A Fresh Wind in the US

The post-election speculation is well underway, with predictable positions on one side arguing for a rapid implementation of the Obama energy plan, and on the other cautioning that not much can or should be done. FWIW, I've stated my opinion several times and, while no one can say with certainty what will happen, bets are already being made, and they suggest the start of a new boom.

BP is coming ashore in the US:

A spokesperson for BP told New Energy Finance: "We have decided to focus our investment on onshore wind assets in the US, where we have been extremely successful and have built up a portfolio that, if fully developed, could amount to as much as 15GW. We will not be pursuing opportunities in wind outside the US, and if we have ongoing ventures in other countries, we will review them." He stressed that the move did not represent a change in BP's level of investment in wind "at all".

Clearly not:

Clipper Windpower and BP are teaming up to build the 5,050-megawatt Titan wind farm, the world’s largest, in eastern South Dakota. Already under development, Titan will generate five times as much electricity as the state’s 780,000 residents currently use. This project includes building a transmission line along an abandoned rail line across Iowa, feeding electricity into Illinois and the country’s industrial heartland.

BP is not the only legacy energy company reallocating their wind energy attention. Shell pulled out of the London Array back in May, disappointing its partner E.ON. Said Paul Golby, UK CEO:

The current economics of the project are marginal at best - with rising steel prices, bottlenecks in turbine supply and competition from the rest of the world all moving against us.

At the time oil was at $120 a barrel and heading up. With oil now almost half that and trending down, all renewable energy projects, including wind, have come under pressure. Illiquid credit markets, a global recession and a lower cost of energy are combining to inhibit new energy project investment generally. Yet wind is clearly experiencing little more than a lull.

A BP spokesman, talking about the US said “It’s a big place and it’s got a lot of wind,” and BP found the existing regulatory frameworks in the U.S. "helpful" in boosting development through incentives. Shell does too:

Shell and BP are competing in the US to build the world’s largest wind farms. ‘Many are now recosting their plans and are attracted by other countries who are tempting them with tax breaks and a freedom to build what they want practically anywhere,’ said one analyst.

That seems a bit over the top given the growing opposition to wind farms in the US, but there's little doubt that public opinion is changing in ways that should make development of large scale wind projects easier to do. That the US environment is perceived as more favorable than the UK's is also odd considering that the Production Tax Credit (PTC) for wind received only a one year extension, while UK's Crown Estate has pledged to pay for half the pre-construction cost of offshore wind. One big reason for companies abandoning the UK market is grid connection:

Some companies in Scotland have been told to join a 13-year queue and are being asked for deposits of millions of pounds before the grid will agree to connect them. Currently, 115 Scottish renewable schemes, totalling 9GW of mostly wind power, are waiting to plug into the grid before they can supply electricity. Some already have planning permission but have to wait many years to connect.

Creating a smart grid with more capacity between windy plains and energy-hungry cities appears to be a high priority for the incoming Obama administration. Wind companies will also welcome a longer-term PTC which will make the financial planning more certain.

The prospects for wind now appear increasingly bright despite lingering concerns over the global economy, as turbine manufacturers, wind developers and the public at large perceive ever more clearly which way the wind is blowing:

The market for wind is very strong, with more than £40bn invested worldwide last year, demand for turbines going through the roof as countries rush to meet climate change targets, and the very few manufacturers producing turbines now looking only for large orders. Emerging Energy Research, a leading research and advisory firm analysing clean energy markets, expects the international wind power industry to increase 500 per cent over 12 years.

Vestas, the world’s biggest turbine maker, now has a £6bn order book and its turbine prices have risen 74 per cent in the past three years. China plans 100GW of wind power by 2020, a ten-fold increase from today. Texas alone plans more wind power than is expected to be installed in Britain in the next 20 years. The net result is that prices are escalating and orders for equipment taking longer and longer.

‘Everyone wants wind power. If you ordered today you could possibly get a turbine in 2011. But you would have to be a serious order,’ said an Enercon spokesman. ‘It is a very good time for wind.’

