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Headwinds: Turbine Makers, like Solar Manufacturers, Could Be in for a Shakeout

Energy guru Daniel Yergin tells a nice story in his latest book about how a Danish farm equipment manufacturer, Vestas, took advantage of California subsidies in the late 1980s to initiate a world revolution in wind generation.

Today, however, the pioneering wind companies like Vestas are running into the same headwinds makers of photovoltaic panels have encountered--the prospect of declining European and North American subsidies, combined with growing competition from low-cost Chinese manufacturers. Wind is much closer than solar to being commercially competitive, and so the situation is not quite as dire. But wind also, by the same token, has achieved higher penetration, which means that the best on-land sites are getting exhausted even as the ability of grids to keep absorbing more intermittent energy is increasingly challenged.

On Monday this week, Vestas shares fell one fifth, after the company issued a third-quarter earnings warning. Share values already had declined 50 percent from this year's high, largely because of reported delays in turbine projects and a German turbine factory.

Smelling blood, critics of high subsidies for renewable energy are going after wind. On Oct. 11, the Manhattan Institute--a neoliberal think tank in (you guessed it) Manhattan--issued a short article highly critical of wind's costliness and alleged climate benefits.

Though the Manhattan Institute often produces well-researched and strongly conceived reports that interest even people of sharply different ideological persuasions, its report on "the high cost of wind energy as a carbon-dioxide reduction method" is not one of its better efforts.

Author Robert Bryce asserts that getting 20 percent of U.S. energy from wind by 2030--a commonly stated goal--would cost $850 billion, yield greenhouse gas reductions equivalent to only 2 percent of projected global emissions, and consume 72,000 square miles of land.

Let's start with the least significant of those assertions, about land. It's often said that wind turbines consume a lot of land, but go bicycling in Denmark's countryside, and you see turbines everywhere right in the middle of plowed fields. The same is true in the North German plains.

So my counter-assertion is this: Wind turbines can consume a lot of land where land is cheap or worthless, say in parts of Texas, which happens to be Bryce's home state. But where land is immensely valuable--say in Germany's Mark Brandenburg, one of the world's great breadbaskets, or in Iowa-Illinois, another--turbines need consume virtually no land.

Regarding costs, Bryce bases his calculations on a historic cost for installed wind of $1.70/W and a projected cost of $2.43/W. Those postulated costs, specified in the text and in a footnote but nowhere justified, may be dubious. Seven years ago, Yergin's Cambridge Energy Research Associates estimated the cost of installed wind at slightly less than $1/W, based on historical data to date at that time.

Could average wind costs be higher now than seven years ago, and does it make sense to predict that they'll be still higher a decade from now? Actually, contrary to what Matthew Wald of the New York Times has said in response to Bryce's article, costs may indeed be trending higher. Even a decade ago most of the best wind sites in Germany had been occupied, forcing the country to move to more expensive sites offshore.  British wind developers are having to go offshore too because of intense local opposition to land-based wind farms.

The more important point, as I see it, concerns Bryce's claims about benefits. Here, simply put, he's putting his calculations in the wrong frame of reference: It makes little sense to consider reductions in U.S. emissions as a fraction of total world emissions. The United States is not morally required to solve the whole world's climate problem, and of course it is not in a position to do so. All it's required to do is address its part of the problem.

Simply put, if current coal generation were reduced from 45 percent of total U.S. generation today to 25 percent and wind generation were increased from 2 percent now to 22 percent a decade from now, the effect would be to cut U.S. greenhouse gas emissions by nearly a sixth--a big gain. (That because coal accounts for about a third of U.S. greenhouse gas emissions.)

Bryce complains that the cost of accomplishing that cut would be equivalent to a carbon tax of $45-54 per ton, about twice as high as a tax Australia will introduce next year or the current cost of carbon emission permits in the European Trading System. But everybody seriously concerned about climate change and greenhouse gas reduction knows that the ETS price is still far too low to induce desired changes in energy investment. Bryce's projected cost only seems too high to him because he understating the gravity of the global problem and overstating what the United States needs to do to address it.

Bryce calculates that the cost of obtaining 20 percent of U.S. electricity from wind by 2030 would be would be an increase in electricity prices of 48 percent in coal-dependent states. That's a high price for the states that generate most of their electricity from coal, to be sure--and I do not dispute it--but if the tax is made revenue-neutral and proceeds are fed back to those most severely affected by it, then it would be manageable.

Such a system is sometimes called a "sky tax" or "sky trust" and has been proposed by people like entrepreneur Peter Barnes and University of Massachusetts economist James K. Boyce. Revenue from a sky tax could stimulate economic development in historically coal-dependent areas and help such areas adopt 21st century technologies.

