20% Wind Vision: A Great Lakes Opportunity Larry Flowers National Renewable Energy Laboratory March 2008.

20% Wind Vision: 20% Wind Vision: A Great Lakes OpportunityA Great Lakes Opportunity

Larry Flowers Larry Flowers National Renewable Energy Laboratory National Renewable Energy Laboratory

March 2008March 2008

People Want Renewable Energy!People Want Renewable Energy!

0

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United States Europe Rest of World

1. Germany: 21800 MW2. United States: 16740 MW 3. Spain: 13915 MW4. India: 7720 MW5. China: 5000 MW

Source: WindPower Monthly and AWEA

World total Jan 2008: 90,419 MW

Total Installed Wind CapacityTotal Installed Wind Capacity

Installed Wind Capacities – Dec ’07*Installed Wind Capacities – Dec ’07*

*Preliminary data

Drivers for Wind PowerDrivers for Wind Power

• Declining Wind Costs• Fuel Price Uncertainty• Federal and State

Policies• Economic Development• Public Support• Green Power• Regional Water Scarcity• Energy Security• Carbon Risk

Comparative Generation CostsComparative Generation Costs

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2005$/MWh

Operating Cost of Natural Gas Combined Cycle

Operating Cost of Natural Gas Combustion Turbine

Average Price of Wind Power With PTC

Wholesale Price Range for Flat Block of Power

Average Price of Wind Power Without PTC

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$/M

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Operating Cost of Natural Gas Combined Cycle

Operating Cost of Natural Gas Combustion Turbine

Average Price of Wind Power With PTC

Wholesale Price Range for Flat Block of Power

Average Price of Wind Power Without PTC

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160

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

2005$/MWh

Operating Cost of Natural Gas Combined Cycle

Operating Cost of Natural Gas Combustion Turbine

Average Price of Wind Power With PTC

Wholesale Price Range for Flat Block of Power

Average Price of Wind Power Without PTC

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40

60

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120

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160

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$/M

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Operating Cost of Natural Gas Combined Cycle

Operating Cost of Natural Gas Combustion Turbine

Average Price of Wind Power With PTC

Wholesale Price Range for Flat Block of Power

Average Price of Wind Power Without PTC

COCO22 prices significantly prices significantly

increase the cost of coalincrease the cost of coal

Levelized Cost of Electricity (2010) vs. CO2 Price

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140

0 10 20 30 40 50

Carbon Price ($/ton CO2)

20

06

$/M

Wh

Coal PC

Coal IGCC

Coal IGCC w/CCS

Gas CC

Nuclear

Wind Class 6

Wind Class 4

Wind Offshore Class 6

Source: UCS/Black & Veatch

☼ Minimum solar or customer-sited RE requirement* Increased credit for solar or customer-sited RE

¹PA: 8% Tier I / 10% Tier II (includes non-renewables)

DSIRE: www.dsireusa.org March 2008

State Goal

State RPS

Solar water heating eligible

Renewables Portfolio StandardsRenewables Portfolio Standards

☼ PA: 18%¹ by 2020

☼ NJ: 22.5% by 2021

CT: 23% by 2020

MA: 4% by 2009 +1% annual increase

WI: requirement varies by utility; 10% by 2015 goal

IA: 105 MW

MN: 25% by 2025(Xcel: 30% by 2020)

TX: 5,880 MW by 2015

☼ AZ: 15% by 2025

CA: 20% by 2010

☼ *NV: 20% by 2015

ME: 30% by 200010% by 2017 - new RE

HI: 20% by 2020

RI: 16% by 2020

☼ CO: 20% by 2020 (IOUs)*10% by 2020 (co-ops & large munis)

☼ DC: 11% by 2022

☼ NY: 24% by 2013

MT: 15% by 2015

IL: 25% by 2025

VT: RE meets load growth by 2012*WA: 15% by 2020

☼ MD: 9.5% in 2022

☼ NH: 23.8% in 2025

OR: 25% by 2025 (large utilities)5% - 10% by 2025 (smaller utilities)

*VA: 12% by 2022

MO: 11% by 2020

☼ *DE: 20% by 2019

☼ NM: 20% by 2020 (IOUs)10% by 2020 (co-ops)

☼ NC: 12.5% by 2021 (IOUs)10% by 2018 (co-ops & munis)

ND: 10% by 2015

Peetz Table Wind Energy Center, COPeetz Table Wind Energy Center, CO

• 400.5 MW (1.5-MW turbines)• Landowner payments: $2

million/year, $65 million over 30-year period

• 300 – 350 workers during peak construction (80% local)

• 16 – 18 O&M positions• Total annual tax payments:

$2.3 million/year (10% of total county budget); $70 million over 30 years

• Located near Peetz, CO• Owned by FPL Energy• Constructed in 2007

Weatherford Wind Energy Center, OKWeatherford Wind Energy Center, OK

• 147 MW (1.5-MW turbines)

• Landowner payments: $300,000 in annual lease payments

• 150 workers during peak construction

• 6 fulltime O&M positions• Property taxes: $17

million over 20 years• Sawartzky Construction

received $300,000 in revenue from the project

• Owned by FPL Energy• Constructed in 2005

• 144 MW (1800-kW turbines)• Landowner payments: $18

million over the life of the project

• 175 workers during peak construction (25% local)

• 8 fulltime O&M positions• Property taxes: $1 million

(2006/7)• 50 Wyoming companies

subcontracted during the construction period

• Located in Uinta County, WY (population 20,213)

