An edited version of this article appeared in a 2001 edition of Renewable Energy World.
Paul Gipe examines the latest report from BTM Consult on the world wind energy market.
More good news for the wind industry, says BTM Consult in the seventh edition of their annual status report on the wind industry. BTM can again report rapid growth. After a slight hesitation in 2000, global markets soared in 2001, setting a new record. The 6,800 MW installed in 2001 was up 2,300 MW from the year before. Growth of new capacity topped 50% last year, rivaling that of 1998 and 1999. Revenues from equipment sales and installation, says BTM, exceeded US$5,200 million. Sales may have been even greater.
Amidst the growing politicization–and commoditization–of statistical information on the wind industry, BTM’s reports remain a breath of fresh air. Their annual reports are a welcome antidote to the now all pervasive “spin” of promoters on both sides of the Atlantic. It is BTM’s independence that gives their findings clout. As in the past, the report contains solid data on the breadth of the industry and remains the one-stop source for a reliable assessment of the size and direction of the wind turbine market.
Gathering data on the wind industry is both time consuming and fraught with the potential for error. BTM itself laments the difficulty of finding reliable data on some markets, such as Spain. The U.S. market can be equally problematic. The California Energy Commission recently issued the first report in its Performance Reporting System after a multiyear hiatus. In spite of pages of statistics, the CEC report concludes that the data reported does not match the turbines in the field by more than 200 MW, a discrepancy of more than 10 percent.
Europe continues to account for two-thirds of total worldwide wind development. And Germany–seemingly the perennial pacesetter–continues to outdistance all other markets. Germany again led the world in wind development, accounting for 40% percent of the total market. In 2001 Germans installed an amazing 2,600 MW, more than 60% greater than the year before, itself a record.
The United States rode a tax-credit driven rush–yes, yet again another wind rush–into second place. Spain trailed the Yankees as Iberian developers confronted limited transmission capacity.
Ride em Cowboys!
The U.S. market resembles a bucking bronco at a Texas rodeo. While BTM reports that the U.S. share of the world market compares to that of Spain, this one-year snapshot does not reflect the boom and bust nature of U.S. wind development. In 2001 BTM reports that developers installed more than 1,600 MW. The year before U.S. developers installed only 160 MW, or 10% of that last year.
Texans, like the U.S.’s new president have ridden–some say strutted–onto the world stage shouting “yee, ha, out a my way.” In one year Texas, a big state with even bigger egos, installed 900 MW. That is more than the total installed capacity in either Italy, Great Britain, or the Netherlands, countries that have been developing wind energy for more than a decade. With some 1,100 MW in place, Texas is surpassed only by Germany, Spain, Denmark, and India. With some of the biggest, if not the biggest, wind farms in the world, Texans have won bragging rights for some time to come.
With its massive Texas projects, Florida Power and Light, solidified its dominance of the U.S. market. Under the name FPL Energy, the Florida utility owns more than half of the 1,700 MW installed last year in the United States. But limited transmission is a problem that may even hinder the ever optimistic Texans.
BTM forecasts another U.S. boom in 2003 as one more wind rush gets underway to beat expiration of the on-again, off-again tax credits. Regardless of future tax subsidies, BTM now expects the U.S. market beyond 2003 to account for 1,000 MW per year.
With such a huge market at stake, European manufacturers are hungrily eying North American. Already Vestas has announced a new assembly plant in Portland, Oregon, the Green capital of the country. While Spanish manufacturers are too busy staying abreast of their own market to fret much about exports, says BTM, Danish companies are being forced, like never before, to move overseas.
Danish Market Collapses
If there are dark clouds on wind energy’s horizon, it is the parliamentary success of rightist governments in Europe and their cultural war against renewables. There is no better example than Denmark, the one time leader of wind energy technology. Few could have predicted the devastation to renewables from the electoral victory of Danish conservative parties. Immediately the new government began swinging a budget-cutting battle axe like their Viking forbears. They eliminated all Danish renewables R&D, only a portion of which has since been restored, the previous government’s off shore wind program, and the fixed-tariff system on which Danish wind energy was built.
To add insult to injury, the average wind speed in Denmark was down 20% from normal last year. Hard hit Danish farmers and cooperatives may reasonably wonder if the end is nigh for non-utility ownership. In fact Danish wind turbine manufacturers are predicting the end of cooperatives’ role in Danish wind development. BTM for its part expects the hard times to continue and warns that the industry trend worldwide is toward consolidation of turbine ownership into fewer hands.