The tendency of U.S. policy in the Obama years has in fact been in that direction, but the administration has yet to fully embrace the idea of using proceeds from auctioned emissions credits or a carbon tax to catalyze desirable economic development and reduce social inequalities. Republicans and independents who once seemed interested in cap-and-trade systems--Lindsay Graham, John McCain, Joseph Lieberman--have all jumped ship.

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Belgium Joins Countries Opting Out of Nuclear Power

Belgium's political parties reached an agreement earlier this week that will close down the country's two nuclear power plants. The plants, with seven reactors in total, provide more than half of the small country's electricity, according to the International Energy Agency.

Belgium, home to about 11 million people, aims to be totally rid of nuclear power by 2025. According to a report from Reuters, though, the nuclear phase-out is dependent on finding a reasonable source of power as a replacement. This is far from guaranteed; natural gas and coal, along with some renewables, provide the remainder of Belgium's power. According to a European Wind Energy Association report from earlier this year, the country will more than quadruple its wind power installations by 2020, but this will still only provide 10 percent of the total power needs.

This is just the latest policy effect of the shockwaves that continue to emanate from Fukushima, though Belgium had actually planned a nuclear exit long before the Japan earthquake. A law passed in 2003 set the stage, though in 2009 the country agreed to extend the reactors' lifetime for 10 extra years. Now the shutdown will be re-accelerated, again with the caveat of finding new sources. They join others, most notably Germany, that are trying to phase nuclear out of their energy portfolio.

As our Peter Fairley reported for Spectrum's special issue on Fukushima and its effects, Germany plans to shutter its reactors, which provide 28 percent of its power, by 2022. This will raise some tough questions, just as it will in Belgium. And perhaps more relevant to Belgium's situation, Switzerland, another small country getting a big chunk of electricity (39 percent) from nuclear, announced plans in May that it will shutter its five reactors by 2034. As these deadlines approach, each country will undoubtedly make some difficult choices on how to replace nuclear as a power source.

(Image of Tihange Nuclear Power Station via Geoffrey Gilson)

 

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Desertec Taps Morocco For First Piece of Sahara Solar Development

We've covered Desertec's Sahara solar ambitions in this space before, so it is with some excitement that we note the announcement of the group's first major project, a 500-megawatt solar thermal plant to be built beginning next year in Morocco.

The specific site is yet to be announced, but the solar plant is meant to be just the first in a series of massive installations around North Africa and the Middle East. As the Guardian reported, the Desertec Industrial Initiative's chief executive Paul van Son called the Moroccan solar plant a "reference project," allowing investors and observers to see that the concept can work. There are still, of course, a number of questions surrounding an overall vision involving 470,000 MW of power, but the fact that Desertec seems poised to move from the abstract to the concrete is a welcome development.

And others are starting to notice the massive energy resource hitting the deserts of North Africa every day as well. Earlier this summer Nur Energie announced an agreement with Italian transmission network operator Terna that will send a high-voltage undersea cable across the Mediterranean from Tunisia. This sets the table for development of solar plants in the Tunisian desert; the agreement will allow up to 2,000 MW to be connected into the Italian grid. Elsewhere, Spectrum's Eliza Strickland reported last month on a Japanese-backed initiative called the Sahara Solar Breeder Project, where sand becomes silicon becomes solar panels and sends energy around the region and to Europe.

Of course, the Arab Spring upheaval in the region has called many energy-related issues into question, from oil access to renewables. But there are signs in some places that the result will be positive; Tunisia's transitional government said they will spend $2 billion renewable development, and according to some experts it seems that the progress toward reform across the region will at worst not stop renewable energy's progress, and at best will speed it along.

(Image of Moroccan desert via Joao Almeida)

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Beacon Power Hits a Speed Bump with Bankruptcy Filing

Flywheel energy storage developer Beacon Power filed for bankruptcy last weekend, prompting immediate comparisons to infamously failed solar manufacturer Solyndra. But while both firms used millions of dollars in federal loan guarantees to expand their businesses, Beacon Power -- which Spectrum profiled this summer -- has working assets and a good shot at restructuring and carrying on.

No doubt Beacon Power has its work cut out for it. In a statement issued yesterday, Beacon Power CEO Bill Capp says the firm is suddenly unable to cover its obligations because of "severely restricted access to additional investments through the equity markets," which Capp blamed on several factors including the "current uncertain economic and political climate" and the automatic delisting of its low-priced stock from NASDAQ last month.

