Technical Advancements and Public Policies Affecting Wind Power’s Role in a Low Carbon Future

1. Costa Samaras December 1, 2005 Technical Advancements and Public Policies Affecting Wind Power’s Role in a Low Carbon Future Climate Decision Making Center NSF SES-034578 Photo Source: GE Energy

2. Problem Statement Wind power is poised to be serious player in the electricity generation portfolio and play a role in a low carbon future. • What was the relative role played by governmental R&D, incremental innovations, and advances in and transfers from industries outside of wind energy in bringing wind to its current status? • How have different approaches in wind energy public policy affected the cost and adoption of wind generated electricity?

3. Agenda • Introduction and research relevance • Data and methods • Capital costs and competition • Wind energy R&D and public policies affecting wind power • Technological transfers • Summary and policy implications Photo Source: GE Energy

4. Research Relevance This work is the first step in a broader effort to try to understand which strategies work best for different technologies

5. Wind energy worldwide growth • 2004 Cumulative MW ≅ 46,000 • Europe - 34,600 MW • U.S. - 6,700 MW • Rest of World – 5,100 MW • 28% avg. annual growth since 1995 Sources: NREL, BTM Consult Aps, March 2003, Windpower Monthly, January 2005, AWEA, IEA

6. Changes in Regional Share of Installed Wind Capacity Sources: NREL, BTM Consult Aps, March 2003 Windpower Monthly, January 2005, AWEA

7. Comparative Costs of Generating Options 100 IGCC w/o CSS 90 Wind@29% Capacity Factor, $1200/kW Capital Cost 80 70 Levelized Cost of Electricity, $/MWh NGCC@$13 60 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

8. Comparative Costs of Generating Optionswith Production Tax Credits (PTC) 100 IGCC w/o CSS 90 NGCC@$13 80 PTC 70 Levelized Cost of Electricity, $/MWh 60 50 Wind@29% Capacity Factor, $1200/kW 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

9. Sensitivity of wind power costs to capital cost 100 $1600/kW IGCC w/o CSS 90 NGCC@$13 $1200/kW 80 70 Levelized Cost of Electricity, $/MWh 60 $800/kW 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

10. Sensitivity of wind power costs to capacity factor 100 20% CF IGCC w/o CSS 90 NGCC@$13 29% CF 80 70 Levelized Cost of Electricity, $/MWh 60 40% CF 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges

11. Data and Methods • Data • Installed capacity, generation and capital cost data • Capital cost breakdown by components over time • Federal Wind R&D expenditures by country • Patent data, US and abroad • Policy timeline in U.S. and E.U. • Academic, government, and trade literature, government and industry interviews • Methods • Quantitative and qualitative cost and policy analyses • Comparing governmental expenditures to expected outcomes • Technology tracing case studies

12. Cost of Wind Energy Declining 5.0

13. Growth of Commercial Wind Turbines Rotor Diameter (m) Sources: European Wind Energy Association (EWEA), Technology Factsheet, NREL Images: wikipedia.com, WQED

14. Public Wind Energy R&D 1974-2003 DOE / NASA MOD Program NREL NWTC formed Source: IEA R&D Database

15. Public Wind Energy R&D 1974-2003 United States $1200M Germany $550M Netherlands $310M Denmark $170M Spain $85M Source: IEA R&D Database

16. Installed MW per $Million Wind R&D 1974-2003 Spain $75MW/$M • 2003 Installed Capacity • Germany – 14,609 MW • U.S. - 6,700 MW • Spain – 6,203 MW • Denmark -3115 MW • Netherlands - 910 MW Germany Denmark United States Netherlands Sources: IEA R&D Database, IEA - Electricity Information - 2004 European Wind Energy Association American Wind Energy Association NREL (REPiS)

17. Carbon Abatement Efficiency of R&D Expenditures • 2003 Major Wind Manufacturers • Germany – 4 • U.S. - 1 • Spain – 2 • Denmark -3 • Netherlands - 0 Data Source: IEA, EuroStat, EIA, California Energy Commission, Danish Wind Energy Association, Lewis and Wiser (2005)