BTM’s cautious reporting may understate last years earnings. BTM based their estimate of total industry turnover on installed costs of US$761 per kW. Even in North America, where huge projects ostensibly gain economies of scale, installed costs–at least those announced publicly–are much higher. Whether pronouncements by wind developers are believable or not, they themselves report installed costs in excess of US$1,000 per kW.
The average of three projects, representing a total of 350 MW in Texas and Pennsylvania, was US$1,100 per kW according to the equity owners of the projects. If this is representative, worldwide revenues from installed wind projects could be as high as US$8,000 million.
Machines continue to grow larger, says BTM. Average installed capacity exceed 900 kW per turbine last year and it probably would have reached the one megawatt threshold if Vestas had not delivered hundreds of its V47 to the North American market. BTM reports that monstrous machines of 4 to 5 MW in size are on the drawing boards for offshore projects. Megawatt turbines now account for half of all new wind turbine capacity, up markedly from 2000 when megawatt-class turbines represented only 40% of the market.
Despite all the hype, the offshore market remains Sluggish. The only project completed last year was Yttre Sttengrund site off Sweden using NEG-Micon’s 2 MW model. Though BTM expects Danish offshore development to begin this year, political instability in the once stable Denmark clouds even offshore’s future. Now, says BTM, manufacturers are eying a huge potential market offshore Germany they believe will open in 2004. In the meantime, 300 MW of off shore wind are under development in Denmark with the Horns Rev project (160 MW) in the North Sea scheduled for this year and Rrdsand project (158) in the Baltic Sea for next year.
Special feature of this year’s report is BTM’s analysis of operations and maintenance cost. Costs are often reported in cents per kWh and BTM explains that this method naturally favors turbines sited in windy areas where the cost of operations and maintenance can be spread over more kilowatt-hours than turbines at less windy sites. BTM notes that O&M costs are not constant over time. For turbines installed today, O&M costs US$0.005/kWh at the beginning of the life cycle, rises to between US$0.005/kWh and US$0.01/kWh after five years, then to as much as US$0.01 to US$0.02/kWh. Relying heavily on a study by Risr, BTM reports that the lifetime O&M costs for the Danish 55 kW model, now 20 years old, is € 0.03/kWh; for the 150 kW model, € 0.02/kWh; and for the 225 to 500 kW class, € 0.01-0.015/kWh.
South America, especially Argentina and Brazil continue to disappoint. Like China, these markets are perennial also rans. Nearly as soon as government’s issue their pronouncements touting new installations, reality sets in and the expansive new projects begin evaporating. Almost in exasperation, BTM notes that the 60 MW project for the Brazilian state of Çeara has been in discussion for six years. The economic crisis gripping Argentina and the restructuring of Brazil’s electricity sector indicate it may be some time yet before wind takes off in South America. The French market is finally beginning to move, says BTM, though the 2001 take-off they expected did not materialize. Unlike other countries with Electricity Feed Laws, France uses a two-tier system and limits the fixed-price tariffs to projects under 12 MW. The French want to avoid the wind power landscapes seen in California and now parts of northern Germany. The program appears to be having the desired effect of pushing distributed installation of clusters across several regions of France, including Brittany and the south of France.
Feed Laws Work Best
Bucking political winds not only in Denmark but in Great Britain and the United States, BTM again concludes that what works best to stimulate wind development is not bidding systems, not portfolio standards, but simple electricity feed laws like those in Germany and Spain. BTM acknowledges that the short-term availability of tax subsidies and Texas’ use of a portfolio standard resulted in a boom for the U.S. market last year. Still, BTM says that more countries are relying on firming up the price paid for wind-generated electricity than using tax subsidies or investment grants.
For the first time, BTM describes the take-off phases of wind development in several markets and explains how each successive market benefited from those that went before. It is taking less and less time for new markets to reach a 2,000 MW threshold, says BTM. Newer markets begin with better technology and much larger turbines than older markets. It took Denmark 16 years to reach 2,000 MW; Germany, 7 years; and Spain, only 5 years. As Texas demonstrates, markets today can top 2,000 MW in three years or less.
As the turbine fleet continues to age, notably in California and Denmark, more turbines will be removed. Some wind turbines in Denmark are now more than two decades old, and many in California are nearing 20 years in operation. BTM acknowledges this trend and notes that in future reports they will begin tracking decommissioning as well as new installations.
