A Story of Three Figures

The wind energy world seems to be dominated by discussions of the Production Tax Credit (PTC), and one cannot help but be concerned about how the uncertainty over the future of this policy is resulting in job losses across our country and especially in the Great Lakes region. But it may be helpful to take a broader look at the wind industry and recently released analyses that provide us with a few sunbeams in the long-range forecast: the Renewable Energy Futures Study, A Systematic Review and Harmonization of Life Cycle GHG Emission Estimates for Electricity Generation Technologies, and two analyses that examine the future of U.S. natural gas markets. It is important to note that most of these works were funded by U.S. Energy Department, which also helps support the Great Lakes Wind Collaborative.

Although each analysis is significant, in combination these three studies paint a picture that I think everyone in the wind industry should remember as we look to a very uncertain next few years, both in the wind industry and the energy industry as a whole.

The Renewable Energy Futures Study (http://www.nrel.gov/analysis/re_futures/) examines the electrical energy market until 2050 and is the most comprehensive and complete projection of how our electric market sector could look if renewables provided a larger percentage of the nation’s electrical energy needs. The study also includes a robust assessment of the nation’s grid infrastructure and considers only technologies that are available today, so it does not include any assumptions of huge efficiency improvements that may never be realized. The report clearly indicates that a future in which more than 80% of the nation’s electrical energy comes from renewables (including wind, solar, hydro, and bio-power) is very possible, from technical and economic standpoints. In this analysis, wind provides the largest portion of the nation’s energy portfolio expansion (almost 450 gigawatts by 2050), while fast-acting natural gas plants provide much of the stability and power back-up. The website for the study (provided above) portrays not only how the power system changes over time but also the expected flow of power across the nation each year until 2050.

The breakthrough work on the Harmonization of Life Cycle GHG Emission Estimates for Electricity Generation Technologies study examines more than 2,000 analyses of carbon emissions of greenhouse gasses from across the electric sector (http://en.openei.org/apps/LCA/) and provides an international consensus of the emissions of different electrical energy technologies. It should be no surprise to anyone that wind is one of the lowest lifecycle emitters of greenhouse gasses, slightly higher than hydropower and ocean energy technologies and lower than all of the other renewables and nuclear. On the website, turn off the markers on the interactive chart for coal and natural gas to see the differences among all technologies.

The last analysis comes from a series of reports discussed at the 2012 Wind Powering America All States Summit and highlights the understanding that the convergence where natural gas overtakes coal as the prime producer of electric power in the U.S. is near, if not already passed (some say it happened last month). With natural gas becoming the new dominant provider of electrical energy, the nation becomes much more dependent on a fuel source that is tied to international pricing and has historically demonstrated price volatility due to a variety of market pressures. In presentations by Mark Bolinger of Lawrence Berkeley National Laboratory and Jeffrey Logan of the National Renewable Energy Laboratory, we see that the cost of natural gas in the near future ranges greatly. Bolinger’s figures (soon to be released as part of the 2011 Wind Technologies Market Report) show the cost of energy from natural gas within the next 5 years ranging from below $40 per megawatt-hour to more than $100 per megawatt-hour. This clearly lies in a range where wind, even without the PTC, can play a strong hedge against potential market fluctuations. Logan’s upcoming report also shows that without the PTC, wind at good sites is economic when compared to natural gas at within the $5 to $6 per MMBtu range. This is well within the range of predicted natural gas prices given the market uncertainties, including expected continuing retiring of coal plants, liquefied natural gas export infrastructure development, expanded industrial usage, and expanding use of natural gas as a transportation fuel.

Everyone who has worked in the wind industry for at least the past 5 years knows that the energy industries can be turbulent from year to year. To many energy industry workers facing a potential pink slip, whether a coal miner in Pennsylvania or a manufacturer of roller bearings for wind turbines in Michigan, my words will ring with a decidedly hollow tone, but I have to say that the long-term prospects for the wind industry are very bright. The results of these studies -- wind can play a strong role in any renewable energy electricity future, wind technologies are one of the best energy options to address the ongoing climate crisis, and the truly critical need to hedge the industry’s headlong rush into a power sector dominated by natural gas -- add to the long list of wind energy’s positive attributes. For the long term, the wind industry is one of the few in which success is as guaranteed as the power industry currently allows.

Ian Baring-Gould

National Technical Director

Wind Powering America

National Renewable Energy Laboratory