Thanks for the opportunity to be with you, and thanks to PSR for sponsoring my travel here. I had the opportunity to spend some time in Madison yesterday talking to legislators about the benefits of the Clean Energy Jobs Act with Pam Kleiss of PSR, and I’ve had a great time. Michael Vickerman is much more of an expert than I am regarding renewable energy in Wisconsin, so I will leave those details to him. I’d like to emphasize one thing – that it is time for renewable energy to graduate, to take on a more serious, business-like tone about the role we intend to play, and that renewable energy take its place as the centerpiece of our energy planning and the source of most of our future energy. Wind provided more than 40% of the nation’s new electric generating capacity the last two years. That’s reality. Let’s start treating renewables as more than some marginal resource that is nice and green but will never amount to anything more than a sideshow when it comes to powering our modern society. Renewable energy has graduated to the mainstream. It is ready for widespread deployment. So now let’s put forward strategies for ensuring that renewables and efficiency reach their full potential here in Wisconsin and across the country. I’d like to share a few lessons I’ve learned from my wind experience, but I believe they are broadly applicable to the entire sustainable energy space. So the question is: how do we make our renewable energy future a reality?
It starts with an ambitious but realistic and achievable vision. That vision is tempered and shaped by strong analysis. The analysis provides insight into the barriers or challenges we face, and hands us the strategies required to accomplish the vision. So implementation is simply systematically going after each of the barriers we face, one after another, at the federal, state, and local level. Sounds simple, doesn’t it? Of course, we’re talking about bringing about fundamental change in a major area of modern society worth many trillions of dollars, so change doesn’t come quickly or easily. But change it will, and it is our job to ensure that change moves in the right direction. Let me take a brief detour through history because I think it is instructive, and then share the wind vision, analysis and strategy that I believe can be broadly applied through a similar approach to the entire renewables space.
I became a renewable energy advocate in 1975, the era of the first Arab oil embargo. There were many people who shared that vision, but one leader with long-lasting impact on the course of the wind industry was William Heronemus. Not because everything he said was right, but because of lasting contributions he made in multiple ways.
Heronemus founded the UMass alternative energy engineering program – a program that graduated most of the engineers who went on to provide first generation leadership in both industry and national labs. More than that, in ways that are remarkably insightful, he foresaw the development both of massive wind farms on the Great Plains as well as the whole concept of offshore wind power. In the 70’s, he was talking about wind providing as much as 15% of the nation’s electricity – something that is only now starting to become real as the wind industry has doubled every three years for the last decade. He wasn’t always accurate in his statements. For example, in 1973 he testified before the Senate that . . .
So Heronemus was remarkably accurate about many things, but he didn’t really understand the magnitude of the challenge – with trillions of dollars of capital invested in the electric power industry you don’t simply replace it all in 27 years. Even more than that, he and many other renewable energy advocates of the 1970s didn’t recognize that the technologies themselves were too immature to perform acceptably. The first wind turbines did not work all that well and were way too expensive. But the vision succeeded in laying a foundation – in policy as well as in an infant industry.
The policy foundation included an ambitious federal R&D program, PURPA, which required utilities to both interconnect and purchase power from renewable energy generators, tax incentives and at least in California, an innovative regulatory program that resulted in standard offer contracts that led to the birth of the wind, solar, geothermal and biomass industries in this country.
Despite the flaws in the policy, business flourished – the first successful wind farms starting in 1981, and dozens of wind turbine manufacturing companies in California and across the country. By 1989, the U.S. was home to 85% of the world’s installed wind capacity, virtually all in California, and also had a leading manufacturer, U.S. Windpower.
But turning vision to reality was tough, both in terms of the technology itself as well as the challenge of building strong and successful companies. Most were undercapitalized and lacked a good balance between engineering and business skills.
In the decade of the 80s, we turned our backs on most of the policies we had established in the 70s – the R&D budget was cut 90% and the tax credits were abruptly ended in 1986. The manufacturing industry in this country was mostly dead, in large part because there was virtually no market from the mid-80s to the mid-90s – what we called the Valley of Death for the U.S. wind industry. I started with AWEA in 1989. I was thrilled with the opportunity, but in comparison with the crowd of 23,000 attendees at WP 2009, a conference with eight table top exhibits doesn’t look like much of a real industry, and it wasn’t.