BTM’s report remains one of the industry’s good values. In combination with statistics from Germany’s WMEP program, BTM’s market update offers a comprehensive picture of wind technology and where it is headed. BTM remains ebullient about the future of wind energy. They forecast continued growth and expect wind turbines to generate an impressive 2% of the worlds electricity within a decade.
World Market Update 2001: Forecast 2002-2006, by BTM Consult, Denmark, March, 2002, 65 pages, ISBN 87-987788-3-8. US$270, CD-ROM with Powerpoint presentation US$250, both together US$470 all inclusive (postage and handling).
I.C. Christensen Allé 1
phone: +45 97 32 52 99
fax: +45 97 32 55 93
Paul Gipe is the author of Elettricità dal Vento (Editori Riuniti, 2002) and a contributing editor to Wind Power in View: Energy Landscapes in a Crowded World (Academic Press, 2002).
What Would Be Helpful in Future BTM Reports [side bar]
Analysis of the small wind turbine market. No one, not even BTM, has tackled the elusive market for small wind turbines. While the revenues from small turbine sales are minuscule in comparison to that from commercial wind turbines, the number of people affected is large. Southwest Windpower alone claims to have sold more the 40,000 wind turbines.
Summary of annual specific yields. Bowing to utility industry conventions, BTM reports estimates of capacity factors by country. However, a more informative measure of wind turbine performance is annual specific yield in kWh/m2 of rotor swept area. In future reports BTM could include running tallies of specific yields is markets where the data exists, such as Denmark, Germany, and Spain. Yearly averages should show steadily improving performance and could more readily indicate when performance improvements reach a technological plateau than capacity factors. Ideally, BTM would sort specific yields by turbine class and manufacturer.
Table summarizing wind penetration. BTM reports wind generation’s penetration of national and regional networks in the 2001 World Market Update for only Denmark and Germany. A more comprehensive summary listing the percentage penetration on national and regional networks on islands would go a long ways toward dispelling the myth that high penetration of wind generation will disrupt utility operations. Data on penetration is available, if less than 100% reliable, for several countries, provinces, and states. For example, wind provides about 1 percent of California’s electricity, much the same as it did a decade ago.
Decommissioning costs. BTM currently reports an average of installed costs in estimating total industry revenues. It would be helpful to planners if they would also report on the controversial topic of the cost to remove old wind turbines. California developers dispute published estimates of decommissioning costs. BTM could contribute its expertise to this issue by assessing the validity of various European and North American decommissioning estimates.
Windenergie Report Deustschland 2001[side bar]
Last year the Institut für Solare Energieversorgungstechnik (ISET) in Kassel issued the tenth report in its series on Germany’s 250 MW research program. As in the past, the 2001 annual report for the Scientific Measurement and Evaluation Program, WMEP 2001 for short, is a gold mine of useful data on how wind turbines perform in the field.
Despite its dwindling percentage of the total German wind turbine fleet–only 6% of total installed wind capacity in Germany at the end of year 2000 was included in the WMEP program–WMEP 2001 still represents the world’s most comprehensive monitoring and analysis of wind turbine operational data. With the addition of statistics on wind turbines outside the 250 MW program, WMEP 2001 reports on a representative 15% of the country’s total fleet.
Of interest to those tracking the problems of interconnection, wind turbines in Germany are now operating on 150 different utility systems. More than 1,200 MW are connected to the lines of Ems-Weser-Elbe (EWE) in northern Niedersachsen, and another 1,100 MW are on the Schleswag system in Schleswig-Holstein. For comparison, in early 2001 both utilities were each handling more wind generating capacity than Southern California Edison, the U.S. utility with the greatest amount of wind capacity online.
Total generation reached 8.6 TWh in 2000 or 1.8% of German consumption. Yet in Schleswig-Holstein wind turbines generated 2.2 TWh for a staggering 17.5% of the state’s electrical demand. Wind provided 10.6% of Mecklenburg-Vorpommern demand, and 5% of that in Niedersachsen. In some locales, wind delivers 60% of the supply. Only in areas of Denmark is there more wind penetration than in these northern German states. In contrast, wind contributes slightly more than 1% of California’s supply, 0.6% of the Netherlands’ electricity and less than a paltry 0.2% of total demand in the USA and Great Britain.
As before, German farmers still account for a significant market for new wind capacity. However, the cost of ever larger turbines and the extensive planning now required suggests that the 35% they represented in 2000 will decrease. Nearly 45% of total capacity added in 2000 was installed by commercial operators and wind farm developers.
