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Wind-Generated Power: Why Midwest Wind Power Isn’t Blowing East
by David Fessler, Advisory Panelist
Monday, July 13, 2009: Issue #1039
In the waning days of the Great Depression, FDR Signed the Rural Electrification Act of 1936 into law, heralding a new era of growth and prosperity for the nation’s heartland.
While electricity was generally available in cities and towns, it was nearly unheard of on farms, ranches and other rural areas. The REA brought electric power to these sparsely populated Midwest farms and ranches.
Today the shoe is on the other foot, so to speak.
President Obama is hoping that Midwest rural areas will return the favor, and provide much needed wind-generated power to densely populated cities and towns up and down both coasts of the country…
Wind turbines are huge, and not well suited to more densely populated areas. They are a natural fit in the vast open plains of the nation’s heartland, where the wind almost never stops blowing. But there’s a problem… it’s just not the one you might think.
Here’s why wind-generated power is still going to be the driving force for change in the way we use energy, and one of the biggest obstacles it has right now to getting us to where we need to be.
A Banner Year For The Wind Power Industry
2008 was a banner year for the wind power industry:
- Previous installation records were blown away, with over 8,500 megawatts (MW) of new generating power installed in the United States alone. That’s enough to light over 2 million homes.
- Wind power installations represented 42% of all the new power generation capacity added in 2008.
- The 44 million tons of carbon emissions avoided equates to taking 7 million cars and trucks off the highways.
As a result of the current recession, the wind energy installation outlook for 2009 will be somewhat muted compared to last year, with about 5,000 MW expected to be installed. But despite the downturn, the industry is still in expansion mode.
And that’s a good thing.
A lot of the stuff is engineered and made right here: domestic “made in the USA” components now make up about 50% of the average system, up from 30% in 2005. And like any other burgeoning sector, when business is booming, companies expand and hire people.
In just the last two years, wind turbine, tower and component manufacturers announced new facilities, added or expanded 70 facilities, 55 of them in 2008 alone.
It’s creates lots of jobs as well. Today 85,000 people are employed in the wind industry. That’s a 70% increase from just one year ago. It’s all good news… well almost all of it.
Where Wind-Generated Power Is Needed The Most
You see, while plenty of wind farms dot the ranchlands of the Midwest, the bulk of the wind-generated power produced is needed in the dense urban areas on the east and west coasts.
And there’s the big problem: the existing power grids won’t cut it.
Just consider: 3,000 utilities generate power and send it to 500 transmission owners. They control over 164,000 miles of transmission lines divided into three major interconnection regions: East, West, and Texas.
As an electrical engineer, I may be one of the few who can appreciate the technology, but it’s truly amazing that it all plays together.
They’re fragmented, low power grids that aren’t capable of transmitting the hundreds of thousands of megawatts that will be needed thousands of miles away from the wind farms.
The bottom line is that in order for the estimated 300,000 MW of proposed wind-generated power to get to where its needed, $60 billion will need to be spent on grid upgrades and interconnects by 2030.
The Biggest Problem Facing Wind-Generated Power
But even assuming the $60 billion was available to be spent on this type of alternative energy right now, not a dime of it would be used to build wind-generated power transmission lines.
The problem? Red tape with a capital R:
- Regulations that aren’t designed for power transmission between states.
- Rules that burden the local ratepayers unfairly with the construction costs instead of distant beneficiaries.
- Approval times measured in years, not months.
Here’s an example of how ridiculous it gets: American Electric Power (NYSE: AEP) is a public utility holding company in the business of generation, transmission and distribution of power at both the retail and wholesale level.
As part of an expansion of its network, the company erected a transmission line between West Virginia and Virginia. The construction time was two years. The approvals took 14.
Susan Tomasky, AEP Transmission President, explains the problem: “There are lots of people with authority to make pieces of the decision, and no single entity that can say ‘yes’ or ‘no’.”
Clearly what’s needed is federal permitting to locate cross-country transmission lines. The federal government has been doing it with natural gas pipelines since the 1960’s.
Looking To The Future Of Wind Turbines
So what are the chances of the fed’s saving us, and getting it done in the near future?
Better than you might think: Jeff Bingaman – Chairman of the Senate Energy Committee – has a proposal that will require comprehensive plans for grid interconnections.
More importantly, it will greatly expand the FERC’s powers to locate big new transmission lines at the federal level (bypassing the myriad of local regulations) and the authority to properly allocate their costs.
And firms like AEP and ITC Holdings Corp. (NYSE: ITC), another power generation and transmission company, are both eager to invest and build lines from the Midwest to cities in the east.
Even if all goes according to plan – which isn’t ever the case in Washington – these lines wouldn’t be in service until 2020 or so. Clearly a more streamlined approach is needed. The refreshing news is that it appears politicians are actually working on the problem.
We’ll be watching and reporting on it here and in my Energy and Infrastructure newsletter soon to be published by the Oxford Club.
Next week, I’ll be traveling with my colleagues to Vancouver, British Columbia, and speaking at the Oxford Club’s Victoria Chapter Meeting. I’ll return here the following week.
