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The answer is blowing in the wind.

Wind power is moving out of California into the rest of the country. Its economic and environmental benefits have caught the attention of legislators and public utility commissions.

No picture describes America's energy future better than a recent photograph taken in Oklahoma. It shows an old oil well--the "see-sawing" hammerhead type used to pump oil to the surface. Only this picture is different. Next to the oil well is a new wind turbine, and it's pumping the oil. (Even more symbolic of U.S. energy production is the much smaller quantity of oil pumped from that well than was produced a decade ago.) As it turns out, the Oklahoma Independent Petroleum Association has entered into an agreement with an Oklahoma wind turbine manufacturer, Bergey Windpower Company, to power its rural wells.

When most people think about wind power they picture a farm, with a clumsy, 30-foot high, metal windmill pumping water into a stock pond. American manufacturers built nearly 7 million of those between 1850 and 1950. Wind energy is great for pumping water. But today, wind energy means thousands of 140-foot wind turbine towers with 80-foot diameter blades on a "windfarm" controlled by people miles away in computer control rooms--where the power is dispatched over transmission lines to major metropolitan areas.

With a growing environmental awareness, new emphasis on statewide energy planning, the Clean Air Act Amendments of 1990 and debate over a national carbon-based tax--wind looks like a new energy resource. The U.S. wind industry has quietly spent a decade on analysis; and this now-proven, cost-effective technology is attracting the interest of legislatures, utilities and utility commissions.

Wind energy is on the agenda this session in Hawaii, Iowa, Idaho, Maine, Minnesota, Missouri, Montana, New York, Oregon, Vermont, Washington, Wisconsin and Wyoming.

Worldwide, installed wind power capacity is around 2,500 megawatts. By way of comparison, a typical nuclear plant has a rated capacity of 1,000 megawatts. A typical coal plant is rated at between 400 and 700 megawatts. Theoretically, wind power can provide more energy than is currently consumed annually in the United States.

The Pacific Northwest is poised to be the next leader in wind power. It needs new generating capacity, it has strong, reliable winds, an environmentally conscious population and receptive utilities, along with negative press about hydropower salmon kills. Four utilities plan to place almost 150 wind turbines in a 50-megawatt plant in Washington by 1996.

Although California produces 80 percent of the world's wind power, it is not a particularly windy state. In recent national surveys, California ranks 29th (per capita) among the lower 48 states in wind energy potential. Those same studies rank Washington 28th, Oregon 18th and Idaho 15th. Other areas of the country have even more potential. Researchers have described the plains states as a "Saudi Arabia" of wind energy. One site in Montana could provide as much electricity as five nuclear power plants; and one ridge in southwestern Minnesota is thought to have the potential to generate as much wind energy as California produces. The wind resources in North and South Dakota, Texas and Kansas alone, if completely developed, could provide more than half of the lower 48 states' electricity requirements. In fact, Texas alone could theoretically generate 36 percent more wind power electricity than is used in the entire continental United States. This potential led to recent wind power hearings by the Texas Public Utility Commission.

Even the most ardent supporters believe wind will not be a primary power source for large urban areas in the near future. Wind turbines cannot replace traditional fuel burning plants because of wind's intermittent nature and our inability to capture and store the energy. However, wind energy is a supplementary resource that can contribute to a stable, diverse utility system.

Subsidies help but are no longer necessary for wind to be competitive with other energy sources. For the most part, federal wind subsidies dried up in the mid-1980s, but the wind industry continued to grow. In fact, 53 percent of California's current wind-generating capacity was installed after the incentives were removed. (Between 1986 and 1989, wind developers did utilize federal tax credits as they were phased out--but they played a minor role.)

"The reason we saw continued wind power development is because, even without the federal tax credits, wind was shown to be a cost-effective energy option in California," says Ron Kessler, director of the U.S. Department of Energy Federal Wind Program.

"Wind power was competitive then, and it is now. It's difficult to compete with low-cost natural gas, but we are doing it," says Hap Boyd, director of regulatory affairs for California-based Kenetech, the parent company of the largest U.S. manufacturer of wind turbines, U.S. Windpower.

One percent of California power is produced by wind--enough electricity to meet the electrical needs of San Francisco residents. It takes a good-sized nuclear reactor or coal-fired power plant to produce as much.

