Chapter 2 Wind Vision: A New Era for Wind Power in the United States 1 Photo from iStock 14254126 1 2 Wind Power in the United States: Recent Progress, Status Today, and Emerging Trends Summary 2 | SummaryChapter With more than 61 gigawatts (GW) installed across 39 states at the end of 2013, wind power has confirmed its credibility as a scalable, reliable and environmentally sound energy technology, and a cost-effective source of low emissions power generation in those regions of the United States in which substantial wind potential exists. The United States has more than 15,000 GW of technical1 wind resource potential, both land-based and offshore, that can be harnessed and deliv- ered reliably into existing power networks through utility-scale and distributed instal- lations [1]. U.S. wind generation was entirely land-based technology as of 2013. The U.S. Department of Energy (DOE) recognizes, however, that offshore wind has become prominent in Europe—reaching 6.5 GW through year-end 2013 [2]—and could emerge in the United States in the near future. Nearly all scales of wind power technology are reflected in theWind Vision study, 2 although distributed wind applications are captured primarily within the larger land-based desig- nation.3 In this chapter, offshore and distrib- uted wind technologies are highlighted in Sections 2.2 and 2.3, respectively. Chapter 2 | Summary 2 U.S. electricity demand served by wind advances, increased industry collaboration, power has tripled since 2008, increasing and improved reliability—provide the foun- from 1.5% of total end-use demand to 4.5%4 dation for the Wind Vision Study Scenario, in 2013 [3]. Trends indicate that continued and introduced in Chapter 1 and summarized in Chapter 3, Text Box 3-2. Wind power has become an established, reliable contributor to the nation’s Wind technology improvements have electricity supply. It provides affordable, evolved to make lower wind speed sites5 Chapter 2 | SummaryChapter clean domestic energy as part of a more economically viable even in regions portfolio of sustainable power gener ­ previously thought to have limited wind ation options. potential, such as the Southeast. Despite increased wind deployment can have signif- deployment growth, technology enhance- icant and wide-ranging positive effects for ments, and cost reductions, however, wind the nation’s energy mix and environmental power expansion continues to be affected by goals, while at the same time creating jobs energy demand, transmission and integration and economic development activities asso- limitations, fluctuations in raw material costs, ciated with wind deployment and equipment policy uncertainty, conflicting uses, siting manufacturing. These resources and trends— concerns, and competition with other energy combined with cost reductions, technology sources such as natural gas. 1. The National Renewable Energy Laboratory (NREL) routinely estimates the technical potential of specific renewable electricity generation technologies. These are technology-specific estimates of energy generation potential based on renewable resource availability and quality, technical system performance, topographic limitations, environmental, and land-use constraints only. The estimates do not consider (in most cases) economic or market constraints, and therefore do not represent a level of renewable generation that might actually be deployed. www.nrel.gov 2. Wind turbines can range in sizes from small 1 kW machines to multi-MW offshore turbines. TheWind Vision primarily focuses on centralized power generation that utilizes utility-scale (1MW+) land-based and offshore wind turbines. 3. Distributed wind is the use of wind turbines at homes, farms and ranches, businesses, public and industrial facilities, off-grid, and other sites connected either physically or virtually on the customer side of the meter. These turbines are used to offset all or a portion of local energy consumption at or near those locations, or are connected directly to the local grid to support grid operations. Distributed wind systems can range in size from a 1-kilowatt or smaller off-grid wind turbine at a remote cabin to a 10-kilowatt turbine at a home or agricultural load to several multi-megawatt wind turbines at a university campus, manufacturing facility, or any large energy user. 4. The Wind Vision metric for the share of wind in a given year is calculated using data published by the EIA, as total net wind generation divided by total annual electricity retail sales. This ratio is 4.5% for 2013 and is consistent with the definitions for the future wind penetration levels in the Wind Vision Study Scenario as noted in Chapter 1. 