energy: wind - the history of wind energy, electricity generation from the wind, types of wind...

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Energy:WindThe History of Wind Energy, ElectricityGeneration from the Wind, Types of Wind Turbines,Wind Energy Potential, Offshore Wind Technology,Wind Power on Federal Land, Small Wind Turbines,Economic and Policy Issues, Tax Policy

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Energy: Wind, softbound:ISBN: 158733-188-8ISBN 13: 978-1-58733-188-6

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

Chapter 1:“History of Wind Energy,” U.S. Department ofEnergy (DOE)—Energy Efficiency and RenewableEnergy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2:“Electricity Generation from Wind—Basics: How Wind Turbines Work,”U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter 3:“How Wind Turbines Work,” U.S. Departmentof Energy—Energy Efficiency and RenewableEnergy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Chapter 4:“Types of Wind Turbines—Basics,”U.S. Energy Information Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 5:“Where Wind Power Is Harnessed—Basics,”U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 6:“Wind Power Today—Building a NewEnergy Future,” U.S. Department of Energy—Energy Efficiency & Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Chapter 7:“Wind Power in the United States: Technology, Economic,and Policy Issues,” by Stan Mark Kaplan, CRS Reportfor Congress RL34546, October 21, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Chapter 8:Estimates of Windy Land Area and Wind Energy Potentialby State for Areas >=30% Capacity Factor at 80m,National Renewable Energy Laboratory, February 4, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Chapter 9:“Distributed Wind Market Applications,”by T. Forsyth and I. Baring-Gould, TechnicalReport NREL/TP-500-39851, November 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

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Summary Table of Contents

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Chapter 10:“U.S. Energy: Overview and Key Statistics,”by Carl E. Behrens and Carol Glover, CRS Reportfor Congress R40187, October 28, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

Chapter 11:Testimony of Dr. Howard Gruenspecht, Acting Administrator,Energy Information Administration, U.S. Department of Energy before theSubcommittee on Energy and Environment of the Committee on Energyand Commerce, U.S. House of Representatives, February 26, 2009 . . . . . . . . . . . . . . 243

Chapter 12:Testimony of Ralph Izzo, President, Chairman and CEO,Public Service Enterprise Group Incorporated beforethe House Committee on Energy and Commerce,Subcommittee on Energy and Environment, February 26, 2009 . . . . . . . . . . . . . . . . . . . . 261

Chapter 13:Written Testimony of Edward C. Lowe, General Manager,Market Development, Renewables, GE Energy Infrastructure beforethe House Committee on Energy and Commerce, Subcommitteeon Energy and Environment. Hearing on “Renewable Energy:Complementary Policies for Climate Legislation,” February 26, 2009 . . . . . . . . . . . . . 269

Chapter 14:“Wind and Water Power Program—Wind Powering America” . . . . . . . . . . . . . . . . . . . . . . 285

Chapter 15:“Wind and Water Power Program—About the Program,”U.S. Department of Energy—Energy Efficiencyand Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289

Chapter 16:“Wind and Water Power Program—Related Wind Links,”U.S. Department of Energy—Energy Efficiencyand Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Chapter 17:“Wind and Water Power Program—Wind EnergyResource Potential,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

Chapter 18:“Wind and Water Power Program—Wind PowerOutreach and Education,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

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Chapter 19:“Wind and Water Power Program—Environmental Impactsand Siting of Wind Projects,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

Chapter 20:“Wind and Water Power Program—Wind Energy forHydrogen Production,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301

Chapter 21:“Wind and Water Power Program—Wind Energy forHydropower Applications,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

Chapter 22:“Wind and Water Power Program—Distributed (Small)Wind Technology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

Chapter 23:“Wind and Water Power Program—Large WindTechnology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

Chapter 24:“Wind and Water Power Program—Supporting WindTurbine Manufacturing,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315

Chapter 25:“Wind and Water Power Program—Jobs and EconomicDevelopment Impact Models,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

Chapter 26:“Wind and Water Power Program—Wind EconomicDevelopment,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

Chapter 27:“Wind and Water Power Program—Offshore WindTechnology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

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Chapter 28:“Wind Energy: Offshore Permitting,” by Adam Vann,CRS Report for Congress R40175, September 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329

Chapter 29:“Wind and Water Power Program—RenewableSystems Interconnection,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347

Chapter 30:“Wind and Water Power Program—Advantages andDisadvantages of Wind Energy,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

Chapter 31:“Assessing the Potential for Renewable Energy onNational Forest System Lands,” U.S. Department of Energy,National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355

Chapter 32:“Energy Projects on Federal Lands: Leasing andAuthorization,” by Adam Vann, CRS Report forCongress R40806, September 8, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479

Chapter 33:U.S. Senate Committee on Energy and Natural ResourcesHearing on Energy Development on Public Lands andthe Outer Continental Shelf, March 17, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501

Chapter 34:U.S. Senate Committee on Energy and Natural ResourcesHearing to Consider Renewable Energy Production, Strategies,and Technologies with Regard to Rural Communities,Chena Hot Springs, AK, August 22, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611

Chapter 35:“20% Wind Energy by 2030—Increasing WindEnergy’s Contribution to U.S. Electricity Supply,Executive Summary,” December 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685

Chapter 36:“Wind Research—Department of Energy ReleasesNew Estimates of Nation’s Wind Energy Potential,”National Renewable Energy Laboratory, February 26, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . 713

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Chapter 37:“Visiting NREL—National Wind Technology Center,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715

Chapter 38:“Wind Research—Large Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717

Chapter 39:“Wind and Water Power Program—Frequently AskedQuestions on Small Wind Systems,” U.S. Departmentof Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721

Chapter 40:“Wind Research—Small Wind Turbine Independent Testing,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729

Chapter 41:“Wind Research –Small Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731

Chapter 42:“Wind and Water Power Program—Wind Powering America—Small Wind for Homeowners, Ranchers, and Small Businesses”U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . 733

Chapter 43:“Wind Research—Midsize Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737

Chapter 44:“Wind Research—Accredited Testing,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739

Chapter 45:“Wind Research—Software Development, Modeling,and Analysis,” National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741

Chapter 46:“Wind Research—Working with Us,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745

Chapter 47:“Energy Tax Policy: Issues in the 111th Congress,”by Donald J. Marples and Molly F. Sherlock,CRS Report for Congress R40999, March 8, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747

Chapter 48:“Renewable Energy and Energy Efficiency Tax IncentiveResources,” by Lynn J. Cunningham and Beth A. Roberts,CRS Report for Congress R40455, March 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777

Chapter 49:Resources from TheCapitol.Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787

Chapter 50:Other Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix

Chapter 1:“History of Wind Energy,” U.S. Department ofEnergy (DOE)—Energy Efficiency and RenewableEnergy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Chapter 2:“Electricity Generation from Wind—Basics: How Wind Turbines Work,”U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Chapter 3:“How Wind Turbines Work,” U.S. Departmentof Energy—Energy Efficiency and RenewableEnergy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Chapter 4:“Types of Wind Turbines—Basics,”U.S. Energy Information Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Chapter 5:“Where Wind Power Is Harnessed—Basics,”U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Chapter 6:“Wind Power Today—Building a NewEnergy Future,” U.S. Department of Energy—Energy Efficiency & Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Building a New Energy Future

Boosting U.S. Manufacturing

Advancing Large Wind Turbine Technology

Growing the Market For Distributed Wind

Enhancing Wind Integration

Increasing Wind Energy Deployment

Ensuring Long-Term Industry Growth

Table of Contents

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Chapter 7:“Wind Power in the United States: Technology, Economic,and Policy Issues,” by Stan Mark Kaplan, CRS Reportfor Congress RL34546, October 21, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Introduction

Background

The Rise of Wind

Benefits and Drawbacks of Wind Power

Wind Resources and Technology

Wind Power Fundamentals

Physical Relationships

Wind Resources

Offshore Wind

Wind Power Technology

Types of Wind Turbines

Capacity Factor

Wind Research and Development Emphasis

Wind Industry Composition and Trends

Wind Turbine Manufacturers and Wind Plant Developers

International Comparisons

Wind Power Economics

Cost and Operating Characteristics of Wind Power

Wind Operation and System Integration Issues

Levelized Cost Comparison

Wind Policy Issues

Siting and Permitting Issues

Transmission Constraints

Federal Renewable Transmission Initiatives

Renewable Production Tax Credit

PTC Eligibility: IOUs vs. IPPs

Specific PTC Legislative Options

Carbon Constraints and the PTC

Alternatives to the PTC

Renewable Portfolio Standards

Federal RPS Debate

Conclusions

Figure 1. Cumulative Installed U.S. Wind Capacity

Figure 2. Wind Power Aerodynamics

Figure 3. U.S. Wind Resources Potential

Figure 4. Evolution of U.S. Commercial Wind Technology

Figure 5. Components in a Simplified Wind Turbine

Figure 6. Installed Wind Capacity By State in 2007

Figure 7. Existing and Planned North American Wind Plants by Size

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Figure 8. U.S. Wind Turbine Market Share by Manufacturer in 2007

Figure 9. Global Installed Wind Capacity By Country

Figure 10. Component Costs for Typical Wind Plants

Table 1. Wind Energy Penetration Rates by Country

Table 2. Assumptions for Generating Technologies

Table 3. Economic Comparison of Wind Power with Alternatives

Table 4. Selected Wind Power Tax Incentive Bills Compared

Table A-1. Base Case Financial Factors

Table A-2. Base Case Fuel and Allowance Price Forecasts

Table A-3. Power Plant Technology Assumptions

Appendix. Financial Analysis Methodology and Assumptions

Chapter 8:Estimates of Windy Land Area and Wind Energy Potentialby State for Areas >=30% Capacity Factor at 80m,National Renewable Energy Laboratory, February 4, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Chapter 9:“Distributed Wind Market Applications,”by T. Forsyth and I. Baring-Gould, TechnicalReport NREL/TP-500-39851, November 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

Chapter 1. Executive Summary

Chapter 2. Small-Scale Remote Or Off-Grid Power

Chapter 3. Residential Power

Chapter 4. Farm, Industry, and Small Business

Chapter 5. “Small-Scale” Community Wind Power

Chapter 10:“U.S. Energy: Overview and Key Statistics,”by Carl E. Behrens and Carol Glover, CRS Reportfor Congress R40187, October 28, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205

Introduction

Oil

Petroleum Consumption, Supply, and Imports

Petroleum and Transportation

Petroleum Prices: Historical Trends

Petroleum Prices: The 2004–2008 Bubble

Gasoline Taxes

Electricity

Other Conventional Energy Resources

Natural Gas

Coal

Renewables

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Conservation and Energy Efficiency

Vehicle Fuel Economy

Energy Consumption and GDP

Major Statistical Resources

Energy Information Administration (EIA)

Other Sources

Figure 1. Per Capita Energy Consumption in Transportationand Residential Sectors, 1949–2008

Figure 2. Electricity Intensity: Commercial, Residential,and Industrial Sectors, 1949–2008

Figure 3. U.S. Energy Consumption, 1950–2005 and 2008

Figure 4. World Crude Oil Reserves, 1973, 1991, and 2008

Figure 5. U.S. Consumption of Imported Petroleum, 1960–2008 andYear-to-Date Average for 2009

Figure 6. Transportation Use of Petroleum, 1950–2008

Figure 7. Nominal and Real Cost of Crude Oil to Refiners, 1968–2008

Figure 8. Nominal and Real Price of Gasoline, 1950–2008 and August 2009

Figure 9. Consumer Spending on Oil as a Percentage of GDP, 1970–2006

Figure 10. Crude Oil Futures Prices, January 2000 to September 2009

Figure 11. Average Daily Nationwide Price of Unleaded Gasoline,January 2002–October 2009

Figure 12. U.S. Gasoline Consumption, January 2000–September 2009

Figure 13. Electricity Generation by Source, Selected Years, 1950–2007

Figure 14. Changes in Generating Capacity, 1995–2007

Figure 15. Price of Retail Residential Electricity, 1960–2007

Figure 16. Natural Gas Prices to Electricity Generators, 1978–2007

Figure 17. Monthly and Annual Residential Natural Gas Prices, 2000–June 2009

Figure 18. Annual Residential Natural Gas Prices, 1973–2008

Figure 19. U.S. Ethanol Production, 1990–2008

Figure 20. Wind Electricity Net Generation, 1989–2008

Figure 21. Motor Vehicle Efficiency Rates, 1973–2007

Figure 22. Oil and Natural Gas Consumption per Dollar of GDP, 1973–2008

Figure 23. Change in Oil and Natural Gas Consumption and Growth in GDP, 1973–2008

Table 1. U.S. Energy Consumption, 1950–2008

Table 2. Energy Consumption in British Thermal Units (BTU)and as a Percentage of Total, 1950–2008

Table 3. Petroleum Consumption by Sector, 1950–2008

Table 4. U.S. Petroleum Production, 1950–2008

Table 5. Transportation Use of Petroleum, 1950–2008

Table 6. Electricity Generation by Region and Fuel, 2008

Table 7. Natural Gas Consumption by Sector, 1950–2008

Table 8. Coal Consumption by Sector, 1950–2008

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Chapter 11:Testimony of Dr. Howard Gruenspecht, Acting Administrator,Energy Information Administration, U.S. Department of Energy before theSubcommittee on Energy and Environment of the Committee on Energyand Commerce, U.S. House of Representatives, February 26, 2009 . . . . . . . . . . . . . . 243

Chapter 12:Testimony of Ralph Izzo, President, Chairman and CEO,Public Service Enterprise Group Incorporated beforethe House Committee on Energy and Commerce,Subcommittee on Energy and Environment, February 26, 2009 . . . . . . . . . . . . . . . . . . . . 261

Chapter 13:Written Testimony of Edward C. Lowe, General Manager,Market Development, Renewables, GE Energy Infrastructure beforethe House Committee on Energy and Commerce, Subcommitteeon Energy and Environment. Hearing on “Renewable Energy:Complementary Policies for Climate Legislation,” February 26, 2009 . . . . . . . . . . . . . 269

Chapter 14:“Wind and Water Power Program—Wind Powering America” . . . . . . . . . . . . . . . . . . . . . . 285

Chapter 15:“Wind and Water Power Program—About the Program,”U.S. Department of Energy—Energy Efficiencyand Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289

Chapter 16:“Wind and Water Power Program—Related Wind Links,”U.S. Department of Energy—Energy Efficiencyand Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291

Chapter 17:“Wind and Water Power Program—Wind EnergyResource Potential,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295

Chapter 18:“Wind and Water Power Program—Wind PowerOutreach and Education,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297

Chapter 19:“Wind and Water Power Program—Environmental Impactsand Siting of Wind Projects,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299

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Chapter 20:“Wind and Water Power Program—Wind Energy forHydrogen Production,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301

Chapter 21:“Wind and Water Power Program—Wind Energy forHydropower Applications,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303

Chapter 22:“Wind and Water Power Program—Distributed (Small)Wind Technology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305

Chapter 23:“Wind and Water Power Program—Large WindTechnology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309

Chapter 24:“Wind and Water Power Program—Supporting WindTurbine Manufacturing,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315

Chapter 25:“Wind and Water Power Program—Jobs and EconomicDevelopment Impact Models,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317

Chapter 26:“Wind and Water Power Program—Wind EconomicDevelopment,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321

Chapter 27:“Wind and Water Power Program—Offshore WindTechnology,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325

Chapter 28:“Wind Energy: Offshore Permitting,” by Adam Vann,CRS Report for Congress R40175, September 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329

Jurisdiction Over the Ocean

State Permitting

Federal Permitting

Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xv

Early Regulation and Litigation

The Energy Policy Act of 2005

EPAct Exemptions

Additional Regulation Under Existing Law

Conclusion

Chapter 29:“Wind and Water Power Program—RenewableSystems Interconnection,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347

Chapter 30:“Wind and Water Power Program—Advantages andDisadvantages of Wind Energy,” U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

Chapter 31:“Assessing the Potential for Renewable Energy onNational Forest System Lands,” U.S. Department of Energy,National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355

Chapter 32:“Energy Projects on Federal Lands: Leasing andAuthorization,” by Adam Vann, CRS Report forCongress R40806, September 8, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479

Introduction

Oil and Natural Gas Exploration and Production on Federal Lands

History and Background

Public Lands Subject to Oil and Natural Gas Leasing

Development of Resource Management Plans

Bureau of Land Management

U.S. Forest Service

The Competitive Leasing Process

The Noncompetitive Leasing Process

Lease Terms and Conditions

General Statutory Restrictions

Payment Terms: Rental Fees and Royalties

Lease Terms, Extensions, and Cancellations

Applications for Permits to Drill

Bureau of Land Management

U.S. Forest Service

Renewable Energy Projects on Federal Lands

Background

Geothermal Project Leasing

Background

xvi Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com

The Leasing Process

Exploration and Production Under Geothermal Leases

Authorizations for Wind and Solar Energy Projects

Background

Title V of the Federal Land Policy and Management Act

Chapter 33:U.S. Senate Committee on Energy and Natural ResourcesHearing on Energy Development on Public Lands andthe Outer Continental Shelf, March 17, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501

Chapter 34:U.S. Senate Committee on Energy and Natural ResourcesHearing to Consider Renewable Energy Production, Strategies,and Technologies with Regard to Rural Communities,Chena Hot Springs, AK, August 22, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611

Chapter 35:“20% Wind Energy by 2030—Increasing WindEnergy’s Contribution to U.S. Electricity Supply,Executive Summary,” December 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685

Chapter 36:“Wind Research—Department of Energy ReleasesNew Estimates of Nation’s Wind Energy Potential,”National Renewable Energy Laboratory, February 26, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . 713

Chapter 37:“Visiting NREL—National Wind Technology Center,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715

Chapter 38:“Wind Research—Large Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717

Chapter 39:“Wind and Water Power Program—Frequently AskedQuestions on Small Wind Systems,” U.S. Departmentof Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721

Chapter 40:“Wind Research—Small Wind Turbine Independent Testing,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729

Chapter 41:“Wind Research –Small Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731

Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xvii

Chapter 42:“Wind and Water Power Program—Wind Powering America—Small Wind for Homeowners, Ranchers, and Small Businesses”U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . 733

Chapter 43:“Wind Research—Midsize Wind Turbine Research,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737

Chapter 44:“Wind Research—Accredited Testing,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739

Chapter 45:“Wind Research—Software Development, Modeling,and Analysis,” National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741

Chapter 46:“Wind Research—Working with Us,”National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745

Chapter 47:“Energy Tax Policy: Issues in the 111th Congress,”by Donald J. Marples and Molly F. Sherlock,CRS Report for Congress R40999, March 8, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747

Introduction

Economic Rationale for Intervention in Energy Markets

Rationale for Intervention in Energy Markets

Externalities

Principal-Agent and Informational Inefficiencies

National Security

Potential Interventions in Energy Markets

Taxes as a User Charge

Current Status of U.S. Energy Tax Policy

Fossil Fuel Production

Renewable Energy Production

Energy Conservation

Alternative Technology Vehicle Credits

Other Energy Tax Provisions

Energy Tax Legislation in the 111th Congress

The American Recovery and Reinvestment Act of 2009 (P.L. 111-5)

The President’s Fiscal Year 2010 and 2011 Budget Proposals

American Energy Production and Price Reduction Act (H.R. 3505)

Carbon Tax/Climate Change

The Tax Extenders Act of 2009

Enacted Legislation in the 110th Congress

Energy Independence and Security Act of 2007 (P.L. 110-140

Energy Tax Provisions in the Food, Conservation, and Energy Act of 2008 (P.L. 110-234)

The Emergency Economic Stabilization Act of 2008 (P.L. 110-343)

Table 1. Energy Tax Expenditures

Table 2. Energy Tax Provisions Enacted Under American Recoveryand Reinvestment Act of 2009

Appendix. Energy Tax Legislation Prior to the 110th Congress

Chapter 48:“Renewable Energy and Energy Efficiency Tax IncentiveResources,” by Lynn J. Cunningham and Beth A. Roberts,CRS Report for Congress R40455, March 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777

Full Text of Tax Incentive Legislation

Federal Incentives

State and Local Incentives

Incentives by Technology Type Biomass

Biomass

Geothermal

Solar

Wind

CRS Reports on Federal Incentives

Recent Legislation

General

Vehicles and Fuels

Wave, Tidal, In-Stream

Wind Power

Popular Incentives Tables

Grants Information

CRS Reports on Grants

Table 1. U.S. Code Citations and Expiration Dates forPopular Renewable Energy an Energy Efficiency Tax Incentives/Credits

Table 2. Alternative Motor Vehicle Credit

Chapter 49:Resources from TheCapitol.Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787

Live Training

Capitol Learning Audio CoursesTM

Chapter 50:Other Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788

Internet Resources

Books

Videos and Movies

xviii Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com

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IntroductionEnergy: Wind

The History of Wind Energy, Electricity Generation from the Wind,Types of Wind Turbines, Wind Energy Potential, Offshore WindTechnology, Wind Power on Federal Land, Small Wind Turbines,

Economic and Policy Issues, Tax Policy

Since early recorded history, people have been harnessing the energy of the wind. In the United

States in the late 19th century, settlers began using windmills to pump water for farms and ranches,

and later, to generate electricity for homes and industry. Industrialism led to a gradual decline in

the use of windmills. The steam engine replaced European water-pumping windmills, and in the

1930s, the Rural Electrification Administration’s programs brought inexpensive electric power to

most rural areas in the United States. However, industrialization also sparked the development

of larger windmills, wind turbines, to generate electricity.

After experiencing strong growth in the mid-1980s, the U.S. wind industry hit a plateau during the

electricity restructuring period in the 1990s and then regained momentum in 1999. Industry growth

has since responded positively to policy incentives. Today, the U.S. wind industry is growing rapidly,

driven by sustained production tax credits (PTCs), rising concerns about climate change, and

renewable portfolio standards (RPS) or goals in roughly 50% of the states.

Although wind power currently provides only about 1% of U.S. electricity needs, it is growing

more rapidly than any other energy source. In 2007, over 5,000 megawatts of new wind generating

capacity were installed in the United States, second only to new natural gas-fired generating

capacity.

Wind power has negligible fuel costs, but a high capital cost. The estimated average cost per

unit incorporates the cost of construction of the turbine and transmission facilities, borrowed funds,

return to investors (including cost of risk), estimated annual production, and other components,

averaged over the projected useful life of the equipment, which may be in excess of twenty years.

Energy cost estimates are highly dependent on these assumptions so published cost figures can

differ substantially.

Modern wind turbines fall into two basic groups: the horizontal-axis variety (the blades circle

around a horizontal axis) and the vertical-axis design (the blades circle around a vertical axis).

Utility-scale turbines range in size from 100 kilowatts to as large as several megawatts. Larger

turbines are grouped together into wind farms which provide bulk power to the electrical grid.

Single small turbines (below 100 kilowatts) are used for homes, telecommunications dishes, or

water pumping. Small turbines are sometimes used in connection with diesel generators, batteries,

and photovoltaic systems. These systems are called hybrid wind systems and are typically used

in remote, off-grid locations where a connection to the utility grid is not available.

A key challenge for wind energy is that electricity production depends on when winds blow rather

than when consumers need power. Wind’s variability can create added expenses and complexity

in balancing supply and demand on the grid. Recent studies imply that these integration costs do

not become significant (5%-10% of wholesale prices) until wind turbines account for 15%-30%

of the capacity in a given control area.

Another concern is that new transmission infrastructure will be required to send the windgenerated

power to demand centers. Building new lines can be expensive and timeconsuming, and there

are debates over how construction costs should be allocated among endusers and which pricing

methodologies are best.

Opposition to wind power arises for environmental, aesthetic, or aviation security reasons. New

public-private partnerships have been established to address more comprehensively problems

with avian (bird and bat) deaths resulting from wind farms. Some stakeholders oppose the

construction of wind plants for visual reasons, especially in pristine or highly-valued areas.

A debate over the potential for wind turbines to interfere with aviation radar emerged in 2006,

but most experts believe any possible problems are economically and technically manageable.

Wind power has become “mainstream” in many regions of the country. Wind technology has

improved significantly over the past two decades, and wind energy has become increasingly

competitive with other power generation options. Federal wind power policy has centered primarily

on the production tax credit (PTC), a business incentive to operate wind facilities. The PTC was

extended through 2013. Analysts and wind industry representatives argue that the on-again off-

again nature of the PTC is inefficient and leads to higher costs for the industry. While wind energy

still depends on federal tax incentives to compete, key uncertainties like climate policy, fossil

fuel prices, and technology progress could dominate future cost competitiveness.

Links to Internet resources are available on the book’s web site at <TCNWind.com>.

xx Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com

Chapter 1: History of Wind Energy

Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 1

U.S. Department of Energy - Energy Efficiency and Renewable Energy

Wind and Water Power Program

History of Wind Energy Since early recorded history, people have been harnessing the energy of the wind. Wind energy propelled boats along the Nile River as early as 5000 B.C. By 200 B.C., simple windmills in China were pumping water, while vertical-axis windmills with woven reed sails were grinding grain in Persia and the Middle East.

Early in the twentieth century, windmills were commonly used across the Great Plains to pump water and to generate electricity.

New ways of using the energy of the wind eventually spread around the world. By the 11th century, people in the Middle East were using windmills extensively for food production; returning merchants and crusaders carried this idea back to Europe. The Dutch refined the windmill and adapted it for draining lakes and marshes in the Rhine River Delta. When settlers took this technology to the New World in the late 19th century, they began using windmills to pump water for farms

Goverment Series: Energy: Wind

2 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com

and ranches, and later, to generate electricity for homes and industry.

Industrialization, first in Europe and later in America, led to a gradual decline in the use of windmills. The steam engine replaced European water-pumping windmills. In the 1930s, the Rural Electrification Administration's programs brought inexpensive electric power to most rural areas in the United States.

However, industrialization also sparked the development of larger windmills to generate electricity. Commonly called wind turbines, these machines appeared in Denmark as early as 1890. In the 1940s the largest wind turbine of the time began operating on a Vermont hilltop known as Grandpa's Knob. This turbine, rated at 1.25 megawatts in winds of about 30 mph, fed electric power to the local utility network for several months during World War II.

The popularity of using the energy in the wind has always fluctuated with the price of fossil fuels. When fuel prices fell after World War II, interest in wind turbines waned. But when the price of oil skyrocketed in the 1970s, so did worldwide interest in wind turbine generators.

The wind turbine technology R&D that followed the oil embargoes of the 1970s refined old ideas and introduced new ways of converting wind energy into useful power. Many of these approaches have been demonstrated in "wind farms" or wind power plants — groups of turbines that feed electricity into the utility grid — in the United States and Europe.

Today, the lessons learned from more than a decade of operating wind power plants, along with continuing R&D, havemade wind-generated electricity very close in cost to the power from conventional utility generation in some locations. Wind energy is the world's fastest-growing energy source and will power industry, businesses and homes with clean, renewable electricity for many years to come.

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Wind and Water Power Program Home | EERE Home | U.S. Department of EnergyWebmaster | Web Site Policies | Security & Privacy | USA.gov

Content Last Updated: 09/12/2005

Chapter 2: Electricity Generation from Wind—Basics: How Wind Turbines Work


Electricity Generation from Wind – BasicsHow Wind Turbines Work Diagram of Windmill Workings

Source: National Renewable Energy Laboratory, U.S. Department of Energy (Public Domain)

Current Map of U.S. Wind Capacity

Note: See progress of installed wind capacity between 1999 and 2009

Source: National Renewable Energy Laboratory, U.S. Department of Energy (Public Domain)

Like old fashioned windmills, today’s wind machines (also called wind turbines) use blades to collect the wind’s kinetic energy. The wind flows over the blades creating lift, like the effect on airplane wings, which causes them to turn. The blades are connected to a drive shaft that turns an electric generator to produce electricity.



With the new wind machines, there is still the problem of what to do when the wind isn't blowing. At those times, other types of power plants must be used to make electricity.

Wind Production In 2008, wind machines in the United States generated a total of 52 billion kilowatthours, about 1.3% of total U.S. electricity generation. Although this is a small fraction of the Nation's total electricity production, it was enough electricity to serve 4.6 million households or to power the entire State of Colorado.

The amount of electricity generated from wind has been growing rapidly in recent years. Generation from wind in the United States nearly doubled between 2006 and 2008.

New technologies have decreased the cost of producing electricity from wind, and growth in wind power has been encouraged by tax breaks for renewable energy and green pricing programs. Many utilities around the country offer green pricing options that allow customers the choice to pay more for electricity that comes from renewable sources to support new technologies.

Also on EnergyExplained

� History of Wind Power

� Wind Energy and the Environment

� Where Wind Power Is Harnessed

Learn More � Wind Data —

http://www.eia.doe.gov/cneaf/solar.renewables/page/wind/wind.html

Chapter 3: How Wind Turbines Work




How Wind Turbines Work Wind is a form of solar energy. Winds are caused by the uneven heating of the atmosphere by the sun, the irregularities of the earth's surface, and rotation of the earth. Wind flow patterns are modified by the earth's terrain, bodies of water, and vegetation. Humans use this wind flow, or motion energy, for many purposes: sailing, flying a kite, and even generating electricity.

The terms wind energy or wind power describe the process by which the wind is used to generate mechanical power or electricity. Wind turbines convert the kinetic energy in the wind into mechanical power. This mechanical power can be used for specific tasks (such as grinding grain or pumping water) or a generator can convert this mechanical power into electricity.

So how do wind turbines make electricity? Simply stated, a wind turbine works the opposite of a fan. Instead of using electricity to make wind, like a fan, wind turbines use wind to make electricity. The wind turns the blades, which spin a shaft, which connects to a generator and makes electricity. Take a look inside a wind turbine to see the various parts. View the wind turbine animation to see how a wind turbine works.

This aerial view of a wind power plant shows how a group of wind turbines can make electricity for the utility grid. The electricity is sent through transmission and distribution lines to homes, businesses, schools, and so on.



Learn more about wind energy technology:

� Types of Wind Turbines� Sizes of Wind Turbines� Inside the Wind Turbine

Many wind farms have sprung up in the Midwest in recent years, generating power for utilities. Farmers benefit by receiving land lease payments from wind energy project developers.