The boom has begun. Will it become a bubble? Do we care? Perhaps it's normal. At least we will be solving some real problems (energy security and climate change) in a sustainable way, even if some of the economic benefits prove eventually to be more transitory. Caveat investor, after all.

UK to Pay Half of Pre-Construction Costs of Offshore Wind

Wow.

UK-Pacific NW Marine Energy Mission

I spent all day on Monday at the Bell Harbor Conference Center with maybe 75 people involved in or interested in the renewable ocean energy industry. There were many excellent presentations and ample time to network and discuss areas of mutual interest. Sadly I couldn't talk to everyone and I missed bits of some presentations because I got engrossed in conversation... I forced myself to take some notes to try to capture some of the good bits.

This was the first stop on a week-long trade mission by a dozen or so entrepreneurs and other business people from England and Scotland. I'm a bit slow getting this post up; by now they've been and gone from Portland, OR (Wednesday) and are now down in Coos Bay for the Oregon Wave Energy Trust (OWET) Ocean Renewable Energy Conference. (Sorry I couldn't go to that one myself, but I have to do some "real work" at least part of the week ;-)

The event was organized by UK Trade and Investment and promoted by PNWER. Local organizing assistance came from the British American Business Council of the Pacific Northwest, Port of Seattle, WA Clean Tech Alliance, Washington Technology Center, Washington State CTED, OWET, and Oregon ECD. Sponsors included The North of England Inward Investment Agency, Ricardo, Scottish Development International (SDI) and Stoel Rives.

LA vice-consul Michael Rosenfeld of the UK consulate and Graham Evans of the WA Clean Tech Alliance traded off as masters of ceremonies; both did a splendid job keeping the sessions on track and on time, making introductions and injecting sufficient levity to keep all engaged.

Steve Klein, CEO of Snohomish PUD gave the morning keynote and talked quite a bit about SnoPUD's renewables plans. Of greatest interest to me was his flat assertion that "no fossil fuel generation will be added to our portfolio." Given their load growth of 10-12 thousand new connections and 15-20 aMW per year--amongst the fastest in the state--this is a remarkable statement. A lot of people are assuming Washington's future electricity demand will be met with liquid natural gas (LNG) thermal plants and/or Canadian imports (probably also LNG) but, as Steve stated, this is not a part of their Integrated Resource Plan (IRP). Instead, they intend to meet demand through conservation, wood waste/landfill/biomass, "cows" (is he serious?), and geothermal, taking advantage of their position on the Pacific "rim of fire". Interestingly, they plan on geothermal being the largest source of new energy (after conservation) with wind next. Small hydro and tidal are expected to be only small contributors at only 5 aMW each by 2020. They are also pursuing tidal energy in Puget Sound; he said that there "could be 100 aMW of tidal [energy] in Puget Sound ... [but] nobody really knows." I'll write more on this later.

Steve spent some time talking about wind energy; he has several "worries":

• they've added 10GW in the last 2 years, and problems are starting to show
• the wind doesn't blow much when it is very hot or very cold--when energy demand is greatest
• it is not predictable
• cost of wind is going up (not down)--as much as doubled
• the devices have mechanical issues (especially the gearboxes)
• SnoPUD isn't "putting all the eggs in the wind basket" (I think it's clear they're going to hard-boil them with geothermal!)

Scott Amsden of Tacoma Power talked about the results of their assessing tidal power in the Tacoma Narrows. This was a project done by my business partner Burt Hamner and Puget Sound Tidal Power. You can read all about it here.