California bankrolled most of the research and development of wind power. California's regulatory climate encourages such experimentation. In 1979 the California Public Utility Commission fined the state's largest utility for not addressing alternative energy sources and conservation in its plans to meet future energy demands. Four years later, the second largest utility also was fined for similar reasons.

What will happen in 1993? States are talking about providing technical assistance and developing model building codes for local governments. Legislatures are again looking at tax incentives for wind equipment. For example, Iowa legislators are looking at a bill that reduces, but does not do away with, the initial property taxes on wind turbines for the first five years.

In the past, states focused mainly on reducing or eliminating property taxes for wind equipment. In addition to the 15 percent federal tax credits offered in the early to mid-1980s, California provided a 25 percent state tax credit. Most of the financial incentives for wind energy were available to "nonutility" developers, which limited utility participation in the new technology.

Many states established loan programs for financing small wind systems in the early 1980s. State legislatures often exempted wind equipment from sales taxes and allowed income tax credits or deductions.

Proponents of wind power point to a number of advantages: Per unit of power, it creates more jobs than traditional energy resources; it is indigenous to the state, keeping energy dollars at home; it reduces reliance on foreign petroleum; it is essentially "free" (no worries about increases in fuel supply costs or the whims of a Middle Eastern oil cartel); it is reliable, its present technology is backed by a decade of actual operation; and its environmental benefits are numerous in the form of reduced sulfur dioxide and nitrogen oxide emissions.

In 1990 alone, California's windfarms offset the emission of more than 2.5 billion pounds of carbon dioxide and 15 million pounds of pollutants, such as sulfur oxides, nitrogen oxides and particulate matter. Some estimate the air quality benefits from wind energy are worth from 2 cents to 15 cents per kilowatt hour (kWh). (A kilowatt-hour is enough electricity to light 10 100-watt bulbs for an hour.)

One of the biggest benefits of wind power that goes unnoticed is that it doesn't use water, like so many other energy resources. Great quantities of water are needed to run coal, nuclear and hydroelectric plants.

"There are tremendous monetary benefits to states and municipalities that look to any kind of energy source that cuts down on the need for water, especially when it comes to water used for cooling," says Larry Morandi, NCSL's water expert.

Wind power is not without its detractors. In addition to the intermittent nature of wind, critics point to four primary areas: aesthetics, land use issues, bird-kills and noise pollution.

In the early 1980s, some citizens complained that wind turbines located close to each other and running in opposite directions were "visually distracting." Since then, public surveys have found that visual impacts are of less concern than issues such as safety, reliability, cost and dependence on foreign oil. In fact, the public prefers wind power plants over traditional coal and nuclear power plants.

Siting any power plant that requires new transmission lines can be difficult, especially with concern about electromagnetic fields. Despite the need for more land than is generally required for other energy sources, siting a windfarm is considered to be easier than siting a new nuclear or coal power plant.

Wind power proponents are quick to point out that grazing, farming, ranching and recreational land uses coexist with wind power plants. Cattle graze on the land among the 7,000 wind turbines in California's Altamont Pass. In Northern Europe, farmland is tilled to the base of each wind turbine tower, and 98 percent of a windfarm in Germany is used for potato farming.

The wind industry is spending millions of research dollars in an attempt to minimize bird-kills. Gathering new information on bird deaths, especially raptors, and ways to prevent them are top priorities for some in the wind industry in 1993. U.S. Windpower established a task force of the nation's leading avian experts to oversee a multiyear research project. One of its first priorities is to discover why some birds can maneuver around the turbines while others can't.

Poorly designed early turbines made a lot of noise. Some citizens complained that turbines would make a "humming" sound, but these problems have been corrected with new materials and technological advances. Most communities have local noise ordinances that wind turbines must meet.

Wind turbine engineers face plenty of challenges. To compete successfully with fossil-fuel power plants, wind turbines must be built inexpensively and to last. On top of a 100-foot tower, wind turbines are expected to run for 5,000 to 6,000 hours a year for more than 20 years with only minor maintenance. This is the mechanical equivalent of a car going 300,000 miles a year for decades with only simple maintenance.

Maintenance is no simple task with turbine blades located more than 100 feet in the air. Researchers discovered that insect debris building up on the blades impaired aerodynamic efficiency to the point that energy production typically dropped by 15 percent--for one turbine model, as much as 50 percent. Icing and salt air corrosion also change turbine performance. Many turbine blades are now regularly scrubbed, and turbines are designed to last at least 20 years.

