January 8, 2015

Green Series: Wind Power

The last decade has seen corporate attention begin to shift toward more environmentally conscious business practices. Whether motivated by profit through tax incentives and “green” marketing opportunities, or by corporate social responsibility efforts, we can expect to see more advancement in this area over the course of the next decade. In this new series, we will explore different “green” initiatives and energy sources, giving a basic overview of how each functions, who is using them, and why.

Wind Energy

Wind energy has been taking off in Europe, with Denmark recently announcing that 39 percent of its energy consumption was powered by wind energy, nearly reaching its 2020 goal of 50 percent. In the US, though, wind energy reached its peak-to-date in 2012, due in part to the fact that wind energy in the US is largely dependent upon tax incentives and the green light from environmental protection agencies. However, the wind industry has proven to be a job creator in the US in the past, and has produced large amounts of energy once wind turbine farms were constructed and put to use. Is wind energy something that the American market can anticipate increasing once again in the years to come?

First: how does wind energy work? Wind energy is created when wind turns a turbine’s propeller blades around a rotor, spinning a generator to produce electricity. The gear box, which connects the low- and high-speed shafts in the turbine, then increases the rotational speed naturally produced by the wind and propellers.

Different size wind turbines can serve different purposes. For example, industrial wind turbines are typically located offshore or in large swaths of land. With dozens, or even hundreds, of turbines grouped together, these turbines form wind farms that produce utility amounts of electricity. Smaller turbines are also available for community or personal use to power schools or homes, though these require a fair amount of space and research to install (e.g. finding and recording the best wind locations; avoiding environmental or legal restrictions; and connecting your system to your community’s electric grid). However, the benefits of running your home or local community centers with clean energy could potentially offset these initial installation costs.

With a growing demand for alternative sources of energy, the manufacture of wind turbines has increased over the past decade, and the wind turbine manufacturing market is largely captured by a handful of companies. According to a 2014 study conducted by the US Department of Energy, General Electric captured 90 percent of the US turbine manufacturing wind market share in 2013, with Siemens and Vestas just behind. Vestas, a Danish manufacturer, was also 2013’s top global wind turbine provider.

Wind turbine production and installation had increased in the US after the introduction of the Federal Production Tax Credit (PTC) in 1992, which helped to expand wind turbine manufacturing to more than 550 manufacturers in the US. The cost of production was lowered by more than 40 percent over a four-year span, and wind power grew to represent one third of all new energy sources in the US.

However, the US wind market took a large hit in 2013. Investors began to pull out of wind energy production initiatives, and manufacturers began to halt projects and lay off workers when it became apparent that the PTC would not be renewed at the end of the year. From 2007 until 2012, wind power represented at least 33 percent of all US energy capacity additions, but that number shrank to 7 percent in 2013. For eight years, the US and China competed for the largest chunk of the global wind market, but in 2013, the US fell behind China, as well as Germany, India, the UK, and Canada. Now, the power generated by US wind turbines accounts for just 4.5 percent of national electricity demand, standing in stark contrast with European nations, who are currently able to power much more of their nations’ needs with renewable resources. 

For example, last October, the Scottish World Wide Fund for Nature found that Scotland’s wind turbines had produced enough energy to power 100 percent of the country’s homes. In addition, Germany is currently installing hundreds of wind turbines in the North Sea to power hundreds of thousands of homes in the near future, and the country expects to provide 30 percent of its electricity via renewable energy resources by the year 2020, an aggressive plan compared to other nations.

Wind energy is also being put to use elsewhere in the world, on a smaller scale. For instance, a $6 billion new development in Cairo, Egypt plans to be one of the largest eco buildings in the world, using two different types of wind turbines alongside the perimeter of the building and on the roof. 

Wind energy has not gone without its share of challenges in the US. In addition to the fallout resulting from the non-renewal of the PTC, several states have shown resistance towards wind farm projects, with locals citing negative conservation and environmental impact as causes for concern. For example, Oklahoma, the fourth-largest generator of wind energy in America, has seen resistance from landowners and those trying to preserve tall grass prairies around the state. In Wyoming, wind turbine companies are being fined for the deaths of eagles, in spite of efforts to minimize hazards.

Despite these obstacles, it appears as though the US may continue to develop the wind energy industry and other clean energy initiatives. In June 2014, the Department of the Interior proposed an area of the Atlantic Ocean the size of Rhode Island to be used for new wind energy initiatives. In addition, the White House also recently announced that it will invest up to $3 billion into clean energy initiatives in developing nations. Such announcements are good news for wind turbine manufacturers, with the demand for parts and wind technology likely increasing as such initiatives become a larger priority in national and international political arenas.

The next few years will be crucial in deciding the future of wind energy development and turbine manufacturing. As projects rapidly expand throughout Europe, it stands to reason that the US will also see the spread of such technology, and predicting this trend may be essential to manufacturers if the market makes a large change in the next few decades.