So we allowed Europe to take the lead, and countries such as Denmark, Germany and Spain ran with it, and with it went most of the manufacturing jobs associated with what became a rapidly growing industry. In the mid-90s, state policy in MN and Iowa led to a rebirth of the U.S. wind market, and that growth has never stopped in more than a dozen years, aided by the federal PTC that took effect in 1994.
So that’s a brief history, and a sense of the vision of the industry’s founding fathers and mothers. So what is today’s vision? About five years ago, it became clear that the industry had enormous momentum, that the vision of wind as contributing perhaps 5% of the nation’s electricity was simply too limited. How big could the wind industry be? Could it be as much as 20%? The wind community decided to find out. And the U.S. DOE agreed to provide the analysis, which I believe is the most important strategic document related to wind of the last decade.
This is the basic conclusion -
Considerations in the 20% Wind Scenario Wind resources of varying quality exist across the United States and offshore. Although land-based resources are less expensive to capture, they are sometimes far from demand centers. Typically, wind power must be integrated into the electric grid with other generation sources. Technology and power market innovations would make it easier to handle a variable energy resource such as wind. New transmission lines would be required to connect new wind power sources to demand centers. Transmission costs add to the cost of delivered wind energy costs, but today’s U.S. grid requires significant upgrading and expansion under almost any scenario. Wind installations will require significant amounts of land, although actual tower footprints are relatively small. Domestic manufacturing capacity might not be sufficient to accommodate near-term rapid growth in U.S. wind generation capacity; the gap may be filled by other countries.
The gas savings estimate is based on a mid-range estimate of gas price elasticity. For low to high elasticities, the estimated savings range from $86 billion to $214 billion.
The 20% Wind Scenario would require delivery of nearly 1.16 billion MWh of wind energy in 2030, altering U.S. electricity generation. In this scenario, wind would supply enough energy to displace about 50% of electric utility natural gas consumption and 18% of coal consumption by 2030. This amounts to an 11% reduction in natural gas across all industries. (Gas-fired generation would probably be displaced first, because it typically has a higher operating cost.)
So that gives you a small sense of what 20% wind looks like and some of the benefits it would bring, although I won’t cover that in detail because most of the environmental and economic benefits are well understood. The more important question to cover in a few minutes is how to get there. That answer is defined by the barriers – what are the challenges to achieving 20% wind and how do we overcome them?
Shaping the electric system to maximize a variable resource such as wind and solar means four major things – a more robust transmission grid – which we need no matter what we do because they have systematically underinvested in transmission for decades we need more flexibility in the power system on both the supply and demand side, so when we add resources other than renewables we should emphasize flexible generators such as high efficiency natural gas and hydro and demand side resources such as demand response. Avoid operationally clunky resources such as nuclear that simply don’t complement variable renewable energy very well. consolidate electric control areas so that we are using our energy resources more efficiently and spreading wind’s variability over a wider geographic area, and finally forecast the wind to take most efficient use of that growing resource.
So 20% wind is one important piece of the renewable energy vision, but it is just a piece. If wind can provide 20% of our nation’s electricity by 2030, what else do we need to do to achieve our renewable energy future? What about the role of solar? Biomass? Energy efficiency?
Such a business as usual approach relegates renewables to a marginal role. How do we best understand how to maximize the role of renewable energy in the future? If we are serious about wind playing a major role, what about other renewables? What about efficiency?
We need a bigger picture analysis, and following the success of their 20% wind analysis, that is exactly what the National Renewable Energy Lab is preparing. They also plan to maximize the role of efficiency by assuming no growth in electricity demand over that four decade period. That is an aggressive assumption, but the potential to achieve that level of efficiency is well documented and is easily defensible.