Generally, most utility executives believe the advantages of wind power outweigh the disadvantages. However, the majority of utilities have not yet seriously considered wind power for large-scale commercial energy production. Utilities still need to be convinced that wind power is viable for them.

H.M. Sachs and F.G. Muller from the Center for Global Climate Change at the University of Maryland outline a few reasons why so few states purchased wind power in 1992. They point to "regulatory paralysis" with different agencies guiding utilities in different directions. California is a good example. The Energy Commission determines the need for capacity, the Utility Commission decides how to acquire it, the Air Quality Board and Air Quality Management Districts exert influence over the technologies chosen, and the Federal Energy Regulatory Commission governs interstate transmission access.

Sachs and Muller also discovered widespread misunderstanding about wind power's potential. They found that some utility staff members distrusted wind power because it is available only in small unit sizes and because the technology is new.

Sachs and Muller point out that utilities base their decisions to acquire resources from non-utility generators (such as wind-generated electricity) on "avoided cost" determinations. These decisions are strongly influenced by assumptions about the future cost of the proxy fuel, usually natural gas. Since natural gas prices declined and rose by as much as a factor of three in 1992, Sachs and Muller say natural gas is a bad proxy. A commodity where the price varies so much and so quickly is not a good basis for screening alternative future energy resources. And very rarely do regulatory proceedings include estimates about factors such as possible carbon taxes and new environmental regulations.

"The most important determinant for wind energy development over the next decade will probably be state regulatory decision making," says Randy Swisher, executive director of the American Wind Energy Association. It is no secret that most of the wind action in the coming year will take place in state PUCs. If more state PUCs start to require that utilities incorporate the external costs ("environmental externalities") of electricity production into their future power supply decisions, wind power will look more attractive when compared to conventional fuels.

Environmental externalities are impacts--both positive and negative--that are not generally reflected in the market price of electricity. For example, carbon dioxide is a negative externality associated with coal-produced electricity.

The Clean Air Act Amendments of 1990 (CAAA) offer utilities a major incentive to turn to wind power. Coal-burning utilities with sulfur dioxide emission limits and the need for new energy (capacity) can either buy more expensive cleaner coal, or buy "emission allowances" from utilities that are cleaner than the federal standards. The CAAA also allows utilities that purchase wind power plants or power from wind plants to earn extra allowances.

And, utilities do have experience with wind energy. The Public Utility Regulatory Policies Act of 1978 (PURPA) required utilities to connect small wind power facilities to their networks. It also required the utilities to purchase the power at the utility's avoided cost if a voluntary contract was not negotiated. Some PUCs require that a specified amount (300 megawatts, for example) of new electricity supply be provided by renewables.

When a state Public Utility Commission decides that additional electricity is needed, some PUCs also penalize traditional combustible fuel options (coal, for example) by a given numerical percentage (15 percent, for example) when compared to other potential new power sources. Therefore, when the PUC decides on which power source they will allow for the future, a new wind power plant starts at a 15 percent advantage when compared to a new coal power plant.

Utility operating and maintenance costs for wind turbines are relatively low--between 1.5 cents and 2 cents/kWh. U.S. Windpower says new turbine maintenance costs are expected to be closer to 1 cent. It costs twice as much to operate, maintain and fuel nuclear-powered plants; it costs three times as much to operate gas and oil-fired power plants. Today's wind turbines are available for operation more than 95 percent of the time, compared to 50 percent to 60 percent of the time in 1981. Generally, the most reliable existing utility resources operate only 70 percent to 80 percent of the time.

There are new wind power subsidies passed by Congress in the Energy Policy Act of 1992 (EPACT). Thanks to EPACT, utilities now have financial incentives to purchase wind power. Excluding external costs, electricity from traditional fossil fuels is produced in the United States at an average cost of around 6 cents per kilowatt hour. (For comparison purposes, an oil-fired power plant spends about 5 cents per kilowatt hour for the fuel alone, apart from the capital investment and operating and maintenance expenses.)

In good (windy) locations, wind-generated electricity ranges from 6 to 8 cents per kWh--down from more than 25 cents in 1981. Thanks to research and development efforts at the National Renewable Energy Laboratory (NREL) in Golden, Colo., and private sector help, wind generated electricity is projected by 1995 to be produced in 13 mph winds for around 5 cents per kWh.

