It’s been a weird time for wind energy lately in the U.S.
New wind installations in the U.S. were at a three-year low last quarter, according to the American Wind Energy Association. The U.S. wind energy industry also pales in comparison to that of China, which is fast becoming a green energy leader, thanks in part to wind. One out of every two wind turbines installed this year will be in China, CNET reports.
Two of China’s largest wind companies are also preparing for IPOs this week that look to raise funds in the $1 billion range. Meanwhile, one American wind IPO in recent memory went sour when First Wind pulled its filing, saying it couldn’t get the pricing it wanted. And recent reports have found that natural gas — a fossil fuel, albeit a much cleaner one than coal – could challenge the growth of wind and solar. The regulatory environment is also uncertain, given the gains Republicans made in Congress and in state leadership in November.
One expert has an idea for wind: Think smaller, says R.J. Lyman, a partner at law firm Goodwin Procter and former Massachusetts assistant environmental secretary. Nix the massive utility-scale projects. And even though there’s offshore wind potential in the U.S. (supported by the government through recent streamlined permitting process and by a Google-backed effort to develop a major offshore wind transmission backbone), they are big, expensive projects that still have kinks to work out — like how to anchor a turbine in the deep sea.
“Less is more and boring is good,” Lyman says. “We’ve never built something out there in the deep water. We haven’t yet laid the cables to run the stuff back here.”
“If you want to get to the point of selling power to the grid so you make money, simplify, simplify, simplify.”
Lyman advocates for smaller wind farms and smaller technologies, placed close to the source to avoid the inherent line losses that come when you transport, say, wind energy from West Texas to the other side of the country. Shoot for fewer gigawatts, projects with costs in the single-digit millions, rather than projects that cost hundreds of millions of dollars and take years to get started.
“You hit a lot of singles and doubles and a lot of runners eventually make it across the plate. If you swing for the fence every time — there’s been a lot of failures with the ‘swing for the fences’ strategy,” Lyman said.
He added that the American wind sector’s performance of late can be attributed in part to the fact that wind is a trailing economic indicator. Projects rely on government support and take a long time to implement — so the industry is just now experiencing the fallout from the economic crisis that other industries were experiencing in 2008 and 2009.
Lyman also believes that there has been more need for replacement and repair of wind turbine components than financiers expected, increasing operating expenses or resulting in downtime for turbines while they’re being repaired. Many turbine manufacturers offer 2o-year warranties, a strategy also taken by other cleantech manufacturers to offset the inherent risk in trying an innovative product. But Lyman says the length of the warranties are based on three years of lab testing — meaning stuff breaks more often than buyers had thought. The technology kinks have been a turn-off to new investors.
There’s also an inherent issue with wind in that it’s intermittent — which will limit its growth, according to a recent analysis by Boston Consulting Group. Wind typically blows stronger at the off-peak time of evenings — one executive from Texas utility Oncor suggested that wind energy could be the perfect solution to charging electric vehicles since most will be plugged in at night. There are also infrastructure “catch-up” issues that need to be worked out such as finding good wind sites that match up with transmission capacity.
All in all, it looks like wind in the U.S. is experiencing some growing pains. Whether investors will continue to have an appetite for big projects remains to be seen.
[Image from Flickr/vaxomatic]