While I am bullish on energy efficiency and renewable energy, we need to remind ourselves that there is no inevitability about that future. It is one very feasible future, but there are competing visions out there that are linked to other technologies and economic interests. The coal vision, which provides about half of our electric power today in this country, and about two thirds of Wisconsin’s electricity, is fading, hopelessly tarnished by the growing specter of climate change. But, as we have seen in the debate over what to do about climate, coal is not going out quietly. The other competing vision is the nuclear vision. According to some, we are seeing the beginning of a nuclear renaissance, and there are many that accept its inevitability because, after all, we can’t run a modern society on technologies such as wind and solar when everyone knows that the wind doesn’t always blow and the sun doesn’t always shine. But the nuclear vision and the renewable energy vision really aren’t compatible. But we know that is nonsense and simply reflects an unsophisticated understanding of the way the electric system actually works.They aren’t compatible on economic grounds – the capital requirements of nuclear power – at about $10 billion per plant – would simply suck up too much of the investment capital. But another point of conflict is operational. If we want to maximize variable wind and solar, we need to design an electric power system that maximizes complementary technologies such as gas, hydro and demand response, whose flexibility is a perfect fit with wind and solar. Nukes are simply too clunky – you can’t run a nuke plant up and down to match the variability of renewable energy.
Wisconsin Green Energy Summit Swisher
Making Our Renewable Energy Future a Reality Randall Swisher Green Energy Summit March 25, 2010
Four Steps to Changing the World <ul><li>Vision </li></ul><ul><li>Analysis </li></ul><ul><li>Strategy </li></ul><ul><li>Implementation </li></ul><ul><ul><li>Based on wind but </li></ul></ul><ul><ul><li>applies to broader </li></ul></ul><ul><ul><li>energy picture </li></ul></ul>
A Short History of the U.S. Wind Industry <ul><li>Start in the early 1970’s – the era of the first Arab oil embargo </li></ul><ul><li>An important renewable energy visionary of that time was William Heronemus </li></ul>Smith-Putnam Turbine 1941-45 Castleton, Vt.
<ul><li>Heronemus founded the UMass alternative energy engineering program, was a pioneer of the wind farm concept and offshore wind power </li></ul><ul><li>His vision: 300,000 wind turbines on the Great Plains providing 10-15% of the nation’s electricity </li></ul><ul><li>“ It would not be foolish at all to state that this country could be totally energized by solar energy and other renewable processes by the year 2000.” - William Heronemus, 1973, before a U.S. Senate subcommittee </li></ul>Bill Heronemus: 1970’s Renewables Visionary
What Heronemus Got Wrong <ul><li>The magnitude of the challenge </li></ul><ul><ul><li>Trillions of dollars of capital investment </li></ul></ul><ul><li>Renewable technologies weren’t ready for prime time in the 1970’s </li></ul><ul><ul><li>But his vision of the future was remarkably prescient </li></ul></ul>
Late 70’s Policy Provided a Foundation <ul><li>Federal Renewable Energy R&D Program </li></ul><ul><li>Public Utility Regulatory Policies Act of 1978 (PURPA) </li></ul><ul><ul><li>Requires utilities to buy electricity from renewable and cogeneration facilities </li></ul></ul><ul><li>Energy Tax Act of 1978 </li></ul><ul><ul><li>Creates 15% Energy Investment Tax Credit (EITC) </li></ul></ul><ul><ul><li>Added to existing 10% ITC </li></ul></ul><ul><ul><li>Limited Partnership Structure -> Wind Farms </li></ul></ul><ul><li>California policy </li></ul><ul><ul><li>Tax incentives </li></ul></ul><ul><ul><li>Strong regulatory support </li></ul></ul><ul><ul><ul><li>Standard offer contracts gave birth to the renewables industries </li></ul></ul></ul>