But Capp calls the comparison to Solyndra unfounded. For one thing, he notes that Beacon's 20-megawatt power grid regulation facility in Stephentown, NY continues operating at full capacity and generating revenue -- it's 200 flywheels continuously accelerating and decelerating to balance electrical supply and demand and thus keep New York state's grid tuned to 60 hertz. In contrast Solyndra's bankruptcy shut its doors immediately. Beacon's employees accepted a 20 percent pay cut to remain on the job, adds Capp, whereas Solyndra immediately shed more than a thousand workers.

Observers appear to be sympathetic to Capp's arguments. CNET greentech writer Martin LaMonica notes in his coverage of the Beacon filing that market conditions are improving for Beacon and other innovative firms that have improved the provision of grid regulation:

"Earlier this month, the Federal Regulatory Energy Commission (FERC) changed the regulations in a way that would significantly benefit Beacon Power financially because its technology can ramp up power very rapidly compared to gas plants. Instead of being compensated only for power, storage providers will also get value for the speed with which power is provided."

LaMonica cites reporting by Bloomberg in mid-October which identified FERC's ruling as a potential "lifeline" for Beacon.

Whether Beacon Power makes it or not, one thing seems certain: this scrappy firm has proven that energy storage is a far smarter way to keep power grids in tune than ramping giant fossil-fueled power plants up and down.

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Renewable-Specific Transmission Projects Gain Steam

It isn't intermittency or storage that really presents the biggest stumbling block for wind power scale-up. it's transmission. Huge wind farms in the middle of the plains sound great, but if there isn't a network of high-voltage lines to bring the power toward load centers -- cities -- then those farms don't get built. There is a growing move to build up these transmission networks, though, by companies and projects with specific goals of getting renewable energy on the grid as quickly as possible.

Clean Line Energy recently announced approval to conduct business as a utility in Oklahoma; this will allow the company to start work on some major transmission lines. According to a press release:

"This approval marks a major milestone in Plains & Eastern Clean Line’s efforts to connect 7,000 megawatts of clean energy generation from western Oklahoma, southwest Kansas, and the Texas Panhandle to Tennessee Valley Authority (TVA), Arkansas, and other southeastern markets."

Clean Line has several projects, but the Plains & Eastern version will eventually deliver power to 2.1 million homes. They hope to have the entire line up and running by 2017. Further north, ITC Holdings has long been in development for the Green Power Express, a transmission network designed to move 12,000 MW of renewable power around; it has since been incorporated into a larger network of transmission plans.

Some projects like this are already up and running. In 2010 Southern California Edison completed three segments of the Tehachapi Renewable Transmission Project to bring renewable power toward the Los Angeles area. And more generally, a report from Edison Electric Institute in 2009 outlined more than $21 billion in investments by utilities and regional transmission operators to build out renewable energy transmission networks.

These projects -- and their cousins, like the Google-backed offshore "backbone," the Atlantic Wind Connection, that is in development -- are going to be key if renewable energy buildout is to continue, and  speed up as needed.

(Image via Thomas Kohler)

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The Non-Story in Carbon Capture

More decades ago than I'd care to admit found me working at the same organization and more or less on the same plain with Bill Keller, who has just stepped down as executive editor of The New York Times. He left the organization we both worked for, Congressional Quarterly,  to join the DC bureau of the Times; soon he would be  promoted rapidly to its Moscow bureau, then South Africa, foreign editor, and top editor, winning a Pulitzer along the way. I suppose he did a lot of impressive work through those years, but when all is said and done what still impresses me most is a lead he wrote to a story right after joining the DC bureau.

It was a story about an obscure member of Congress and his position on some transient legislative issue, and the lead went more or less like this: "Call up Congressman X and ask him about Y, and he'll blab on and on for hours, not letting you get a word in edgewise. Call up the congressman and ask him about Z and he'll say, 'Oh, sorry. I have another call coming in that I have to take. Can I talk to you later?' " The implicit message for a journalist was that you sometimes can learn more from what happens when you try to talk with somebody about something than from what the person actually says.

This comes to mind now because I'm just back from a vacation in Germany, Poland, and Prague, a trip that seemed at first like a golden opportunity to revisit the issue of carbon capture and storage. Five years ago, on a somewhat similar occasion, I contacted the Swedish utility Vattenfall and expressed interest in visiting a pilot carbon capture plant it was about to build in southeastern Germany, A senior public relations person with the company immediately got back to me, met me in Berlin, and had us driven in a company car to the site, several hours away.