Again, there’s no evidence that the increasing age of the program’s fleet has led to higher operating costs. The cost to operate and maintain the turbines in the program during 2000 ranged from 20 DM per kW of capacity to 40 DM per kW after the two-year warranty period has expired. The cost to maintain a turbine in the 500 kW class averages 20,000 DM per year or about 3% of initial installed cost.
An intriguing section of the report is ISET’s Model Specific Evaluations. This sections offers a detailed view of the specific performance of individual turbine brands. For example, there are 70 Enercon E40 turbines on towers from 42 meters to 65 meters tall monitored as part of the WMEP program. On average, these E40s were slightly more than six years old, and during 2000 produced a specific yield 859 kWh/m2 of rotor swept area. These E40s were available for operation 99% of the time, costing DM 24,200 per turbine to operate them for the year.
Similarly, there are 45 of Vestas V39 series in the program. These turbines use rotors from 39 meters to 44 meters in diameter and towers from 41 meters to 63 meters tall. Yields for the Vestas in 2000 were 744 kWh/m2, significantly lower than those for Enercon’s E40. Though their availability was equally as high as the E40s, they were slightly more costly to operate in 2000 at DM 22,900 than the E40s.
ISET’s WMEP 2001 report offers 332 pages of valuable data from the world’s most comprehensive wind turbine monitoring program. Copies can be purchased for DM 30 plus postage from ISET, Königstor 59, D34119 Kassel, Germany; +49 561 72940; fax: +49 561 7294 100; email@example.com; www.iset-unikassel.de.
California Updates Wind Stats–Finally[side bar]
In February, the California Energy Commission issued its long-awaited update on the performance of the state’s wind industry. The Wind Performance Report Summary 1996-1999 eliminates some confusion, while adding its own.
Because the CEC collects data directly from the state’s electric utilities on energy deliveries, the report of electricity generated by California’s wind turbines is the most accurate and reliable of the data found in the report. However, the CEC is dependent upon wind companies for calculating the total number of wind turbines and wind-generating capacity in the state. Historically this has proven problematic.
Some wind projects have changed hands so many times no one knows they have a legal obligation to report the number, size, and type of turbines on their sites. Some operators simply don’t cooperate. Others inexplicably fail to add new projects to their reports. For example, the CEC’s Juan Guzman says that after issuing the Performance Report he learned that Enron (now General Electric) was operating the Cabazon project in the San Gorgonio Pass. Enron did not report the 40 MW project of Zond Z-750 turbines in their 1998 filing.
Enron’s failure to file the Cabazon data, coupled with other operators’ failure to file reports with the state, led the CEC to issue a surprising disclaimer. Though the Wind Performance Report data says there were 1,406 MW of wind capacity at the end of 1999, the CEC believes there was actually 1,670 MW. The CEC reports that the discrepancy has steadily increased since the last state report was issued.
The CEC report also doesn’t include the growing number of small turbines in the state, nor the two turbines installed on San Clemente Island. Nevertheless, California’s Wind Project Performance Reporting System is the most authoritative assessment of what is operating in the state.
Fortunately, yields statewide have held their own. Since its peak in 1994, statewide annual specific yield in kWh/m2 have declined only modestly from 5% to 8%. The aging fleet of first and second generation turbines is being offset by the introduction of more modern turbines through repowerings in the San Gorgonio and Tehachapi passes. Repowerings have been stalled in the Altamont Pass by legal and environmental obstacles. When these will be resolved remains uncertain.
California’s wind industry suffered a devastating blow by the state’s experiment with utility deregulation. Since the mid 1990s the future of wind companies in the state has been uncertain. First was a decision by the Federal Energy Regulatory Commission thwarting the construction of new projects, quickly followed by Kenetech’s bankruptcy, then a brief dalliance with so-called green power projects, and more recently by the bankruptcy of Pacific Gas & Electric and the near bankruptcy of Southern California Edison during the sates power crisis. It’s been a wild ride, but the state’s wind turbines, for the most part, remain standing and delivering a much needed 1% of the California’s electricity.
Those who track the industry will quickly realize that the numbers in the report don’t always add up or match those published previously. The CEC staff acknowledges that there are discrepancies and faults the complexity of the contracts between wind companies and the utilities, as well as to the refusal of some companies to cooperate. Analysts should use due care in working with the CEC data.