Business Growth Followed: In the 1980s, the U.S. led the World in Wind Technology <ul><li>The first successful wind farms were established in 1981 in California </li></ul><ul><li>Many U.S. turbine manufacturers were established in the early 80s </li></ul><ul><li>By 1989, the U.S. was home to 85% of the world’s installed wind capacity </li></ul><ul><ul><li>almost all in California </li></ul></ul><ul><ul><li>and a leading manufacturer: US Windpower (founded in 1976) that led sophisticated outreach to the electric utility industry </li></ul></ul>
But Turning Vision to Reality was Tough <ul><li>Harnessing the wind was tougher than it looks </li></ul><ul><li>First California Wind Farms – 1981 </li></ul><ul><ul><li>Poor performance - very low capacity factors </li></ul></ul><ul><ul><li>But provided a successful laboratory – some turbines worked, some didn’t, but they rapidly improved </li></ul></ul><ul><li>Building strong companies was a challenge – </li></ul><ul><ul><li>Most undercapitalized </li></ul></ul><ul><ul><li>Lacked a good balance between engineering and business skills </li></ul></ul><ul><ul><li>Limited knowledge of the utility industry </li></ul></ul>
Policies Abandoned: We Turned our Backs on the Opportunity <ul><li>The DOE Wind R&D budget was cut 90% through the 1980s </li></ul><ul><li>The wind investment tax credit was abruptly ended in 1986 </li></ul><ul><ul><li>Most U.S. turbine manufacturers went out of business – no market </li></ul></ul><ul><ul><li>In 1989, the domestic wind market was lifeless . . . And seven years later US Windpower was bankrupt </li></ul></ul><ul><li>Imagine the WINDPOWER ’89 Conference . . . </li></ul>
Europe Took the Lead in the 1990s <ul><li>Strong market incentives in Denmark, Germany and Spain led to a thriving turbine manufacturing industry </li></ul><ul><ul><li>Wind now provides over 20% of Denmark’s electricity </li></ul></ul><ul><ul><li>Germany was the largest single wind market until 2008 </li></ul></ul><ul><ul><li>This European leadership spurred technology development & made possible wind’s ability to compete with fossil generation in the U.S. </li></ul></ul><ul><li>In the mid-90s, state policy in Minnesota and Iowa led to a rebirth of the U.S. wind market </li></ul>
Today, the Global Industry has Three Key Markets <ul><li>Europe – 76,000 MW (end of 2009) </li></ul><ul><ul><li>Most manufacturers based in Europe </li></ul></ul><ul><li>North America – 38,500 MW </li></ul><ul><ul><li>The U.S. is now the largest single market, and all major global companies want to participate </li></ul></ul><ul><li>Asia – 39,000 MW </li></ul><ul><ul><li>Chinese market growing most quickly, and establishing a strong manufacturing base </li></ul></ul>
The Present: What is Today’s Vision? . . . And the analysis to support it
20% Wind Energy by 2030 <ul><li>U.S. Department of Energy: </li></ul><ul><li>“ The U.S. possesses sufficient and affordable wind resources to obtain at least 20% of its electricity from wind by the year 2030.” </li></ul><ul><li>www.20percentwind.org </li></ul>
The 20% Technical Report <ul><li>Compares two scenarios - 20% wind energy by 2030 vs. no new U.S. wind power capacity </li></ul><ul><li>Not a prediction - an analysis based on one scenario </li></ul><ul><li>Is the work of more than 100 individuals involved from 2006 - 2008 (government, industry, utilities, NGOs) </li></ul><ul><ul><li>NREL – analytical foundation/their model </li></ul></ul><ul><ul><li>Black & Veatch – input assumptions/market data on cost </li></ul></ul>
Assumptions: The 20% Wind Energy Scenario <ul><li>U.S. electricity consumption grows 39% from 2005 to 2030 – to 5.8 billion MWh (Source: EIA) </li></ul><ul><li>20% wind electricity requires about 300 GW (300,000 MW) of wind generation </li></ul><ul><li>Technology will continue to improve: Productivity of wind turbines increases about 15% by 2030 </li></ul><ul><ul><li>This is an extremely conservative assumption </li></ul></ul><ul><li>No technology breakthroughs required: 20% wind can be achieved with existing wind technology </li></ul>
20% Wind Energy by 2030 Installed Capacity at year end 2009 is greater than 35 GW; 3 years ahead of schedule 305 GW