Naval architect Charlie Nordstrom of the Glosten Associates gave a very interesting presentation on the growing interest in offshore wind and some details of the Trillium project that he and his firm are pursuing in Lake Ontario. Offshore wind has challenging logistics, foremost of which are the size and weight of the components and the enormous deamnds that these place on the equipment used to transport and install the turbines. For example, the 5MW turbines used in the Beatrice project in the UK require an approximately 800 ton "pick" or lift by a marine crane, and there are not very many such cranes. Also, since the weather conditions have to be right to do the picks, progress can be slow--Charlie noted that it took most of the summer to do just 2 installations. Not only are the demand on the equipment great, but there isn't very much of the right equipment available. On the west coast there are only a handful of cranes that can pick more than 500 tons. Glosten Associates are designing a 1000-ton crane for Manson Construction, which, when built, will be the largest crane available. At Trillium they are planning to use the Jumping Jack to do the installation. An additional constraint on offshore wind (or other energy projects) is the Jones Act, which basically prevents ships from other countries being used in US waters. (Of course, there aren't really any such ships available--in Europe they are all booked years out.)

Charlie identified the following best practices for offshore wind construction:

• minimize at-sea work
• design for installation
• keep expensive assets busy
• rely on operators' experience
• use existing equipment
• know your site conditions
• plan for equipment availability

Later in the afternoon Paul McKeever of NaREC added two more to this list:

• have equipment redundancy
• strategically purchase spare parts

After a break, we heard from the UK companies; I'll write about that in a later entry.

At lunch (great food!), Roget Garratt, Director of Resource Acquisition & Emerging Technology for Puget Sound Energy (PSE) gave the keynote, talking about PSE's customer base, growth, and generation plans. Afterwards he took some questions; the best was asked by Burt Hamner: in its IRP what does PSE anticipate will be the cost of energy in 2020? A quick glance around the room confirmed that this was The Question that many in the renewable energy industry really want to know. After all, if you are a project developer in renewable energy or part of the supply chain for the technology, you really need to know the price at which the customer will buy. Of course it gets a lot more complicated when once considers the (on-again/off-again) credits, potential penalties for not meeting the RPS, etc. but it all starts with the core COE. Although Roger answered the question he never gave a number. Does PSE consider this information proprietary, not wanting to let the other utility officials in the room know their planning numbers?

In the afternoon there were several panel discussions and they were pretty interesting--so much so I find that I neglected to take very many notes. Charlie Brandt of PNNL, Tim Stearns of CTED, Sheila Hosner of the Washington Department of Ecology and Mary Jane Parks of Principle Power discussed permitting and regulatory issues. Short story--there are a lot of agencies and permits needed to do any kind of offshore project, but the authorities are not awful to work with as long as you follow the process. Sheila recommended proactively keeping them informed, beginning long before you even file something. In that repsect it's rather like applying for an SBIR or other government grant--spending quality time with the program manager and building trust through constant communication really pays off. Sheila also represents the Governor's Office of Regulatory Assistance which has been established specifically to help companies wend permits through regulatory offices. Later, in wrapping up the day Graham Evans noted that many of the speakers (not just in this panel) agreed that "embracing" the regulatory process--not fearing, but cooperating--was the best practice for getting regulatory and permitting approval.

Burt Hamner gave a lucid overview of the Grays Harbor Ocean Energy project he and I are pursuing off the Washington Coast--the only proposed offshore wind project on the US west coast, and the only one with a FERC permit.

Brian Polagye of the University of Washington, Bob McClure of BioSonics and Paul McKeever of NaREC discussed R&D directions and emerging technologies in their panel. Bob's presentation was particulalry interesting, detailing his firm's state-of-the-art hydroacoustic technology to assess fish and aquamarine populations to astonishing levels of detail. Verdant Power and many others are clients using their equipment and know-how to assure that their marine energy equipment is compatible with the local species.

There was a lot more going on than I can write here, and lots of excellent information, ideas, and exchanges. Graham stated, to broad agreement, that this was just the beginning of such collaborative meetings, and that there is much more information, expertise, and lessons learned that are still to be shared. I know I speak for many participants in saying that I am keenly looking forward to the first quarter of 2009, when the reciprocal trip of NW ocean energy companies and people will journey to the UK to see what they have there and talk to those involved in more detail. Sign me up for that trip--it's going to be too cool!