Types of Wind Turbines Modern wind turbines fall into two basic groups: the horizontal-axis variety, as shown in the photo, and the vertical-axis design, like the eggbeater-style Darrieus model, named after its French inventor.

Horizontal-axis wind turbines typically either have two or three blades. These three-bladed wind turbines are operated "upwind," with the blades

Chapter 4: Types of Wind Turbines—Basics


Types of Wind Turbines – Basics Horizontal-Axis Wind Machine

Source: National Energy Education Development Project (Public Domain)

Darrieus Vertical-Axis Wind Turbine in Martigny, Switzerland



Source: Lysippos, Wikimedia Commons author (GNU Free Documentation License) (Public Domain)

There are two types of wind machines (turbines) used today, based on the direction of the rotating shaft (axis): horizontal-axis wind machines and vertical-axis wind machines. The size of wind machines varies widely. Small turbines used to power a single home or business may have a capacity of less than 100 kilowatts. Some large commercial-sized turbines may have a capacity of 5 million watts, or 5 megawatts. Larger turbines are often grouped together into wind farms that provide power to the electrical grid.

need live links

Horizontal-axis Turbines Look Like Windmills Most wind machines being used today are the horizontal-axis type. Horizontal-axis wind machines have blades like airplane propellers. A typical horizontal wind machine stands as tall as a 20-story building and has three blades that span 200 feet across. The largest wind machines in the world have blades longer than a football field. Wind machines stand tall and wide to capture more wind.

Vertical-axis Turbines Look Like Egg Beaters Vertical-axis wind machines have blades that go from top to bottom. The most common type — the Darrieus wind turbine, named after the French engineer Georges Darrieus who patented the design in 1931 — looks like a giant, two-bladed egg beater. This type

Chapter 4: Types of Wind Turbines—Basics


of vertical wind machine typically stands 100 feet tall and 50 feet wide. Vertical-axis wind machines make up only a very small share of the wind machines used today.

Wind Power Plants Produce ElectricityWind power plants, or wind farms, as they are sometimes called, are clusters of wind machines used to produce electricity. A wind farm usually has dozens of wind machines scattered over a large area. The world's largest wind farm, the Horse Hollow Wind Energy Center in Texas, has 421 wind turbines that generate enough electricity to power 220,000 homes per year.

Many wind plants are not owned by public utility companies. Instead, they are owned and operated by business people who sell the electricity produced on the wind farm to electric utilities. These private companies are known as Independent Power Producers.

Also on Energy Explained� History of Wind Power� Wind Energy and the Environment� Electricity Generation from Wind

Last Reviewed: January 26, 2010

http://www.eia.doe.gov/energyexplained/index.cfm?page=wind_types_of_turbines

Chapter 6: Wind Power Today—Building a New Energy Future


1

BUILDING A NEW ENERGY FUTUREWe will harness the sun and the winds and the

soil to fuel our cars and run our factories. . . . — President Barack Obama, Inaugural Address, January 20, 2009

In 2008, wind energy enjoyed another record-breaking year of industry growth. By installing 8,358 megawatts (MW) of new generation during the year, the U.S. wind energy industry took

the lead in global installed wind energy capacity with a total of 25,170 MW. According to initial estimates, the new wind projects completed in 2008 account for about 40% of all new U.S. power-producing capacity added last year. The wind energy industry’s rapid expansion in 2008 demonstrates the potential for wind energy to play a major role in supplying our nation with clean, inexhaustible, domestically produced energy while bolstering our nation’s economy.

To explore the possibilities of increasing wind’s role in our national energy mix, government and industry representatives formed a collaborative to evaluate a scenario in which wind energy supplies 20% of U.S. electricity by 2030. In July 2008, the U.S. Department of Energy (DOE) published the results of that evaluation in a report entitled 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply. According to the report, the United States has more than 8,000 gigawatts (GW ) of available land-based wind resources that could be captured economically.

In the early release of its Annual Energy Outlook 2009, the U.S. Energy Information Administration (EIA) estimates that U.S. electricity consumption will grow from 3,903 billion kilowatt-hours (kWh) in 2007 to 4,902 billion kWh in 2030, increasing at an average annual rate of 1%. To meet 20% of that demand, U.S. wind power capacity would have to reach more than 300 GW (300,000 MW). This growth represents an increase of more than 275 GW within 21 years. Although achieving 20% wind energy will have significant economic, environmental, and energy security benefits, to make it happen the industry must overcome significant challenges.

Stimulating Economic GrowthAchieving 20% wind energy by 2030 would have widespread

economic benefits. The American Wind Energy Association (AWEA) reported that the wind industry employed about 85,000 workers and channeled approximately $17 billion into the U.S. economy in 2008. Approximately 55 facilities for manufacturing wind-related equipment were announced or opened in 2008. Under the 20% wind energy scenario, the industry could support 500,000 jobs by 2030, 180,000 of which would be directly related to the industry through construction, operations, and manufacturing.

In the decade preceding 2030, the 20% scenario would support 100,000 jobs in associated industries such as accountants, lawyers, steelworkers, and electrical manufacturing, and it will generate much needed income for rural communities. Farmers and landowners would gain more than $600 million in annual land-lease payments and regional governments would gain more than $1.5 billion annually in tax revenues by 2030. Rural counties could use these taxes to fund new schools, roads, and other vital infrastructure, creating even more jobs for local communities.

Protecting the EnvironmentAchieving 20% wind by 2030 would also provide significant

environmental benefits in the form of avoided greenhouse gas emissions and water savings. For example, a 1.5-MW wind turbine can power 500 homes and displace 2,700 metric tons of carbon dioxide (CO2) per year (the equivalent of planting 4 square kilometers of forest every year). According to AWEA, by the end of 2008, wind energy produced enough electricity to power approximately 7 million households and avoid nearly 44 million metric tons of emissions—the equivalent of taking more than 7 million cars off the road. Generating 20% of U.S. electricity from wind could avoid

Wind Energy Program Mission: The mission of DOE’s Wind and Hydropower Technologies Program is to increase the development and deployment of reliable, affordable, and environmentally responsible wind and water power technologies in order to realize the benefits of domestic renewable energy production.

www1.eere.energy.gov/windandhydro/wind_2030.htm



2

approximately 825 million metric tons of CO2 in the electric sector in 2030.

In addition to emissions reductions, the increased use of wind energy will reduce water consumption. Electricity generation accounts for 50% of all water withdrawals in our nation. The 20% wind scenario is projected to result in an 8% reduction (or 4 trillion gallons) in cumulative water use by the electric sector from 2007 through 2030. In 2030, annual water consumption in the electric sector will be reduced by 17%.

Meeting the ChallengesThe 20% report concluded that, although achieving 20% wind

energy is technically feasible, it requires enhanced transmission infrastructure, increased U.S. manufacturing capacity, streamlined siting and permitting regimes, and improved reliability and operability of wind systems. To address these challenges, the DOE Wind Program collaborates with federal, state, industry, and stakeholder organizations to lead wind-energy technology research, development, and application efforts.

Enhancing Wind IntegrationOne of the challenges to meeting 20% of the

nation’s electricity demand with wind energy is moving the electricity from the often remote areas where it is produced to the nation’s urban load centers. More transmission capacity and more sophisticated interconnections across the grid are needed to relieve congestion on the existing system, improve system reliability, increase access to energy at lower costs, and access new and remote generation resources. The Wind Program is working closely with the DOE Office of Electricity Delivery and Energy Reliability to effectively coordinate the DOE’s contributions to the transmission planning efforts. This joint program effort will focus on linking remote regions with low-cost wind power to urban load centers, allowing thousands of homes and businesses access to abundant renewable energy.

In addition to the need for expanding and improving the nation’s transmission system, the natural variability of the wind resource can present challenges to grid system operators and planners with regard to managing regulation, load following, scheduling, line voltage, and reserves. Although the current level of wind penetration in the United States and around the world has provided substantial experience for successful grid operations with wind power, many grid operators are still concerned about the impacts that increasing the percentage of wind in their energy portfolios will have on system reliability. To increase utility understanding of integration and transmission issues associated with increased wind power generation, Wind Program

researchers at the DOE national laboratories are working with industry partners on mitigating interconnection impacts, electric power market rules, operating strategies, and system planning needed for wind energy to compete without disadvantage to serve the nation’s energy needs.

Increasing the Manufacturing Capacity and Growing a Skilled Workforce

Achieving 20% wind energy would also support an expansion of the domestic manufacturing sector and related employment. To keep pace with this rapid growth, manufacturers need to develop robust and cost-effective manufacturing processes that incorporate automated systems to reduce labor intensity and increase

Wind’s economic ripple effect

Induced Impacts

These jobs and earnings result from the spending by people directly and indirectly supported by the project,

including benefits to grocery store clerks, retail salespeople, and child care providers

Indirect Impacts

These are jobs in andpayments made to supporting

businesses, such as bankers financing the construction, contractors and equipment suppliers

Direct ImpactsOn-Site Off-Site

management, gas and

and their suppliers

Annual CO2 emissions avoided with2030 wind scenario

According to EIA, The United States annually emits approximately 6,000 million metric tons of CO2.These emissions are expected to increase to nearly 7,900 million metric tons by 2030, with the electric power sector accounting for approximately 40% of the total (EIA, 2007). Generating 20% of U.S. electricity from wind could avoid approximately 825 million metric tons of CO2in the electric sector in 2030. The 20% scenario would also reduce cumulative emissions from the electric sector through that same year by more than 7,600 million metric tons of CO2(2,100 million metric tons of carbon equivalent).



3

production. To fill the jobs created by this expansion, training programs are needed to provide a skilled workforce.

To facilitate this growth, the Wind Program is working with universities and industry members to incorporate advanced materials into wind turbine blades and investigate manufacturing process automation and fabrication techniques to reduce product-to-product variability and premature failure while increasing the domestic manufacturing base. To grow the skilled workforce, the program works with universities and K-12 schools to develop vibrant wind energy educational programs in locations across the country.

Advancing Wind Energy TechnologyDOE’s Wind Program has worked with industry for more than

25 years to advance both large and small wind energy technologies and lower the cost of energy. For large wind technologies, these industry partnerships have succeeded in increasing capacity factors and dramatically reducing costs. Capacity factors have increased from about 22% for wind turbines installed before 1998 to about 34% for turbines installed between 2004 and 2006. Costs have been reduced from $0.80 (current dollars) per kilowatt-hour (kWh) in 1980 to between $0.05 and $0.08/kWh today, so that in some areas of the nation, wind power has become the least expensive source of new utility-scale electricity generation.

In order to increase industry growth, however, the technology must continue to evolve, building on earlier successes to further improve reliability, increase capacity factors, and reduce costs. To this end, in 2008, DOE announced a Memorandum of Understanding (MOU) designed to advance wind power technologies and increase deployment. Under this MOU (http://www.energy.gov/media/DOE_Turbine_Manufactures_MOU_5-31-08.pdf), DOE is cooperating with six leading wind turbine manufacturers: GE Energy, Siemens Power Generation, Vestas Wind Systems, Clipper Turbine Works, Suzlon Energy, and Gamesa Corporation. The two-year collaboration is designed to increase turbine performance and reliability.

DOE’s R&D CapabilitiesTo meet the many complex challenges facing the wind industry

today, DOE draws on the capabilities and technical expertise found

in nine of its national laboratories. The laboratories include: Argonne National Laboratory, Argonne, Illinois; Idaho National Laboratory, Idaho Falls, Idaho; Los Alamos National Laboratory, Los Alamos, New Mexico; Lawrence Berkeley National Laboratory, Berkeley, California; Lawrence Livermore National Laboratory, Livermore, California; National Renewable Energy Laboratory, Golden, Colorado; Oak Ridge National Laboratory, Oak Ridge, Tennessee; Pacific Northwest National Laboratory, Richland, Washington; and Sandia National Laboratories, Albuquerque, New Mexico.

As the lead wind energy research facility, the National Renewable Energy Laboratory (NREL) conducts research across the broad spectrum of engineering disciplines that are applicable to wind energy, including: atmospheric fluid mechanics and aerodynamics; dynamics, structures, and fatigue; power systems and electronics;

wind turbine engineering applications; and systems integration. As the only facility in the United States accredited through the American Association of Laboratory Accreditation (A2LA) to perform several critical tests, NREL’s National WInd Technology Center (NWTC) provides the high quality testing required by wind turbine certification agencies, financial institutions, and other organizations throughout the world. Tests accredited by A2LA to International Electrotechnical Commission (IEC) Standards include wind turbine noise, power performance, power quality, and several structural safety, function, and duration tests.

The Idaho National Laboratory (INL) has more than 10 years of experience in wind-radar interaction R&D. INL staff work with wind

Clipper Windpower’s wind turbine manufacturing facility in Cedar Rapids, Iowa.

NREL’s National Wind Technology Center provides high-quality testing for wind turbine systems and components.



4

developers and radar site managers to mitigate wind-radar system interactions that may ultimately affect the development of wind plants. INL’s wind-radar interaction R&D efforts include conducting site-specific assessments to develop guidelines; improving radar software; improving hardware; filtering algorithms, gap filling, and fused radar systems; improving small plane detection; providing better modeling techniques; and developing computer modeling systems to predict performance before construction.

Sandia National Laboratories (SNL) specializes in all aspects of wind turbine blade design and system reliability. Activities at SNL focus on reducing the cost of wind generated electricity and improving the reliability of systems operating nationwide. Research disciplines include: materials, airfoils, stress analysis, fatigue analysis, structural analysis, and manufacturing processes. By partnering with universities and industry, SNL has advanced the state of knowledge in the areas of materials, structurally efficient airfoil designs, active-flow aerodynamic control, and sensors.

Lawrence Berkeley National Laboratory (LBL) works with DOE, state and federal policymakers, electric suppliers, renewable energy firms, and others to evaluate state and federal renewable energy policies and provide expert assistance in policy design; analyze the markets for and economics of various renewable energy sources; and examine the benefits and costs of increased market penetration of renewable energy technologies with a focus on wind and solar power. LBL also spearheads the program’s annual production of the Annual Report on U.S. Wind Power Installation, Cost, and Performance Trends.

The Argonne, Los Alamos, Lawrence Livermore, Oak Ridge, and Pacific Northwest National Laboratories all provide support for the program’s systems integration research.

improved methodologies for wind forecasting and working to increase the deployment of advanced wind forecasting techniques that will optimize overall grid reliability and system operations.

conducting power flow analysis of the western interconnect of scenarios associated with 20% electricity from wind by 2030 and of scenarios to reach state renewable electricity standards.

is working to improve wind forecasting methods through the analysis and validation of SODAR and tall-tower data. Researchers at LLNL also work with utilities to effectively integrate improved wind forecasting information into control room operations.

archive that will provide information for wind energy research, planning, operations, and site assessment. ORNL is also examining the issues involved in importing large quantities of wind energy to the southeastern United States to satisfy possible renewable portfolio standards.

integration strategies such as virtual balancing areas, sharing of regulation resources, operating reserves, area control error, and control room use of forecasting to address wind and load variability on the utility grid in the Pacific Northwest.

Sandia National Laboratories developed an advanced data acquisition system (ATLAS II) on a GE Wind 1.5-MW wind turbine. The turbine is part of a cooperative activity involving SNL, GE Wind, and NREL.

Sandia researchers work with industry partners to develop the advanced materials and manufacturing processes required by longer blades.

Researchers at the NWTC structural test facility, which is accredited by A2LA to perform blade tests in accordance with IEC standards, conduct structural tests on full-scale wind turbine blades for subcontractors and industry partners. The facility can handle blades up to 45 meters in length.

The NWTC has two dynamometer test facilities—a 2.5-MW and a

225-kW—to help its industry partners conduct a wide range of tests on wind turbine drivetrains

and gearboxes.



5

The wind industry’s recent rapid growth has accelerated job creation, particularly in manufacturing. In that sector, the share of domestically manufactured wind turbine components has

grown from about 30% in 2005 to approximately 50% in 2008. To ensure that this growth continues, the DOE Wind Program works with U.S. manufacturers to develop advanced fabrication techniques and automation processes that will enable them to increase their component production capabilities.

The focus of the fabrication and materials research is to reduce the rate of weight growth as the blades increase in size. Using advanced materials such as carbon and carbon/glass hybrids will reduce the

weight of the blade while increasing its strength and flexibility. By using advanced materials and optimized blade sensors to enhance reliability and load control, researchers hope to extend the life of blades as well as other turbine components to reduce repair and replacement costs.

The Wind Program is also exploring methods of improving resin transfer molding (RTM) and vacuum-assisted RTM manufacturing processes for utility-grade blades that incorporate automated processes to help manufacturers ensure consistent product quality and reduce labor.

BOOSTING U.S. MANUFACTURINGMore than 90% of these jobs will be in the private sector, jobs . . .

constructing wind turbines and solar panels.—President Barack Obama, remarks to Congress and the American people, February 24, 2009

SNL works with industry partners to develop advanced fabrication techniques and automation processes.



6

During the past few years, the Wind Program has worked with blade manufacturer Knight & Carver to develop an innovative wind turbine blade design that is the first of its kind to be produced at a utility-grade size, and which promises to be more efficient than conventional designs. Made of fiberglass and epoxy resin, the Sweep Twist Adaptive Rotor (STAR) blade is 27 m long—almost 3 m longer than the blade it will replace. Instead of the traditional linear shape, the blade curves toward the trailing edge, which allows it to respond to turbulent gusts in a manner that reduces fatigue loads on the blade. The STAR blade was specially designed for maximum energy capture at low wind speed sites. Knight & Carver expects that STAR

will increase energy capture by 5% to 9%, significantly reducing the cost of energy (COE) of wind turbines at low-wind-speed sites. STAR can be deployed at sites with annual average wind speeds of 5.8 meters per second (m/s), measured at 10-m height. Such sites are abundant in the United States. The ability to site turbines in these areas would increase twentyfold the available land area on which wind energy can be economically developed.

The Wind Program’s blade manufacturing research also includes work to develop:

that fully integrate structure and aerodynamics, along with slenderized blade geometries

active-aero devices

regions (ply drop-off is a technique widely used to achieve gradual thickness change in composite laminate, and it can be used to form boundary tapering of a composite patch bonded to a parent structure)

Creating Advanced MaterialsToday’s utility-scale wind turbine blades are fabricated with

conventional composite materials such as fiberglass, polyester and vinyl ester resins, and core (balsa or foam). They have a rotor diameter span between 57 m and 90 m and have a power generation capacity of between 1 MW and 3 MW. The newest turbine design concepts will take wind power generation far beyond the 1-MW to 3-MW range and will require much larger turbine blades with more efficient architectures, load alleviation concepts, and a higher content of carbon fiber and epoxy resins.

Wind Program researchers are developing several new blade material options for wind turbine manufacturers, including carbon, carbon-hybrid, S-glass, and other new material forms. They are creating design details that minimize stress concentrations in ply drop-off regions and are developing less expensive, embedded blade attachment devices.

One of the program’s latest studies conducted by researchers at SNL presents an overview of composite laminates for wind turbine blade construction and summarizes test results for three prototype blades that incorporate a variety of structural and material innovations. The study examines recent SNL-sponsored material fatigue testing performed at Montana State University and provides highlights of the SNL/Global Energy Concepts Blade System Design Study-Phase II research that tested a variety of carbon and carbon-hybrid materials. The blades tested under this study survived 20-year equivalent fatigue test loads thus demonstrating the value of incorporating carbon into wind turbine blades. Although cost and market stability remain as challenges for large implementation of carbon in commercial designs, the methodologies developed by these projects will enable blades to be lighter, stronger, and smarter. For more information on the studies conducted at SNL visit www.sandia.gov/wind/topical.htm.

The DOE Wind Program worked with Knight & Carver to develop an innovative wind turbine blade that the company expects to increase energy capture by 5% to 9%. The most distinctive feature of the Sweep Twist Adaptive Rotor (STAR) blade is its gently curved tip.



7

ADVANCING LARGE WINDTURBINE TECHNOLOGY

We’ve also made the largest investment in basic research funding in American history,

an investment that will spur not only new discoveries in energy, but breakthroughs

. . . in science and technology.—President Barack Obama, remarks to Congress and

the American people, February 24, 2009

Three decades of wind energy research have succeeded in greatly increasing wind turbine size and capacity, from 100-kW machines with a 17-m rotor diameter to multimegawatt machines with rotor diameters larger than 100 m, while greatly reducing the cost of wind

energy. Although these improvements in performance, reliability and cost have all contributed to the success enjoyed by the wind industry today, to achieve 20% wind energy, the technology must continue to evolve. Continued incremental improvements can further reduce system cost and increase performance and reliability. These improvements can only be achieved through a systems development and integration approach. No single component improvement in cost or efficiency can achieve the cost reduction or improved capacity factor that system-level advances can achieve.

Capacity factors can be increased by using larger rotors on taller towers, which requires innovative design approaches and advanced materials, controls, and power systems. Costs can be reduced and

Since 1980, wind turbines have grown in size and capacity, from 100-kW machines with a 17-m rotor diameter to multimegawatt machines with rotor diameters larger than 100 m.

GE 1.5-MW wind turbine

Chapter 7: Wind Power in the United States: Technology, Economic, and Policy Issues


CRS Report for CongressPrepared for Members and Committees of Congress

Wind Power in the United States: Technology, Economic, and Policy Issues

Stan Mark Kaplan Specialist in Energy and Environmental Policy

October 21, 2008

Congressional Research Service

7-5700 www.crs.gov

RL34546





Summary Rising energy prices and concern over greenhouse gas emissions have focused congressional attention on energy alternatives, including wind power. Although wind power currently provides only about 1% of U.S. electricity needs, it is growing more rapidly than any other energy source. In 2007, over 5,000 megawatts of new wind generating capacity were installed in the United States, second only to new natural gas-fired generating capacity. Wind power has become “mainstream” in many regions of the country, and is no longer considered an “alternative” energy source.

Wind energy has become increasingly competitive with other power generation options, although the impacts of the current financial crisis are uncertain. Wind technology has improved significantly over the past two decades. CRS analysis presented here shows that wind energy still depends on federal tax incentives to compete, but that key uncertainties like climate policy, fossil fuel prices, and technology progress could dominate future cost competitiveness.

A key challenge for wind energy is that electricity production depends on when winds blow rather than when consumers need power. Wind’s variability can create added expenses and complexity in balancing supply and demand on the grid. Recent studies imply that these integration costs do not become significant (5%-10% of wholesale prices) until wind turbines account for 15%-30% of the capacity in a given control area. Another concern is that new transmission infrastructure will be required to send the wind-generated power to demand centers. Building new lines can be expensive and time-consuming, and there are debates over how construction costs should be allocated among end-users and which pricing methodologies are best.

Opposition to wind power arises for environmental, aesthetic, or aviation security reasons. New public-private partnerships have been established to address more comprehensively problems with avian (bird and bat) deaths resulting from wind farms. Some stakeholders oppose the construction of wind plants for visual reasons, especially in pristine or highly-valued areas. A debate over the potential for wind turbines to interfere with aviation radar emerged in 2006, but most experts believe any possible problems are economically and technically manageable.

Federal wind power policy has centered primarily on the production tax credit (PTC), a business incentive to operate wind facilities. The PTC is currently set to expire on December 31, 2009. Analysts and wind industry representatives argue that the on-again off-again nature of the PTC is inefficient and leads to higher costs for the industry. A federal renewable portfolio standard—which would mandate wind power levels—was rejected in the Senate in late 2007; its future is uncertain.

If wind is to supply up to 20% of the nation’s power by 2030, as suggested by a recent U.S. Department of Energy report, additional federal policies will likely be required to overcome barriers, and ensure development of an efficient wind market.





Contents Introduction ................................................................................................................................1

Background ................................................................................................................................2The Rise of Wind ..................................................................................................................2Benefits and Drawbacks of Wind Power................................................................................4

Wind Resources and Technology.................................................................................................7Wind Power Fundamentals....................................................................................................7

Physical Relationships ....................................................................................................7Wind Resources ....................................................................................................................8

Offshore Wind ................................................................................................................9Wind Power Technology ..................................................................................................... 10

Types of Wind Turbines ................................................................................................ 11Capacity Factor............................................................................................................. 13Wind Research and Development Emphasis .................................................................. 13

Wind Industry Composition and Trends..................................................................................... 14Wind Turbine Manufacturers and Wind Plant Developers.................................................... 17International Comparisons................................................................................................... 18

Wind Power Economics ............................................................................................................ 21Cost and Operating Characteristics of Wind Power.............................................................. 21

Wind Operation and System Integration Issues .............................................................. 23Levelized Cost Comparison ................................................................................................ 24

Wind Policy Issues.................................................................................................................... 30Siting and Permitting Issues ................................................................................................ 30Transmission Constraints .................................................................................................... 33

Federal Renewable Transmission Initiatives .................................................................. 36Renewable Production Tax Credit ....................................................................................... 36

PTC Eligibility: IOUs vs. IPPs ...................................................................................... 37Specific PTC Legislative Options.................................................................................. 37Carbon Constraints and the PTC ................................................................................... 38Alternatives to the PTC................................................................................................. 39

Renewable Portfolio Standards............................................................................................ 39Federal RPS Debate ...................................................................................................... 39

Conclusions .............................................................................................................................. 40

Figures Figure 1. Cumulative Installed U.S. Wind Capacity .....................................................................3

Figure 2. Wind Power Aerodynamics ..........................................................................................7

Figure 3. U.S. Wind Resources Potential .....................................................................................9

Figure 4. Evolution of U.S. Commercial Wind Technology........................................................ 11

Figure 5. Components in a Simplified Wind Turbine ................................................................. 12

Figure 6. Installed Wind Capacity By State in 2007 ................................................................... 15

Figure 7. Existing and Planned North American Wind Plants by Size ........................................ 16





Figure 8. U.S. Wind Turbine Market Share by Manufacturer in 2007......................................... 17

Figure 9. Global Installed Wind Capacity By Country ............................................................... 19

Figure 10. Component Costs for Typical Wind Plants ................................................................ 22

Tables Table 1. Wind Energy Penetration Rates by Country.................................................................. 19

Table 2. Assumptions for Generating Technologies.................................................................... 25

Table 3. Economic Comparison of Wind Power with Alternatives.............................................. 29

Table 4. Selected Wind Power Tax Incentive Bills Compared .................................................... 38

Table A-1. Base Case Financial Factors..................................................................................... 43

Table A-2. Base Case Fuel and Allowance Price Forecasts......................................................... 44

Table A-3. Power Plant Technology Assumptions ...................................................................... 45

Appendixes Appendix. Financial Analysis Methodology and Assumptions ................................................... 41

Contacts Author Contact Information ...................................................................................................... 46




Congressional Research Service 1

Introduction Rising energy prices and concern over greenhouse gas emissions have focused congressional attention on energy alternatives, including wind power. Although wind power currently provides only a small fraction of U.S. energy needs, it is growing more rapidly than any other electricity source. Wind energy already plays a significant role in several European nations, and countries like China and India are rapidly expanding their capacity both to manufacture wind turbines and to integrate wind power into their electricity grids.

This report describes utility-scale wind power issues in the United States. The report is divided into the following sections:

• Background on wind energy;

• Wind resources and technology;

• Industry composition and trends;

• Wind power economics; and

• Policy issues.

Three policy issues may be of particular concern to Congress:

• Should the renewable energy production tax credit be extended past its currently scheduled expiration at the end of 2009, and, if so, how would it be funded? The economic analysis suggests that the credit significantly improves the economics of wind power compared to fossil and nuclear generation.

• Should the Congress pass legislation intended to facilitate the construction of new transmission capacity to serve wind farms? As discussed below, sites for wind facilities are often remote from load centers and may require new, expensive transmission infrastructure. Texas and California have implemented state policies to encourage the development of new transmission lines to serve wind and other remote renewable energy sources. Legislation before the Congress would create a federal equivalent.

• Should the Congress establish a national renewable portfolio standard (RPS)? As discussed in the report, the economics of wind are competitive, but not always compelling, compared to fossil and nuclear energy options, and because wind power is dependent on the vagaries of the weather it is not as reliable as conventional sources. Some benefits of wind power cited by proponents, such as a long-term reduction in demand for fossil fuels, are not easily quantified. To jump-start wind power development past these hurdles, many states have instituted RPS programs that require power companies to meet minimum renewable generation goals. A national RPS requirement has been considered and, to date, rejected by Congress.

Other policy questions, such as federal funding for wind research and development, and siting and permitting requirements, are also outlined.





Figure 4. Evolution of U.S. Commercial Wind Technology

Source: L. Flowers, “Wind Energy Update,” National Renewable Energy Lab, February 2008.

Utility-scale wind turbines have grown in size from dozens of kilowatts in the late 1970s and early 1980s to a maximum of 6 megawatts in 2008.39 The average size of a turbine deployed in the United States in 2007 was 1.6 megawatts, enough to power approximately 430 U.S. homes.40

The average size of turbines continues to expand as units rated between 2 and 3 megawatts become more common. Larger turbines provide greater efficiency and economy of scale, but they are also more complex to build, transport, and deploy.

Types of Wind Turbines

Industrial wind turbines fall into two general classes depending on how they spin: horizontal axis and vertical axis, also known as “eggbeater” turbines. Vertical axis machines, which spin about an axis perpendicular to the ground, have advantages in efficiency and serviceability since all of the control equipment is at ground level. The main drawback to this configuration, however, is that the blades cannot be easily elevated high into the air where the best winds blow. As a result, horizontal axis machines—which spin about an axis parallel to the ground rather than perpendicular to it—have come to dominate today’s markets.41

39 The German company Enercon is testing two different 6 megawatt turbines, although they are not yet available on commercial markets. The largest commonly used commercial wind turbines are the 3.6 megawatt offshore units produced by Siemens and General Electric. 40 This assumes a capacity factor (see following subsection) of 34% and an EIA estimate of the average U.S. household consumption of 11,000 kilowatt-hours per year. 41 Horizontal turbines are further divided into classes depending on generator placement, type of generator, and blade control. For example, downwind turbines have their blades behind the generator and upwind turbines, in front. Generators can be asynchronous with the grid, or operate at the same frequency. Blade speed can be fixed or variable, and controlled through pitch or stall aerodynamics. For a more complete discussion of wind turbine technical issues, see P. Carlin, A. Laxson, and E. Muljadi, The History and State of the Art of Variable-Speed Wind Turbines, NREL, February 2001.