This time, when I contacted the same person again and expressed interest in revisiting the plant, which is now up and running, to get a technical briefing on the results of the experiment, the answer was in effect: "Oh, sorry. I've got another call coming in that I have to take. Can I get back to you?" Though I persisted up to the time of my departure, pointing out in a followup message that I would be driving right by the plant while going from Berlin to Cracow, the answer was the same--a non-answer.

It's been reported that Vattenfall has had more trouble than expected overcoming public opposition to the storage of carbon captured at the Schwarze Pumpe plant. Other experimental plants also have run into difficulties; recently proposed plants have been cancelled in Scotland and Denmark. It seems safe to say, given Vattenfall's lack of interest in discussing Schwarze Pumpe in any detail today, that the plant also has not been a shining technical success. If it were showing that the oxyfuel approach is superior economically to competing approaches, surely Vattenfall would want to broadcast that success.

Coal-burning utilities still are holding out the prospect of "clean coal," but even as that prospect is becoming more remote, the world is burning more dirty coal than ever. As Fred Pearce pointed out in a recent article, it's the reason why global greenhouse gas emissions increased by a somewhat higher percentage than energy consumption last year: Worldwide, coal accounts for a larger fraction of energy generation than ever, and in countries like Germany that situation is going to get worse before it gets better.

Vattenfall's reluctance to talk in technical detail about carbon capture and storage (CC&S) is all the more regrettable because the U.S. Department of Energy decided last year to bet on the technology being tested at Schwarze Pumpe, called oxycombustion or oxyfueling. In oxycombustion, coal is burned in an almost pure oxygen atmosphere, so that emissions contain virtually no NOx, which makes it easier to separate and store the carbon initially contained in the coal. DOE's decision was a surprise because up to then IGCC (integrated gasification, combined cycle) was considered the front-runner. IGCC involves gasifying coal, filtering out the carbon, and finally burning hydrogen to generate power.

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In Solar Shakeout, Focus Shifting to Big-Name Players

In the wake of highly publicized solar bankruptcies and amid expectations that the shakeout will continue to claim victims, attention has been shifting to the big North American and European players that were dominating the news cycle before Chinese companies began capturing so much of the action.

The last weeks produced particularly complex and unsettling news for First Solar, the maker of a thin-film photovoltaic material that was the pace-setter in driving down installation costs for several years running. First there was the abrupt and unexplained replacement of the company's CEO following by a drubbing in the stock market, then better-than-expected third-quarter results, a surge in stock prices, only to be followed by another dive in share values.

Two months earlier, Germany's Q-Cells--the country’s biggest PV manufacturer (photo above, Berlin quarters)--took an even worse drubbing, After reporting nearly 400 million euros in losses for the first half of the year and predicting losses of close to 1 billion euros for the year as a whole, Q-Cells said it would lay off half its German employees and radically restructure. It's no wonder under the circumstances that the U.S. subsidiary of Germany's Solar World, another top PV maker, recently led seven solar firms in bringing a trade complaint against China.

As low-cost Chinese sellers of basic polysilicon PV cells continue to put brutal pressure on everybody else, and as cash-strapped governments begin to pare solar subsidies, the question will be in the coming year whether the industry's traditional stalwarts can weather the storm.

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With End of Incentives Looming, Race on to Cut Wind Power Costs

At the American Wind Energy Association's Offshore Wind Expo taking place in Baltimore earlier in October, I asked Liz Salerno, AWEA's director of industry data and analysis, what her group's focus was in the coming months. Without hesitation she noted the importance of the Production Tax Credit, the incentive that gives a 2.2 cents-per-kilowatt-hour bonus to companies producing wind energy. The PTC is set to expire at the end of 2012, and the wind industry is lobbying hard for its extension. The renewable energy source, they say, is not yet ready to stand on its own and compete with more entrenched power sources like coal.

There is a push not only from industry but also environmentalists and some politicians -- like the Governors' Wind Energy Coalition -- to help keep wind competitive. But in the meantime, there is substantial work going on to try and bring wind's costs down into coal's range even without government support. To start with, Iowa State University's Wind Energy Manufacturing Laboratory has expressed a goal of bringing wind energy down to six cents per kilowatt-hour -- well in the range of fossil fuels -- by 2020. Among other projects, they're working on ways to ensure the huge turbine blades are made completely smooth, as any imperfections would lower the blade's efficiency and therefore raise costs of producing the power.

Elsewhere, the government entity Advanced Research Projects Agency - Energy, or ARPA-E, is funding a project looking into an aerodynamic technology called circulation control to improve turbine blades' efficiency. Accordingly to ARPA-E, "unlike fixed airfoils, which must be laboriously manufactured to high precision, an effective blown wing can be generated from a slotted extruded pipe that can be domestically manufactured at a fraction of the cost."

