.
We wouldn’t want to dismiss the baby steps. Hybrid-electric cars may not eliminate the use of gasoline, but do reduce it substantially. If we get a breakthrough in battery tech, we’ll be ready to proceed to adopt electric personal transport. Even if grid power continued to come from fossil fuels for a while, electrics are so much more efficient than internal combustion that electrics powered by coal-fired power plants are still much cleaner than gasoline engines.
All the chanting about drilling for more oil is based on speculation. We have enough proven reserves available for development to need our need for about a year, and it would take a decade or so to develop a meaningful fraction of that. Drilling’s not only not the answer, it’s not even a very useful exercise.
There are lots of potential conservation solutions we’re not paying enough attention to, as well. We could look at the economics of loading cars onto trains for long haul travel, for instance. Earth-exchange heat pumps are low-hanging fruit technologically, with short-term benefits in reduction of heat pollution and the number of jobs its adoption would create, and longer-term benefits in development of more-efficient means of installing the ground loops.
One thing our economic drama has clearly demonstrated is that, in the short term, we can conserve our way out of our energy crisis. In the long run, we have to adopt domestically-sourced ways of living, because, in addition to the energy issue, it’s pathetic that we can’t even clothe ourselves from domestic resources.
Please do a dose of reality here folks and consider what the cost per kwh of electricity generated by wind and solar is right now and then have a look at the prices and consumption on your own latest utility bill. If you do a little math and figure out the cost of substitution you might not like what you see for a few years. It makes the hit of $4 gas look small. Then there is a whole problem of modernization of the power grid which will take quite a while. We still need to be drilling all we can. That buys time to ramp up wind and solar energy to a cost point that people can afford to live in their own houses. We aren’t even close to that point yet.
Reality limits the benefits we can obtain from wind and solar plants. Wind plants have a capacity factor of about 30%. That means your windmill is only providing electricity about 8 hours of each 24 hour day. Solar plants only generate power during daylight. That means the capacity factor is well below 50%.
We have great need for base-loaded power plants–those that run 24/7, day or night, windy or not.
Nuclear plants are base-load plants with capacity factors over 90%. They are environmentally friendly and they produce power for less than 2 cents per kW-hr. Nuclear currently provides about 20% of U.S. electrical needs. Power from wind and solar is presently many times (~10x) more costly than from nuclear.
Yes, wind and solar can contribute to our power needs, but nuclear is where we should be putting most of our money.
I relate to Ken from Dallas comment, “One thing our economic drama has clearly demonstrated is that, in the short term, we can conserve our way out of our energy crisis. In the long run, we have to adopt domestically-sourced ways of living, because, in addition to the energy issue, it’s pathetic that we can’t even clothe ourselves from domestic resources.”
Relying on the brains of engineers and VC’s isn’t going to solve the energy problem (although I am an engineer and like the job security that comes with energy wasters). We as Americans currently use 25% of the worlds energy and only hold 5% of the worlds population. This FACT is utterly outrageous. We must learn how to personally conserve and be more efficient in our day to day life’s. This does take a taxing conscience effort at first but it then becomes habit and little energy is then required to maintain this lifestyle. This does not mean you need to go out and buy a Hybrid car or buy expensive “green” products but simple things like not taking a bag at grocery store or riding your bike to work.
Human beings might be going beyond its limits with Mother nature and one must respect the earth that we rely on. We dont want to upset her if she is on her cycle…
Tread the earth lightly.
I am exhausted by those who say we should consume less, like that’s going to happen. Give me a break. Yes we use 25 % of the world resources and yes we produce 25 % of the world’s output with only 5 % actually it’s 6 % of the world’s population.
Rather than being convinced, without regard for facts, that 6 % of the world can produce 25 % of it’s output, why not ask what it will take for the rest of the world to produce like the US does?? What might the world look like then, and what if everyone produced using CLEAN technology?? How well could people in India live?? China?? How about Africa??
I drive a Humvee, hoping to help with a early death to oil, because whatever is next must be cleaner, better and you only have to be able read to know that’s true. History is a wonderful subject, check it out sometime.