A simplified diagram of a typical horizontal axis wind turbine is shown in Figure 5. The blades connect to the rotor and turn a low-speed shaft that is geared to spin a higher-speed shaft in the generator. An automated yaw motor system turns the turbine to face the wind at an appropriate angle.42

Figure 5. Components in a Simplified Wind Turbine

There are barriers to the size of wind turbines that can be efficiently deployed, especially at onshore locations. Wind turbine components larger than standard over-the-road trailer dimensions and weight limits face expensive transport penalties.43

Other barriers to increasingly large turbines include (1) potential for aviation and radar interference, (2) local opposition to siting, (3) erection challenges (i.e., expensive cranes are needed to lift the turbine hubs to a height of 300 feet or more), and (4) material fatigue issues. Some of these issues are discussed in more detail later.

42 Generally, the yaw control will position the turbine to face the wind at a perpendicular angle. The turbine can avoid damage from excessive wind speeds by yawing away from the wind or applying the brake. 43 The standard trailer for an 18-wheel tractor trailer is approximately 12.5 feet high and 8 feet wide. Gross vehicle weight limitations are 80,000 pounds, corresponding to a cargo weight of 42,000 pounds. According to NREL, the trailer limitations have the greatest impact on the base diameter of wind turbine towers. R. Thresher and A. Laxson, “Advanced Wind Technology: New Challenges for a New Century,” NREL, June 2006.





Appendix. Financial Analysis Methodology and Assumptions The financial analysis of power plant costs in this report estimates the operating costs and required capital recovery of each generating technology for an analysis period through 2050. Plant operating costs will vary from year to year depending, for example, on changes in fuel prices and the start or end of government incentive programs. To simplify the comparison of alternatives, these varying yearly expenses are converted to a uniform annual cost expressed as 2008 present value dollars.122

Similarly, the capital costs for the generating technologies are also converted to levelized annual payments. An investor-owned utility or independent power project developer must recover the cost of the investment and a return on the investment, accounting for income taxes, tax law (depreciation rates), and the cost of money. These variables are encapsulated within an annualized capital cost for a project computed using a “capital charge rate.” The financial model used for this study computes a project-specific capital charge rate that reflects, for example, the assumed cost of money and the applicable depreciation schedule.

In the case of publicly owned utilities the return on capital is a function of the interest rate. A “capital recovery factor” reflecting each project’s cost of money is computed and used to calculate a mortgage-type levelized annual payment.123

Combining the annualized capital cost with the annualized cash flows yields the total estimated annualized cost of a project. This annualized cost is divided by the projected yearly output of electricity to produce a cost per Mwh for each technology. By “annualizing” the costs in this manner it is possible to compare alternatives with different year-to-year cost patterns on an apples-to-apples basis.

Inputs to the financial model include financing costs, forecasted fuel prices, non-fuel operations and maintenance expense, the efficiency with which fossil-fueled plants convert fuel to electricity, and typical utilization rates (see Table A-1, Table A-2, and Table A-3). Most of these inputs are taken from published sources, such as EIA’s assumptions used to produce its 2007 and 2008 long-term energy forecasts. Overnight power plant capital costs—that is, the cost to construct a plant before financing expenses—are estimated by CRS based on a review of public information on recent projects.

122 Converting a series of cash flows to a financially-equivalent uniform annual payment is a two-step process. First, the cash flows for the project are converted to a 2008 “present value.” The present value is the total cost for the analysis period, adjusted (“discounted” using a “discount factor”) to account for the time value of money and the risk that projected costs will not occur as expected. This lump-sum 2008 present value is then converted to an equivalent annual payment using a uniform payments factor (the “capital recovery factor”). For a more detailed discussion of the levelization method see, for example, Chan Park, Fundamentals of Engineering Economics, 2004, Chapter 6; or Eugene Grant, et al., Principles of Engineering Economy, 6th Ed., 1976, Chapter 7. 123 For additional information on capital charge rates see Hoff Stauffer, “Beware Capital Charge Rates,” The Electricity Journal, April 2006. The capital recovery factor is equivalent to the PMT function in the Excel spreadsheet program. For additional information on the calculation of capital recovery factors see Chan Park, Fundamentals of Engineering Economics, 2004, Chapter 2; or Eugene Grant, et al., Principles of Engineering Economy, 6th Ed., 1976, Chapter 4.





Government incentives are also an important part of the financial analysis. EPACT05 created or extended federal incentive programs for coal, nuclear, and renewable technologies. This study assumes the following incentives:

• A renewable energy production tax credit of 2.0 cents per kWh, with the value indexed to inflation. The credit applies to the first 10 years of a plant’s operation. The Base Case analysis assumes that the tax credit, which is currently scheduled to expire at the end of 2008, will be extended (as has happened in the past). The credit is available only to wind power production that is sold to an unaffiliated third party. Under most circumstances this requirement effectively limits the production tax credit to independent power producers. A utility that owns a wind plant and uses the power to serve its own load would not qualify.124 The credit is currently available to new wind, geothermal, and several other renewable energy sources. New solar energy systems do not qualify, and geothermal systems can take the production tax credit only if they do not use the renewable investment tax credit (discussed below).

• A nuclear energy production tax credit for new advanced nuclear plants of 1.8 cents per kWh. The credit applies to the first eight years of operation. Unlike the renewable production tax credit described above, the nuclear credit is not indexed to inflation and therefore drops in real value over time. This credit is subject to several limitations:

• It is available to plants that begin construction before January 1, 2014, and enter service before January 1, 2021.

• For each project the annual credit is limited to $125 million per thousand megawatts of generating capacity.

• The full amount of the credit will be available to qualifying facilities only if the total capacity of the qualifying facilities is 6,000 megawatts or less. If the total qualifying capacity exceeds 6,000 megawatts the amount of the credit available to each plant will be prorated. For example, EIA assumes in its 2007 Annual Energy Outlook that 9,000 megawatts of new nuclear capacity qualifies; in this case the credit amount drops to 1.2 cents per kWh.125 The Base Case for this study follows EIA in using the 1.2 cent per kWh assumption for the effective value of the credit.

• Loan guarantees for carbon-control technologies, including nuclear power.Under final DOE rules, the loan guarantees can cover up to 80% of the cost of a project. Guarantees are made available based on a case-by-case evaluation of applicants and are dependent on congressional authority (in April 2008, the Department of Energy announced plans to solicit up to $18.5 billion in loan guarantee applications for nuclear projects126). Entities receiving loan guarantees must make a “credit subsidy cost” payment to the federal treasury that reflects the net anticipated cost of the guarantee to the government, including a

124 See 10 CFR § 451.4. 125 For a discussion of the credit see EIA, Annual Energy Outlook 2007, p. 21. 126 DOE Announces Plans for Future Loan Guarantee Solicitations, Department of Energy press release, April 11, 2008. Loan guarantee authority of $18.5 billion for nuclear power plants is provided by P.L. 110-161.





probability of default. The guarantees are, under current rules, unlikely to be available to public power entities.127

• Energy Investment Tax Credit. Tax credits under this program are available to certain renewable energy systems, including solar and geothermal electricity generation, and some other innovative energy technologies. Wind energy systems do not qualify. The credit is 10% for systems installed after January 1, 2009. Geothermal projects that take the investment tax credit cannot take the renewable production tax credit.128

The results of the analysis are shown in the main body of the report. Note that these estimates are approximations subject to a high degree of uncertainty over such factors as future fuel and capital costs. The rankings of the technologies by cost are therefore also an approximation and should not be viewed as a definitive estimate of the relative cost-competitiveness of each option. Also note that site-specific factors would influence an actual developer’s choice of generating technologies. For example, coal may be less costly if a plant is close to coal mines, and the economics of wind depend in part on the strength and consistency of the wind in a given area.

Table A-1. Base Case Financial Factors

Item Value Sources and Notes

Representative Bond Interest Rates

Utility Aa 2010: 6.8% 2015: 7.0% 2020: 7.0%

IPP High Yield 2010: 9.8% 2015: 10.0% 2020: 10.0%

Public Power Aaa 2010: 5.1% 2015: 5.4% 2020: 5.4%

Corporate Aaa 2010: 6.3% 2015: 6.5% 2020: 6.5%

When available, interest rates for investment grade bonds with a rating of Baa or higher (i.e., other than high yield bonds) are Global Insight forecasts. When Global Insight does not forecast an interest rate for an investment grade bond the value is estimated based on historical relationships between bond interest rates (the historical data for this analysis is from the Global Finance website). High yield interest rates are estimated based on the differential between Merrill Lynch high yield bond indices and corporate Baa rates, as reported by WSJ.com (Wall Street Journal website).

Cost of Equity—Utility 14.00%

Cost of Equity—IPP 15.19%

California Energy Commission, “Comparative Cost of California Cental Station Electricity Generating Technologies,” December 2007, Table 8.

Debt Percent of Capital Structure Utility: 50% IPP: 60% Utility or IPP with

Northwest Power and Conservation Council, “The Fifth Northwest Electric Power and Conservation Plan,” May

127 Entities receiving loan guarantees must make a substantial equity contribution to the project’s financing. Public power entities normally do not have the retained earnings needed to make such payments. The rules also preclude granting a loan guarantee if the federal guarantee would cause what would otherwise be tax exempt debt to become subject to income taxes. Under current law this situation would arise if the federal government were to guarantee public power debt. For further information on these and other aspects of the loan guarantee program see U.S. DOE, final rule, “Loan Guarantees for Projects that Employ Innovative Technologies,” 10 C.F.R. § 609 (RIN 1901-AB21), October 4, 2007 http://www.lgprogram.energy.gov/keydocs.html. 128 For additional information see the discussion of the investment tax credit in the federal incentives section of the Database of State Incentives for Renewable Energy website, http://www.dsireusa.org/.





Item Value Sources and Notes

federal loan guarantee: 80% POU: 100%

2005, Table I-1.

Federal Loan Guarantees

Cost of equity premium for entities using 80% financing.

1.75 percentage points

Credit Subsidy Cost 12.5% of loan value

Congressional Budget Office, Nuclear Power’s Role in Generating Electricity,May 2008, web supplement (“The Methodology Behind the Levelized Cost Analysis”), Table A-5 and page 9.

Long-Term Inflation Rate (change in the implicit price deflator)

1.9% Global Insight

Composite Federal/State Income Tax Rate

38% EIA, National Energy Modeling System Documentation, Electricity Market Module, March 2006, p. 85.

Notes: EIA = Energy Information Administration; IOU = Investor Owned Utility; POU = Publicly Owned Utility; IPP = Independent Power Producer. For a summary of bond rating criteria see http://www.bondsonline.com/Bond_Ratings_Definitions.php. “High yield” refers to bonds with a rating below Baa.

Table A-2. Base Case Fuel and Allowance Price Forecasts

Delivered Fuel Prices, Constant 2008$ per Million Btus

Air Emission Allowance Price, 2008$ per Allowance

Coal Natural Gas Nuclear Fuel Sulfur Dioxide Nitrogen Oxides

2010 $1.93 $7.51 $0.58 $249 $2,636

2020 $1.80 $6.41 $0.67 $1,074 $3,252

2030 $1.87 $7.48 $0.67 $479 $3,360

2040 $1.96 $9.17 $0.65 $158 $3,180

2050 $2.06 $11.24 $0.63 $52 $3,009

Sources: Forecasts are from the assumptions to the Energy Information Administration’s 2008 Annual Energy Outlook, which assumes implementation of current law and regulation. The original values in 2006 dollars were converted to 2008 dollars using the Global Insight forecast of the change in the implicit price deflator. The EIA forecasts are to 2030; the forecasts are extended to 2050 using the 2025 to 2030 growth rates. The sulfur dioxide and nitrogen oxides allowance forecasts are for the eastern region of the United States (allowance prices are expected to vary regionally under the Clean Air Interstate Rule).

Note: Btu = British thermal unit.



National Renewable Energy Laboratory1617 Cole Boulevard, Golden, Colorado 80401-3393 303-275-3000 �� www.nrel.gov

Operated for the U.S. Department of Energy Office of Energy Efficiency and Renewable Energy by Midwest Research Institute � Battelle

Contract No. DE-AC36-99-GO10337

Technical Report NREL/TP-500-39851 November 2007

Distributed Wind Market Applications T. Forsyth and I. Baring-Gould

Prepared under Task No. WER6.7502



Table of Contents CHAPTER 1. EXECUTIVE SUMMARY.................................................................................................................1

I. SUMMARY OF MARKET POTENTIAL........................................................................................................................3 II. SUMMARY OF DOMESTIC MARKETS FOR DISTRIBUTED WIND TECHNOLOGIES .....................................................4 III. SUMMARY OF INTERNATIONAL MARKET FOR DISTRIBUTED WIND TECHNOLOGIES ............................................8 IV. MARKET-BASED BARRIERS TO THE DISTRIBUTED WIND MARKET....................................................................11 V. TECHNICAL BARRIERS TO THE DISTRIBUTED WIND MARKET .............................................................................12 VI. ACKNOWLEDGEMENTS ......................................................................................................................................13 VII. CONCLUSION ....................................................................................................................................................13

CHAPTER 2. SMALL-SCALE REMOTE OR OFF-GRID POWER..................................................................15

I. EXECUTIVE SUMMARY .........................................................................................................................................15 II. APPLICATION BACKGROUND...............................................................................................................................15 III. CURRENT STATUS OF SMALL-SCALE WIND .......................................................................................................16 IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................17

Expected United States Market ..........................................................................................................................17 Expected International Market...........................................................................................................................17 Technology Adoption Timeframe .......................................................................................................................19 Non-Technical Barriers for Technology Adoption.............................................................................................20 Time-Critical Issues ...........................................................................................................................................22 Incentive Markets...............................................................................................................................................22 Utility Industry Perspectives ..............................................................................................................................22

V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................23 Barriers for Small-Scale Turbines .....................................................................................................................23

VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................26 Technical Challenges.........................................................................................................................................26

VII. CONCLUSIONS ..................................................................................................................................................30 VIII. REFERENCES ...................................................................................................................................................31

CHAPTER 3. RESIDENTIAL POWER .................................................................................................................32

I. EXECUTIVE SUMMARY .........................................................................................................................................32 II. APPLICATION BACKGROUND...............................................................................................................................33 III. CURRENT STATUS OF GRID-CONNECTED RESIDENTIAL DISTRIBUTED GENERATION .........................................34

The Future..........................................................................................................................................................34 IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................35

Expected United States Market ..........................................................................................................................35 Expected International Market...........................................................................................................................39 Technology Adoption Time Frame.....................................................................................................................40 Non-Technical Barriers for Technology Adoption.............................................................................................41 Economics ..........................................................................................................................................................41 Lack of Incentives...............................................................................................................................................44 Subsidy Market for Residential Wind Distributed Generation...........................................................................46 Utility Industry Impact of Residential Distributed Generation ..........................................................................46

V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................49 Technology Barriers for Distributed Wind Generation .....................................................................................49 Expected Turbine Size for Residential Distributed Generation .........................................................................52 Required Cost of Energy ....................................................................................................................................53 Seasonality and Geographic Nature of Wind Resource .....................................................................................54 Impact of Intermittency on Residential Wind Energy.........................................................................................55 Interface between Turbine and Wind-Distributed Generation...........................................................................55

VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................55 The Future..........................................................................................................................................................55

VII. CONCLUSIONS ..................................................................................................................................................58 VIII. ACKNOWLEDGEMENTS....................................................................................................................................59 IX. REFERENCES......................................................................................................................................................59

i

Chapter 9: Distributed Wind Market Applications


X. BIBLIOGRAPHY ...................................................................................................................................................61

CHAPTER 4. FARM, INDUSTRY, AND SMALL BUSINESS ............................................................................61

I. EXECUTIVE SUMMARY .........................................................................................................................................61 II. APPLICATION BACKGROUND...............................................................................................................................62 III. CURRENT STATUS OF ACTIVITIES FOR THIS APPLICATION .................................................................................62 IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................63

Expected Market in the United States ................................................................................................................63 Expected International Market...........................................................................................................................65

V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................65 VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................66 VII. CONCLUSIONS ..................................................................................................................................................67 VIII. REFERENCES ...................................................................................................................................................69 XI. BIBLIOGRAPHY ..................................................................................................................................................69

CHAPTER 5. “SMALL-SCALE” COMMUNITY WIND POWER ....................................................................70

I. EXECUTIVE SUMMARY .........................................................................................................................................70 II. APPLICATION BACKGROUND...............................................................................................................................71 III. CURRENT STATUS OF COMMUNITY WIND..........................................................................................................72 IV. MARKET BARRIERS ISSUES & ASSESSMENT ......................................................................................................74

Expected U.S. Market for “Small-Scale” Community Wind Applications.........................................................74 Expected International Market for “Small-Scale” Community Wind Applications...........................................75 “Small-Scale” Community Wind Technology Adoption Time Frame................................................................76 Non-Technical Barriers for “Small-Scale” Community Wind Technology Adoption........................................78 Time-Critical Nature of “Small-Scale” Community Wind Technology .............................................................80 Subsidy Market for “Small-Scale” Community Wind ........................................................................................82 Utility Industry Impact of “Small-Scale” Community Wind ..............................................................................82

V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................83 Technology Barriers for “Small-Scale” Community Wind................................................................................83 Complexity of “Small-Scale” Community Wind Technology Barriers ..............................................................85 Expected Turbine Size to Meet “Small-Scale” Community Wind Market .........................................................85 Required Cost of Energy to Compete in “Small-Scale” Community Wind Market ...........................................86 Seasonality and Geographic Nature of Wind Resource .....................................................................................86 Impact of Intermittency ......................................................................................................................................86 Interface for “Small-Scale” Community Wind ..................................................................................................87

VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................88 The Future..........................................................................................................................................................88

VII. CONCLUSIONS ..................................................................................................................................................91 VIII. ACKNOWLEDGEMENTS....................................................................................................................................91 IX. REFERENCES......................................................................................................................................................92 X. BIBLIOGRAPHY ...................................................................................................................................................93 XI. APPENDIX A ......................................................................................................................................................95

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Table of FiguresFigure E.1. Overview of market segments and commercial wind turbines ........................................ 3 Figure E-2. Market projections using number of units installed in the United States ........................ 5 Figure E.3. Incremental domestic installed capacity by sector through 2020 .................................... 7 Figure E.4. Potential capacity variation for all domestic market segments........................................ 8 Figure E.5. Incremental international installed capacity by sector through 2020 without data for

off-grid or small-system segment (which is too large to show graphically)................................. 10 Figure E.6. Potential capacity variation for all international market segments .................................. 10 Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey ...... 36 Figure 3-2. Renewable energy end-user information from Home Power readers survey .................. 38 Figure 3-3. Constructing a demand curve for DWT – experience from PV [27] ............................... 44 Figure 3-4. United States residential average retail price of electricity by state, 2004 (cents/kWh).. 54 Figure 5-1. United States large- and small-scale community wind energy market upper-bound

growth forecast.............................................................................................................................. 72

Table of Tables Table E.1. Market Projections of Domestically Installed Units ......................................................... 5 Table E.2. Projected Domestic Installed Capacity (MW) by Sector through 2020............................ 6 Table E.3. Cumulative Installed International Capacity in MW by Sector through 2020.................. 9 Table 2-1. Electrical Access in Developing Countries by Region (Year 2000) ................................. 20 Table 2-2. Summary Information Table: Small-Scale Remote Power (Residential or Village) ........ 29 Table 3-1. 2006 Survey Responses on Grid-Connected Residential Wind Market Barriers.............. 43 Table 3-2. Small Wind Programs by State.......................................................................................... 48 Table 3-3. 2006 Grid-Connected Survey Responses .......................................................................... 51 Table 3-4. Average Customer Load in kWh/year, by State and Segment .......................................... 53 Table 3-5. Summary Information Table: Residential Power .............................................................. 57 Table 4-1. Summary Information Table: Farm, Industry, and Small Business .................................. 68 Table 5-1. 2006 Survey Responses on “Small-Scale” Community Wind Market Barriers................ 80 Table 5-2. 2006 Survey Responses on “Small-Scale” Community Wind Technical Barriers ........... 84 Table 5-3. Summary Information Table: “Small-Scale” Community Wind Power ........................... 90 Table 5-4. Community-Owned Wind Projects Utilizing Turbines from 100 kW to 1,000 kW ......... 95

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Chapter 1. Executive Summary

The Executive Summary will discuss the distributed wind market potential from a domestic and international perspective with greater confidence in the number of units installed for the domestic market. The market potential discussion will be followed by a summary of information provided in each chapter, including regions of market interest for both the domestic and international market, key market and technical barriers, time-critical issues for market development, technology adoption timeframe, and recommended areas of concentration.

Distributed wind energy systems provide clean, renewable power for on-site use and help relieve pressure on the power grid while providing jobs and contributing to energy security for homes, farms, schools, factories, private and public facilities, distribution utilities, and remote locations. America pioneered small wind technology in the 1920s, and it is the only renewable energy industry segment that the United States still dominates in technology, manufacturing, and world market share.

The series of analyses covered by this report were conducted to assess some of the most likely ways that advanced wind turbines could be utilized as an option to large, central station power systems. Each chapter represents a final report on specific market segments written by leading experts in each sector. As such, this document does not speak with one voice but rather a compendium of different perspectives from the U.S. distributed wind field.

For this analysis, the U.S. Department of Energy (DOE) Wind and Hydropower Technologies Program and the National Renewable Energy Laboratory’s (NREL’s) National Wind Technology Center (NWTC) defined distributed applications as wind turbines of any size that are installed remotely or connected to the grid but at a distribution-level voltage.

Distributed wind systems generally provide electricity on the retail side of the electric meter without need of transmission lines, offering a strong, low-cost alternative to photovoltaic (PV) power systems that are increasingly used in urban communities. Small-scale distributed wind turbines also produce electricity at lower wind speeds than large, utility-grade turbines, greatly expanding the availability of land with a harvestable wind resource. These factors, combined with increasingly high retail energy prices and demand for on-site power generation, have resulted in strong market pull for the distributed wind industry, which is poised for rapid market expansion.

Seven market segments were identified for initial investigation. These market segments, documented in this report, include small-scale remote or off-grid power; residential or on-grid power; farm, business, and small industrial wind applications; and “small-scale” community wind. A summary of the market for remote wind-diesel applications is also included in this summary, although a full report was never completed. The remaining two market segments, water pumping for large-scale irrigation and water desalination, are currently being assessed as part of other program activities and are not included at this time. While some of these market applications have existed for some time, others are just beginning to emerge as part of distributed wind power. A short introduction to each of these assessments is provided below.

� Small-scale remote or off-grid power (residential or village): Supplying energy to rural, off-grid applications in the developed and developing world. This market

1



encompasses either individual homes or small community applications and is usually integrated with other components, such as storage and power converters and PV systems.

� Residential or on-grid power: Small wind turbines used in residential settings that are installed on the house side of the home electrical meter using net metering to supply energy directly to the home. Excess energy is sold back to the supplying utility.

� Farm, business, and small industrial wind applications: Supplying farms, businesses, and small industrial applications with low-cost electric power. The loads represented by this sector are larger than most residential applications, and payback must be equivalent to similar expenditures (4 to 7 years). In many cases, businesses are not eligible for net metering applications; thus the commercial loads must use most of the power from the turbine.

� “Small-scale” community wind: Using wind turbines to power large, grid-connected loads such as schools, public lighting, government buildings, and municipal services. Turbines can range in size from very small, several-kW turbines to small clusters of utility-scale multi-megawatt turbines. The key, defining factor is that these systems are owned by or for the community.

� Wind/diesel power systems: Providing power to rural communities currently supplied through diesel technology in an effort to reduce the amount of diesel fuel consumed. The rising cost of diesel fuel and increased environmental concerns regarding diesel fuel, transportation, and storage have made project economics more sensible.

� Irrigation water pumping: Using wind turbines to supply energy for agricultural applications. Current applications are powered by grid electricity, diesel, gasoline, propane, and particularly natural gas. Wind or hybrid systems allow farmers to offset use of high-priced fossil fuels.

� Water desalination: Using wind energy to directly or indirectly desalinate sea or brackish water using reverse osmosis, electrodialysis, or other desalination technologies. The economic and technical performance of wind-powered desalination depends on the configuration and placement of wind resource with regard to the impaired water and existing energy resources. Water desalination works well with the wind resource found in coastal or desert environments.

In these analyses, the DOE Wind and Hydropower Technology Program is assessing two new segments that have not historically been classified under the distributed wind banner: farm/ commercial and the “small-scale” community wind market. Both of these markets struggle to find commercial turbines to meet their needs, demonstrating opportunity for the development of U.S. turbines.

These two emergent market segments combined with the existing small wind market result in three conglomerated turbine capacities. The first is the residential and smaller business sector at roughly 0 kilowatt (kW) to 100 kW capacity. The second sector is the farm/commercial market sector that includes farm, industrial, and wind/diesel from 100 kW to 500 kW. The last market sector for distributed wind is the “small-scale” community wind sector, which has been estimated to be 500 kW to 1 megawatt (MW). Although not covered specifically within this analysis, there is also likely a need to develop methodologies to lower the cost of power from large, multi-megawatt turbines that are installed in distributed community applications. Further hardware development in all of these sectors would help meet the desires of Americans to

2



provide their own electricity, whether for a residence, farm, or business in rural America where zoning challenges are minimized.

This study identifies and describes how the distributed wind industry can overcome long-standing barriers and play an important role (in the United States and the international arena) in supplying power near the point of end use or behind the meter.

I. Summary of Market Potential Authors were asked to conservatively assess the potential market size for the five market segments in terms of the number of units expected to be installed in 5-year increments through 2020. Additionally, authors were asked to recommend the expected turbine size that would be most applicable to meet the proposed markets. Figure E.1 shows an overview of the different market segments, the kilowatt capacity of the turbines for each market segment, and the existing turbines available within each distributed market segment.

Market Segments

Small-Scale Remote Power

Residential Power

Farm/Business/Ind Power

Wind/Diesel Power

““Small-Scale”” Community Power

300W300W

DOE Size Categories

US Commercial Products

Non-US Commercial Products*

RefurbishedRefurbished

1 kW 5 kW 10 kW

20 kW

50 kW

65 kW 100kW 200kW 300kW 400kW 500kW 600kW 700kW +

-

1 kW 5 kW 10 kW

20kW

50kW

65kW 100kW 200kW 300kW 400kW 500kW 600kW 700kW +

Net Billing, on site Irrigation, Industrial

US International

Distributed Wind Turbine Commercial/Farm Small-Scale Community

-

CommercialCommercial * - Currently sold in the US 4/27/06* - Currently sold in the US 4/27/06PrototypePrototype

Figure E.1. Overview of market segments and commercial wind turbines

From a manufacturing perspective, the strongest market segment is turbines smaller than 10 kW in size, with 20 domestic or internationally manufactured turbines to choose from. The number

3



of turbine choices between 20 kW and 100 kW is quite limited, and turbines between 100 kW to 1 MW are practically nonexistent.

It should be noted that the re-powering of wind farms in Europe and the United States has made available re-manufactured turbines that are being used to supply many current distributed applications. Although generally inexpensive compared to existing new turbine models, most of these are based on significantly outdated technology. Turbine design, reliability, and energy capture have been improved over the intervening time, resulting in current projects with reduced energy capture than would be expected from projects with turbines incorporating current technology and design practices.

II. Summary of Domestic Markets for Distributed Wind Technologies Teams of technical experts with knowledge of their market segments provided the market projections summarized below. Each of these experts was asked to provide a conservative estimate to ensure the report validity in retrospect. It should be noted that NREL did not attempt to validate the expected market data from these market summary reports.

The benefits from distributed wind projects are minimized when quantified using total megawatts of installed capacity, especially for the smaller distributed turbines. However, the use of a simple number of units produced reduces the visibility of the mid-size turbines used in the farm/commercial, wind/diesel, and “small-scale” community wind segments. For this reason, the summary results are presented in terms of both the number of units and total installed capacity. It should be noted that the estimates of the number of units and thus the total installed megawatts are very rough and should only be considered in relative terms. The DOE Wind and Hydropower Program is in the process of conducting more detailed market assessments for the segments that show the most promise.

Table E.1 summarizes the cumulative number of expected domestic turbine sales over the five market segments. Note that the table also presents the turbine size for each market segment. Currently the largest sector in terms of the number of installed units is the small-scale remote or off-grid power market segment. The majority of these off-grid units have a lower capacity, with a typical turbine size in the range of a few kilowatts or less. All market segments combine to a potential total of 680,000 installed units by the end of 2020.

There are several market niches within the domestic off-grid segment, specifically in Alaska and Native American communities. An example is the Navajo Nation—approximately one-third of the 250,000 people on the reservation lack electricity.

The estimated market growth across 15 years to 2020 is 11% per year for the small-scale remote or off-grid market segment; 22% per year for the residential or on-grid segment; 48% across the farm, business, and small industrial segment; 26% per year for the wind/diesel segment; and 23% per year for the “small-scale” community segment.

4



Small wind turbine systems are typically procured by property owners. Manufacturers market their systems through distributors, dealers, and directly to customers. Local dealers or installers typically install grid-connected systems, although some customers install their own systems with inspections conducted by certified electricians. The wind resource, turbine size and model, micro-siting, and installation requirements such as tower height and foundation are site-specific. Many states, counties, and utilities are promoting distributed wind generation for its clean energy benefits and contribution to renewable portfolio standards, energy reliability, and energy independence.