EPACT provides a 1.5 cents per kilowatt hour tax credit to utilities that purchase wind-generated electricity supply. Utilities often choose future electricity sources through a bidding process where a half cent difference per kilowatt hour can win the contract--so 1.5 cents is a meaningful number.

"Since the 1.5 cents is for wind energy produced over 10 years, it is difficult to place a value on the incentive for an independent power transaction," says Kentech's Hap Boyd. "Since utilities have a guaranteed rate of return, they are better able to utilize the tax credit and should be able to realize the full benefit."

Some states have legislation in effect that complements the federal EPACT provisions. The Iowa Legislature passed a law in 1990 that requires utilities to purchase power at a "competitive rate" of at least 6 cents per kilowatt hour. If a utility wants to provide power in Iowa, it must pay at least 6 cents per kWh--which allows wind energy technologies to compete with low-cost natural gas and coal.

"The 6 cents figure is a competitive rate. It is not a subsidy. It is an 'Iowa Style' avoided-cost calculation," Representative David Osterberg points out. "It is the amount that a utility would have to pay for a new power resource anyway."

Iowa legislators and staff looked at what it would cost to build, operate and maintain a new, coal-fired power plant. They made calculations and it worked out to be 6 cents per kWh, excluding external (social) costs.

Whether or not state public utility commissions or legislatures require utilities to consider external costs when making decisions about energy sources, the wind industry is poised to provide a significant portion of state energy supplies for the future. The documented environmental and economic benefits provided by wind power are hard to ignore.

If wind can contribute 20 percent of the total U.S. electricity supply in 20 years, Randy Swisher will be ecstatic. Other wind proponents hope wind power equals or surpasses hydroelectric capacity--and provides around 10 percent of the national electricity supply by the year 2010. Even that amount will help states move toward energy independence. Something definitely is blowing in the wind.

George Burmeister and Eric Sikkema specialize in energy issues at NCSL. Burmeister serves on a national task force of utility experts that is looking at environmental costs and utility planning decisions. Legislators who want to tour a California windfarm preceding NCSL's 1993 Annual Meeting in San Diego in July should contact Burmeister at (303) 830-2200.

Facts or Fiction?

MYTH: Wind energy is unreliable.

FACT: Nationwide studies of wind resources reveal predictable patterns of wind speed and direction. The availability of new high-tech turbines to produce electricity exceeds 90 percent, compared to traditional fossil fuel power plants that operate only 70 percent to 80 percent of the time.

MYTH: Turbines only work at high wind speeds.

FACT: While wind speed averaging at least 15 miles per hour is considered best for power generation, engineers are working to produce a variable speed wind turbine that can produce cost-competitive electricity in 13 mph winds.

MYTH: Wind energy technology requires subsidies to be competitive.

FACT: Fifty-three percent of the wind turbines in California were installed after subsidies decreased in the mid-1980s.

MYTH: Wind energy requires too much land.

FACT: Wind projects in the United States and Europe coexist or share land space with ranches and farms. Large wind projects typically leave more than 95 percent of the available land for ranching and farming.

MYTH: Wind turbines are dangerous to migratory birds.

FACT: While this is cause for concern, studies show that the mortality rates of migratory birds have not been significantly affected. Scientists are currently developing mechanisms to divert birds away from turbines.

MYTH: Spinning turbines create a lot of noise.

FACT: Although earlier designs were much louder, new more efficient turbines are quieter and meet the requirements of local noise ordinances.

MYTH: U.S. research and development efforts for wind power are equal to European efforts.

FACT: European governments are putting $180 million into wind research in 1993 compared to the U.S. government's $25 million a year. Over the next five years in collaboration with utilities and the wind industry, the U.S. Department of Energy will put $65 million into a shared-cost project to develop new wind turbine systems.

MYTH: Only a few companies are involved in the wind power business.

FACT: While there is only one major U.S. wind turbine manufacturer (U.S. Windpower), there are a number of smaller, growing wind-project developers--more than two dozen in California. Private and institutional investors usually purchase the projects, and utilities purchase the electricity provided. The developers install and maintain the wind turbines.
COPYRIGHT 1993 National Conference of State Legislatures
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Copyright 1993, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:includes related article on windpower misconceptions and facts; wind power
Author:Sikkemma, Eric
Publication:State Legislatures
Article Type:Cover Story
Date:Apr 1, 1993
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