Good investing,
David Fessler
- Americas Wind Energy Corporation (Nasdaq: AWNE): Stock of the Day
- Jacobs Engineering Group, Inc. (NYSE: JEC): Stock of the Day
- Wind Power: Why This Renewable Energy Could Solve The U.S. Oil Addiction
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14 Responses to “Wind-Generated Power: Why Midwest Wind Power Isn’t Blowing East”
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July 13th, 2009 at 12:27 pm
Very good article. It seems that in order to avoid numerous headlines about thousands being without power because of (take your choice) hail storms, tornados, snow storms, high winds, whatever, the new power transmission facilities should be underground. How much time and $ do you think that would add – so much as to sink the project?
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July 13th, 2009 at 12:30 pm
David, good article summarizing the regulatory and capital investment challenges. When you have time could you discuss the engineering and operational challenges including wind firming and any investment opportunities in these areas.
Thanks
Mike
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July 13th, 2009 at 12:39 pm
David:
Your wind power article today is useful and I’ll be quoting from in on my webpage: http://www.arcticgaspipeline.com. Earlier today I had done a story on a local wind project that could become caught up on a bureaucratic, regulatory approval process. The local theme of my article parallels some of the bureaucratic national siting and NIMBY issues to which you refer.
Keep up the great work. I’ll be in Victoria and look forward to visiting with you.
Dave Harbour, APR
Commissioner Emeritus (NARUC)
Board of Advisors, Consumer Energy Alliance
Publisher, Northern Gas Pipelines
2440 E. Tudor Rd. – #463
Anchorage, Ak. 99507
(907) 227-7110
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July 13th, 2009 at 12:39 pm
Thank you for the up date , I suggest you look at Kraft , they have just finished here In Litte Chute,Wisconsin . an addittion to there Pizza place ,it is the largest in the world ,that make Pizzas ,when all done ,they will ba able to make 80-90 million Pizzas ,in a year check that stock .. GENE JANSSEN
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July 13th, 2009 at 12:42 pm
Although the main usage areas are distant from the wind power generation areas, it isn’t necessary to move the wind-generated power that distance. Local midwest cities and rural areas could easily soak-up the minuscule added capacity of of these new wind-based electric power generation facilities, freeing conventional fuel & nuclear power generating systems to service the east and west coasts. Just let things happen. Government planning isn’t necessary.
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July 13th, 2009 at 12:59 pm
Please read the book, “Gusher of Lies” by Robert Bryce. There’s a lot of problems you might not be aware of.
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July 13th, 2009 at 1:05 pm
Dear David,
What about energy storage via batteries? Is this an option?
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July 13th, 2009 at 2:01 pm
Relative to your blog on wind power eneration.
I don’t care if it takes 100 years to get all the approvals in place. The last thing we need is another federal agency (just for approval or otherwise! Government is NEVER the solution only the problem. Do you know anything about the US dept of energy? It was formed in the 70s. It’s whole purpose was to get us off of mid-east oil dependancy! How are we doing? HA! The dept of energy has 36,000 employees and an annual budget of 26.5 BILLION. And you want another govt agency? You are out of your mind!
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July 13th, 2009 at 2:33 pm
I am so tired of reading about large powerlines , grids and utilties. We don’t need them!!!! There are individual vertical axis , a rotary reverse blade and other generators sized for individual houses. Cities Wind tunnels ontop of high rises.
In short this is the opportunity to break away from political control of our lives.
Please stop supporting Goldman Sacks and the powerful world leaders.
Sincerely
George E. Langevin
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July 13th, 2009 at 8:29 pm
Wind generated power is a loser —– See “A Problem With Wind Power” by Eric Rosenbloom at www:aweo.org. Denmark’s experience has resulted in its abandonment of further investment in wind generated power.
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July 13th, 2009 at 11:57 pm
8500 Megawatts — when? Is that peak or time-leveled power output? And at what cost? Although investment in companies currently buoyed by the interest in wind power might be a good strategy for a momentum investor at this time, will that interest be sustainable when the political winds change in Washington? T. Boone Pickens recently announced that he is giving up, and he was willing to pour in much of his own money. Why did he quit? Perhaps you could interview him and issue a follow-on report. He’s been in the energy business a lot longer than most of us have been alive, and made a lot of money based on his own business decisions. I do concur with you that approvals for siting of generation and transmission facilities is a significant problems that consolidation in a federal agency might improve.
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July 14th, 2009 at 12:23 am
Instead of setting up large wind farms in areas far from the consumption centres like cities, efforts needs to be made to setting up lighter and smaller (in size but sufficient large in output) wind tunnel generators on the rooftops of buildings within the cities and their suburbs. Such wind tunnel generators are now available if one looks around the scientific and technological institutes where scientists and engineers have the capacity to provide the product but do not have entrepreneurial skills to market the same.
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July 14th, 2009 at 12:32 am
your comment in this regard is very interesting & knowledegable to reader
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July 14th, 2009 at 9:43 am
There is a seldom mentioned problem with wind turbines. They can only operate when the wind is greater than a certain minimum and less than a certain maximum. Typical wind farms only produce 20-30% of their capacity on an annual basis. This can cause problems for grid operators because of an unstable supply. They must have conventional coal, hydro, or nuclear plants spinning and ready to take up the load in case the output from the wind turbines suddenly decreases, this is the reason that many grid operators limit the percentage of wind power that may be attached to the grid.
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