Widespread deployment of small wind turbines can increase the public’s familiarity with wind turbine visual impacts, attract mainstream media coverage, and pave the way for local community support for larger wind developments. Small turbines, in particular installations at schools and other high-visibility locations, can become an important asset in reducing fears about unfamiliar technology, which in turn can help reduce the expense and unpredictable nature of siting and permitting large wind developments. Small turbines can be installed in selected neighborhoods to increase public awareness of residential wind options and provide an additional benefit by educating students on how electricity is made and the benefits of wind power. Neighborhood DWT installations can also help utilities increase customer interest and participation in voluntary green power programs and provide local “advertisements” of utilities’ involvement in renewable energy.

III. Current Status of Grid-Connected Residential Distributed Generation The Future Residential DWT installed capacity has historically comprised less than 5% of total sales of small wind turbines (up to 100 kW) [worldwide]. However, manufacturers expect that portion to grow to more than 20% by 2020 [2]. The U.S. Department of Energy Renewable Energy Plant Information System (REPiS) has documented nearly 1,200 small wind turbines (up to 100 kW) totaling 16 MW as of 2005 in 45 states. Approximately 70% of the DWT systems and 40% of the DWT capacity documented in the REPiS database are estimated to be grid-connected residential applications [3].

Based on a review of available market data, this study estimates that approximately 700 wind turbines totaling 3.5 MW were sold worldwide for residential grid-connected applications during 2005, with 500 of these totaling 2.5 MW sold in the United States. This study estimates that the cumulative grid-connected residential installed capacity was 2,900 units totaling 14.5 MW worldwide as of 2005, with 1,800 of these units totaling 9 MW installed in the United States.

Market challenges. Because economics are a significant barrier to market adoption and growth of grid-connected DWT, it is important to examine factors contributing to turbine system costs. Key determining factors include turbine size (rotor diameter, rated capacity), average wind speed at hub height, power output control/limitation technology, and applied grid control technology. External factors include infrastructure and transport logistics costs, permitting costs and time, and other location-specific conditions.

From the perspectives of power generation potential (kWh/kW), return on investment, and cost of energy (cents/kWh), current small turbine designs are at a disadvantage compared with much larger utility-scale wind turbines. Small turbines are relatively more expensive to manufacture

34



(both materials and labor) and their limited hub heights (because of cost, setback requirements, aesthetics, etc.) result in comparatively less energy production. In addition, their low volume currently manufactured impede cost reductions with series-scale production [4]. The lack of performance standards, independent testing and consistent ratings for DWT contribute to product reliability concerns in the market. Complex interconnection standards and the reluctance of utilities to adopt net metering and DWT incentive programs further constrain the market and hinder market efficiencies. Dealers and installers increasingly report that the insurance industry is requiring additional insurance coverage for DWT owners. Finally, small wind turbines are not consistently addressed in state renewable portfolio standards (RPS), incentive policies, and consumer education campaigns.

In the United Kingdom, the most commonly perceived barriers to residential distributed generation are permitting, expensive metering, lack of installation targets and incentives, high cost, and low consumer awareness. As in the United States, the United Kingdom experiences a high correlation between incentives and installations [5].

Utility acceptance. The market for grid-connected residential wind is primarily rural homeowners and small businesses. Many domestic residential sites appropriate for wind power are served by rural electric co-ops (RECs), which typically view net metering and distributed generation as cross-subsidies and inconsistent with co-op principles that members share equally in the investment, risk, and benefits of the co-operative [6]. The official position of the National Rural Electric Co-operative Association (NRECA) is that net metering results in reduced co-op revenue while the fixed costs remain the same and that the co-op’s other consumers ultimately subsidize the self-generating consumer [7]. While RECs do hold a large territory, many other utilities in more populated areas do not oppose net metering. However, most utilities still require significant education, softening of interconnection requirements, and generally an improved understanding of the benefits of capturing consumer investments in DWT.

Potential new market segments. While the rural residential market has been the primary target for United States grid-connected small wind systems, new initiatives are exploring the urban and suburban markets. Among others, a U.S. manufacturer is aggressively pursuing small wind for the suburban residential market with new turbine technology and shorter towers. It can be anticipated that at least 1 year of market experience will be required to determine if this is a viable market segment for DWT and to identify the key technical and market barriers for this market segment, as well as the best practices for suburban residential market penetration.

Several efforts are underway internationally to develop roof-top mounted [8] and building-integrated DWT designs [9], but so far none have proven commercially viable. It is premature to anticipate the feasibility of such designs, especially until extensive testing establishes that they pose no potential threat to the integrity of the structures on which they are mounted. The concepts are mentioned simply as examples of enabling technologies that may have the potential to significantly augment the distributed generation market in the future.

IV. Market Barriers Issues and Assessment Expected United States Market Market targets. Historically, rural properties have been the primary market for residential-scale wind distributed generation systems. The industry is increasingly focused on the rural residential market, with new attention on the large-lot suburban residential market. As shown below in

35



Figure 3-1, a 2004 survey of readers of Home Power Magazine (3,573 respondents) indicated that 38% intended to utilize renewable energy in a rural home, 27% in a suburban home, and 16% in an urban home, with more than 40% of respondents planning to install wind turbines [10].

Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey

Market potential. The growth potential of the U.S. residential DWT market presents a unique, timely opportunity. Moreover, trends show that growth may occur at significantly increased rates if critical market barriers are overcome. A new market survey of the grid-connected residential wind market was conducted for this study in January 20061. This most recent survey found that the leading U.S. DWT manufacturers are projecting an average annual growth rate of 32% for the U.S. grid-connected market through 2020, with their potential domestic market share as high as 9,500 units totaling 26 MW in 2010, 21,000 units totaling 70 MW in 2015, and 41,000 units totaling 130 MW in 2020. These projections provide an aggressive outlook for the DWT market and signify that manufacturers are confident that the market is poised for strong growth.

It is important to note that predictions about the percentage of future DWT market growth vary greatly and often depend heavily on the degree of expected state and federal support for DWT. The DWT market study conducted by the American Wind Energy Association (AWEA) in the spring of 2005 [11] found that in ideal market conditions (i.e., with sufficient policy support), annual U.S. sales of DWT could reach $55M by 2010. The same study forecasts a slow growth scenario based on scaled-back projections from only the established industry players, estimating annual U.S. sales at $27M in 2010 if the key barriers are not addressed. These estimates represent higher and lower bound average annual growth rates of 24% and 9%, respectively; however, some industry members believe that these projections are too conservative. With increased monitoring of these market trends, it is becoming increasingly evident that the DWT industry has the potential to become one of the leading renewable energy distributed system industries for residential homes in the United States.

1 See the Acknowledgements section for a list of survey participants.

36



In 2002, AWEA set a bold industry goal of installing 50,000 MW of total DWT capacity (3% of domestic electricity demand) by 2020 based on census data for appropriately sized lots and acreages, and put the total potential domestic market at 15.1 million homes2. The AWEA report estimated that more than 80% of the United States DWT market will be grid-connected residential systems with an average turbine size of 7.5 kW. Reaching 50,000 MW by 2020 would require average annual growth of around 60% over the next 15 years. Although this is an ambitious goal, given the recent annual market growth of 40% [12], it may be obtainable with adequate incentives, research and development (R&D) funding, and other policy support at state and federal levels.

In consideration of these studies and familiarity with current industry trends, this study conservatively estimates that cumulative U.S. on-grid residential wind turbine installations in 2010 will have a lower bound of 5,100 units totaling 29 MW and an upper bound of 7,400 units totaling 44 MW, with average annual growth rates of 9% and 28%, respectively. An increase in the average turbine size for this sector from 5 kW in 2005 to 9 kW in 2020 is projected as a result of the availability of new products. As shown in the Summary Information Table (Table 3-5), assuming the same growth rates in the number of units, this study’s lower and upper bound United States estimates are 10,000-26,000 units totaling 72-211 MW in 2015 and 18,000-92,000 units totaling 170-1,000 MW in 2020, resulting in a midpoint forecast for the United States grid-connected residential market sector of 55,000 units totaling 590 MW in 2020.

One of the conclusions of this study is that the residential wind industry would benefit from a new, detailed potential market analysis. An in-depth market study focused on consumer motivations would provide valuable information to inform research, product development, marketing, and policy decisions.

Regions of interest. The criteria for states in the United States with strong residential DWT markets include high residential electricity rates and/or loads, adequate wind resources, financial incentives, clear and reasonable permitting requirements, positive public perception of small turbines, state or utility public education and awareness campaigns, and simplified interconnection processes.

Taking into consideration relevant economic variables, a 2004 study by Lawrence Berkeley National Laboratory calculated simple payback for DWT break-even turnkey costs in the United States [13]. The top ten states for DWT simple payback at $2.50/W were reported to be California, New York, New Jersey, Rhode Island, Vermont, Hawaii, Montana, Maine, Alaska, and Illinois.3 Since then, California and Illinois rebate funding levels have declined, and Massachusetts and Washington have introduced significant DWT incentive programs. Fifteen states have renewable energy funds with $3.5 billion in aggregate for renewable energy from 1998 to 2010: California, Connecticut, Delaware, Illinois, Maine, Massachusetts, Minnesota, Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin [14]. However, so far only a few of these have established funding mechanisms for DWT.

2 The 2002 AWEA Roadmap estimated that by 2020 there will be 43.2 million homes with more than 0.50 acre of land and that 35% of these homes will have a sufficient wind resource to generate electricity from DWT. 3 The model assumed a 10-kW system, 25-year system lifetime, 8% IRR on investment, operating and maintenance at 1.5¢/kWh, cash payment, and wind production valued at full average residential electricity rate.

37



Responses to the survey conducted for this study confirm that the states of specific interest for the grid-connected residential market fall into three primary regions:

� West Coast (California and Washington State)

� Northeast and Mid-Atlantic (New York, Massachusetts, Pennsylvania, Vermont)

� Midwest/Central (Texas, Ohio, Minnesota, Iowa, Wisconsin, Colorado).

Correlations to residential PV. Considerable market information is available for the residential PV industry that could be useful to the DWT industry. Examples include trends in grid-connected PV installations and forecasts,4 cost of energy, consumer demographics, purchase criteria, effectiveness of incentives and market drivers, and potential applications and market size for hybrid wind/PV systems. This insight can help inform marketing and technology decisions for the potentially large suburban residential market that some small wind turbine manufacturers are beginning to target.

Figure 3-2. Renewable energy end-user information from Home Power readers survey

4 The U.S. Department of Energy’s Energy Information Administration (EIA) forecasts residential grid-connected PV to be 127 MW of installed capacity in 2010, 141 MW in 2015, and 157 MW in 2020. The calculations are based on 2-kW residential systems.

38



It is also important to note that the PV industry has significant public support and resources to advance policy incentives, obtain research funding, and conduct public education and awareness campaigns. Coordination between the DWT and PV industries based on similar interconnection technologies and overlapping target markets could prove effective for developing recommendations beneficial to both industries. Customer motivations and resource information, such as that collected by Home Power Magazine in a 2003 reader’s survey (Figure 3-2) can provide important insights for marketing both PV and DWT.

Expected International Market U.S. DWT manufacturers are in an excellent position to take advantage of the international DWT market. AWEA estimates that more than 40% of U.S.-manufactured DWT are exported [15]. Currently, two U.S. manufacturers, Bergey Windpower and Southwest Windpower, are both recognized as the world’s dominant market leaders in terms of sales volume [16]. A recent study conducted by Marbek for the Canadian Wind Energy Association indicated that 96% of reported sales in Canada are attributed to three U.S. manufacturers: Bergey Windpower, Southwest Windpower, and Aeromax [17]. The international export market, therefore, presents a considerable economic opportunity for U.S. manufacturers, both for grid-connected residential DWT as well as off-grid, remote applications.

The 2006 market survey conducted for this study confirms a robust international export growth outlook. The leading U.S. DWT manufacturers are projecting an average annual growth rate of 34% for the non-U.S. grid-connected market through 2020, indicating a potential U.S. export market of 3,200 units totaling 11 MW in 2010, 10,000 units totaling 31 MW in 2015, and 22,000 units totaling 66 MW in 2020.

Other estimates of the international DWT market come from AWEA’s 2005 DWT market study and a 2002 study by Garrad Hassan Consulting. The AWEA study estimates that the international small wind market is roughly the size of the total domestic market and that 40% of DWT manufactured in the United States are exported. A 2002 article in REFOCUS magazine by United Kingdom-based Garrad Hassan Consulting projects a five-fold increase from 2002 for global small wind sales. This estimate equates to 150 MW/year, or 150,000 turbines/year assuming $5/W total installed costs and an average turbine size of 1 kW [18].

A number of countries have shown considerable interest in DWT technologies. In 2005, Canada and the United Kingdom published studies about their potential markets for small wind. A 2005 United Kingdom study on “microgeneration” anticipates up to 5 GWh of energy from residential wind by 2030 (1.5-kW systems), with a doubling by 2050 and with small wind supplying 4% of United Kingdom’s electricity requirement [19]. The study, commissioned by the UK Department of Trade and Industry, estimates an upper bound of nearly 120 MW and a lower bound of 20 MW of installed DWT capacity by 2020, depending on the amount of government support.

The Canadian study reports a total potential of 120,000 units for grid-connected residential, 3-kW average capacity, and total capacity of 360,000 kW. The study references U.S. programs and market adoption rates and concludes that the Canadian DWT market requires incentives in four areas: market development (federal rebate and provincial incentives), policy development (net metering and streamlined environmental processes), technology development (standardized testing and demonstration programs), and education and awareness-raising (model

39



interconnection agreements and installation guidelines for siting, zoning, permitting, and interconnection) [20].

Lawrence Berkeley National Lab reports that China manufactured 12,000 small wind turbines in 2000 and that the Chinese market has been strongly supported by government policies and incentives [21]. In February 2005, China passed a groundbreaking law to promote renewable energy. However, while China has a great potential for wind, as in much of the world, its primary market is off-grid rural electrification [22].

In consideration of these studies, the large DWT market share held by U.S. manufacturers, and familiarity with current industry trends, this study conservatively estimates lower and upper bound international annual growth rates of 11% and 28%, respectively. These rates are slightly higher than those estimated for the domestic residential DWT market as a result of the likelihood that new international residential markets will continue to emerge and expand. As with the U.S. market, the average international turbine size for this sector is expected to increase from 5 kW in 2005 to about 9 kW in 2020 as a result of the availability of new products.

As shown in the Summary Information Table (Table 3-5), using these estimated growth rates for the number of units, cumulative international on-grid residential wind turbine installations in 2010 are estimated to have a lower bound of 2,500 units totaling 14 MW and an upper bound of 3,300 units totaling 19 MW. Lower and upper bound international grid-connected residential wind installation estimates are 4,800-11,000 units totaling 34-86 MW in 2015 and 8,700-37,000 units totaling 82-410 MW in 2020, resulting in an international mid-point forecast for this sector of 23,000 units totaling 250 MW in 2020.

Regions of interest. Responses to the survey conducted for this study indicate that the major international markets for grid-connected residential wind fall in these three regions:

� Asia (Japan, China, India)

� Europe (United Kingdom, Spain, Italy, Germany, Netherlands, Greece)

� Central and South America.

Technology Adoption Time Frame There are some technologies on the horizon that could stymie the implementation of worldwide residential DWT. Fuel cells are often cited as a potential future example. However, commercially available fuel cells that do not rely on ever-tighter supplies of natural gas will not be available for several decades. By contrast, the recent United Kingdom “microgeneration” study forecasts mass-commercialization of DWT in 2015, with electricity prices the most important market change for small wind [23].

A much more immediately available technology, and one that “competes” with small wind in various applications today, is PV. Given the current public benefits programs, PV is more competitive than wind in the 1- to 3-kW category. In addition, currently PV systems can be ordered, permitted, and installed in a fraction of the time that is required to install a comparably sized residential wind turbine. However, in areas that do not have incentives for PV, residential wind is cost-competitive and easily installed for those facing reasonable zoning, permitting, and interconnection requirements. While PV is often viewed as a competitor, market growth can be anticipated in hybrid wind/PV systems.

40



That said, there are still pressing hurdles that the DWT industry needs to overcome to reduce consumer hesitation with the technology, specifically in regard to reliability and timeframe for installation. In addition, the limited availability of cost-effective, state-of-the-art, synchronous inverters is a constraint to 3-kW (and larger) grid-connected variable-speed turbine types. While the manufacturers of these inverters also manufacture products for the grid-tied PV market, the inverter itself controls DWT generators differently than PV systems. When a small wind turbine manufacturer develops a new turbine model, inverter manufacturers may find it risky to invest in a new product line without the prospect of selling substantial numbers. Inverters and system electronics continue to be the least reliable component of small wind technology, which in turn has stalled innovation [24]. Some companies, such as SMA of Germany and Magnetek of the United States, have designed inverters for a number of residential wind turbines.

Development of new small wind turbines that do not require an inverter for grid-intertie applications is another direction being pursued by a few designers. This would bypass the above-mentioned dilemma. However, current development on these concepts has been greatly slowed by lack of R&D funding. Multiple paths for inverterless small wind turbines should be employed to seek the best solution to connecting DWT to the grid in a timely manner, including direct-drive induction generators and gear-driven systems.

Another significant time-sensitive barrier to current small wind turbine designers is the lack of effective computer modeling covering all components of a small wind turbine, in a variety of wind conditions including furling wind speeds. Quickly addressing this need could expedite crucial design improvements to help meet required cost targets during this critical window of opportunity to maintain U.S. dominance in this sector.

Towers are one of the greatest challenges for DWT. Towers for large wind turbines are generally less than 20% of the hardware cost. For small wind turbines, towers often comprise 40%-80% of the hardware cost. A concerted effort to develop more cost-effective designs with composites or other materials should be explored.

Non-Technical Barriers for Technology Adoption The January 2006 survey (Table 3-1) conducted for this study indicates that economics, lack of incentives, zoning, public perception challenges, and interconnection issues are the most significant barriers to residential DWT market adoption. Up-front costs also are rated as the key decision-making factor in a recent Canadian DWT market study [25].

Economics Most consumers carefully weigh the economics of DWT systems, taking into consideration total installed costs, out-of-pocket costs, perception of value and return on investment. Factors contributing to DWT system costs are listed above in the market challenges section. Reductions in total residential DWT installed costs from the current range of $4-7/W to $2-3/W after incentives will be necessary for significant market expansion in the U.S. grid-connected market [26]. This estimate is based on an analysis of PV module shipments vs. price (Figure 3-3) and an assumption that since PV and small wind are competitors in the grid-connected market, small wind must be priced competitively with PV.

Lengthy and costly permitting processes, requirements to access state incentive funds (environmental analyses, site assessments, installation inspections, lengthy applications), and other site-related processes also drive up total installed costs because dealers and installers

41



typically assist consumers with these steps. Inconsistent “rated output” turbine model designations may be an additional factor in reducing consumer confidence and perceived value.

42



Chapter 4. Farm, Industry, and Small Business

Prepared by: Ken L. Starcher and Vaughn C. Nelson, West Texas A&M University, Alternative Energy Institute Robert E. Foster and Luis Estrada, New Mexico State University, Southwest Technology Development Institute

I. Executive Summary Wind energy has proven to be one of the most economical, modular, and readily connected renewable technologies. Its use in agricultural, production plants, and small business/home applications will continue to grow for the next 20 years and beyond.

This report is a summary of the expected growth areas, the growth rates, the necessary turbine style/sizes, and the barriers to sustainable market growth for the farm, industry, and small business wind market sector.

The prime barrier is cost. Too few turbines are currently produced to obtain the economies of scale through volume production. Thus, favorable life-cycle costs will not be realized to sell these mid-size turbines alone. The economic payback has to be on the order of 4 to 7 years to be attractive compared to other similarly sized investments for agribusiness. The cost of energy (COE) is in direct competition to that of utility-provided energy at $10–$15/MWh.

The second barrier is lack of installed infrastructure for the ongoing sales and maintenance of a distributed array of many types of turbines. Enough income must exist within 150 miles of a central service site to support $1 million/year in sales (20-25 turbines/year of 50-kW units). An installed base of 300 turbines is needed for an area to support a maintenance facility fulltime. However, a model of similar scale exists for the large farm implement market, covering the same size area, expected sales per year, and installed repair/re-supply base.

The lack of enough matching turbines to the loads is the third most important barrier to the implementation of wind for the farm and small-business market. A 10-kW unit will meet all small loads. These units are available and easily connected through net billing laws in most states already allowing this size unit. Likewise, 50-kW turbines are in production and can help meet the farm-ranch-small irrigation market. Unfortunately, 100- to 250-kW units for center-pivot irrigation and agri-processing industry are very limited. And the 250- to 500-kW units for large industrial loads are no longer made in any significant quantities.

One way to improve the potential sales is not to focus on turbine sales alone, but to develop the market in combination with demand-side energy management and full service of the turbines after installation. This would reduce owners’ worries regarding long-term O&M and also ensure that energy produced was used at the best value to the turbine owner (displacing energy that would have been purchased at retail rates from the utility).

61

Chapter 10: U.S. Energy: Overview and Key Statistics



U.S. Energy: Overview and Key Statistics

Carl E. Behrens Specialist in Energy Policy

Carol Glover Information Research Specialist

October 28, 2009


7-5700 www.crs.gov

R40187





Summary Energy supplies and prices are major economic factors in the United States, and energy markets are volatile and unpredictable. Thus, energy policy has been a recurring issue for Congress since the first major crisis in the 1970s. As an aid in policy making, this report presents a current and historical view of the supply and consumption of various forms of energy.

The historical trends show petroleum as the major source of energy, rising from about 38% in 1950 to 45% in 1975, then declining to about 40% in response to the energy crisis of the 1970s. Significantly, the transportation sector has been and continues to be almost completely dependent on petroleum, mostly gasoline. The importance of this dependence on the volatile world oil market was revealed over the past five years as perceptions of impending inability of the industry to meet increasing world demand led to relentless increases in the prices of oil and gasoline. With the downturn in the world economy and a consequent decline in consumption, prices collapsed, but the dependence on imported oil continues as a potential problem.

Natural gas followed a similar pattern at a lower level, increasing its share of total energy from about 17% in 1950 to more than 30% in 1970, then declining to about 20%. Consumption of coal in 1950 was 35% of the total, almost equal to oil, but it declined to about 20% a decade later and has remained at about that proportion since then. Coal currently is used almost exclusively for electric power generation.

Nuclear power started coming online in significant amounts in the late 1960s. By 1975, in the midst of the oil crisis, it was supplying 9% of total electricity generation. However, increases in capital costs, construction delays, and public opposition to nuclear power following the Three Mile Island accident in 1979 curtailed expansion of the technology, and many construction projects were cancelled. Continuation of some construction increased the nuclear share of generation to 20% in 1990, where it remains currently. The first new reactor license applications in nearly 30 years were recently submitted, but no new plants are currently under construction or on order.

Construction of major hydroelectric projects has also essentially ceased, and hydropower’s share of electricity generation has gradually declined, from 30% in 1950 to 15% in 1975 and less than 10% in 2000. However, hydropower remains highly important on a regional basis.

Renewable energy sources (except hydropower) continue to offer more potential than actual energy production, although fuel ethanol has become a significant factor in transportation fuel, and wind power has recently grown rapidly. Conservation and energy efficiency have shown significant gains over the past three decades and offer encouraging potential to relieve some of the dependence on imports that has caused economic difficulties in the past, as well as the present.

After an introductory overview of aggregate energy consumption, this report presents detailed analysis of trends and statistics regarding specific energy sources: oil, electricity, natural gas, coal and renewable energy. A section on trends in energy efficiency is also presented.






Oil ..............................................................................................................................................6Petroleum Consumption, Supply, and Imports.......................................................................7Petroleum and Transportation.............................................................................................. 10Petroleum Prices: Historical Trends..................................................................................... 12Petroleum Prices: The 2004-2008 Bubble............................................................................ 15Gasoline Taxes ................................................................................................................... 18

Electricity ................................................................................................................................. 18

Other Conventional Energy Resources ...................................................................................... 22Natural Gas......................................................................................................................... 22

Coal.......................................................................................................................................... 26

Renewables............................................................................................................................... 27

Conservation and Energy Efficiency ......................................................................................... 29Vehicle Fuel Economy........................................................................................................ 29Energy Consumption and GDP ........................................................................................... 30

Major Statistical Resources ....................................................................................................... 32Energy Information Administration (EIA) ........................................................................... 32Other Sources ..................................................................................................................... 33

Figures Figure 1. Per Capita Energy Consumption in Transportation and Residential Sectors,

1949-2008................................................................................................................................3

Figure 2. Electricity Intensity: Commercial, Residential, and Industrial Sectors, 1949-2008 ........................................................................................................................................4

Figure 3. U.S. Energy Consumption, 1950-2005 and 2008...........................................................6

Figure 4. World Crude Oil Reserves, 1973, 1991, and 2008.........................................................7

Figure 5. U.S. Consumption of Imported Petroleum, 1960-2008 and Year-to-Date Average for 2009 ................................................................................................................... 10

Figure 6. Transportation Use of Petroleum, 1950-2008.............................................................. 12

Figure 7. Nominal and Real Cost of Crude Oil to Refiners, 1968-2008 ...................................... 13

Figure 8. Nominal and Real Price of Gasoline, 1950-2008 and August 2009.............................. 14

Figure 9. Consumer Spending on Oil as a Percentage of GDP, 1970-2006................................. 15

Figure 10. Crude Oil Futures Prices, January 2000 to September 2009 ...................................... 16

Figure 11. Average Daily Nationwide Price of Unleaded Gasoline, January 2002-October 2009 ...................................................................................................................................... 17

Figure 12. U.S. Gasoline Consumption, January 2000-September 2009 ..................................... 18

Figure 13. Electricity Generation by Source, Selected Years, 1950-2007 ................................... 19

Figure 14. Changes in Generating Capacity, 1995-2007 ............................................................ 20





Figure 15. Price of Retail Residential Electricity, 1960-2007..................................................... 22

Figure 16. Natural Gas Prices to Electricity Generators, 1978-2007........................................... 24

Figure 17. Monthly and Annual Residential Natural Gas Prices, 2000-June 2009....................... 25

Figure 18. Annual Residential Natural Gas Prices, 1973-2008 ................................................... 26

Figure 19. U.S. Ethanol Production, 1990-2008......................................................................... 28

Figure 20. Wind Electricity Net Generation, 1989-2008 ............................................................ 29

Figure 21. Motor Vehicle Efficiency Rates, 1973-2007 ............................................................. 30

Figure 22. Oil and Natural Gas Consumption per Dollar of GDP, 1973-2008............................. 31

Figure 23. Change in Oil and Natural Gas Consumption and Growth in GDP, 1973-2008.......... 32

Tables Table 1. U.S. Energy Consumption, 1950-2008...........................................................................2

Table 2. Energy Consumption in British Thermal Units (BTU) and as a Percentage of Total, 1950-2008......................................................................................................................5

Table 3. Petroleum Consumption by Sector, 1950-2008 ..............................................................8

Table 4. U.S. Petroleum Production, 1950-2008 ..........................................................................9

Table 5. Transportation Use of Petroleum, 1950-2008 ............................................................... 11

Table 6. Electricity Generation by Region and Fuel, 2008 ......................................................... 21

Table 7. Natural Gas Consumption by Sector, 1950-2008.......................................................... 23

Table 8. Coal Consumption by Sector, 1950-2008..................................................................... 27


Key Policy Staff........................................................................................................................ 34





Introduction Tracking changes in energy activity is complicated by variations in different energy markets. These markets, for the most part, operate independently, although events in one may influence trends in another. For instance, oil price movement can affect the price of natural gas, which then plays a significant role in the price of electricity. Since aggregate indicators of total energy production and consumption do not adequately reflect these complexities, this compendium focuses on the details of individual energy sectors. Primary among these are oil, particularly gasoline for transportation, and electricity generation and consumption. Natural gas is also an important energy source, for home heating as well as in industry and electricity generation. Coal is used almost entirely for electricity generation, nuclear and hydropower completely so.1

Renewable sources (except hydropower) continue to offer more potential than actual energy production, although fuel ethanol has become a significant factor in transportation fuel, and wind power has recently grown rapidly. Conservation and energy efficiency have shown significant gains over the past three decades, and offer encouraging potential to relieve some of the dependence on imports that has caused economic difficulties in the past as well as the present.

To give a general view of energy consumption trends, Table 1 shows consumption by economic sector—residential, commercial, transportation, and industry—from 1950 to the present. To supplement this overview, some of the trends are highlighted by graphs in Figure 1 and Figure 2.

In viewing these figures, a note on units of energy may be helpful. Each source has its own unit of energy. Oil consumption, for instance, is measured in million barrels per day (mbd),2 coal in million tons per year, natural gas in trillion cubic feet (tcf) per year. To aggregate various types of energy in a single table, a common measure, British Thermal Unit (Btu), is often used. In Table 1, energy consumption by sector is given in units of quadrillion Btus per year, or “quads,” while per capita consumption is given in million Btus (MMBtu) per year. One quad corresponds to one tcf of natural gas, or approximately 50 million tons of coal. One million barrels per day of oil is approximately 2 quads per year. One million Btus is equivalent to approximately 293 kilowatt-hours (Kwh) of electricity. Electric power generating capacity is expressed in terms of kilowatts (Kw), megawatts (Mw, equals 1,000 Kw) or gigawatts (Gw, equals 1,000 Mw). Gas-fired plants are typically about 250 Mw, coal-fired plants usually more than 500 Mw, and large nuclear powerplants are typically about 1.2 Gw in capacity.

Table 1 shows that total U.S. energy consumption almost tripled since 1950, with the industrial sector, the heaviest energy user, growing at the slowest rate. The growth in energy consumption per capita (i.e., per person) over the same period was about 50%. As Figure 1 illustrates, much of the growth in per capita energy consumption took place before 1970.

1 This report focuses on current and historical consumption and production of energy. For a description of the resource base from which energy is supplied, see CRS Report R40872, U.S. Fossil Fuel Resources: Terminology, Reporting, and Summary, by Gene Whitney, Carl E. Behrens, and Carol Glover. 2 Further complications can result from the fact that not all sources use the same abbreviations for the various units. The Energy Information Administration (EIA), for example, abbreviates “million barrels per day” as “MMbbl/d” rather than “mbd.” For a list of EIA’s abbreviation forms for energy terms, see http://www.eia.doe.gov/neic/a-z/a-z_abbrev/a-z_abbrev.html.





