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 Around the world, the largest wind producing countries tend to be those not with the best wind resources, but rather with the longest and strongest history of wind power subsidies. Germany's system of feed-in tariffs, for example, requires utilities to buy renewable energy from independent power producers at a favorable rate. As a result, Germany has the largest installed wind capacity in the world, followed by Spain, the U.S., India, and Denmark. The chart to the right shows the degree to which major economies depend on wind power, and suggests that while still a small portion of total electricity supply, wind has the potential to be quite a large contributor to worldwide energy demand. One commonly cited statistic is that current installed wind capacity amounts to less than 0.1% of total potential wind capacity around the world-- so there remains a lot of room for growth.
[edit] Companies who stand to benefitTurbines 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,[2] 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 its 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. [edit] Companies who stand to loseNuclear 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). 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. [edit] Pros and Cons of wind energy  There are two clear advantages to wind energy for those looking to invest in new power capacity. The first is that it burns cleanly, and therefore is eligible for production tax credits as part of the electricity regulations targeting renewable energy and will benefit from any renewable energy purchasing requirements or carbon regime in the future. The second is that large-scale wind farms, even without subsidies, are cost competitive with fossil fuel powered plants, achieving cost parity with natural gas and coming close to competing with coal. The chart to the right shows the classic economies of scale that have been achieved as wind technology has improved, increased capacity has been installed, and costs have come down. Also, unlike coal, natural gas, or nuclear energy, wind energy has zero fuel costs.  Unlike its competitors, however, wind energy suffers from several unique problems. First, it is intermittent, based on when the wind is blowing, and therefore cannot be increased or decreased on demand. This problem is exacerbated by the difficulty of storing wind energy, though some inroads have been made on this front. Moreover, wind energy needs to be regulated to ensure that it does not "over-produce", i.e., providing more energy than the grid requires at a given point. Companies like Xcel Energy are utilizing massive battery storage units to save excess power generated by turbines for use when the winds die down. Second, wind is not omni-present. It is most common in windy areas along the coasts and high plains, and importantly, even in high wind areas, siting of wind turbines is crucial. Detailed and lengthy anemometer studies (essentially, poles with wind meters to measure directionality and wind speed) need to be undertaken prior to investing in wind projects, and even then, it is not 100% guaranteed that wind speeds will meet expectations. [edit] Economics of wind energyThe economics of wind energy are driven by a few key factors. (1) Cost of installation - With zero fuel costs, the economics of wind energy are similar to nuclear energy, in that the cost of installation represents the bulk of power generation costs. These costs include the turbine (typically, 70% of total installation costs), rotor, construction, and, critically, connection to the grid. Grid connections, in particular, can be very expensive, and therefore, wind farms typically are located relatively near a grid interconnection. Wind turbines do, however, have the lowest installation costs of any of the renewables, especially with large wind installations, which take advantage of economies of scale to reach lows of $800 per kilowatt installed[3]. Small wind farms and individual turbines can cost up to $3,500 per KW installed[4], which is a bit higher than the average geothermal plant, at $2500 per kilowatt installed[5], but still less expensive than the $8,000 per kilowatt installed[6] associated with photovoltaics. Wind farms also have the capacity to generate much more electricity than geothermal or solar installations. Wind rivals natural gas ($1200 - $1600 per kilowatt installed[7]) and is much less expensive than a coal plant that has all the emissions retrofittings ($2,200 - $3,700 per kilowatt installed[8]), though gas and coal plants generally take up much less land than wind farms with equivalent capacities. Modern wind technology has a generation cost of just $0.08 per kWh, near coal's $0.05 per kWh. If coal were to receive a $30 per ton carbon tax, however, or to implement carbon sequestration technology, its cost would rise to $0.08 per kWh, putting wind on par with the world's cheapest form of power.[9] (2) Utilization - After investing all that money in build-out, it is crucial that the wind turbine is actually turning as much as possible. On average, wind only produces for 35% of the day[10]. Therefore, both the utilization of the turbine (think of it as what percent of the time the turbine is spinning) and the wind speed are critical to the economics of wind power plants. For this reason, project developers must choose their sites carefully.  (3) Tax credits - Historically, wind energy has benefited from an investment tax credit, especially in California which saw a host of installations of wind turbines in the 1980's. Unfortunately, these turbines never need to actually generate power in order to receive the credit. The second round of tax subsidies for wind has focused on the Production Tax Credit (PTC), currently at 1.9 cents per kwh produced. This tax credit has been very beneficial for wind production, encouraging new investment and fulfillment of power production expectations. The chart to the right demonstrates the degree to which, at least historically, investment in wind energy has depended on tax credits. Wind energy, despite not requiring a raw material fuel source other than high and low pressure zones, has suffered from the same shortage of raw materials that has plagued natural gas, coal, nuclear, and solar power plants. In the case of wind, the shortage has centered around the availability of components to complete a wind installation, especially gearboxes and castings, which are highly engineered. Additional components required include rotor blades, a tower (on which to place the rotor), and a generator. For this reason, the wind industry has seen some vertical consolidation, for example, Suzlon's recent acquisitions of Hansen and REpower. (4) Government Support: Aside from a production tax credit on renewable energy sources (including wind), and the Renewable Portfolio Standards that have been adopted by 26 states, the U.S. government is coming out in vocal support of wind energy. On May 23rd, 2008, the U.S. Department of Energy released a report titled "20% Wind Energy by 2030" stating that, even with contemporary wind technology, it will be possible for the U.S. to generate 20% of its electricity through wind farms by the year 2030, a move which would reduce natural gas consumption by 11% and coal consumption by 18%. To this end, the industry, at its Windpower 2008 Conference, called for the U.S. government to extend its tax credits. China is planning on having 100 GW of wind energy installed by 2020.[11] Even oil maverick T. Boon Pickens is getting into wind, investing over $2 billion in a Texas wind farm in May, 2008.[12] (5) The Necessity to Upgrade Electric Utilities Grids: A 100-year-old grid paradigm in the U.S. means that a convoluted set of local and regional transmissions lines without a real interstate electricity transmission system makes transporting to market the wind energy produced in the more favorable regions of the country extremely difficult.[13] For this form of energy to be realize at its full capacity, in which wind-friendly regions produce large quantities of electricity to market around the country, the nation's aging electrical transmission infrastructure will require upgrades - both costly (the DOE has called for a $60 billion high-voltage transmission backbone[14]) and time-consuming.
[edit] Recent rise in capital costsInstalled wind capital costs in the US, after two decades of decline, have risen markedly since 2004 from their low point of about $1100 / kW, moderately affecting wind's competitiveness. Analysts at the Lawrence Berkeley National Lab have attributed this to a mixture of several factors:[1]
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Companies in the Wind Energy Industry (6)
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