5. In Wind Vision, ‘lower wind speed sites’ are those with average wind speeds less than 7.5 meters per second [m/s] at hub height. In the International Electrotechnical Commission (IEC) turbine classification system this is equivalent to IEC Class 3 or higher turbine class. 3 Chapter 2 | Summary 2.0 Introduction This chapter summarizes the state of wind power as of for wind equipment. Recent fluctuations in demand year-end 2013 across a number of aspects, including and market uncertainty have forced some manufac- wind power markets and economics; economic and turing facilities to furlough employees and others to social impacts, including workforce development and cease operations altogether. environmental effects; wind resource characterization; The levelized cost of electricity (LCOE) is the present wind technology and performance; supply chain, value of total costs incurred to deliver electricity to manufacturing, and logistics; wind integration and the point of grid connection, divided by the present delivery; wind siting, permitting, and deployment; and value of energy production over a defined duration. In collaboration, education, and outreach. More recent effect, LCOE is the cost of generating electricity from data for 2014 may be available but were excluded a specific source—over an assumed financial life- due to publication schedule requirements. The special time—that allows recovery of all project expenses and issues surrounding offshore wind and distributed wind meets investor return requirements. LCOE provides an are also presented. This compilation characterizes the economic assessment of the cost of the energy-gen- trends influencing formation of theWind Vision Study erating system including all costs over its lifetime: Scenario (Chapter 3) and aligns them to roadmap initial investment, operations, and maintenance; cost activities described in Chapter 4. The following is a of fuel; and cost of capital. short summary of key points in this chapter. In sites with higher wind speeds,7 the LCOE of wind Wind Power Markets and Economics declined by more than 33% from 2009–2013, and, in Investments in wind manufacturing and deployment some markets, wind power sales prices are compet- continue to support industry growth. According to itive with traditional fossil generation [6]. Significant the United Nations Environment Programme, global variations, however, are seen in the LCOE of individ- investment in wind power grew from $14 billion in ual wind projects. The LCOE for wind is influenced 2004 to $80 billion in 2013, a compound annual by capital and balance of system costs, operations 6 growth rate of 21% [4, 5]. Domestic manufacturing and maintenance (O&M) costs, financing costs, and for many wind components is strong largely because project performance. Incentives and policies also of this investment trend, technical advancements have significant effects on project-specific LCOE, that have helped make wind viable even in lower most notably for wind project development costs and resource areas, and increased domestic demand power purchase agreement (PPA) terms. for wind power. The combined import share of selected wind equipment tracked by trade codes (i.e., Installation rates for wind projects are affected by blades, towers, generators, gearboxes, and complete overall electricity demand, wholesale power prices, nacelles), when presented as a fraction of total equip- and state and federal policies. A national boom in ment-related turbine costs, declined from roughly natural gas reserves has created some uncertainties 80% in 2006–2007 to 30% in 2012–2013 [6]. The share for wind power in the near term. The Energy Infor- of wind turbine project costs, including non-turbine mation Administration (EIA) confirmed 29% of the equipment project costs that were sourced domesti- nation’s electric power as coming from natural gas in cally, was approximately 60% in 2012 [6]. In 2013, the 2012. This trend fell to 26% in 2013, but natural gas wind supply chain included more than 560 facilities still exerted downward pressure on wholesale power across 43 states [7]. Given the transport and logistics prices. At the same time, overall energy demand since challenges of moving large wind turbine components 2008 has remained constant due to a stagnant econ- over long distances, continued U.S. manufacturing omy coupled with energy efficiency improvements— and supply chain vitality is expected to be at least thus reducing overall growth for electricity generation partially coupled to future levels of domestic demand technologies, including wind. 6. Unless otherwise specified, all financial results reported in this chapter are in 2013$. 7. In the Wind Vision, ‘higher wind speed sites’ are those with average wind speeds of 7.5 meters per second [m/s] or higher at hub height. In the International Electrotechnical