Table 1 does not list the consumption of energy by the electricity sector separately because it is both a producer and a consumer of energy. For the residential, commercial, industrial, and transportation sectors, the consumption figures given are the sum of the resources (such as oil and gas) that are directly consumed plus the total energy used to produce the electricity each sector consumed—that is, both the energy value of the kilowatt-hours consumed and the energy lost in generating that electricity. As Figure 2 demonstrates, a major trend during the period was the electrification of the residential and commercial sectors and, to a lesser extent, industry. By 2007, electricity (including the energy lost in generating it) represented about 70% of residential energy consumption, about 80% of commercial energy consumption, and about a third of industrial energy consumption.3

Table 1. U.S. Energy Consumption, 1950-2008

Energy Consumption by Sector (Quadrillion Btu)

Consumption Per Capita (Million Btu)

Resid. Comm. Indust. Trans. Total Population(millions) Total Resid. Trans.

1950 6.0 3.9 16.2 8.5 34.6 152.3 227.3 39.4 55.8

1955 7.3 3.9 19.5 9.6 40.2 165.9 242.3 44.0 57.6

1960 9.1 4.6 20.8 10.6 45.1 80.7 249.6 50.2 58.7

1965 10.7 5.8 25.1 12.4 54.0 94.3 278.0 55.0 64.0

1970 13.8 8.3 29.6 16.1 67.8 205.1 330.9 67.3 78.5

1975 14.8 9.5 29.4 18.2 72.0 216.0 333.4 68.7 84.5

1980 15.8 10.6 32.1 19.7 78.1 227.2 343.8 69.5 86.7

1985 16.1 11.4 28.9 20.1 76.5 237.9 321.5 67.6 84.4

1990 17.0 13.3 31.9 22.4 84.7 249.6 339.1 68.2 89.8

1995 18.6 14.7 34.0 23.8 91.2 266.3 342.4 69.8 89.6

2000 20.5 17.2 34.8 26.6 99.0 282.2 350.7 72.6 94.1

2005 21.7 17.9 32.5 28.4 100.5 295.6 340.0 73.4 96.0

2006 20.8 17.7 32.5 28.8 99.9 298.4 334.7 69.6 96.7

2007 21.6 18.3 32.5 29.1 101.6 301.3 337.1 71.8 96.7

2008P 21.6 18.5 31.2 27.9 99.3 304.1 326.6 71.2 91.8

Source: Energy Information Administration (EIA), Annual Energy Review 2008, Tables 2.1a and D1. Per capita data calculated by CRS.

Notes: Data for 2008 are preliminary.

3 In calculating these percentages, “electric energy consumption” includes both the energy value of the kilowatt-hours consumed and the energy lost in generating that electricity.





Figure 1. Per Capita Energy Consumption in Transportation and Residential Sectors, 1949-2008

0

20

40

60

80

100

120

1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004

Mill

ion

BTU

Con

sum

edpe

rCap

ita

Residential

Transportation

2008P

Source: Energy Information Administration (EIA), Annual Energy Review 2008, Tables 2.1a and D1. Per capita data calculated by CRS.

Notes: Data for 2008 are preliminary.

Chapter 11: Testimony of Dr. Howard Gruenspecht, Energy Information Administration


Testimony of

Dr. Howard Gruenspecht

Acting Administrator

Energy Information Administration

U.S. Department of Energy

before the

Subcommittee on Energy and Environment

Committee on Energy and Commerce

U.S. House of Representatives

February 26, 2009



Mr. Chairman, and members of the Committee, I appreciate the opportunity to appear before you

today. My testimony reviews the role of renewable electricity generation in the Energy

Information Administration’s (EIA) Annual Energy Outlook 2009 (AEO2009) projections,

provides a brief overview of the renewable resource base, and discusses key findings from earlier

EIA analyses of proposals for a Federal renewable portfolio standard.

EIA is the independent statistical and analytical agency within the Department of Energy. We are

charged with providing objective, timely, and relevant data, analyses, and projections for the use

of the Congress, the Administration, and the public. Although we do not take positions on policy

issues, we do produce data and analyses to help inform energy policy deliberations. Because we

have an element of statutory independence with respect to this work, our views are strictly those

of EIA and should not be construed as representing those of the Department of Energy or the

Administration.

Renewable Electricity Generation in the AEO2009 Early Release Reference Case

The projections in EIA’s AEO2009, which extend through 2030, are intended to represent an

energy future based on given technological and demographic trends, current laws and

regulations, and consumer and supply behavior as derived from known data. EIA recognizes that

projections of energy markets are highly uncertain and are subject to political disruptions,

technological breakthroughs, and other unforeseeable events. In addition, long-term trends in

technology development, demographics, economic growth, and energy resources may evolve

along a different path than expected in the projections. The complete AEO2009, which EIA will

2



release in the coming weeks, includes a large number of alternative cases intended to examine

these uncertainties.

Projections for electricity sales and generation in the AEO2009 reference case reflect both

market and policy drivers. Projected electricity sales are sensitive to changes in projected

electricity prices, which reflect fuel prices, economic growth, and policies that promote energy

efficiency, including recently enacted lighting and appliance standards. The projected generation

mix reflects fuel prices, the impact of concerns regarding greenhouse gas (GHG) emissions on

investment behavior, and the projected growth in sales. Several policy factors play an important

role, notably the renewable portfolio standards (RPS) enacted in 27 states and the District of

Columbia. AEO2009 also reflects Federal policies that promote renewable generation sources,

including the production tax credit (PTC) for wind through the end of 2009 and for other eligible

resources through 2010, as well as investment tax credits for solar photovoltaics (PV) through

2016, reflecting provisions of the Energy Improvement and Extension Act of 2008. The

AEO2009 reference case does not, however, include the further 3-year extension of the PTC and

other provisions to promote renewable energy and energy efficiency that were enacted earlier

this month as part of the American Recovery and Reinvestment Act of 2009. EIA is currently

analyzing the impact of these provisions, which are expected to raise the projected amount of

renewables.

Spurred by State renewable incentive programs, tax incentives for renewables, and projected

prices for natural gas and other fuels, the AEO2009 reference case projects that renewable energy

sources will play a growing role in electricity generation (Figures 1 and 2). In absolute terms,

the largest growth in nonhydroelectric renewable generation is projected to come from biomass

3



and wind power. Between 2007 and 2030, generation from biomass power—both co-firing in

existing coal plants and the addition of new plants—increases by more than 500 percent, while

generation from wind power increases by more than 300 percent. While solar power is expected

to remain a relatively small part of the overall renewable generation mix, it is projected to

increase by more than 1600 percent between 2007 and 2030. The growth in solar power is

spurred by the State renewable programs and the investment tax credit provisions in the Energy

Improvement and Extension Act of 2008 that extended the credit through 2016 and removed the

cap on the size of the credit.

Overall, the projected growth in nonhydropower renewable generation in the AEO2009 reference

case constitutes 52 percent of overall projected growth in electricity sales through 2020 and 38

percent of growth in electricity sales through 2030.

Another perspective on projected renewable generation in the AEO2009 focuses on its share of

electricity sales. Share calculations relevant to consideration of any particular RPS proposal

must be constructed to reflect its design features. RPS credits available to renewable generators

depend on which renewables count and whether there are double or triple credits for some

specified renewables, such as distributed PV and wind, or for renewables in specified locations,

such as Indian lands, which affect the numerator in the RPS share calculation. Some proposals

that EIA has analyzed also allow credits for efficiency programs to count towards meeting the

RPS target up to a specified percentage, at the option of State governments. Exclusions from the

RPS, another key design feature, affect the denominator of the RPS share calculation. Several

past RPS proposals have exempted utilities below a specified sales cutoff value, existing

4



hydropower and municipal solid waste (MSW) generation, and sales from cooperatives and/or

municipal utilities from RPS coverage.

Some sample calculations based on the AEO2009 illustrate how design features affect RPS share

calculations. For example, if existing hydropower and MSW are not eligible for RPS credits, as

in many RPS proposals that EIA has analyzed in the recent past, and no electricity sellers are

exempted from the RPS, RPS eligible generation projected in the AEO2009 reference case

provides 7 percent of total electricity sales in 2020 and 9 percent of total electricity sales in 2030.

The same calculation done in a manner that provides triple RPS credits for distributed wind and

solar and provides an exemption from RPS coverage for the same categories of electricity sellers

exempted from coverage by the RPS proposal in H.R. 890 shows RPS credits from the same

AEO2009 generation profile equal to 9.6 percent of covered sales in 2020 and 11.6 percent of

covered sales in 2030. These sample calculations do not represent the full range of possibilities,

since they do not consider the possibility of credits for efficiency or double credits for

renewables in certain locations.

The AEO2009 RPS share, calculated in accordance with the crediting and coverage rules in any

specific RPS program design and adjusted for the projected impact of the American Recovery

and Reinvestment Act on the energy sector, characterizes the projected starting point for

compliance. Some combination of additional generation from RPS-eligible sources, credits for

efficiency (if allowed under the RPS program), or RPS credits purchased from the government if

a safety valve provision is included in the program and comes into play, would then be required

to close the gap between this starting point and the RPS targets.

5



Renewable Resources

The National Energy Modeling System (NEMS), used to produce the AEO2009, represents the

major renewable energy resources with significant mid-term potential to contribute to U.S.

electricity markets. These include resources for onshore and offshore wind, biomass, solar,

geothermal, landfill gas, and hydroelectricity. EIA represents the total quantity of technically

recoverable resources and, where applicable, the increasing cost of exploiting resources that are

less accessible or of lower quality.

The wind resources included in NEMS are derived from work done at the National Renewable

Energy Laboratory (NREL) to characterize the location, extent, and accessibility of the U.S.

wind resource base, as shown in Figure 3. Land-based wind resources vary significantly in

development cost and economic performance, based on average wind speed, distance from

transmission lines and from demand centers, and even the roughness of terrain and access to

construction infrastructure and other factors. In addition, some resources may be in aesthetically

or environmentally sensitive areas with high mitigation or opportunity costs for development.

EIA estimates that wind resources in excess of 15.7 miles per hour annual average wind speed at

50 meters altitude could, in theory, accommodate 3,700 gigawatts of wind capacity, compared to

a current installed capacity base of approximately 25 gigawatts. The estimated cost to develop

these resources ranges from about $2,000 per kilowatt to more than $6,000 per kilowatt, with

about 250 gigawatts estimated to be available at a cost of less than $2,400 per kilowatt.

However, much of this resource is concentrated in areas away from the bulk of the U.S.

population. In some regions, the available resource is in excess of local demand or grid

capacities to absorb the intermittent output of wind generators, while in others the available

6



resource can serve only a small fraction of load. NEMS allows for the construction of some

interregional transmission, but this projected transmission construction adds additional cost to

the wind development and may not entirely alleviate the problem.

Offshore wind resources are potentially more productive than onshore resources and are

generally located closer to major population centers. While there is significant uncertainty over

the cost of exploiting this resource, EIA estimates that it is significantly higher than the cost of

onshore development, based on the limited data available from Europe. Like onshore resources,

the cost of the offshore resources increases with increasing utilization of the resource, in part

influenced by the same factors that increase the cost of onshore resources, such as distance to

load centers, environmental or aesthetic concerns, variable terrain/seabed, and also by water

depth.

Biomass can be converted to electricity in either dedicated plants or co-fired as a small fuel

fraction in existing plants. Some types of biomass may also be suitable for producing liquid

fuels such as ethanol. NEMS represents four distinct types of biomass material available to the

electric power sector: forestry residues, urban wood waste and mill residues, agricultural

residues, and energy crops. As with most renewable resources, availability varies significantly

by region. Based largely on recent work from the University of Tennessee, costs are estimated to

rise with increasing supply, as shown in Figure 4. This reflects the value of some feedstocks to

alternative uses, increasing collection and separation costs, and the value of energy crop lands for

other uses such as food and feed production. Energy crops are not yet commercially established

in the United States, and EIA assumes that their development will take some time. As a result,

the supply of agricultural residues and energy crops varies over time in the AEO2009

7



0

1,000

2,000

3,000

4,000

5,000

6,000

1990 2000 2010 2020 2030

Coal

Natural Gas

Nuclear

Renewable

Oil & Other

Figure 1. Electricity Generation mix graduallyshifts to lower carbon options

billion kilowatthoursbillion kilowatthours

ProjectionsHistory

050

100150200250300350400450500

1990 2000 2010 2020 2030

Biomass

Wind

Solar

WasteGeothermal

Figure 2. Nonhydropower renewable power meets 38% of total generation growth between 2007 and 2030

billion kilowatthoursbillion kilowatthoursHistory Projections

Source: Energy Information Administration, National Energy Modeling System run AEO2009.D112408B.

17



Figure 3. Onshore and Offshore Wind Resources

Figure 4 – Cumulative Supply of Biomass Feedstock in 2020

0

2

4

6

8

10

12

0 2000 4000 6000 8000 10000 12000

Trillion Btu

Pric

e(2

007

dolla

rspe

rmill

ion

Btu

Source: Energy Information Administration, National Energy Modeling System

Urban Wood Waste

Forestry Residues

Agricultural Residues

Energy Crops

18

Chapter 12: Testimony of Ralph Izzo, Public Service Enterprise Group Incorporated


TESTIMONY OF RALPH IZZO PRESIDENT, CHAIRMAN AND CEO

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

HOUSE COMMITTEE ON ENERGY AND COMMERCE SUBCOMMITTEE ON ENERGY AND ENVIRONMENT

FEBRUARY 26, 2009

Mr. Chairman, Congressman Upton and Members of the Subcommittee, my name is

Ralph Izzo and I am President, Chairman and CEO of Public Service Enterprise Group.

Our family of companies distributes electricity and natural gas to more than two million

utility customers in New Jersey, and owns and operates approximately 17,000 megawatts

of electric generating capacity concentrated in the Northeast, Mid-Atlantic and Texas.

I appear before you this morning to express my strong desire to see this Congress adopt a

national Renewable Electricity Standard. I applaud Chairman Markey for his leadership

on this issue, as well as New Jersey Congressman Frank Pallone, who has championed

renewable energy for as long as I’ve known him.

I support a national RES as a citizen who is deeply concerned about climate change; as an

investor who sees exciting opportunities in the renewable sector; and as the head of a

company concerned about its customers and their ability to pay for green investments,

particularly in this economic environment.

1



The reports of how our climate is already changing are increasingly alarming.

Temperatures are rising, and the Arctic ice sheet and glaciers around the world are

melting even faster than anticipated.

Global warming is the most important environmental challenge of our time. To avoid

catastrophic impacts from climate change, most scientists agree that we must achieve

carbon emission reductions of 80% by 2050. To reach this target, we urgently need

decisive federal action – not a patchwork of state and regional fixes, but a strong,

progressive national energy policy.

PSEG has advocated a three-pronged approach to reduce carbon emissions.

� Conservation through energy efficiency improvements.

� Development of renewable energy resources.

� And an expansion of clean, zero- and low-carbon central station electric

generation, such as nuclear power.

Putting a price on carbon with a cap-and-trade program will help make progress toward

all of these goals. However, effectively combating global warming will require a

comprehensive package of policy solutions.

Meeting our carbon reduction targets will require that we electrify our transportation

sector and decarbonize our electric generation. This cannot be achieved if we only focus

on short-term, least-cost carbon reduction measures. We need policies aimed directly at

2

Chapter 12: Testimony of Ralph Izzo, Public Service Enterprise Group Incorporated


driving these transformations, and a federal RES will create demand for technologies that

will transform the way we generate electricity.

With America’s skilled workforce and entrepreneurial spirit, we should be leading this

charge. But today we are playing catch up with other nations in developing renewable

energy industries.

With the right national policy, America can develop the world’s leading clean energy

industry. We will create jobs. And we will develop new technologies that we can export

all over the world. Investment in renewable energy is a strategy for long-term growth.

As an investor and businessman, I believe the adoption of a federal RES would create

tremendous opportunities. PSEG is already beginning to invest heavily in alternative

energy. Two weeks ago, our utility filed a proposal with New Jersey regulators to invest

almost $800 million in solar generation over the next five years. Under this program, we

will install solar generation on brownfields, low-income housing and government

buildings. It also will include roughly 200,000 solar installations on our utility poles.

This is in addition to the more than $100 million our utility is already investing in solar

generation.

Our merchant renewable generating company is also developing solar, offshore wind and

other alternative energy projects. Most notable among these is a joint venture with

Deepwater Wind to build a 350 megawatt wind generation facility roughly 17 miles off

3

Chapter 13: Written Testimony of Edward C. Lowe, GE Energy Infrastructure


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Chapter 13: Written Testimony of Edward C. Lowe, GE Energy Infrastructure


33

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Chapter 17: Wind and Water Power Program—Wind Energy Resource Potential




Wind Energy Resource Potential The United States has enough wind resources to generate electricity for every home and business in the nation. But not all areas are suitable for wind energy development. The Wind Energy Program measures the potential wind energy resources of areas across the United States in order to identify ideal areas for project development.

For information on the program's mapping activities and individual state maps, visit the Wind Powering America Web site.

Wind Energy Resource Potential and Wind EnergyProjectsOne of the first steps to developing a wind energy project is to assess the area's wind resources and estimate the available energy. Correct estimation of the energy available in the wind can make or break the economics of a project.

To help the wind industry identify the areas best suited for development, the Wind Energy Program works with the National Renewable Energy Laboratory (NREL) and other organizations to measure, characterize, and map wind resources 50 meters (m) to 100 m above ground.

This map shows the annual average wind power estimates at 50 m above ground. It combines high and low resolution datasets that have been screened to eliminate land-based areas unlikely to be developed due to land use or environmental issues. In many states, the wind resource has been visually enhanced to better show the distribution on ridge crests and other features.



Estimates of the wind resource are expressed in wind power classes ranging from Class 1 to Class 7, with each class representing a range of mean wind power density or equivalent mean speed at specified heights above the ground. This map does not show Classes 1 and 2 as Class 2 areas are marginal and Class 1 areas are unsuitable for utility-scale wind energy development.

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Chapter 18: Wind and Water Power Program—Wind Power Outreach and Education




Wind Power Outreach and EducationThe Wind and Water Power Program works to remove barriers to wind power deployment and to increase the acceptance of wind power technologies by enhancing public acceptance and engaging key stakeholders. This page describes the program's efforts to increase the deployment of wind energy nationwide, its goals, and where you can find more information about the program's major outreach initiative, Wind Powering America.

GoalThe program conducts outreach activities to overcome market and regulatory barriers at the national, state, and local levels, which is essential to making progress toward significant increases in the use of wind energy. Reaching an installed capacity threshold of 100 Megawatts (MW) in a state has been used as an important indicator that wind is being accepted as a large-scale generating option by that state's utilities, regulators, and investors. When the program launched Wind Powering America in 1999, only four states boasted more than 100 MW of installed wind capacity. By 2008, 22 states had more than 100 MW and seven states had more than 1000 MW. The program's goal for technology acceptance is for 30 states to have 100 MW of wind installed by 2010.

Accelerating the Use of Wind TechnologiesThe program develops and disseminates credible information on a range of wind technologies and issues to national, state, and local stakeholders and decisionmakers. Through the Wind Powering America initiative, team members work at the state and regional levels to promote wind energy, placing an emphasis on states with good wind resource potential but little

Chapter 27: Wind and Water Power Program—Offshore Wind Technology




Offshore Wind Technology Offshore wind energy installations have the potential to meet a significant portion of the future energy needs of the United States. Offshore wind resources provide an opportunity for the production of power close to coastal cities that are major electricity users. However, the commercialization of new offshore wind power technologies faces technical, regulatory, socioeconomic, and political challenges, many of which can be mitigated through targeted long-range research and development efforts.

GoalThe program's offshore wind goal is to reduce the cost of electricity from large wind systems in shallow water (less than 100 feet) in Class 6 winds (17.9-19.7 miles per hour) to 7 cents per kilowatt-hour (kWh) by 2014, from a baseline of 9.5 cents/kWh in 2005. The program's strategic objective is to reduce barriers to deployment of offshore wind energy in the near term and establish the U.S. as a leader in this growth industry.

Research Project Highlights

Developing Offshore Technologies

Wind turbines installed offshore can be much larger than those installed on land because the wind resource is extensive and transportation is not constrained. However, because of the harsh marine environment, offshore wind turbines must be more rugged and reliable, and wind turbines installed in deeper waters farther from shore will require new foundation and platform technologies over the next decade.

To address some of the new technological challenges posed by offshore wind, the program provides research assistance aimed at reducing costs for foundations, electrical grids, operations and maintenance, and installation and staging. Concepts for floating wind turbine platforms are also being investigated.



The Wind Program conducts research on offshore wind technologies for shallow water, transitional depth, and deepwater.

Measuring Offshore Wind Resources

The program works to provide the best possible information to potential offshore U.S. wind developers. As part of this effort, program researchers are working with AWS Truewind to assess offshore wind resources, using mesoscale models to generate 200-m x 200-m resolution wind data out to 50 nautical miles from shore.

Investigating Offshore Standards

The program works with the Minerals Management Service, the Department of Energy's national laboratories, and industry experts to review existing national safety certification standards and how they will apply to U.S. offshore wind turbines and structures. These standards will ensure the safe installation and operation of wind turbines in U.S. coastal waters.

Chapter 28: Wind Energy: Offshore Permitting



Wind Energy: Offshore Permitting

Adam Vann Legislative Attorney

September 3, 2009


7-5700 www.crs.gov

R40175





Summary Technological advancement, tax incentives, and policy concerns have driven a global expansion in the development of renewable energy resources. Wind energy, in particular, is now often cited as the fastest growing commercial energy source in the world. Currently, all U.S. wind energy facilities are based on land. However, multiple offshore projects have been proposed and are moving through the permitting process.

The United States has the authority to permit and regulate offshore wind energy development within the zones of the oceans under its jurisdiction. The federal government and coastal states each have roles in the permitting process, the extent of which depends on whether the project is located in state or federal waters. Currently, no single federal agency has exclusive responsibility for permitting related to activities on submerged lands in federal waters; authority is allocated among various agencies based on the nature of the resource to be exploited and the type of impacts incidental to such exploitation. The same is true for offshore wind energy context, where several federal agencies have a role to play in permitting development and operation activities.

Section 388 of the Energy Policy Act of 2005 (EPAct; P.L. 109-58) addressed previous uncertainties regarding offshore wind projects. This provision retained a role for the Army Corps of Engineers in permitting under the Rivers and Harbors Act but grants ultimate authority over offshore wind energy development to the Secretary of the Interior. The provision also contained various exemptions from the regulatory regime it establishes for projects that received certain permits prior to the enactment of the Energy Policy Act of 2005. The Minerals Management Service (MMS), an agency within the Department of the Interior (DOI), has issued regulations that implement the statutory authority under Section 388.

This report supersedes CRS Report RL32658, Wind Energy: Offshore Permitting, by Adam Vann.





Contents Jurisdiction Over the Ocean ........................................................................................................1

State Permitting ..........................................................................................................................3

Federal Permitting.......................................................................................................................4Early Regulation and Litigation.............................................................................................4The Energy Policy Act of 2005..............................................................................................6EPAct Exemptions ................................................................................................................9Additional Regulation Under Existing Law ......................................................................... 10

Conclusion................................................................................................................................ 14






echnological advancements and tax incentives have driven a global expansion in the development of renewable energy resources. Wind energy, in particular, is now often cited as the fastest growing commercial energy source in the world.1 Currently, unlike much of

Europe,2 all wind power facilities in the United States are based on land. However, multiple offshore projects have been proposed in recent years, including the Cape Wind project off the coast of Massachusetts; Winergy’s proposals off the coasts of Massachusetts, New York, New Jersey, Delaware, Maryland, and Virginia; and a Galveston-Offshore Wind, LLC project in a portion of the Gulf of Mexico under the jurisdiction of Texas.3

The focus of this report is the current law applicable to siting offshore wind facilities, including the relationship between state and federal jurisdictional authorities.4 This report also discusses the court challenges to early federal offshore wind energy permitting authorities and the effect that the Energy Policy Act of 2005 has had on the regulatory environment.

Jurisdiction Over the Ocean

The jurisdiction of coastal nations over the world’s oceans extends across various adjoining and overlapping zones by operation of international conventions and by the domestic laws and proclamations of individual governments. The United States has varying degrees of authority over four functional areas: the Territorial Sea, the Contiguous Zone, the Exclusive Economic Zone (EEZ), and state-controlled waters. The federal government has differing levels of authority in each of these zones vis-à-vis the states and other nations. Even within these zones, all nations enjoy freedom of navigation and overflight as well as other internationally lawful uses of the sea, subject to certain regulatory authority reserved to the coastal nation.5 However, it seems relatively clear that the United States would have sufficient jurisdiction over each of its zones to authorize the construction and operation of offshore wind projects.

United States authority in the oceans begins at its coast—called the baseline—and extends 200 nautical miles out to sea. The first 12 nautical miles comprise the U.S. territorial sea.6 Under the 1982 United Nations Convention on the Law of the Sea7 (UNCLOS III), a coastal nation may claim sovereignty over the air space, water, seabed, and subsoil within its territorial sea.8 U.S.

1 See Mass. Tech. Collaborative, U.S. Dep’t of Energy, & General Electric, A Framework for Offshore Wind Energy Development in the United States at 9 (September 2005); U.S. Dep’t of Energy & U.S. Dep’t of the Interior, White House Report in Response to the National Energy Policy Recommendations to Increase Renewable Energy Production on Federal Lands at 6 (August 2002). 2 For an overview of offshore wind farm regulation in the United Kingdom, see Nathanael D. Hartland, The Wind and the Waves: Regulatory Uncertainty and Offshore Wind Power in the United States and United Kingdom, 24 U. Pa. J. Int’l Econ. L. 691 (2003). 3 Betsie Blumberg, Wind Farms: An Emerging Dilemma for East Coast National Parks, in National Park Service, Natural Resource Year in Review—2003 63 (March 2004); see Texas General Land Office, Offshore Wind Energy (available at http://www.glo.state.tx.us/news/archive/2005/events/offshorewind.html). 4 For a discussion of policy and other issues related to wind energy, see CRS Report RL34546, Wind Power in the United States: Technology, Economic, and Policy Issues, by Stan Mark Kaplan. 5 Restatement (Third) of the Foreign Relations Law of the United States, § 514 (1986). 6 Proc. No. 5928 (December 27, 1988). 7 United Nations Convention on the Law of the Sea, December 10, 1982, 21 I.L.M. 1261 (entered into force November 16, 1994) (hereinafter UNCLOS III). 8 UNCLOS III arts. 2.1, 2.2, 3; see also United States v. California, 332 U.S. 19 (1947); Alabama v. Texas, 347 U.S. (continued...)

T





Supreme Court precedent and international practice indicate that this sovereignty authorizes coastal nations to permit offshore development within their territorial seas.9

The U.S. contiguous zone extends beyond the territorial sea to 24 nautical miles from the baseline. In this area, a coastal nation may regulate to protect its territorial sea and to enforce its customs, fiscal, immigration, and sanitary laws.10 The U.S. EEZ extends 200 nautical miles from the baseline. In accordance with international law, the United States has claimed sovereign rights to explore, exploit, conserve, and manage EEZ natural resources of the seabed, subsoil, and the superadjacent waters.11 United States jurisdiction also extends over “other activities for the economic exploitation and exploration of the zone, such as the production of energy from the water, currents and winds”12 and, subject to some limitations, “the establishment and use of artificial islands, installations and structures; marine scientific research; and the protection and preservation of the marine environment.”13 In almost all situations, the U.S. EEZ overlaps geographically with the Outer Continental Shelf (OCS), a geologically distinct area of appurtenant seabed referenced in several federal laws.14

The relative jurisdiction of the federal government with respect to individual states is also of importance. The Submerged Lands Act of 195315 assured coastal states title to the lands beneath coastal waters in an area stretching, in general, three geographical miles from the shore.16 Thus, states may regulate the coastal waters within this area, subject to federal regulation for “commerce, navigation, national defense, and international affairs” and the power of the federal government to preempt state law.17 The remaining outer portions of waters over which the United States exercises jurisdiction are federal waters.18

It would seem relatively clear that the federal government would have permitting authority for offshore wind farms, to the outer boundaries of its EEZ, and that this authority would be supported by international treaty. However, federal authority would be limited by the internationally recognized right of free passage and by the jurisdiction granted to the states under

(...continued)

272, 273-274 (1954). 9 See United States v. California, 436 U.S. 32, 36 (1978); United States v. Alaska, 422 U.S. 184, 199 (1975); Alabama v. Texas, 347 U.S. 272, 273-274 (1954); United States v. California, 332 U.S. 19 (1947). 10 UNCLOS III art. 33. 11 UNCLOS III arts. 56, 58; Exclusive Economic Zone of the United States of America, Proclamation No. 5030, 48 Fed. Reg. 10,605 (March 14, 1983); Territorial Sea of the United States of America, Proclamation No. 5928, 54 Fed. Reg. 777 (December 27, 1988); Contiguous Zone of the United States, Proclamation No. 7219, 64 Fed. Reg. 48,701 (August 2, 1999). 12 UNCLOS III art. 56.1 (emphasis added). 13 Id. at art. 56.1(b). 14 See U.S. Commission on Ocean Policy, An Ocean Blueprint for the 21st Century: Final Report of the U.S. Commission on Ocean Policy, Primer on Ocean Jurisdictions: Drawing Lines in the Water, Pre-Publication Copy 41-44 (2004), available at http://www.oceancommission.gov/documents/prepub_report/primer.pdf. 15 43 U.S.C. §§ 1301-1303, 1311-1315. 16 Id. at § 1301(a)(2). State jurisdiction typically extends three nautical miles (approximately 3.3 miles) seaward of the coast or “baseline.” Texas and the Gulf Coast of Florida have jurisdiction over an area extending 3 “marine leagues” (9 nautical miles) from the baseline. 43 U.S.C. § 1301(a)(2). 17 Id. at §§ 1314(a), 1311(a)(2). 18 Id. at § 1302.





the Submerged Lands Act. The scope of this federal authority is discussed in greater detail later in this report.

