Change is blowing for wind power industry

A drop in the oil barrel
But even if wind power becomes widely developed, it will do little to reduce the U.S. dependence on foreign oil. The reason is simple: very little oil is used to make electricity. Of the roughly 20 million barrels a day consumed in the U.S., only about 500,000 barrels -– or roughly 3 percent -– are used to generate power.

About half the power consumed in the U.S. is generated with coal, according to the latest figures from the Energy Information Administration. Next on the list is nuclear (20 percent), natural gas (18 percent), and hydroelectric (7 percent.) Taken together, renewable sources like wind, solar, biomass, etc. make up some 2 percent of all power generated.

Even though more than half of all wind power capacity in the U.S. has been installed since 2000, it still generates less than one percent of the power consumed in the U.S. And the American Wind Energy Association says it forecasts that level will reach less than 6 percent by 2020. That’s because wind power developer still face some significant obstacles -- beyond the objections of local residents.

For one thing, continued investment will depend on whether energy prices stay high: developers of wind power installations are looking at a 30-to-40 year investment. If natural gas prices fall over that period, a project that’s profitable today could be a money-loser ten years from now.

An apples-to-apples comparison of the cost of wind power and conventional coal- or gas-fired turbines is not simple. A lot depends on the specific characteristics of the wind installation. In locations where wind doesn’t blow all the time, for example, the amount of power generated is less than a comparable fossil-fuel-powered plant.

“If you have the choice between a natural-gas power plant that you can turn on and off upon your command with a wind power project that delivers electricity in a variable fashion at the same cost, you pick the gas plant every time,” said Ryan Wiser, a scientist at the Lawrence Berkeley National Laboratory who specializes in the economics of renewable energy.

Then there is the issue of transmission costs: some of the best locations for generating wind are far from population centers. Some areas simply have a better, more reliable source of wind power. Though half the nation’s installed wind power capacity  is based in California and Texas, the greatest potential for wind generation can be found in areas where this is little demand for power.

“We have to acknowledge that where the wind is located is typically not where people are located,” said Wiser. “There’s a lot of wind in North Dakota, there’s just not a lot of people in North Dakota.”

That means a massive upgrade of transmission lines is needed tap those distant sources. The recent energy bill included provisions to expand access to the grid for wind power installations and upgrades power lines. Though the capital to build those lines initially would be borne by investors, electricity users would eventually have to pay the freight. So any head-to-head cost comparison of alternative sources has to include the cost of transmission to move wind power to its customers.

Still, of all the alternatives currently available, the cost of wind power is the closest to that of power generated from fossil fuel. And because the cost of conventionally generated electricity varies widely –- from less than a nickel per  kilowatt-hour in Kentucky to more than triple that in Hawaii -– wind can be a cheaper source of energy than fossil fuels. While cutting pollution is a major benefit, economics are going to be the biggest driver of the future growth of wind power.

“Consumers want to do the right thing, but they don’t want to pay extra for it,” said Kateri Callahan, president of the Alliance to Save Energy.

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