Wind Energy

TOP CONTRIBUTORS

Matt H

Isaac Middendorf

Avinash Gandhi

Wind is the ultimate renewable resource. Wind is caused by differences in temperature and air pressure (due to the sun's heating of the Earth's surface). Air tends to flow from areas of higher pressure to areas of lower pressure... hence, generating wind. Wind started off, however, as a pipe dream, a solution for remote communities (i.e., off-the-grid), with expensive electricity costs. However, wind technology has evolved over the past thirty years, most notably increasing in scale (and rotor blade size) and enabling the construction of large-scale wind farms capable of truly competing with commercial power plants; because of this, the global wind market has grown at such a rate that it was worth $51.4 billion in 2008.^[1]

As of 2007 installed wind capacity amounted to less than 0.1% of total potential wind capacity around the world, however there has been steady growth in 2008 and the first quarter of 2009 in countries such as the U.S..^[3] In 2008 the U.S. market for small wind turbines (turbines with capacity of 100 kilowatts or less) grew by 78%. Installed capacity grew by 17.3 MW, while worldwide 38.7 MW was installed. U.S. market for small wind turbines was $77 million of the $156 million global market and U.S. manufacturers sold about half of all small turbines installed worldwide in 2008.^[4] Growth in the U.S. was attributed to a 30% tax credit passed by Congress in the beginning of 2008.^[5]

Also, in 2008 over 8,500 MW of wind capacity was installed in the U.S., which increased the country's capacity by 50% to 25,300 MW. This was enough to pass Germany for the country with the most installed wind capacity. Estimates of the benefits of this capacity are that it will avoid 44 million tons of carbon emissions and generate enough electricity to power over 7 million homes. Wind projects installed by the end of the year generated over 1.25% of the nations energy in 2008.^[5]

In 2009 U.S. installed wind capacity grew by by 9,922 MW, which brought the total to over 35,000MW. It generates enough to power 9.7 million homes. In the beginning of 2010 there were three GW of new wind projects under construction.^[7] In 2008 global wind capacity was 94.2GW.^[6]

Companies who stand to benefit

Turbines are the generators that turn wind energy into electricity. Just five manufacturers hold 80% of the market for turbines, and recent demand for new windmills has led to price spikes and shortages on the market,^[8] benefiting Vestas, GE, Enercon (unlisted), Gamesa, and Suzlon Energy Limited. The story of Suzlon is particularly interesting, as the India-based company has risen from out of nowhere to become one of the world's largest turbine manufacturers, competing effectively against the likes of General Electric.

FPL Group (FPL) and Xcel Energy (XEL) are two of the largest operators of wind power plants in the U.S., and should see increased demand for services as the wind industry grows.

Siemens AG (SI), owner of one of the largest gearbox manufacturing concerns, Winergy, represents another interesting play. Gearbox manufacturers are the closest wind energy analogies to the exploration and production companies in the oil & gas industries. With limited supply of their services and skills and very high demand, gearbox manufacturers control a valuable resource.

Trinity Industries (TRN) makes towers used for windmills. The company has specialized trucks to transport and install the massive structures. They are also based in Texas, the leading US state in wind power development and home of T. Boone Pickens, a wealthy and vocal proponent of renewable energies such as wind power.

Zoltek Companies (ZOLT) produces carbon fiber a variety of applications, but is biggest growth area is for the blades that drive wind turbines. Its customers include companies such as Gamesa and Vestas, the latter which contributed 33% of Zoltek's revenues in FY2007.

In July of 2009 a large boost was given to companies in China when the country announced that it would bring its total wind capacity up to 100 GW by 2020. It is part of an effort to generate 3% of the country's total electricity from non-hydro renewable sources. On August 8, 2009 the country began construction of its first 10GW wind farm in Jiuquan. The National Energy Administration (NEA) has planned six additional 10GW wind farms in areas such as: Inner Mongolia, Gansu, Xinjiang, Hebei and Jiangsu. Huaneng Power International, Datang Interntional Power and six additional foreign firms are among the current developers.^[9]

Companies who stand to lose

Nuclear generators, such as Exelon (EXC), would stand to lose out to wind in some cases, as the nearest competitor for relatively clean energy with high installation costs and few fans among local residents who have to suffer through giant plants nearby (sky-high turbines can seem nearly as bad as a nuclear dome). Wind turbines can negatively impact surrounding land values. Turbines are very tall and obstruct views, which drives down property values and any potential tourism. In addition to the requirement of large amounts of land, turbines are susceptible to lightning strikes and the constant noise of turbines can be damaging for humans and animals.

Ironically, small-scale wind companies are losing out from the rise of wind energy, as they have seen a rising cost of raw materials and engineered parts. This has been a problem for Vestas in particular, which originally pioneered the small-scale wind industry, but has moved to larger turbines and scuppered its beloved smaller turbines in order to service the commercial wind farm market.

Yours is a cvleer way of thinking about it.

Good to see real expertise on display. Your corntuibtion is most welcome.

References

1. ↑ SeekingAlpha: "Solar, Wind and Biofuels' Impressive Growth Surge in '08"
2. ↑ AWEA 2009 Year End Report, awea.org, January 2010
3. ↑ Annual Report on U.S. Wind Power 2007
4. ↑ American Wind Energy Association, AWEA REPORTS 78% GROWTH IN 2008 FOR U.S. SMALL WIND MARKET
5. ↑ ^{5.0 5.1} AWEA Annual Wind Industry Report 2008 Pg. 2
6. ↑ ^{6.0 6.1} AWEA, Wind Energy Fast Facts, accessed October 14, 2009
7. ↑ Addison, John, "U.S. Wind Energy Breaks Record in 2009: Can Wind Power Continue to Grow?," February 3, 2010
8. ↑ The Wall Street Journal "Alternative Energy Hurt by a Windmill Shortage", July 9th, 2007
9. ↑ Reuters.com, "China starts building first 10-GW mega wind farm," August 8, 2009