State Permitting

States may play a regulatory role when a wind energy project is proposed for construction in federal or state waters. State jurisdiction over projects located in federal areas is substantially circumscribed; however, under the Coastal Zone Management Act19 (CZMA), states are explicitly granted some regulatory authority. In general, the CZMA encourages states to enact coastal zone management plans to coordinate protection of habitats and resources in coastal waters.20 The CZMA establishes a policy of preservation alongside sustainable use and development compatible with resource protection.21 State coastal zone management programs that are approved by the Secretary of Commerce receive federal monetary and technical assistance. State programs must designate conservation measures and permissible uses for land and water resources22 and must address various sources of water pollution.23

The CZMA also requires that the federal government and federally-permitted activities comply with state programs.24 Responding to a Supreme Court decision that excluded OCS oil and gas leasing from state review under the CZMA, Congress amended the “consistency review” provision to include the impacts on a state coastal zone from actions in federal waters.25 Thus, states have some authority to demand that federally-permitted projects in federal waters will not result in a violation of state coastal zone management regulation.

In addition to consistency review, projects to be constructed in state waters, including any cables that would be necessary to transmit power back to shore, are subject to all state regulation or permitting requirements. Coastal zone regulation varies significantly among the states. The CZMA itself establishes three generally acceptable regulatory frameworks: (1) “State establishment of criteria and standards for local implementation, subject to administrative review and enforcement;” (2) “[d]irect State land and water use planning and regulation;” and (3) regulation development and implementation by local agencies, with state-level review of program decisions.26

Within these frameworks, several states, such as New Jersey, California, and Rhode Island, centralize authority for their programs in one agency.27 In New Jersey, for instance, the state

19 16 U.S.C. §§ 1451-1464. 20 Coastal U.S. states and territories, including the Great Lakes states, are eligible to receive federal assistance for their coastal zone management programs. Currently, there are 33 approved state and territorial plans. Of eligible states, only Illinois does not have an approved program. See National Oceanic and Atmospheric Administration, Office of Ocean and Coastal Resource Management, State and Territory Coastal Management Program Summaries, available at http://coastalmanagement.noaa.gov/mystate/welcome.html. 21 Id. at § 1452(1), (2). 22 Id. at § 1455(d)(2), (9)-(12). 23 Id.at § 1455(d)(16). 24 Id. at § 1456(c). 25 Id.; Sec’y of the Interior v. California, 464 U.S. 312, 315 (1984). 26 16 U.S.C. § 1455(d)(11). 27 See Rusty Russell, Neither Out Far Nor In Deep: The Prospects for Utility-Scale Wind Power in the Coastal Zone, 31 (continued...)





Department of Environmental Protection (through the Coastal Management Office within the Commissioner’s Office of Policy, Planning, and Science) is the lead agency for coastal zone management under several state laws.28 The majority of states, however, operate coastal zone management programs under “networks” of parallel agencies, with various roles defined by policy guidance and memoranda of understanding (MOUs).29 Based on a series of MOUs, each agency is obligated to issue and apply state regulations and permits consistently with the state’s coastal zone management program.30 Thus, depending on the state with jurisdiction, offshore wind energy projects could be subject to comprehensive regulation with permitting authority spread among multiple state and local agencies.

Federal Permitting

Use of federal and federally-controlled lands, including the OCS, requires some form of permission, such as a right-of-way, easement, or license.31 For onshore wind projects on federal public lands, the Department of the Interior (DOI), through the Bureau of Land Management, has created a regulatory program under the Federal Land Policy and Management Act,32 but a federal statute expressly governing offshore wind energy development was not enacted until August 2005 as part of the Energy Policy Act of 2005 (EPAct). Before enactment of EPAct, some permitting in support of offshore wind energy development had taken place under laws existing at that time. Use of these authorities proved controversial and was the subject of a lawsuit challenging preliminary permitting actions. The previous regulatory regime, the conflicts it engendered, and EPAct legal authority are discussed below.

Early Regulation and Litigation Prior to enactment of EPAct, the Army Corp of Engineers (Corps) took the lead role in the federal offshore wind energy permitting process, claiming jurisdiction pursuant to section 10 of the Rivers and Harbors Act (RHA),33 as amended by the Outer Continental Shelf Lands Act

(...continued)

B.C. Envtl. Aff. L. Rev. 221, 240-241 (2004). 28 E.g., Freshwater Wetlands Protection Act, N.J.S.A. 13:9B; Flood Hazard Area Control Act, N.J.S.A. 58:16A; Wetlands Act of 1970, N.J.S.A. 13:9A; Waterfront Development Act, N.J.S.A. 12:5-3; NJ Water Pollution Control Act, N.J.S.A. 58:10A; Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19; Tidelands Act, N.J.S.A. 12:3. 29 Russell, supra note 27, at 241. 30 Id. at App. E. 31 Several federal laws would appear to indicate that Congress intends the OCS to be used only when permission has been expressly granted. See 43 U.S.C. § 1332(1), (3) (“the subsoil and seabed of the outer Continental Shelf appertain to the United States and are subject to its jurisdiction, control, and power of disposition.... ”); see also 42 U.S.C. § 9101(a)(1)(stating that the purpose of the Ocean Thermal Energy Conversion Act is to “authorize and regulate the construction, location, ownership, and operation of ocean thermal energy conversion facilities.”). 32 43 U.S.C. §§ 1701 et seq. 33 33 U.S.C. §§ 407-687. Section 10 was enacted in 1899, and its text has not changed substantively since that time. It states:

The creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity of any of the waters of the United States is prohibited; and it shall not be lawful to build or commence the building of any wharf, pier, dolphin, boom, weir, breakwater, bulkhead, jetty, or other structures in any port, roadstead, haven, harbor, canal, navigable river, or other water of the United States, outside established harbor lines, or where no harbor lines have been established,

(continued...)





(OCSLA).34 The Corps has jurisdiction under these laws to permit obstructions to navigation within the “navigable waters of the United States” and on the OCS.35

In addition to reviewing offshore construction for potential obstructions to navigation, the Corps examined wind energy-related development pursuant to the National Environmental Policy Act (NEPA), which generally requires analysis of the environmental impacts of federal actions.36

Thus, pursuant to the RHA and NEPA, the Corps may have examined many of the salient issues present in an offshore wind energy proposal. Controversy arose, however, with respect to two primary issues that were litigated in Alliance to Protect Nantucket Sound v. United States Department of the Army.37 First, it was unclear whether Corps jurisdiction pursuant to the RHA and the OCSLA extended to all offshore structures or only to those otherwise permitted for energy or mineral development pursuant to other OCSLA provisions. On the basis of the language of the statutes at issue, their legislative history, and Corps regulations and guidance, a federal district court and the First Circuit Court of Appeals held that the Corps was authorized to exercise RHA section 10 authority for any offshore structure, regardless of purpose, in state or federal waters.38

The second issue in the Alliance case was whether a section 10 RHA permit was sufficient to authorize the siting, construction, and operation of an offshore wind energy facility. Because any wind turbines would be attached to the seabed of the OCS, some authorization to occupy the submerged lands of the OCS would be required before construction could legally take place.39

Use or occupancy of the OCS without such authorization arguably may constitute common law trespass.40 Questions over the type of authorization a section 10 permit encompasses spring, in part, from Corps regulations, which state:

(...continued)

except on plans recommended by the Chief of Engineers and authorized by the Secretary of the Army; and it shall not be lawful to excavate or fill, or in any manner to alter or modify the course, location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake, harbor or refuge, or inclosure within the limits of any breakwater, or of the channel of any navigable water of the United States, unless the work has been recommended by the Chief of Engineers and authorized by the Secretary of the Army prior to beginning the same. 33 U.S.C. § 403.

34 43 U.S.C. §§ 1331-1356a. 35 33 U.S.C. § 403. Corps regulations define the “navigable waters of the United States” as “those waters that are subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible for use to transport interstate or foreign commerce.” 33 C.F.R. § 329.4. Under the RHA, navigable waters “includes only those ocean and coastal waters that can be found up to three geographic miles seaward of the coast.” Alliance To Protect Nantucket Sound, Inc. v. U.S. Dept. of Army, 288 F.Supp.2d 64, 72 (D.Mass. 2003) (hereinafter Alliance I), aff’d, 398 F.3d 105 (1st Cir. 2005) (hereinafter Alliance II); see also 33 C.F.R. § 329.12(a). On the OCS, however, the Corps’ regulatory jurisdiction extends beyond that three-mile limit for, at least, certain purposes. 43 U.S.C. § 1333(a)(1), (e). 36 42 U.S.C. §§ 4321 et seq. 37 Alliance I, 288 F.Supp.2d at 64. 38 Id. at 75. 39 See 43 U.S.C. § 1333(a)(2)(A) (applying the criminal and civil laws of states adjacent to the OCS as federal law); see also Guy R. Martin, The World’s Largest Wind Energy Facility in Nantucket Sound? Deficiencies in the Current Regulatory Process for Offshore Wind Energy Development, 31 B.C. Envtl. Aff. L. Rev. 300, n.96 (2004). 40 The Court of Appeals for the Fifth Circuit has held that because the United States does not own the OCS in fee simple, it cannot claim trespass based on unauthorized construction on OCS. On the other hand, the court stated that “[n]either ownership nor possession is, however, a necessary requisite for the granting of injunctive relief,” because the United States has paramount rights to the OCS and an interest to protect. Thus damages available under trespass may not be available for unauthorized construction on the OCS, while injunctive relief would appear possible even under (continued...)



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Appendix A

U.S. Renewable Resource GIS Maps

with High Potential Screening and

Comparative Analysis Results

Solar CSP Analysis: Annual Resource >=.5.0 kWh/m2/day A – 2 Solar CSP Analysis: Slope <=5% A – 3 Solar CSP Analysis: Within 25 Miles of Graded Roads or Railroads A – 4 Solar CSP Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 5 Solar CSP Analysis: Compatible National Forest System Lands A – 6 Solar CSP Analysis: Screened Results A – 7 Solar CSP Comparative Analysis: Results by National Forest Unit A – 8 Solar PV Analysis: Annual Resource >=5.0 kWh/m2/day A – 9 Solar PV Analysis: Slope <=5% A – 10 Solar PV Analysis: Within 25 Miles of Graded Roads or Railroads A – 11 Solar PV Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 12 Solar PV Analysis: Compatible National Forest System Lands A – 13 Solar PV Analysis: Screened Results A – 14 Solar PV Comparative Analysis: Results by National Forest Unit A – 15 Wind Analysis: Annual Resource >=Class 3 at 50 m A – 16 Wind Analysis: Within 25 Miles of Graded Roads on National Forest System Lands A – 17 Wind Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 18 Wind Analysis: Compatible National Forest System Lands A – 19 Wind Analysis: Screened Results A – 20 Wind Comparative Analysis: Results by National Forest Unit A – 21 NFS Units with the Highest Potential for Solar CSP, Solar PV, and Wind A – 22

Chapter 31: Assessing the Potential for Renewable Energy on National Forest System Lands


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A-3



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A-2

1



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Appendix D

State Policies and Financial Incentives

for Renewable Energy



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Federal Policies

Modified Accelerated Cost Recovery System (MACRS) with 50% Bonus Depreciation

Under the Modified Accelerated Cost Recovery System (MACRS), businesses can recover investments in solar, wind, and geothermal property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from 3 to 50 years, over which the property may be depreciated. For solar, wind, and geothermal property placed in service after 1986, the current MACRS property class is 5 years.

In addition to the MACRS depreciation, Section 101 of the Job Creation and Worker Assistance Act of 2002 (http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ147.107.pdf) added Subsection 168(k) to the tax code relating to the accelerated cost-recovery system. This provision allowed businesses to take an additional 30% depreciation on solar, wind, and geothermal property in the first year. In May 2003, The Job Creation and Tax Relief Reconciliation Act of 2003 was signed into law, increasing the bonus depreciation to 50% in the first year that the equipment is purchased and placed into service.

Note that many states either have not adopted the federal bonus depreciation or have specifically “uncoupled” their state tax depreciation schedules from the new federal rules.

Renewable Electricity Production Tax Credit

Eligible Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Geothermal Electric, Municipal Solid Waste, Cogeneration, Refined Coal, Anaerobic Digestion, Small Hydroelectric

Amount: 1.8 cents/kWh for wind, solar, geothermal, closed-loop biomass; 0.9 cents/kWh for others

Terms: First 10 years of operation for wind, closed-loop biomass; first 5 years for other technologies

Website: http://www.irs.gov/pub/irs-pdf/f8835.pdf

Note, however, that owners of solar and geothermal projects who claim the 10% federal business energy tax credit (http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=US02F&State=Federal&currentpageid=1) may NOT also claim this production tax credit.

Solar and Geothermal Business Energy Tax Credit

Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar Thermal Process Heat, Photovoltaics, Geothermal Electric



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Amount: 10%

Max. Limit: $25,000 per year, plus 25% of the total tax remaining after the credit is taken

Terms: Credit may be carried back to the three preceding years and then carried forward for 15 years

State Policies

Arizona

Production Incentive – Green Tag Purchase Program

Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal Electric, Small Hydroelectric, Renewable Fuels

Amount: $1 to $100 per MWh total production; varies by technology and contract length

Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)

Website: http://www.mainstayenergy.com/

Mainstay Energy is a private company offering customers who install, or have installed, renewable energy systems the opportunity to sell the green-tag RECs associated with the energy generated by these systems. These green tags will be brought to market as Green-e*(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program, participating customers receive regular, recurring payments.

The amount of the payments depends on the type of renewable energy technology, the production of electricity by that system, and the length of the contract period. Mainstay offers 3-, 5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive payment on a $/kWh basis. Payments are made quarterly.

Generation Disclosure

The Arizona Corporation Commission adopted disclosure provisions as part of its 1996 Retail Electric Competition Rules. Under the disclosure provisions, all retail suppliers of electricity must disclose composition, fuel mix, and emissions characteristics upon request.

Green Power Purchasing

Scottsdale – local government buildings using photovoltaics



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Net Metering

Salt River Project

Tucson Electric Power Company

Renewables Portfolio Standard

Under the Environmental Portfolio Standard (EPS), regulated utilities in the state are required to provide a certain percentage of their electricity from renewable energy. The standard begins with 0.2% renewables for 2001 and increases to 1.1% renewables in 2007 through 2012. Of these amounts, solar-electric must make up 50% in 2001, increasing to 60% for 2004 through 2012.

Applicable technologies include solar-electric (PV), solar water heating and solar air conditioning, landfill gas, wind, and biomass. Arizona Public Service Company requested and received a rule waiver that would allow it to meet a portion of its EPS requirements from geothermal resources.

California

Corporate Solar and Wind Energy Tax Credit

California's Solar or Wind Energy System Credit (SB17x2) was approved by the Governor on October 8, 2001. The law provides personal and corporate income tax credits for the purchase and installation of photovoltaic or wind-driven systems with a peak generating capacity of up to 200 kilowatts. After January 1, 2004, and before January 1, 2006, the tax credit is equal to 7.5% of the net installed system cost after deducting the value of any municipal-, state-, or federal-sponsored financial incentives, or $4.50 per watt of rated peak generating capacity, whichever is less. A 15% tax credit was available January 1, 2001, through December 31, 2003. A 5-year warranty is required of each system. Taxpayers claiming the credit cannot sell the electricity produced by the system, but may utilize California’s net metering law, if eligible.

Production Incentive – Supplemental Energy Payments

Eligible Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass, Hydroelectric, Geothermal Electric, Fuel Cells, Municipal Solid Waste, Anaerobic Digestion, Tidal Energy, Wave Energy, Ocean Thermal

Amount: For above-market costs as compared to a market-price referent (subject to determination by the Energy Commission)

Terms: Three- to 10-year contracts

Website: http://www.energy.ca.gov/portfolio/



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Solar Property Tax Exemption: According to the California Revenue and Taxation Code, section 73, active solar energy systems installed between January 1, 1999, and January 1, 2006, are not subject to property taxes.


California’s energy suppliers must disclose to all customers the energy resource mix used in generation. Providers must use a standard label created by the California Energy Commission (CEC), and this information must be provided to end-use customers at least four times per year.


Davis – local government buildings using photovoltaics

Los Angeles – local government buildings

San Diego – local government buildings using solar water heat, solar thermal electric, photovoltaics, landfill gas, wind, biomass, geothermal electric, fuel cells, municipal solid waste, digester gas, small hydroelectric, tidal energy, wave energy, and ocean thermal

Santa Monica – local government buildings using geothermal electric

Net Metering

California's net-metering law requires that all three of California’s investor-owned electric utilities (PG&E, SCE, and SDG&E) and rural cooperatives, allow net metering for all customer classes for systems up to 1,000 kW (1 MW). Municipal utilities are allowed to permit either net-metering or co-metering. Net-metering customers are allowed to carry forward kWh credits for up to 12 months. Any net excess generation at the end of each 12-month period is granted to the utility. Customers subject to time-of-use (TOU) rates are entitled to deliver electricity back to the system for the same time-of-use (including real-time) price that they pay for power purchases. However, TOU customers choosing to net meter must pay for the metering equipment capable of making such measurements. Eligible technologies include photovoltaics, landfill gas, wind, fuel cells, anaerobic digestion.

Public Benefits Fund

California set the bar for all other renewable energy funds with the creation of a $540 million fund for renewables with its electric industry restructuring legislation (AB 1890) back in 1996. The success of that program lead to legislation to extend that funding�at the same annual levels�another 10 years, through 2012, creating an additional $1.35 billion in renewables funding.

This extended funding was enabled through Assembly Bill 995, which passed in September 2000. The California Energy Commission’s (CEC) authority to administer the extended fund was established in 2002 by Senate Bill 1038. The initial funding was collected from 1998 to 2001 from customers of the state’s three investor-owned utilities�SDG&E, SCE, and PG&E�whichmust pay specified amounts each year. The extended funding continues to be collected from the same entities. The CEC manages the renewables funds.



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Legislation enacting California's Renewable Portfolio Standard (RPS) (SB 1078) was signed by the Governor of California on September 12, 2002. This legislation, which requires retail sellers of electricity to purchase 20% of their electricity from renewable sources by 2017, establishes California as having the most aggressive RPS in the country. Renewable sources include biomass, solar thermal, photovoltaics, wind, geothermal, fuel cells using renewable fuels, small hydropower of 30 MW or less, digester gas, landfill gas, ocean wave, ocean thermal, and tidal current. Municipal solid waste is generally only eligible if it is converted to a clean burning fuel using a non-combustion thermal process. There are restrictions for some of these technologies.

Colorado




Terms: Any size system, grid tied, new renewable (January 1, 1999 or later)


Mainstay Energy is a private company offering customers who install, or have installed, renewable energy systems the opportunity to sell the green tags RECs associated with the energy generated by these systems. These green tags will be brought to market as Green-e*(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program, participating customers receive regular, recurring payments.



Colorado is one of several states to require disclosure without having restructured its electricity market. In January 1999, the Colorado Public Utility Commission (PUC) adopted regulations requiring the state's investor-owned utilities (IOUs) to disclose information regarding their fuel mix to retail customers. Utilities with a total system load of more than 100 MW are required to provide this information as a bill insert or as a separate mailing twice annually, beginning October 1999.

The PUC provided a suggested format for the disclosure. Fuel mix percentages are to be based on the power supply mix for the previous calendar year. Supporting documentation concerning



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the calculations used to determine the power supply mix percentages must be submitted to the PUC for approval.


Aspen – local government buildings using wind

Boulder – local government buildings using wind

Net Metering

Aspen Electric/Holy Cross Electric

Fort Collins Utilities

Gunnison County Electric

Xcel Energy


State

The initiative requires Colorado utilities with 40,000 or more customers to generate or purchase a percentage of their electricity from renewable sources according to the following schedule:

� 3% from 2007 through 2010

� 6% from 2011 through 2014

� 10% by 2015 and thereafter.

Of the electricity generated each year from renewable sources, at least 4% must come from solar technologies. At least one-half of this percentage must come from solar systems located on-site at customers’ facilities. Other eligible technologies include wind, geothermal heat, biomass facilities that burn nontoxic plants, landfill gas, animal waste, small hydroelectric, and hydrogen fuel cells. Energy generated in Colorado is favored: each kWh of renewable electricity generated in-state will be counted as 1.25 kWh for the purposes of meeting this standard.

Fort Collins

Electric Energy Supply Policy - Standard: Additional 2% by 2004; 15% by 2017

Georgia

Production Incentive - Green Tag Purchase Program




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of this generation from large-scale hydroelectric facilities�so the RPS target will require an additional 3,700 MW of renewable resource generation capacity.

Nevada

Production Incentives

Green Tag Purchase Program







Renewable Energy Credits

Nevada's Renewable Energy Portfolio Standard requires the state's two investor-owned utilities to derive a minimum percentage of the electricity they sell from renewable energy resources. Included in the standard is a REC program. The PUC is in the process of drafting the permanent regulations for RECs. Starting January 1, 2003, Nevada's renewable energy producers can earn RECs, which can then be sold to utilities that are required to meet Nevada's portfolio standard.

One REC will represent a kilowatt-hour of electricity generated from a renewable energy system, with the exception of PV, which counts as 2.4 kWh per AB 296 of 2003. The value of a REC ismarket-driven. RECs are issued by Nevada’s PUC and are valid for 5 years.

Renewable energy is defined as biomass, geothermal energy, solar energy, wind, and waterpower. Solar energy includes any displacement of fossil energy use and could include (solar daylighting, solar water heating, etc.)



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Renewable Energy Producers Property Tax Exemption

Enacted by SB 227 on June 1, 2001, this statute allows certain new or expanded businesses a 50% property tax exemption for real and personal property used to generate electricity from renewable energy. The exemption may be taken over a 10-year period by a business that uses renewable energy as its primary source of energy and that has a generating capacity of at least 10 kW. Renewable energy includes biomass, solar, and wind.

Renewable Energy Systems Exemption

This statute states that any value added by a qualified renewable energy source shall be subtracted from the assessed value of any residential, commercial, or industrial building for property tax purposes. Qualified equipment includes solar, wind, geothermal, solid waste, and hydro. This exemption applies for all years following installation.

Renewable Energy/Solar Sales Tax Exemption

The sales/use tax rate for any sales, storage, consumption, or use of products or systems designed or adapted to use renewable energy to generate electricity and all of its integral components is 2% in all counties for those purchases made from January 1, 2002, through June 30, 2005.

Renewable energy means a source of energy that occurs naturally or is regenerated naturally, including without limitation biomass, fuel cells, geothermal energy, solar energy, waterpower, and wind. Biomass includes agricultural crops, wastes, and residues; wood, wood wastes, and residues; animal wastes; municipal wastes; and aquatic plants. SB 489 of 2003 extended this exemption to solar water heating and solar lighting systems, as well as extending the expiration date to July 1, 2005. Systems designed or adapted to use renewable energy to generate electricity means a system of related components from which at least 75% of the electricity generated is produced from one or more sources of renewable energy and that is designed to work as an integral package such that the system is not complete without one of its related components.


Beginning January 2002, each electric utility must disclose certain information to its customers, according to regulations established by the Nevada PUC. The disclosure must be in a standard format, provided in bill inserts twice a year, as well as on utility web sites. The disclosure must include the average mix of fuel sources used to create electricity, average emissions, customer service information, and information on low-income energy programs.

Net Metering

In 1997, Nevada enacted a law allowing investor-owned utility customers who generate up to 10 kW of solar or wind power to net meter. In 2001, AB 661 removed the limit on the amount of energy a utility can receive through net metering. In 2003, AB 429 increased the limit on system size from 10 kW to 30 kW and added waterpower (restricted to certain types) to the definition of renewable energy, which already includes biomass, geothermal energy, solar energy, and wind.



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Also in 2003, per AB 296, in complying with a portfolio standard, each 1 kWh of electricity generated from solar photovoltaics counts as 2.4 kWh, if the electricity is generated on the premises of a retail customer who uses at least 50% of the electricity.

Customer generators are billed monthly except in situations in which the customer and the utility agree on annual billing. Net excess generation is credited to the utility and is considered renewable energy that the utility has generated to fulfill its renewable energy portfolio. Utilities are required to supply a two-way meter to measure flow in both directions, and utilities are prohibited from adding any additional charges to the bills of those customers participating in net metering. Furthermore, utilities cannot place any additional standards or requirements on customer generators beyond those requirements established by the National Electric Code (NEC), Underwriters Laboratories (UL), and the Institute of Electrical and Electronic Engineers (IEEE).


As part of its 1997 restructuring legislation, the Nevada legislature established an RPS. Under the standard, the state's two investor-owned utilities, Nevada Power and Sierra Pacific Power, must derive a minimum percentage of the total electricity they sell from renewable energy resources. In 2001, the legislature revised the minimum amounts to increase by 2% every 2 years, starting with a 5% renewable energy requirement in 2003 and achieving a 15% requirement by 2013 and each year thereafter. Not less than 5% of the renewable energy must be generated from solar renewable energy systems.

North Carolina








The amount of the payments depends on the type of renewable energy technology, the production of electricity by that system, and the length of the contract period. Mainstay offers 3-,



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5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive payment on a $/kWh basis. Payments are made quarterly.

TVA – Green Power Switch Generation Partners Program

Eligible Technologies: PV, Wind

Amount: $500 (residential only) plus $0.15 per kWh for 10 years (residential and commercial)

Terms: $500 payment available until the program capacity reaches 150 kW

Website: http://www.gpsgenpartners.com

TVA and participating power distributors currently offer a dual-metering option to residential and small-commercial consumers (non-demand-metered) through the Green Power Switch Generation Partners program. The output (green power) generated from this program will be counted as a TVA Green Power Switch resource.

Through this program, TVA will purchase the entire output of a qualifying system at $0.15 per kWh through a participating power distributor, and the consumer will receive a credit for the power generated. Participation in this program is entirely up to the discretion of the power distributor. As of June 2004, about a dozen distributors have signed up for the program. Thus far, the program includes several residential solar participants and one 20-kW wind project.

Energy Improvement Loan Program

The Energy Improvement Loan Program (EILP) is available to North Carolina businesses, local governments, public schools, and nonprofit organizations that demonstrate energy efficiency, use of renewable energy resources, energy cost savings, or reduced energy demand. Loans with an interest rate of 1% to a maximum limit of $500K are available for certain renewable energy and energy recycling projects. Eligible renewable energy projects generally include solar, wind, small hydro (less than 20 MW), and biomass. A rate of 3% is available for projects that demonstrate energy efficiency, energy cost-savings, or reduced energy demand. In order to qualify for an EILP low-interest loan, a project must (1) be located in North Carolina; (2) demonstrate energy efficiency, use of renewable energy resources, or result in energy cost savings; (3) use existing reliable, commercially available technologies; (4) meet federal and state air and water quality standards; and (5) be able to recover capital costs within the loan's maximum term of 10 years through energy cost savings.

North Dakota






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Large Wind Property Tax Reduction

North Dakota modified its property tax incentives for large wind systems with its 2001 bill that reduces property taxes by 70% for wind facilities of 100 kW or larger. To be eligible, construction must begin by January 1, 2011. The state also has a sales tax exemption for these systems.

Geothermal, Solar, and Wind Property Tax Exemption

North Dakota exempts from local property taxes any solar, wind, or geothermal energy device. Qualifying systems can be stand alone or part of a conventional system, but in the case where the solar, wind, or geothermal system is part of a conventional energy system, only the renewable energy portion of the total system is eligible. This exemption is applied only during the 5-year period following installation. To apply for this exemption, system owners must contact their local tax assessor or their county director of tax equalization.

Large Wind Sales Tax Exemption

North Dakota's large wind sales tax exemption applies to the owner of a wind-powered electrical generating facility that has at least one single electrical energy generation unit with a nameplate capacity of 100 kW or more. The exemption will apply to building materials, production equipment, and other tangible personal property used in the construction of the facility. The exemption applies to any sales or use tax that would be due in the construction of the facility between July 2001 and January 2011.

Net Metering

Passed in 1991 by the North Dakota PUC, this net-metering ruling applies to both renewable energy generators and cogenerators up to 100 kW in capacity. Net metering is available to all customer classes, and there is no statewide limit to the capacity signed up for net metering. When customers have excess generation in a monthly billing period, utilities must purchase net excess generation at the avoided cost.



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Oklahoma

Zero-Emission Facilities Production Tax Credit

Starting January 1, 2003, an income tax credit is available to producers of electric power using renewable energy resources from a zero-emission facility located in Oklahoma. The zero-emission facility must have a rated production capacity of 50 MW or more. Renewable energy resources include wind, moving water, sun, and geothermal energy. The construction and operation of the zero-emission facility must result in no pollution or emissions that are or may be harmful to the environment, as determined by the Department of Environmental Quality.

The amount of the credit varies depending on when the electricity is generated. For electricity generated after January 1, 2004, but prior to January 1, 2007, the amount of the credit is $0.005 per kilowatt-hour for electricity generated by zero-emission facilities. For electricity generated after January 1, 2007, but prior to January 1, 2012, the amount of the credit is $0.0025 per kilowatt-hour of electricity generated by zero-emission facilities.

Credits may be claimed over a 10-year period, and non-taxable entities may transfer the tax credit to taxable entities.








Net Metering

Net metering has been available in Oklahoma since 1988 under Oklahoma Corporate Commission Order 326195. This ruling requires investor-owned utilities and rural cooperatives under the Commission's jurisdiction to file net-metering tariffs for customer-owned renewable



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energy and cogeneration facilities at 100 kW or less in capacity. The program is available to all customer classes, and there is no statewide limit to the amount of net-metering capacity.

Utilities are not allowed to impose extra charges for customers signed up for net metering, nor are they allowed to require new liability insurance as a condition for interconnection. Utilities are also not required to purchase net excess generation from customers. The ruling, however, does allow customers to request that utilities purchase the net generation. In this case, the utility purchases the generation at the utility's filed avoided cost. Although all renewable energy sources are eligible, only wind-generating systems have used net metering in Oklahoma to date. In most cases, customer generation does not exceed demand.