And these are just a couple of examples. For a supposedly "mature" technology, wind power most likely has significant room for efficiency -- and therefore cost -- improvements. For the moment, the Production Tax Credit is important to keep wind power moving, but as technology improves in the future it may do just fine on its own.

(Image via sbwoodside)

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ConocoPhillips Energy Prize Goes to High-Altitude Wind System

Oil giant ConocoPhillips has awarded its $125,000 energy prize to a tethered, high-altitude wind power device by Adam Rein and Ben Glass, of Altaeros Energies. The device -- basically a horizontal-axis wind turbine floating with a helium-filled shroud -- can be rapidly deployed from a single shipping container in emergency situations. It flies at up to 2,000 feet above the ground, where wind is both stronger and more consistent.

The concept of tethered wind systems has its advantages, including the wind speed increase at higher altitudes as well as a potential lack of some of the location-based issues that arise with standard wind turbines. Instead of 400-foot-tall turbines that raise NIMBY problems, a thin tether holding a turbine aloft thousands of feet in the air could be nearly invisible. As the Energy Prize web site noted, the Altaeros concept might be useful in remote locations where building up traditional energy infrastructure isn't possible.

There are other designs following this idea as well. As a video here at Spectrum showed, a kite-based system could also provide high-altitude power without the traditional wind infrastructure. There is even a group called the Airborne Wind Energy Consortium for the nascent industry; they have several member companies designing different types of airborne wind devices. The Consortium quotes noted climate scientist Ken Caldeira on the incredible potential of high-altitude wind energy:

"There is enough energy in high-altitude winds to power civilization 100 times over. Sooner or later, we're going to learn to harness that vast resource and use it to run civilization."

(Image of another high-altitude wind device via Magenn Power)

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Germany's Self-Contradictory Climate Attitudes

Germany with the UK has led the world in taking aggressive action on climate policy, cutting its greenhouse gas emissions since 1990 considerably more than the Kyoto Protocol required. (U.S. emissions, though dropping in the last decade, still are much higher than in 1990.) But now, as the going is getting rougher, German voters and opinion leaders seem confused about who is to blame and what to do.

Articles appearing the current issue of Die Zeit, probably the country most-read and most influential newspaper of political opinion and commentary, provide a couple of examples. In one, an interview with the leader of Germany's Green Party, Die Zeit aggressively asks what purpose the party still serves, now that the government has decided to ditch nuclear energy--one of the Green Party's main demands from the time of its birth three decades ago. And what's to differentiate it now from the Social Democratic Party, asks Die Zeit, a paper that tends to be aligned with the social-democratic center (with liberalism, in American political terms.).

What differentiates it, its leader Cem Oezdemir answers sharply, is that it does not automatically support any major development project just because it might create jobs, the way the socialists do. The Greens are squarely focused on long-term sustainability, Oezdemir claims, in a way no other German party is.

What's striking about that exchange is that, despite its pointedness, Die Zeit did not ask how Oezdemir and the Greens feel about the near-certain  prospect of Germany's greenhouse gas emissions rising sharply, as a result of the "atomic exit."

Instead, Die Zeit addresses that question in a separate interview to the German federal government's Minister of the Environment  Jochen Flasbarth, as if the poor outlook for greenhouse gas reduction were the government's fault. (Until Fukushima, the governing conservative coalition sought to negotiate "an exit from the nuclear exit.") Categorically, Die Zeit takes Flasbarth to task for refusing to concede that the country's 2020 greenhouse gas reduction goals are now unachievable.

Admittedly, Flasbarth's answer is lame: "It's time you accepted and understood emissions trading. Whatever excess emissions we generate will be saved elsewhere in Europe." But what's most striking here, as in the interview with Oezdemir, is what Die Zeit did not ask. What is Germany, whose climate record on the whole is exemplary, do do about countries whose records are woefully deficient? Should it impose sanctions on a country like Canada, whose emissions are far, far higher than in 1990 and now wishes to develop its oil sands willy nilly, and export its product to the United States, whose record also leaves a lot to be desired?

Merkel is personally close to Obama, and the current German government is not going to rock relations with its North American friends. But it would have been interesting to know what the Green Party leader had to say. Oezdemir (photo) was the first German of Turkish descent to be elected to parliament, and he makes it crystal clear in the interview with Die Zeit that his goal is to get his party into a governing coalition government. A decade ago he had to retreat from the leadership after the disclosure that he had pocketed frequent flier miles accumulated in the course of public business. But he has climbed back and now appears to be firmly in the saddle.

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