20% Wind: Electricity Sector Costs <ul><li>Both scenarios cost over $2 trillion in new investment in net present value terms by 2030 </li></ul><ul><li>20% Wind Scenario requires only 2% more investment ($43 billion in net present value) </li></ul>
Savings from Reduced Natural Gas Price Pressure The benefits from reduced pressure on natural gas prices across all gas users would be $150 billion (NPV), by itself exceeding the incremental cost of investing in the 20% Wind Scenario. *NPV Source: Hand et al., 2008 Billions of Dollars* 0 20 40 60 80 100 120 140 160 Incremental C ost Natural Gas Savings
20% Wind Impact on Generation Mix in 2030 <ul><li>Reduces electric utility natural gas consumption by 50% </li></ul><ul><li>Reduces total natural gas consumption by 11% </li></ul><ul><li>Natural gas consumer benefits: $86-214 billion * </li></ul><ul><li>Reduces electric utility coal consumption by 18% </li></ul><ul><li>Avoids construction of 80 GW of new coal power plants </li></ul>U.S. electrical energy mix Source *: Hand et al., 2008
What is the Strategy to achieve 20% Wind? . . . Understand and overcome the barriers
Here are key steps to 20% Wind <ul><li>Long-term stable policy </li></ul><ul><li>Transmission infrastructure* </li></ul><ul><li>Better electric system planning* </li></ul><ul><li>Continue reducing the cost of wind </li></ul><ul><li>Ensure wind’s environmental and other impacts are minimized </li></ul><ul><ul><li>Systematic and streamlined siting and permitting </li></ul></ul><ul><li>Workforce development </li></ul><ul><li>Overcome information barriers </li></ul>
<ul><li>The lack of transmission infrastructure is the single greatest long-term strategic constraint facing the wind industry. </li></ul><ul><li>There is a growing recognition of this barrier by policymakers . . . and a growing number of companies are moving to address the need. </li></ul>Barrier 2: Transmission Infrastructure
Green Power Superhighways <ul><li>Link areas with vast supplies of renewables to areas of high electricity demand green power superhighways </li></ul><ul><li>Improve grid operations </li></ul>
<ul><li>If you want more wind & solar: </li></ul><ul><ul><li>Develop a robust transmission grid </li></ul></ul><ul><ul><li>Shape a more flexible power system </li></ul></ul><ul><ul><li>Coordinate or consolidate electric operations on a regional basis </li></ul></ul><ul><ul><ul><li>Spread wind projects over a larger geographic area </li></ul></ul></ul><ul><ul><li>Forecast the wind to reduce costs and uncertainty </li></ul></ul>Barrier 3: Improving Grid Operations
The Way Forward <ul><li>The 20% Wind analysis and plan is a one important piece of the renewable energy vision, but it is just one resource and represents just part of the strategy for sustainable energy advocates. </li></ul>
A Bigger Picture Analysis and Strategy <ul><li>NREL is now developing a detailed analysis of the feasibility of 80% renewable energy by 2050 </li></ul><ul><ul><li>Includes aggressive energy efficiency assumptions </li></ul></ul>
The Renewable Energy Vision isn’t Guaranteed <ul><li>Competing visions are dueling in the courts of public opinion and public policy </li></ul><ul><ul><li>The coal vision is irreparably tarnished, but still powerful </li></ul></ul><ul><ul><li>The nuclear vision is not compatible with maximizing renewables </li></ul></ul><ul><ul><li>To prevail, we need to avoid parochialism within the sustainable energy community – neither wind nor solar nor efficiency can do it alone </li></ul></ul>
State Action <ul><li>Finally, central to the progress that has gotten us to this point is effective state action – the state RPS </li></ul><ul><li>State leadership is essential to making the renewable energy vision a reality – keep it up, Wisconsin! </li></ul>
<ul><li>WINDPOWER 2010 </li></ul><ul><li>Largest Wind Power </li></ul><ul><li>Conference on the Planet! </li></ul><ul><li>May 23-26, 2010 </li></ul><ul><li>Dallas, Texas </li></ul><ul><li>www.windpowerexpo.org </li></ul>Contact me at: [email_address]