Oregon

Business Energy Tax Credit

Eligible Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, Geothermal Electric, Geothermal Heat Pumps, Municipal Solid Waste, Cogeneration, Hydrogen, Refueling Stations, Ethanol, Methanol, Biodiesel, Fuel Cells (Renewable Fuels), Energy Efficiency

Amount: 35% of project costs

Max. Limit: $10,000,000 per project

Terms: Distributed over 5 years; 8-year carry forward

Website: http://www.energy.state.or.us/bus/tax/taxcdt.htm

Renewable Energy Grant

Using revenues generated from the sales of Green Tags, Bonneville Environmental Foundation (BEF), a not-for-profit organization, accepts proposals for funding for renewable energy projects located in the Pacific Northwest (Oregon, Washington, Idaho, Montana). Any private person, organization, local or tribal government located in the Pacific Northwest may participate. Projects that generate electricity are preferred. Acceptable projects include solar PV, solar thermal electric, solar hot water, wind, hydro, biomass, and animal waste-to-energy.

BEF may deliver funding through various means, including grants, loans, convertible loans, guarantees, and direct investments in renewable energy projects. BEF renewable-energy grants and investments may range from a few thousand dollars for small installations, to significant investments in central station grid-connected renewable energy projects. If a BEF grant is requested for a generating project, the BEF share will not exceed 33% of total capital costs and 0% of operating costs.



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Solar Starters

The Bonneville Environmental Foundation (BEF) and the Northwest Solar Cooperative have joined together to help reduce the costs of small residential and commercial photovoltaic systems in parts of Oregon and Washington; systems up to 5 kW are approved automatically; larger sizes may be acceptable. The Northwest Solar Cooperative will sign 5-year agreements with the owners of new photovoltaic systems and will pay them an annual amount equivalent to 10¢/kWh for the environmental attributes�or Green Tags�produced by the solar systems. System owners will be paid annually. BEF will then purchase the Green Tags from the Northwest Solar Cooperative and sell them to its wholesale customers and on its web site (https://www.greentagsusa.org/GreenTags/index.cfm). The first phase of the project is projected to include 30 to 50 small photovoltaic systems. There are 36 participants in the program.








New Renewable Energy Resources Grants

This program is designed to support renewable energy projects that do not already have an established incentive program developed and launched by the Energy Trust of Oregon. They expect to reserve 10% of the Renewable Energy program budget, which is about $1 million annually, for open solicitation incentives. Projects will generally be awarded in the areas of small wind, solar PV, biomass, biogas, small hydro, and geothermal electric.



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Small Scale Energy Loan Program (SELP)

Eligible Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation Fuels, Geothermal Electric, Municipal Solid Waste, Cogeneration, Waste Heat Recovery

Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local Government, State Government, Tribal Government, Rural Electric Cooperative

Amount: Typically $20,000 to $20 million

Max. Limit: None

Terms: Repayment to match term of bonds

Website: http://www.energy.state.or.us/loan/selphme.htm


Under Oregon’s 1999 electric utility restructuring legislation, electricity suppliers are required to disclose their fuel mix and emissions. Beginning March 1, 2002, disclosure must be supplied using a format prescribed by the Oregon PUC. Power source and environmental impact information must be provided to all residential consumers at least quarterly.


Portland: municipal buildings using PV, wind, biomass, geothermal electric, and anaerobic digestion

Net Metering

Oregon's net metering law, HB 3219 of July 1999, allows net metering for customers with solar, wind, or hydropower systems up to 25 kW. All customer classes are eligible, but enrollment is limited to a total installed capacity of 0.5% of a utility's historic single-hour peak load. Above this installed capacity, net-metering eligibility can be limited by regulatory authority. Net excess generation is either purchased at avoided cost or credited to the customer’s next monthly bill. At the end of an annual period, any unused credit is granted to the electric utility. This credit is then either granted to customers enrolled in the utility's low-income assistance programs, credited to the generating customer, or “dedicated to other use.”

In 1996, the City of Ashland enacted a net-metering law establishing a simple grid interconnection policy. It encourages the adoption of solar energy systems by allowing net metering and committing the City to purchase, at full retail price, up to 1,000 kWhs of excess electricity per month from small wind or solar energy systems.



D - 27

Public Benefits Fund

Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Direct-Use Geothermal Energy, Fuel Cells (Renewable Fuels)

Types: Renewables, Efficiency, Low Income, Schools

Total Fund: $10 million for renewables/year

Charge: 3% paid by certain electricity users

Website: http://www.energytrust.org/Frames/Frameset.html?mainFrame=http%3A//www.energytrust.org/Pages/renewable_energy_programs/index.html

South Dakota



Amount: $1-$100 per MWh total production; varies by technology and contract length





Wind Energy Property Tax Exemption

This wind energy property tax exemption bill requires that all commercial wind-power production facilities, regardless of ownership, now be assessed at the local level. Previously,some facilities were centrally assessed for tax purposes at the state level. The assessment is for the base, foundation, tower, and substations, which are considered real property. It doesn't include the generator and turbine blades, which are considered personal property.

Chapter 32: Energy Projects on Federal Lands: Leasing and Authorization



Energy Projects on Federal Lands: Leasing and Authorization

Adam Vann Legislative Attorney

September 8, 2009


7-5700 www.crs.gov

R40806





Summary A variety of statutes and agency regulations govern leasing and permitting for energy projects, including oil and natural gas development as well as alternative energy projects, on federal lands. This report explains the legal framework for energy leasing and development on federal lands. The report reviews laws and regulations affecting leasing of federal lands for exploration and production of oil and natural gas, which have evolved under a complex leasing system over the last century. The report also addresses existing laws and regulations that affect the use of federal lands for renewable energy projects, including geothermal, wind, and solar energy.

Chapter 32: Energy Projects on Federal Lands: Leasing and Authorization





Oil and Natural Gas Exploration and Production on Federal Lands ..............................................1History and Background........................................................................................................1Public Lands Subject to Oil and Natural Gas Leasing ............................................................2Development of Resource Management Plans .......................................................................2

Bureau of Land Management ..........................................................................................2U.S. Forest Service .........................................................................................................3

The Competitive Leasing Process..........................................................................................4The Noncompetitive Leasing Process ....................................................................................5Lease Terms and Conditions..................................................................................................6

General Statutory Restrictions .........................................................................................6Payment Terms: Rental Fees and Royalties......................................................................6Lease Terms, Extensions, and Cancellations ....................................................................7

Applications for Permits to Drill ...........................................................................................8Bureau of Land Management ..........................................................................................8U.S. Forest Service .........................................................................................................9

Renewable Energy Projects on Federal Lands............................................................................ 10Background ........................................................................................................................ 10Geothermal Project Leasing ................................................................................................ 11

Background .................................................................................................................. 11The Leasing Process...................................................................................................... 11Exploration and Production Under Geothermal Leases .................................................. 13

Authorizations for Wind and Solar Energy Projects ............................................................. 14Background .................................................................................................................. 14Title V of the Federal Land Policy and Management Act ............................................... 15






Introduction A variety of interrelated statutes and agency regulations govern leasing and permitting for energy exploration and production on federal lands.1 Generally, these projects can be divided into two categories, each of which is governed by its own set of statutes and regulations. The first category is the exploration for and production of fossil fuels, including oil and natural gas. Oil and natural gas exploration and production on federal lands are generally governed by the Mineral Lands Leasing Act of 1920 and subsequent amendments to that act, as administered by the Bureau of Land Management, an agency that is part of the U.S. Department of the Interior. Generally, the lessee is authorized to explore for and ultimately produce oil or natural gas on federal lands in exchange for lease payments and royalties paid to the U.S. government on the production. Exploration and production activities under a lease must be authorized independently by the Bureau of Land Management.

The second category pertains to renewable energy projects that are permitted under rights-of-way or similar property interests granted to applicants in accordance with the Federal Land Policy and Management Act of 1976. Under that act, these projects are often undertaken pursuant to a right-of-way or similar property interest. However, geothermal energy projects are considered mineral projects and thus are leased under a separate set of laws and regulations in a manner similar to oil and natural gas project leasing.

Oil and Natural Gas Exploration and Production on Federal Lands

History and Background At the start of the 20th century, private entities could explore, develop, and purchase federal lands containing oil with relative ease. Oil and natural gas resources on these federal lands were transferred to full private ownership pursuant to the terms of the Mining Law of 1872. This process was known as “patenting.” Under the patenting process, full ownership of oil lands “could be obtained for a nominal amount.”2

However, Congress eventually decided that oil and natural gas resources on onshore federal lands should remain under federal ownership. The enactment of the Mineral Lands Leasing Act of 1920 (MLA) ended the private acquisition of title to onshore federal oil lands by authorizing the Secretary of the Interior to issue permits for exploration and to lease lands containing oil and natural gas and other defense-related minerals.3 The MLA thus allowed the federal government to maintain ultimate control over these federal lands while leasing them to oil and natural gas

1 This report provides a discussion of energy projects on onshore federal lands (i.e., “public lands,” as that term is defined in the Federal Land Policy and Management Act of 1976). For discussion of offshore energy projects, see CRS Report RL33404, Offshore Oil and Gas Development: Legal Framework, by Adam Vann; CRS Report R40175, Wind Energy: Offshore Permitting, by Adam Vann; and CRS Report RL34741, Drilling in the Great Lakes: Background and Issues, coordinated by Pervaze A. Sheikh. 2 See Pan Am. Petroleum & Transp. Co. v. United States, 273 U.S. 456, 486 (1927) (internal citation omitted). 3 Mineral Lands Leasing Act of 1920 41 Stat. 4373 (1920), codified at 30 U.S.C. §181 et seq.

Chapter 34: Renewable Energy Production, Strategies, and Technologies


U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON :

For sale by the Superintendent of Documents, U.S. Government Printing OfficeInternet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

53–003 PDF 2009

S. HRG. 111–130

RENEWABLE ENERGY PRODUCTION, STRATEGIES, AND TECHNOLOGIES

HEARINGBEFORE THE

COMMITTEE ONENERGY AND NATURAL RESOURCES

UNITED STATES SENATE ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

TO

CONSIDER RENEWABLE ENERGY PRODUCTION, STRATEGIES, AND TECHNOLOGIES WITH REGARD TO RURAL COMMUNITIES

CHENA HOT SPRINGS, AK, AUGUST 22, 2009

(

Printed for the use of theCommittee on Energy and Natural Resources



(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES

JEFF BINGAMAN, New Mexico, Chairman

BYRON L. DORGAN, North Dakota RON WYDEN, OregonTIM JOHNSON, South DakotaMARY L. LANDRIEU, LouisianaMARIA CANTWELL, WashingtonROBERT MENENDEZ, New JerseyBLANCHE L. LINCOLN, ArkansasBERNARD SANDERS, VermontEVAN BAYH, IndianaDEBBIE STABENOW, MichiganMARK UDALL, ColoradoJEANNE SHAHEEN, New Hampshire

LISA MURKOWSKI, Alaska RICHARD BURR, North Carolina JOHN BARRASSO, Wyoming SAM BROWNBACK, Kansas JAMES E. RISCH, IdahoJOHN MCCAIN, ArizonaROBERT F. BENNETT, Utah JIM BUNNING, Kentucky JEFF SESSIONS, Alabama BOB CORKER, Tennessee

ROBERT M. SIMON, Staff DirectorSAM E. FOWLER, Chief Counsel

MCKIE CAMPBELL, Republican Staff Director KAREN K. BILLUPS, Republican Chief Counsel



(III)

C O N T E N T S

STATEMENTS

Page

Dodson, Jim, President & CEO, Fairbanks Economic Development Corpora-tion, Fairbanks, AK ............................................................................................. 44

Donatelli, Barbara, Senior Vice President, Administration and GovernmentRelations, Cook Inlet Region Inc., Anchorage, AK ............................................ 39

Haagenson, Steve, Executive Director, Alaska Energy Authority, and State-wide Energy Coordinator, Anchorage, AK ......................................................... 10

Hirsch, Brian, Senior Project Leader, Alaska National Renewable Energy Laboratory, Chena Hot Springs, AK .................................................................. 5

Holdmann, Gwen, Director, Alaska Center for Energy and Power, University of Alaska, Fairbanks, AK .................................................................................... 16

Johnson, D. Douglas, Director of Projects, ORPC Alaska, LLC, Anchorage,AK .......................................................................................................................... 49

Karl, Bernie, Proprietor, Chena Hot Springs Resort and Geothermal PowerGeneration Facility, Chena Hot Springs, AK .................................................... 36

Meiners, Dennis, CEO, Intelligent Energy Systems, Anchorage, AK ................. 52 Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 1 Rose, Chris, Executive Director, Renewable Energy Alaska Project (REAP),

Chena Hot Springs, AK ....................................................................................... 20

APPENDIX

Responses to additional questions .......................................................................... 63

[Due to the large amount of materials submitted, additional documents and state-ments have been retained in committee files.]



(1)

RENEWABLE ENERGY PRODUCTION, STRATEGIES, AND TECHNOLOGIES

SATURDAY AUGUST 22, 2009

U.S. SENATE,COMMITTEE ON ENERGY AND NATURAL RESOURCES,

Chena Hot Springs, AK The committee met, pursuant to notice, at 10:22 a.m. at Chena

Hot Springs Resort, Milepost 56.5, Chena Hot Springs Road, Hon. Lisa Murkowski presiding.

OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S.SENATOR FROM ALASKA

Senator MURKOWSKI. All right. Good morning. We will call toorder this hearing, this field hearing of the Senate Energy and Natural Resources Committee. The hearing this morning is con-cerning the potential importance of renewable energy powersources to meet our Nation’s energy needs.

It’s wonderful to be here at Chena Hot Springs. It’s wonderful to be outside, even if we are in a tent, but being here on a Saturday morning on a glorious Interior day is terrific.

What we will focus on today is the importance of renewable en-ergy power sources, as I say, to meet our Nation’s energy needs, what types of technology we should be working to foster, what fi-nancial assistance may be needed from Congress to make these dif-fering types of energy expand nationwide. Of course, of particular interest at this hearing is the use of renewable energy in high-cost rural areas.

Before I move further into my opening comments, I want to rec-ognize a few individuals. First, my colleague, Senator Stevens, has joined us here this weekend. Senator Stevens has long been a lead-er in advancing energy issues in this State, and I’m delighted that he is with us today. We have Representative Paul Seaton fromHomer who is with us. We also have Representative John Harris—actually Speaker John Harris has joined us. As others come intothe room, I’ll hopefully be able to acknowledge them as well.

We know that renewable energy has been a topic, a very populartopic, in recent years in Congress. Back in 2005 we passed the En-ergy Policy Act. We provided in that act a host of research and de-velopment grants and tax aid for renewables. Then in 2007, in theEnergy Independence and Security Act, we went even further, pro-viding more aid for geothermal and for ocean energy projects, andearlier this year we extended the renewable tax credits for a num-ber of years. This winter the Obama administration suggested that



2

this country should be spending $15 billion a year to expand re-newable energy production.

We know that we’ve got a long ways to go when it comes to fur-thering the use of renewal energy. Petroleum last year accounted for 39 percent of our total energy needs, natural gas accounted for 23 percent, coal 22 percent, and nuclear power was at 8 percent. All renewables together accounted for just 7 percent of our Nation’s total energy production, and what we think of as new renewable,which is the wind, the solar, the geothermal, and new forms of bio-mass, this is just at about 3 percent. So we’ve got a long ways togo.

But it is a real improvement in the past 5 years. Since 2003we’ve seen wind energy generation triple, up above 1 percent oftotal energy generation. Biomass still leads all renewables, ac-counting for 53 percent of renewable energy with hydropower in second place at 36 percent. Wind and geothermal are holding in there at about 5 percent, solar electricity accounts for 1 percent of renewable energy, and ocean marine energy development is barely a rounding error at this point in time.

But as Alaskans we know that renewable energy offers great po-tential in this State, where we see—particularly during the winter, our electricity from diesel generation costing about—an average of about 65 cents per kilowatt hour. I was in Newtok yesterday. They’re sitting at about 85 cents a kilowatt hour. Given those prices, anything that supports free fuel may produce real cost sav-ings, if the capital construction costs can be financed and can be controlled.

About 40 percent of the State might benefit from geothermal en-ergy, either shallow vent geothermal, or the future enhanced geo-thermal systems that are now under study.

Right now about 24 percent of our State’s total electricity comes from hydropower. There’s about 28 hydroprojects that are currentlyproducing electricity statewide. But we’ve got about another 250 projects that are already identified sites for hydroelectric genera-tion from lake taps to water diversion from streams and rivers.

We lead the Nation here in Alaska in the amount of power that we could gain from ocean marine hydrokinetic projects, using the waves, using the currents to produce our power. Just the State’s southern coast theoretically could produce 1,250 terawatts of power a year. This is 300 times more power than Alaskans use each year.

We also lead the Nation here in Alaska in traditional per capitabiomass. Alaskans are burning about 100,000 cords of firewoodeach year for space heat. The State is already burning 8 milliongallons of fish oil a year down in Kodiak to power boilers to dryfish meal, and using some of that for electricity generation.

We generate 650,000 tons of garbage a year, which Fairbanks isalready planning to convert into energy. Anchorage is underway ongenerating 2.5 megawatts of electricity from methane gas producedby the Anchorage landfill. This is enough to power 2,500 homes.None of these forms of biomass take into account the 9.5 millionacres of timber lands in the Tongass National Forest in the South-east, or the lands and timber lands in the Chugach National Forestdown in Southcentral.



3

We all know about our enormous wind potential here in the State. Kotzebue has 17 wind turbines that are currently producing about 8 percent of the community’s power. There’s more wind tur-bines already erected in dozens of villages in rural Alaska. Most of southern and western Alaska possess the best wind potential in thewhole country. We’ve got the Fire Island wind farm that’s on the threshold of construction in Anchorage, there are good wind sites south of Fairbanks, and AVEC, the Alaska Village Electric Co-op hopes to install more than 50 turbines in 36 rural villages, if theycan find the money, it’s always about the money. But the plan is out there.

All of these sites, particularly the large geothermal sites in theAleutians and the hydro sites, offer the possibility of using renew-able energy to generate hydrogen fuel or ammonia fuel that hope-fully, someday, we could export, like we export our oil today, to fuel Alaska’s economy of the future.

Now, this hearing is meant to focus on the renewables, to look at what the development can mean for the State, and especially tolook at the very innovative ways that technology can be used to generate renewable energy and energy efficiencies that will ulti-mately lower consumers’ costs.

You know, I mentioned the high prices that we’re paying. Whenwe think about what happened last year when Alaska as a State— actually the country as a whole, but more particularly the remote villages just got nailed with the high prices of fuel, and, you know, we don’t have a lot of margin for error there.

We’ve had congressional hearings back in Washington DC. Some of you have had an opportunity to speak at them. The congres-sional hearings are a little bit different breed than what you may have experienced if you have gone down to Juneau. Congressional hearings almost never permit unlimited verbal testimony, although someone can submit written testimony for the hearing record. I’llgive you the address later if you would like to submit some testi-mony if what you hear today prompts something that you would like to submit.

Today at the hearing we’ve got two panels of witnesses intended to provide a host of information. The witnesses will cover an over-view of renewables, their need and potential, and what the Federal Government should be doing to increase their energy generation. Iexpect we’re going to hear some innovative suggestions. I hope we will get some innovative suggestions for the technology in the fu-ture, and perhaps better information than what we get in Wash-ington for how renewables can be harnessed to generate the powerwhile we’re producing less carbon.

We have a court reporter here today, and everything that is saidwill be part of the record to be taken back to DC, and this testi-mony from the hearing will be made available to other Senators onthe Energy Committee hearing. So the good ideas that are pre-sented today will be reviewed and studied by the Senate membersand staff. So I’m hopeful that this hearing will be a useful spring-board to advance renewable energy development, both here in Alas-ka and nationwide.

So hopefully, we’re counting on it being a good sounding boardto hear what we in Congress should be doing when it comes to both



4

a policy and a financial aid standpoint to help renewable energy development.

The sites today—when I spoke with Senator Jeff Bingaman, whois the chairman of the Energy Committee, and indicated that we wanted to hold this field hearing at the Chena Energy Fair—we in-dicated that this was the perfect place to do it. Chena is the first site in the country, first site in the country, to sport a working low- temperature geothermal power plant. As you know, the plant is powering the PA system here this afternoon and everything elsefrom the ice museum’s chiller system to the greenhouse fans and lights.

Then later this afternoon I will be participating, as I’m sure many of you will, in the christening of the first truly mobile, self- contained geothermal power plant. It’s been built here, and it’s awaiting field testing in Florida.

The innovations here at Chena that have been developed by Ber-nie Karl, who will be one of our witnesses on the second panel, and those who have helped him, are truly an inspiration for a host of renewable projects that are under consideration throughout the State. Whether it’s the Fire Island wind project or Mount Spurr or Naknek, Manley Hot Springs, or Atukan, geothermal projects. Whether it’s the hydroprojects that we’re talking about, Lake Chakachamna, Susitna, the Grant Lake hydropower near Dillingham, we’ve got Thayer Creek down in Angoon. There’s so much out there.

So I’m hopeful that with this hearing and what we gather today,we’re going to be moving toward the day when there are the re-sources at the Federal, State, and local level to make these projects proceed. Later this afternoon at the energy fair, I’ll talk a little bit more about what the Federal aid is and what’s out there and avail-able to further renewables. But right now I would like to hear from our witnesses about what more we should be doing to spur our re-newable power generation, where we should be focusing those lim-ited resources.

So today, this morning, we have on our first panel Mr. Brian Hirsch. He’s the senior project leader in Alaska for the U.S. De-partment of Energy’s National Renewable Energy Lab. We also have a gentleman that is familiar to so many in the energy world,Steve Haagenson, who’s the director of the Alaska Energy Author-ity. We have Gwen Holdman. Gwen has taken me around Chena here numerous occasions explaining all the wonders of what goeson. Gwen is now the director of the Alaska Center for Energy andPower at the University of Alaska Fairbanks. We also have ChrisRose. Chris has truly been a leader in renewable energy. He’s theexecutive director of the Renewable Energy Alaska Project.

So, ladies and gentlemen, it’s a pleasure to welcome you heretoday. Without further adieu, why don’t we start with you, Mr.Hirsch, and just go down the line. We’d ask you to try to limit yourcomments to about 5 minutes. Your full written statement will beincluded as part of the record. So if you want to summarize or addon anything, we’d certainly appreciate it. But welcome to you.



5

STATEMENT OF BRIAN HIRSCH, SENIOR PROJECT LEADER, ALASKA NATIONAL RENEWABLE ENERGY LABORATORY, CHENA HOT SPRINGS, AK

Mr. HIRSCH. Thank you, Senator. Thanks for the opportunity todiscuss renewable energy technology and development, especially as it pertains to rural energy in Alaska, and the U.S. Department of Energy’s involvement in these issues.

As you stated, I am Brian Hirsch, on assignment here in Alaska with the National Renewable Energy Laboratory, which is the U.S.Department of Energy’s primary National Laboratory for research and development on energy efficiency and renewable energy issues.

In recent years DOE and NREL has been called upon to provide on location technical assistance and support to State and local enti-ties, especially in locations like Alaska where there’s high costs, complexities, and challenges around logistics and rugged climates.

We face many challenges here in providing energy for the State and the Nation. My testimony here will look primarily at whatwe’ve been able to accomplish, and challenges and opportunities for the future.

Alaska’s well known for our substantial fossil fuel resources. We are less well known for our renewable energy opportunities, but they are equally abundant. We believe that with proper develop-ment, they can support vibrant communities, help the environ-ment, and a prosperous future. We need look no further thanChena Hot Springs, as you mentioned.

The U.S. Department of Energy has been involved very much with everything from the very initial wells and development of the lowest temperature electricity producing geothermal systems here, as well as the mobile geothermal system that will be unveiled today, and an experimental 3,000 foot well that is also looking at enhanced geothermal production that may have broader application throughout Alaska and the country.

As you mentioned, Alaska has substantial tidal and wave poten-tial. The Electric Power and Research Institute estimates that Alaska has 80 percent of tidal and 50 percent of wave potential for the entire country. Just harvesting a small portion of that wouldmore than meet Alaska’s needs and allow us to export and supportenergy needs in the Lower 48 and elsewhere and become a renew-able energy exporting State, as well as a fossil fuel exporting State.

Challenges associated with that have to do with converting the energy, delivering it to shore, and where it’s needed, and storing it for the time of year. Because of our extreme seasonality, Alaskais the most challenged of any State in the country on these issues.These are the areas of our focus.

So, for example, we’ve been partnering with the Denali Commis-sion on an emerging energy technology grant program that boththe National Renewable Energy Laboratory and the National En-ergy Technology Laboratory combined establishing the Arctic En-ergy Office is on the review committee, and we are targeting exper-imental technologies that really have the most potential benefit forAlaska around these storage and delivery issues.

Alaska has considerable wind resources, as you mentioned. TheU.S. Department of Energy has a cost share with the State of Alas-ka on an anemometer loan program that can measure the wind re-



�� 1

Executive Summary & Overview

INTRODUCTION AND COLLABORATIVE APPROACH

Energy prices, supply uncertainties, and environmental concerns are driving the United States to rethink its energy mix and develop diverse sources of clean, renewable energy. The nation is working toward generating more energy from domestic resources—energy that can be cost-effective and replaced or “renewed” without contributing to climate change or major adverse environmental impacts. In 2006, President Bush emphasized the nation’s need for greater energy efficiency and a more diversified energy portfolio. This led to a collaborative effort to explore a modeled energy scenario in which wind provides 20% of U.S. electricity by 2030. Members of this 20% Wind collaborative (see 20%Wind Scenario sidebar) produced this report to start the discussion about issues, costs, and potential outcomes associated with the 20% Wind Scenario. A 20% Wind Scenario in 2030, while ambitious, could be feasible if the significant challenges identified in this report are overcome.

This report was prepared by DOE in a joint effort with industry, government, and the nation’s national laboratories (primarily the National Renewable Energy Laboratory and Lawrence Berkeley National Laboratory).1 The report considers some associated challenges, estimates the impacts, and discusses specific needs and outcomes in the areas of technology, manufacturing and employment, transmission and grid integration, markets, siting strategies, and potential environmental effects associated with a 20% Wind Scenario. In its Annual Energy Outlook 2007, the U.S. Energy Information Administration (EIA) estimates that U.S. electricity demand will grow by 39% from 2005 to 2030, 1 This is the executive summary of the full report entitled 20% Wind Energy by 2030: Increasing Wind Energy’s Contribution to U.S. Electricity Supply, available at www.nrel.gov/docs/fy08osti/41869.pdf.Chapters and appendices referenced herein can be found in the full report.

20% Wind Scenario: Wind Energy Provides 20% of U.S. Electricity Needs by 2030 Key Issues to Examine:

� Does the nation have sufficient wind energy resources?

� What are the wind technology requirements? � Does sufficient manufacturing capability exist? � What are some of the key impacts? � Can the electric network accommodate 20% wind? � What are the environmental impacts? � Is the scenario feasible?

Assessment Participants:

� U.S. Department of Energy (DOE) � Office of Energy Efficiency and Renewable Energy

(EERE), Office of Electricity Delivery and Energy Reliability (OE), and Power Marketing Administrations (PMAs)

� National Renewable Energy Laboratory (NREL) � Lawrence Berkeley National Laboratory (Berkeley

Lab) � Sandia National Laboratories (SNL)

� Black & Veatch engineering and consulting firm � American Wind Energy Association (AWEA)

� Leading wind manufacturers and suppliers � Developers and electric utilities � Others in the wind industry

Chapter 35: 20% Wind Energy by 2030—Increasing Wind Energy’s Contribution


2 ��

reaching 5.8 billion megawatt-hours (MWh) by 2030. To meet 20% of that demand, U.S. wind power capacity would have to reach more than 300 gigawatts (GW) or more than 300,000 megawatts (MW). This growth represents an increase of more than 290 GW within 23 years.2

The data analysis and model runs for this report were concluded in mid-2007. All data and information in the report are based on wind data available through the end of 2006. At that time, the U.S. wind power fleet numbered 11.6 GW and spanned 34 states. In 2007, 5,244 MW of new wind generation were installed.3 With these additions, American wind plants are expected to generate an estimated 48 billion kilowatt-hours (kWh) of wind energy in 2008, more than 1% of U.S. electricity supply. This capacity addition of 5,244 MW in 2007 exceeds the more conservative growth trajectory developed for the 20% Wind Scenario of about 4,000 MW/year in 2007 and 2008. The wind industry is on track to grow to a size capable of installing 16,000 MW/year, consistent with the latter years in the 20% Wind Scenario, more quickly than the trajectory used for this analysis. SCOPE This report examines some of the costs, challenges, and key impacts of generating 20% of the nation’s electricity from wind energy in 2030. Specifically, it investigates requirements and outcomes in the areas of technology, manufacturing, transmission and integration, markets, environment, and siting. The modeling done for this report estimates that wind power installations with capacities of more than 300 gigawatts (GW) would be needed for the 20% Wind Scenario. Increasing U.S. wind power to this level from 11.6 GW in 2006 would require significant changes in transmission, manufacturing, and markets. This report presents an analysis of one specific scenario for reaching the 20% level and contrasts it to a scenario of no wind growth beyond the level reached in 2006. Major assumptions in the analysis have been highlighted throughout the document and have been summarized in the appendices. These assumptions may be considered optimistic. In this report, no sensitivity analyses have been done to estimate the impact that changes in the assumptions would have on the information presented here. As summarized at the end of this chapter, the analysis provides an overview of some potential impacts of these two scenarios by 2030. This report does not compare the Wind Scenario to other energy portfolio options, nor does it outline an action plan. To successfully address energy security and environmental issues, the nation needs to pursue a portfolio of energy options. None of these options by itself can fully address these issues; there is no “silver bullet.” This technical report examines one potential scenario in which wind power serves as a significant element in the portfolio. However, the 20% Wind Scenario is not a prediction of the future. Instead, it paints a picture of what a particular 20% Wind Scenario could mean for the nation.