18. U.S. Demand Pull Public Policies RPS PTC set to expire Accelerated depreciation PTC Investment tax credit 5.0

19. Renewable Portfolio Standards Nevada: 20% by 2015, solar 5% of annual New York: 24% by 2013 Minnesota: 19% by 2015* Maine: 30% by 2000 Wisconsin: 2.2% by 2011 Iowa: 2% by 1999 Illinois: 8% by 2013** 21 States + D.C. Montana: 15% by 2015 MA: 4% by 2009 RI: 16% by 2019 CT: 10% by 2010 NJ: 6.5% by 2008 DE: 10% by 2019 Maryland: 7.5% by 2019 Washington D.C: 11% by 2022 California: 20% by 2017 Pennsylvania: 8% by 2020 Arizona: 1.1% by 2007, 60% solar New Mexico: 10% by 2011 Texas: 5,880 MW (~4.2%) by 2015 Colorado: 10% by 2015 Hawaii: 20% by 2020 *Includes requirements adopted in 1994 and 2003 for one utility, Xcel Energy. **No specific enforcement measures, but utility regulatory intent and authority appears sufficient. Source: Original slide prepared by Union of Concerned Scientists, www.ucsusa.org/clean_energy/clean_energy_policies

20. Distribution of Capital Costs Rotor Nacelle Tower BOS Photo Source: GE Energy

21. Wind power cost of energy ($/kWh) • Decreased capital and BOS costs • Longer lived capital in place • Favorable financing and ownership • Decreased O&M costs • Larger rotors • Improved capacity factor • Improved specific yield (kWh/m2) • Improved reliability Source: NREL, EPRI

22. Power from the wind: Increasing annual energy production Larger rotors Higher towers Advanced airfoils and blade sections Better turbine siting Variable speed operation

23. Innovations and impacts

24. Transfers from Other Industries • AC motor control • Variable • speed • operation • Permanent • magnet • generators • Direct Drive • gearboxes • Boatbuilding • Pipe manufacturing • Hard disk • industry • Fiberglass • application • Carbon • fiber • Steel and materials for high mast utility & light poles • Pipe manufacturing • Tubular • steel, high • strength • alloys • “Soft” • towers • Utilities • IT • Traction power • Power • electronics • Foundations • Logistics Photo Source: GE Energy

25. Larger Rotors – increased area Composite Industry, Robotics, Power Electronics, Boatbuilding, pipe manufacturing • Tapered and twisted blades • Composite materials • Pitch control • Dynamic braking • Advanced airfoils • Advanced manufacturing • Structural integrity • Load Shedding • Lighter Higher rated capacity / greater kWhs Larger Rotors & Rotor Swept Area Photo Sources: NREL

26. Higher capacity factors AC motor control, Traction power industry Utility industries, Telemetry and oil and gas • Variable speed drives • Advanced power electronics • Direct drive • SCADA • Greater efficiencies • Greater energy capture • in low speed areas • Turbine health monitoring More kWhs per project, Lower COE, • Greater availability • Lower O&M Costs • Higher capacity • Factors Photo Sources: NREL

27. Borrowed Technology Boatbuilding Composites Material Science Steel industry High strength alloys Aviation and helicopter design CFD and advanced Design models Aerodynamics Computer science, Data collection and testing Oil and gas industry SCADA and Remote sensors IT and hard disk Permanent magnets Power Electronics Utilities Variable speed power conversion Power semiconductors Dynamic braking AC Motor control Fans and motors Soft-starting Source: Manwell, McGowan, Rogers (2002), Loiter and Norberg-Bohm (1999)

28. Capital Cost Influence Diagram Transfers from other industries Manufacturing Learning by Doing and Economies of scale Demand pull Public policies Intra-industry advances Components Logistics and Installation Federal R&D Capital Cost

29. Initial Findings • Only 30% of wind turbine components were traditionally manufactured solely for the wind industry1; blades are the primary component in this value • Wind power has evolved into commercial viability largely independent of governmental R&D • Previous literature2 and industry interviews offer similar conclusion 1 Neij (1999), NREL (1995), WindForce10 (1999) 2 Loiter and Norberg-Bohm (1999 &1997) Gipe (1995), Heymann (1998), Van Est (1999)

30. Policy Implications • Why is it that this technology has evolved and did it largely independently of governmental R&D? • Which technology policies caused either direct or indirect advances in wind power? • When does it make sense to offer demand-pull polices versus supply push policies in low carbon energy technologies?

31. Research Goals and Summary • We are attempting to gain insights about attributes of successful low carbon technologies • What can lead to path dependencies? • How do current climate models account for this? • In the long run we intend to compare other technologies • What portfolio of R&D, subsidies, taxes, or regulations are most appropriate for different technologies?

32. Questions and Comments Photo Sources: GE Energy