2 AEO data from 2007 were used in this report. AEO released new data in March of 2008, which were not incorporated into this report. While the new EIA data could change specific numbers in the report, it would not change the overall message of the report. 3 According to AWEA’s 2007 Market Report of January 2008, the U.S. wind energy industry installed 5,244 MW in 2007, expanding the nation's total wind power generating capacity by 45% in a single calendar year and more than doubling the 2006 installation of 2,454 MW. Government sources for validation of 2007 installations were not available at the time this report was written.

Chapter 36: Wind Research—Department of Energy Releases New Estimates


National Renewable Energy Laboratory

Wind Research

Department of Energy Releases NewEstimates of Nation's Wind Energy PotentialFebruary 26, 2010

The Department of Energy (DOE) recently released new estimates of the U.S. potential for wind-generated electricity, tripling previous estimates of the size of the nation's wind resources. The new study, which was carried out by the National Renewable Energy Laboratory (NREL) and AWS Truewind, finds that the contiguous 48 states have the potential to generate up to 37 million gigawatt hours annually. By contrast, total U.S. electricity generation from all sources was roughly 4 million gigawatt hours in 2009. The estimates show the total energy yield that could be generated using current wind turbine technology on the nation's windy lands. (The estimates show what is possible, not what will actually be developed.)

Along with the state-by-state estimates of wind energy potential, NREL and AWS Truewind have developed wind resource maps for the United States and for the contiguous 48 states that show the predicted average wind speeds at an 80-meter height. The wind resource maps and estimates provide local, state, and national policymakers with accurate information about the nature of the wind resource in their areas and across the nation, helping them to make informed decisions about wind energy in their communities.

The new estimates reflect substantial advances in wind turbine technology that have occurred since DOE's last national wind resource assessments were conducted in 1993. For example, previous wind resource maps showed predicted average wind speeds at a height of 50 meters, which was the height of most wind turbine towers at the time. The new maps show predicted average wind speeds at an 80-meter height, the height of today's turbines. Because wind speed generally increases with height, turbines built on taller towers can capture more energy and generate more electricity. The new estimates also incorporate updated capacity factors, reflecting improvements in wind turbine design and performance.

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Content Last Updated: May 20, 2010

Chapter 39: Wind and Water Power Program—FAQs on Small Wind Systems




Frequently Asked Questions on Small Wind Systems Below are frequently asked questions related to using a small wind energy system to power your home. The frequently asked questions below will help you determine if a small wind energy system is practical for powering your home.

� What are the benefits to homeowners from using wind turbines?� Is wind power practical for me?� Is my site right?� What about legal, environmental, and economic issues?� Where can I find more information?� What equipment do I need to run my own home wind energy system?

By investing in a small wind system, you can reduce pollution and reduce your exposure to future fuel shortages and price increases. Deciding whether to purchase a wind system, however, is complicated; there are many factors to consider. But if you have the right set of circumstances, a well-designed wind energy system can provide you with many years of cost-effective, clean, and reliable electricity.

What are the benefits to homeowners from using wind turbines?Wind energy systems provide a cushion against electricity price increases. Wind energy systems reduce U.S. dependence on fossil fuels, and they don't emit greenhouse gases. If you are building a home in a remote location, a small wind energy system can help you avoid the high costs of extending utility power lines to your site.

Although wind energy systems involve a significant initial investment, they can be competitive with conventional energy sources when you account for a lifetime of reduced or altogether avoided utility costs. They length of the payback period — the time before the savings resulting from your system equal the system cost — depends on the system you choose, the wind resource in your site, electric utility rates in you're area, and how you use your wind system.

Is wind power practical for me? Small wind energy systems can be used in connection with an electricity transmission and distribution system (called grid-connected systems), or in stand-alone applications



that are not connected to the utility grid. A grid-connected wind turbine can reduce your consumption of utility-supplied electricity for lighting, appliances, and electric heat. If the turbine cannot deliver the amount of energy you need, the utility makes up the difference. When the wind system produces more electricity than the household requires, the excess can be sold to the utility. With the interconnections available today, switching takes place automatically. Stand-alone wind energy systems can be appropriate for homes, farms, or even entire communities (a co-housing project, for example) that are far from the nearest utility lines. Either type of system can be practical if the following conditions exist.

Conditions for stand-alone systems

� You live in an area with average annual wind speeds of at least 4.0 meters per second (9 miles per hour)

� A grid connection is not available or can only be made through an expensive extension. The cost of running a power line to a remote site to connect with the utility grid can be prohibitive, ranging from $15,000 to more than $50,000 per mile, depending on terrain.

� You have an interest in gaining energy independence from the utility � You would like to reduce the environmental impact of electricity production � You acknowledge the intermittent nature of wind power and have a strategy for

using intermittent resources to meet your power needs

Conditions for grid-connected systems

� You live in an area with average annual wind speeds of at least 4.5 meters per second (10 miles per hour).

� Utility-supplied electricity is expensive in your area (about 10 to 15 cents per kilowatt-hour).

� The utility's requirements for connecting your system to its grid are not prohibitively expensive.

� Local building codes or covenants allow you to legally erect a wind turbine on your property.

� You are comfortable with long-term investments.

Is my site right? To get a general idea if your region has good wind resources, look at the Wind Powering America Wind Resources page, which has state wind maps. The maps will show you if wind speeds in your area are strong enough to further investigate the wind resource. Ofcourse, the maps are just a starting point — the actual wind resource on your site will vary depending on topography and structure interference. And a localized site with good winds, such as a ridgetop, may not show up on the maps.

Another source for wind data is the National Climatic Data Center, which collects data for selected sites and makes area wind data summaries available for purchase.



You will need site-specific data to determine the wind resource at your exact location. If you do not have on-site data and want to obtain a clearer, more predictable picture of your wind resource, you may wish to measure wind speeds at your location for a year. You can do this with a recording anemometer, which generally costs $500 to $1500. The most accurate readings are taken at "hub height" (i.e., the elevation at the top of the wind turbine tower). This requires placing the anemometer high enough to avoid turbulence created by trees, buildings, and other obstructions. The standard wind sensor height used to obtain data for the DOE maps is 10 meters (33 feet).

You can have varied wind resources within the same property. If you live in complex terrain, take care in selecting the installation site. If you site your wind turbine on the top or on the windy side of a hill, for example, you will have more access to prevailing wind than in a gully or on the leeward (sheltered) side of a hill on the same property. Consider existing obstacles and plan for future obstructions, including trees and building, which could block the wind. Also realize the power in the wind is proportional to its speed (velocity) cubed (v�). This means that the amount of power you get from your generator goes up exponentially as the wind speed increases. For example, if your site has an annual average wind speed of about 5.6 meters per second (12.6 miles per hour), it has twice the energy available as a site with a 4.5 meter per second (10 mile per hour) average (12.6/103).

What about legal, environmental, and economic issues? In addition to reviewing your site and particular situation and goals, you should also

� research potential legal and environmental obstacles � obtain cost and performance information from manufacturers � perform a complete economic analysis that accounts for a multitude of factors � understand the basics of a small wind system, and � review possibilities for combining your system with other energy sources,

backups, and energy efficiency improvements.

Establish an energy budget to help define the size of turbine that will be needed. Since energy efficiency is usually less expensive than energy production, making your house more energy efficient first will likely result in being able to spend less money since you may need a smaller wind turbine to meet your needs.

Potential Legal and Environmental Obstacles

Before you invest any time and money, research potential legal and environmental obstacles to installing a wind system. Some jurisdictions, for example, restrict the height of the structures permitted in residentially zoned areas, although variances are often obtainable. Your neighbors might object to a wind machine that blocks their view, or they might be concerned about noise. Consider obstacles that might block the wind in the future (large planned developments or saplings, for example). If you plan to connect the



wind generator to your local utility company's grid, find out its requirements for interconnections and buying electricity from small independent power producers.

Pricing a System

When you are confident that you can install a wind machine legally and without alienating your neighbors, you can begin pricing systems and components.

Approach buying a wind system as you would any major purchase. Obtain and review the product literature from several manufacturers. Lists of manufacturers are available from the American Wind Energy Association; however, not all small turbine manufacturers are members of AWEA. Manufacturer information can also be found at times in the periodicals listed below. Once you have narrowed the field, research a few companies to be sure they are recognized wind energy businesses and that parts and service will be available when you need them. Also, find out how long the warranty lasts and what it includes.

Ask for references of customers with installations similar to the one you are considering. Ask system owners about performance, reliability, and maintenance and repair requirements, and whether the system is meeting their expectations.

The Economics of Wind Power for Home Use

A residential wind energy system can be a good long-term investment. However, because circumstances such as electricity rates and interest rates vary, you need to decide whether purchasing a wind system is a smart financial move for you. Be sure you or your financial adviser conduct a thorough analysis before you buy a wind energy system.

Grid-connected-system owners may be eligible to receive a small tax credit for the electricity they sell back to the utility. The National Energy Policy Act of 1992 and the 1978 Public Utilities Regulatory Policy Act (PURPA) are two programs that apply to small independent power producers. PURPA also requires that the utility sell you power when you need it. Be sure you check with your local utility or state energy office before you assume any buy-back rate. Some Midwestern rates are very low (less than $.02/kWh), but some states have state-supported buy-back rates that encourage renewable energy generation. In addition, some states have "net billing," where utilities purchase excess electricity for the same rate at which they sell it.

Also, some states offer tax credits and some utilities offer rebates or other incentives that can offset the cost of purchasing and installing wind systems. Visit the DSIRE web site,which contains a database of financial incentives for wind energy. Check with your state's department of revenue, your local utility, public utility commission, or your local energy office for information.

Where can I find more information?



� AWEA's Small Wind Turbine Manufacturers List� AWEA's Residential Wind Turbine Q&A� AWEA's Wind Energy FAQ� Your State Energy Office� Wind Powering America: Small Wind Electric Systems

What equipment do I need to run my own home wind energy system? All wind systems consist of a wind turbine, a tower, wiring, and the "balance of system" components: controllers, inverters, and/or batteries. Hybrid systems use additional equipment, like photovoltaic panels and diesel generators to ensure electricity is available at all times.

Wind Turbines

Home wind turbines consist of a rotor, a generator mounted on a frame, and (usually) a tail. Through the spinning blades, the rotor captures the kinetic energy of the wind and converts it into rotary motion to drive the generator. Rotors can have two or three blades, with three being more common. The best indication of how much energy a turbine will produce is the diameter of the rotor, which determines its "swept area," or the quantity of wind intercepted by the turbine. The frame is the strong central axis bar onto which the rotor, generator, and tail are attached. The tail keeps the turbine facing into the wind.

A 1.5-kilowatt (kW) wind turbine will meet the needs of a home requiring 300 kilowatt-hours (kWh) per month, for a location with a 6.26-meters-per-second (14-mile-per-hour) annual average wind speed. The manufacturer will provide you with the expected annual energy output of the turbine as a function of annual average wind speed. The manufacturer will also provide information on the maximum wind speed in which the turbine is designed to operate safely. Most turbines have automatic speed-governing systems to keep the rotor from spinning out of control in very high winds. This information, along with your local wind speed distribution and your energy budget, is sufficient to allow you to specify turbine size.

Towers

To paraphrase a noted author on wind energy, "the good winds are up high." Because wind speeds increase with height in flat terrain, the turbine is mounted on a tower. Generally speaking, the higher the tower, the more power the wind system can produce. The tower also raises the turbine above the air turbulence that can exist close to the ground. A general rule of thumb is to install a wind turbine on a tower with the bottom of the rotor blades at least 9 meters (30 feet) above any obstacle that is within 90 meters (300 feet) of the tower.



Experiments have shown that relatively small investments in increased tower height can yield very high rates of return in power production. For instance, to raise a 10-kW generator from a 18-meter (60-foot) tower height to a 30-meter (100-foot) tower involves a 10% increase in overall system cost, but it can produce 25% more power.

There are two basic types of towers: self-supporting (free standing) and guyed. Most home wind power systems use a guyed tower. Guyed-lattice towers are the least expensive option. They consist of a simple, inexpensive framework of metal strips supported by guy cables and earth anchors.

However, because the guy radius must be one-half to three-quarters of the tower height, guyed-lattice towers require enough space to accommodate them. Guyed towers can be hinged at the base so that they can be lowered to the ground for maintenance, repairs, or during hazardous weather such as hurricanes. Aluminum towers are prone to cracking and should be avoided.

Balance of System

Stand-alone systems require batteries to store excess power generated for use when the wind is calm. They also need a charge controller to keep the batteries from overcharging. Deep-cycle batteries, such as those used to power golf carts, can discharge and recharge 80% of their capacity hundreds of times, which makes them a good option for remote renewable energy systems. Automotive batteries are shallow-cycle batteries and should not be used in renewable energy systems because of their short life in deep cycling operations.

In very small systems, direct current (DC) appliances operate directly off the batteries. If you want to use standard appliances that require conventional household alternating current (AC), however, you must install an inverter to convert DC electricity to AC. Although the inverter slightly lowers the overall efficiency of the system, it allows the home to be wired for AC, a definite plus with lenders, electrical code officials, and future homebuyers.

For safety, batteries should be isolated from living areas and electronics because they contain corrosive and explosive substances. Lead-acid batteries also require protection from temperature extremes.

In grid-connected systems, the only additional equipment is a power-conditioning unit (inverter) that makes the turbine output electrically compatible with the utility grid. No batteries are needed. Work with the manufacturer and your local utility on this.

Hybrid Systems

According to many renewable energy experts, a stand-alone "hybrid" system that combines wind with photovoltaic (PV) technologies and/or a diesel generator offers several advantages.



In much of the United States, wind speeds are low in the summer when the sun shines brightest and longest. The wind is strong in the winter when there is less sunlight available. Because the peak operating times for wind and PV occur at different times of the day and year, hybrid systems are more likely to produce power when you need it.

For the times when neither the wind generator nor the PV modules are producing electricity (for example, at night when the wind is not blowing), most stand-alone systems provide power through batteries and/or an engine-generator powered by fossil fuels like diesel.

If the batteries run low, the engine-generator can be run at full power until the batteries are charged. Adding a fossil-fuel-powered generator makes the system more complex, but modern electronic controllers can operate these complex systems automatically. Adding an engine-generator can also reduce the number of PV modules and batteries in the system. Keep in mind that the storage capability must be large enough to supply electrical needs during noncharging periods. Battery banks are typically sized for one to three days of windless operation.

Chapter 42: Wind and Water Power Program—Wind Powering America



Wind and Water Power Program - Wind Powering America

Small Wind for Homeowners, Ranchers, and Small Businesses The National Renewable Energy Laboratory produced Small Wind Electric Systems Consumer's Guides to help homeowners, ranchers, and small businesses decide if wind energy will work for them. The U.S. map shows which states have small wind consumer's guides. Click on a state to download the guidebook. The U.S. Small Wind Guide is available in both English (PDF 1.3 MB) and Spanish (PDF 1.5 MB). And, there is an American Corn Growers Association Small Wind Guide (PDF 1.7 MB). Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.

Small Wind Turbine Independent TestingNREL's Small Wind Turbine Research staff are independently testing small wind turbines to help the wind industry provide consumers with more certified small wind turbine systems.

Small Wind Events and Newsletter The Interstate Renewable Energy Council (IREC) maintains a calendar specifically for small wind events and publishes a quarterly Small Wind Newsletter.

Chapter 47: Energy Tax Policy: Issues in the 111th Congress


Energy Tax Policy: Issues in the 111th Congress


industry. The Appendix of this report provides a brief summary of energy tax policies enacted in the 108th and 109th Congresses.

Economic Rationale for Intervention in Energy Markets The primary goal of taxes in the U.S. economy is to raise revenues. There are times, however, when tax policy can be used to achieve other goals. These include the use of tax policy as an economic stimulus or the use of tax policy to achieve social objectives. Tax policy can also be used to correct for market failures, which without intervention result in market inefficiencies. There are a number of market failures surrounding the production and consumption of energy. Tax policy, as it relates to energy, can be used to address these market failures.

Rationale for Intervention in Energy Markets There are a variety of circumstances in which government intervention in energy markets may improve market outcomes. Generally, government intervention has the potential to improve market outcomes when there are likely to be market failures. Externalities represent one of the most important market failures in energy’s production and consumption. Market failures in energy markets also arise from principal-agent problems and information failures. Concerns regarding national security are used to rationalize intervention in energy markets as well.

Externalities

An externality is a spillover from an economic transaction to a third party, one not directly involved in the transaction itself. Externalities are often present in energy markets as both the production and consumption of energy often involve external costs (or benefits) not taken into account by those involved in the energy-related transaction. Instead, these externalities are imposed on an unaffiliated third party. In the presence of externalities, the market outcome will likely lead to an economically inefficient level of production or consumption.

When externalities are present, markets fail to establish energy prices equal to the social marginal cost of supply. The result is a system where cost and/or price signals are inaccurate, such that the socially optimal level of output, or allocative efficiency, is not achieved. Economic theory suggests that a tax be imposed on activities associated with external costs, while activities associated with external benefits be subsidized—in order to equate the social and private marginal costs. These taxes and/or subsidies will result in a more efficient allocation of resources.

Many energy production and consumption activities result in negative externalities, perhaps the most recognized being environmental damage. Air pollution results from mining activities as well as from the transportation, refining, and industrial and consumer use of oil, gas, and coal. Industrial activity can also produce effluents that contaminate water supplies as well as result in other damages to the land. In addition to causing environmental damage, the production and consumption of energy can also lead to lung damage and a variety of other health problems. The use of fossil fuels, both in the production of energy (i.e., coal-fired power plants) and at the





consumer level (i.e., using gasoline to power automobiles), and the associated greenhouse gas emissions have contributed to global climate change.1

There may also be market failures associated with external benefits stemming from the process of learning-by-doing. Learning-by-doing refers to the tendency for production costs to decline with experience. As firms become more experienced in the manufacturing and use of energy-efficient technologies their knowledge may spill over to other firms without compensation. In energy markets, early adopters of energy-efficient technologies and practices may not be fully compensated for the value of the knowledge they generate.2

Principal-Agent and Informational Inefficiencies

Market failures in energy use may also arise due to the principal-agent problem.3 Generally, the principal-agent problem exists when one party, the agent, undertakes activities on the behalf of another party, the principal. When the incentives of the agent differ from those of the principal, the agent’s activities are not undertaken in a way that is consistent with the principal’s best interest. The result is an inefficient outcome. In energy markets, the principal-agent problem commonly arises when one party is responsible for making equipment purchasing choices while another party is responsible for paying the energy costs, which are related to the efficiency level of the purchased equipment.

For residential rental properties, the incentives for the landlords and tenants surrounding the adoption of energy-savings practices are often not aligned. Landlords will under-invest in energy-saving technologies for rental housing when the benefits from such investments accrue to tenants (i.e., tenants are responsible for paying their own utilities) and the landlord does not believe the costs of installing energy-saving devices can be recouped via higher rents. Tenants do not have an incentive to invest in energy-savings technologies in rental units when their expected tenure in a specific property is relatively short, and they will not have enough time to reap the full benefits of the energy conserving investments. There is also evidence that when utilities are included in the rent, tenants do not engage in energy conserving behaviors. On the other hand, when tenants pay utilities on their own, energy-saving practices are more frequently adopted.4 The implication is that inefficient energy use by tenants in apartments where utilities are included as part of the rent would offset energy-saving investments made by landlords; consequently, landlords under-invest in energy efficiency. In general, the under-investment in energy conservation measures in rental housing provides economic rationale for intervention.

In another example, the incentives of homebuilders and homebuyers may not be aligned. Consequently, the principal-agent problem may result in an inefficient utilization of energy-efficient products in newly constructed homes. Homebuilders may have an incentive to install

1 See CRS Report RL34513, Climate Change: Current Issues and Policy Tools, by Jane A. Leggett for an overview of climate change issues and potential policy remedies. 2 Kenneth Gillingham, Richard G. Newell, and Karen Palmer, Energy Efficiency Economics and Policy, Resources for the Future, RFF DP 09-13, Washington, DC, April 2009. 3 The extent of principal-agent problems in residential energy use is quantified in Scott Murtishaw and Jayant Sathaye, Quantifying the Effect of the Principal-Agent Probelm on U.S. Residential Energy Use, Lawrence Berkeley National Labratory, August 12, 2006, http://www.escholarship.org/uc/item/6f14t11t. 4 Arik Levinson and Scott Niemann, “Energy Use by Apartment Tenants when Landlords Pay for Utilities,” Resource and Energy Economics, vol. 26 (2004), pp. 51-75.





relatively low efficiency products to keep the cost of construction down if they do not believe that the cost of installing energy-efficient products will be recovered upon sale of the property. The value of installing energy-efficient devices may not be recoverable if builders are not able to effectively communicate the value of energy-efficient devices once installed. Further, since homebuilders are not able to observe the energy use level of prospective buyers they may not be able to choose the products that best match the use patterns of the ultimate energy consumer. The result may be less energy efficiency in new homes.

There are also informational problems that may lead to underinvestment in energy-efficient technologies. For example, homeowners may not know the precise payback or rate of return of a specific energy-efficient device. This may explain the so-called “energy paradox”—the empirical observation that consumers require an abnormally high rate of return to undertake energy-efficiency investments.5

National Security

Preserving national security is another often cited rationale for intervention in energy markets. Presently, much of the petroleum consumed in the United States is derived from foreign sources. There are potentially a number of external costs associated with petroleum importation, especially when imported from unstable countries and regions. First, a high level of reliance on imported oil may contribute to a weakened system of national defense or contribute to military vulnerability in the event of an oil embargo or other supply disruption. Second, there are costs to allocating more resources to national defense than necessary when relying on high levels of imported oil. Specifically, there is an opportunity cost associated with resources allocated to national defense, as such resources are not available for other domestic policy initiatives and programs. To the extent that petroleum importers fail to take these external costs into account, there is market failure.

In addition, the economic well-being and economic security of the nation depends on having stable energy sources. There are economic costs associated with unstable energy supplies. Specifically, increasing unemployment and inflation may follow oil price spikes.6

Potential Interventions in Energy Markets When there are negative externalities associated with an activity, correcting the economic distortion with a tax, if done correctly, can improve economic efficiency.7 Conversely, when there are positive externalities associated with an activity, a subsidy can improve economic efficiency. The tax (subsidy) should be set equal to the monetary value of the damages (benefits) to third parties imposed by the activity.8 The tax serves to increase the price of the activity, and reduce the

5 Gilbert E. Metcalf , “Using Tax Expenditures to Achieve Energy Policy Goals,” American Economic Review, vol. 98, no. 2 (2008), pp. 90-94. 6 See James D. Hamilton, Causes and Consequences of the Oil Shock of 2007-08, National Bureau of Economic Research, Working Paper 15002, Cambridge, MA, May 2009. Hamilton evaluates the role of the oil shock of 2007-08 in the succeeding economic recession. 7 There are non-tax options for addressing for addressing energy market failures such as regulation and private sector solutions. 8 Taxes imposed to correct for negative externalities are also known as Pigovian taxes, named after the economist who developed the concept, Arthur Cecil Pigou.



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Chapter 49: Resources from TheCapitol.Net


Resources from TheCapitol.NetLive Training

<www.CapitolHillTraining.com>

• Capitol Hill Workshop

<www.CapitolHillWorkshop.com>

• Understanding Congressional Budgeting and Appropriations

<www.CongressionalBudgeting.com>

• Advanced Federal Budget Process

<www.BudgetProcess.com>

• The President’s Budget

<www.PresidentsBudget.com>

• Understanding the Regulatory Process: Working with Federal Regulatory Agencies

<www.RegulatoryProcess.com>

• Drafting Effective Federal Legislation and Amendments

<www.DraftingLegislation.com>

Capitol Learning Audio Courses™<www.CapitolLearning.com>

• Congress and Its Role in Policymaking

ISBN: 158733061X

• Understanding the Regulatory Process Series

ISBN: 1587331398

• Authorizations and Appropriations in a Nutshell

ISBN: 1587330296



Other ResourcesThese sources are available on the book’s web site at <TCNWind.com>

Internet Resources

• DOE’s Wind and Water Program

<http://www1.eere.energy.gov/windandhydro/>

• Wind for Schools Project Power System Brief (2 page PDF)

<http://www.nrel.gov/docs/fy07osti/41993.pdf>

• Wind and Hydropower Technologies Program (2 page PDF)

<http://www1.eere.energy.gov/office_eere/pdfs/windhydro_fs.pdf>

• 20% Wind Energy by 2030 (DOE), July 2008 (248 page PDF)

<http://www1.eere.energy.gov/windandhydro/pdfs/41869.pdf>

• Wind Energy Multiyear Program Plan, 2007-2012 (115 page PDF)

<http://www1.eere.energy.gov/windandhydro/pdfs/40593.pdf>

• National Renewable Energy Laboratory (NREL)—Wind Research

<http://www.nrel.gov/wind/>

• NREL’s Wind R&D Success Stories (2 page PDF)

<http://www.nrel.gov/wind/pdfs/46635.pdf>

• Small Wind Electric Systems, a U.S. Consumer’s Guide (NREL) (27 page PDF)

<http://www.nrel.gov/docs/fy07osti/42005.pdf>

• Sandia National Laboratories–Wind Power Technologies—Online Abstracts and Reports

<http://windpower.sandia.gov/TopicSelection.htm>

• Sandia National Laboratories–Wind Power Technologies—Wind Energy Related Links

<http://windpower.sandia.gov/links.htm#LINKS>

• Wind Maps and Wind Resource Potential Estimates

<http://www.windpoweringamerica.gov/wind_maps.asp?&print>

• Wind Energy for Water Applications

<http://www1.eere.energy.gov/windandhydro/

printable_versions/water_applications.html>

• State Energy Profiles (EIA)

<http://tonto.eia.doe.gov/state/>

• American Wind Energy Association—

U.S. Wind Energy Projects (As of 12/31/09)

<http://www.awea.org/projects/>

Chapter 50: Other Resources


• WINDPOWER Outlook 2010 by the American Wind Energy Association (6 page PDF)

<http://www.awea.org/pubs/documents/Outlook_2010.pdf>

• The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6)

<http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR00006:>

• Wind & Water Program, Wind Powering America, Anemometer Loan Programs

<http://www.windpoweringamerica.gov/anemometer_loans.asp>

• Wind & Water Program, Wind Powering America, Wind Working Groups

<http://www.windpoweringamerica.gov/wind_working_groups.asp>

• Wind & Water Program, Wind Powering America,

Wind Maps and Wind Resource Potential Estimates

<http://www.windpoweringamerica.gov/wind_maps.asp>

• Wind & Water Program, Wind Powering America, Wind Energy Audio,

Agricultural Podcasts, Webinar Podcasts, News, Publications, and Web Resources

<http://www.windpoweringamerica.gov/audio.asp>

• Wind & Water Program, Wind Powering America, Publications

This page lists all of the publications referenced on the Wind Powering America Web site.

<http://www.windpoweringamerica.gov/publications.asp>

Books

• Aerodynamics of Wind Turbines, by Martin Hansen,

ISBN-13: 978-1844074389, ASIN: 1844074382

• Wind Power for Dummies, by Ian Woofenden,

(John Wiley & Sons, Inc. 2009), ISBN: 978-0-470-49637-4 ASIN: 0470496371

• Wind Power Renewable Energy for Home, Farm and Business, by Paul Gipe,

(Charles Green Publishing Co. 2004), ISBN: 978-1-931498-14-2 ASIN: 1931498148

• Wind Energy Basics, Second Edition: A Guide to Home- and Community-Scale

Wind Energy Systems, by Paul Gipe, (Charles Green Publishing Co. 2009),

ISBN: 978-1-60358-030-4 ASIN: 1603580301

• Homebrew Wind Power, by Dan Bartmann and Dan Fink,

(Buckville Publishing, LLC 2009), ISBN: 978-0-9819201-0-8 ASIN: 0981920101

• Developing Wind Power Projects: Theory and Practice, by Tore Wizelius,

(Earthscan Publishing, Ltd. 2007), ISBN: 978-1844072620 ASIN: 1844072622

• Wind Energy Explained: Theory, Design & Application,

by James F. Manwell, Jon G. McGowan, and Anthony L. Rogers,

(John Wiley & Sons, Ltd. 2009), ISBN: 978-0-470-01500-1 ASIN: 0470015004



• Generating Wind Power (Energy Revolution), by Niki Walker,

(Crabtree Publishing Company 2007), ISBN: 978-0-7787-2927-3

Generating Wind Power (Energy Revolution)

• Wind Energy Handbook, by Tony Burton, David Sharpe, Nick Jenkins, and

Ervin Bossanyi, (John Wiley & Sons, Ltd. 2001), ISBN 0-471-48997-2 ASIN: 0471489972

• Wind Energy Generation: Modelling and Control,

by Olimpo Anaya-Lara, Nick Jenkins, Janaka Ekanayake, Phill Cartwright,

and Michael Hughes, ISBN-13: 978-0470714331, ASIN: 0470714336

• The Wind Farm Scam, by John Etherington,

ISBN-13: 978-1905299836, ASIN: 1905299834

• Sustainable Energy—Without the Hot Air,

by David MacKay, ISBN-13: 978-0954452933, ASIN: 0954452933

• The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope,

by William Kamkwamba and Bryan Mealer, ISBN-13: 978-0061730337, ASIN: 0061730335

• The Name of the Wind (Kingkiller Chronicles, Day 1),

by Patrick Rothfuss, ISB-13: 978-0756405892, ASIN: 0756405890

Videos and Movies

• Gone with the Wind (70th Anniversary Ultimate Collector’s Edition),

Clark Gable and Vivien Leigh, Blu-Ray, ASIN: B0013N7FZ6

• Gone with the Wind (Two-Disc 70th Anniversary Edition),

Clark Gable and Vivien Leigh, ASIN: B002M2Z3BA

• Inherit the Wind, Spencer Tracy (Actor),

Fredric March, DVD, ASIN: B00005PJ6V

• Essential Earth Wind & Fire, ASIN: B000069RJI

• Wind, Matthew Modine and Jennifer Grey,

ASIN: B000085EFG

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