• Owned by FPL Energy• Constructed in 2003

Wyoming Wind Energy CenterWyoming Wind Energy Center

Total Econom ic Im pacts to Ohio from energy equivalent new w ind and new coal

$0

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Wind (1478 MW) Coal (500 MW, 26% in-state)

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P roperty taxes

Coal

Operations

Construction

Energy-equivalent Energy-equivalent new wind vs. new coal in Ohionew wind vs. new coal in Ohio

Ohio – Economic Impacts Ohio – Economic Impacts from 1000 MW of new wind developmentfrom 1000 MW of new wind development

Payments to Landowners: • $2.7 Million/yr Local Property Tax Revenue:• $22 Million/yrConstruction Phase:• 1,550 new jobs• $189 M to local economiesOperational Phase:• 250 new long-term jobs• $21 M/yr to local economies

Construction Phase:• 1,400 new jobs• $125 M to local

economiesOperational Phase:• 300 local jobs• $30 M/yr to local

economies

Wind energy’s economic “ripple effect”

Construction Phase = 1-2 yearsOperational Phase = 20+ years

Total economic benefit = $1.3 billion

New local jobs during construction = 2,950

New local long-term jobs = 550

Direct Impacts Indirect & Induced Impacts

Totals (construction + 20yrs)

All jobs rounded to the nearest 50 jobs; All values greater than $10 million are rounded to the nearest million

Environmental BenefitsEnvironmental Benefits

• No SOx or NOx

• No particulates

• No mercury

• No CO2

• No water

Key Issues for Wind Power Key Issues for Wind Power

• Policy Uncertainty• Siting and Permitting: avian,

noise, visual, federal land • Transmission: FERC rules,

access, new lines

• Operational impacts: intermittency, ancillary services, allocation of costs

• Accounting for non-monetary value: green power, no fuel price risk, reduced emissions

Increasing Attention in North AmericaIncreasing Attention in North America

• IEEE Power Engineering Society Magazine, November/December 2005

• Updated in 2007• Wind Power Coordinating

Committee Wind Super-Session, Summer 2008

• Utility Wind Integration Group (UWIG): Operating Impacts and Integration Studies User Group

• www.uwig.org

Integrating Wind into Power SystemsIntegrating Wind into Power Systems

State of the Union Address“…We will invest more in … revolutionary and…wind

technologies”

Advanced Energy Initiative

“Areas with good wind resources have the potential to supply up to 20% of the electricity consumption of the United States.”

A New VisionA New VisionFor Wind Energy in the U.S.For Wind Energy in the U.S.

“The future ain’t what it used to be.”

- Yogi Berra

- 200 400 600 800 1,0000

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Class 6

Class 4

Class 7

Class 5

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Class 6

Class 4

Class 7

Class 5

Class 3

10% Available 10% Available

TransmissionTransmission

2010 Costs w/ PTC, $1,600/MW-mile, w/o Integration costs

What does 20% Wind look like?What does 20% Wind look like?

Source: AWEA 20% Vision

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Cumulative Capacity (left scale)

Annual Capacity (right scale)

• National and state policy uncertainty• Mixed stakeholder perspectives and knowledge• Electricity supply planning based on capacity• Variable wind output viewed as unreliable• Incomplete comparative generation assessments• Mismatch of wind and transmission development

timeframes• Federal lending all source requirements for G&T’s• Lack of interstate approach to transmission development• Lack of utility financial incentives to own wind facilities• High cost and low turbine availability for community projects• High cost and permitting challenges of <1 MW turbines • Uncertainty in emerging emissions REC markets

Market ChallengesMarket Challenges

Great Lakes Region – Economic ImpactsGreat Lakes Region – Economic ImpactsFrom the 20% Vision From the 20% Vision

(61.5 GW new development from Onshore and Offshore)(61.5 GW new development from Onshore and Offshore)

Direct Impacts

Payments to Landowners: • $156 Million/year Local Property Tax Revenue:• $640 Million/yearConstruction Phase:• 91.3 thousand new jobs• $12.0 Billion to local economiesOperational Phase:• 14.9 thousand new long-term jobs• $1.4 Billion/yr to local economies

Construction Phase:• 91.3 thousand new jobs• $9.3 Billion to local

economiesOperational Phase:• 14.2 thousand local jobs• $1.5 Billion/yr to local

economies

Wind energy’s economic “ripple effect”

Construction Phase = 1-2 yearsOperational Phase = 20+ years

Indirect & Induced Impacts

Totals (construction + 20yrs)

Total economic benefit = $79 Billion

New local jobs during construction = 182,600

New local long-term jobs = 29,100

20% Wind Vision Employment20% Wind Vision Employment

-

20,000

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180,000

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2007

2009

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2013

2015

2017

2019

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2029

Job

s

Operations

Construction

Manufacturing

49

Fuel Savings From WindFuel Savings From Wind

0.0E+00

5.0E+09

1.0E+10

1.5E+10

2.0E+10

2.5E+10

3.0E+10

3.5E+10

4.0E+10

4.5E+10

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Gas Fuel Savings

Coal Fuel Savings

Gas Fuel Usage(20%wind)Coal Fuel Usage(20%wind)

Reduction in National GasConsumption in 2030 (%)

Natural Gas Price Reduction in 2030 (2006$/MMBtu)

Present Value Benefits(billion 2006$)

Levelized Benefit of Wind ($/MWh)

11% 0.6 -1.1- 1.5 86 - 150 - 214 16.6 - 29 - 41.6

Electricity Sector Fuel Usage

Electric Sector COElectric Sector CO22 Emissions Emissions

Incremental direct cost to society $43 billion

Reductions in emissions of greenhouse gasses and other atmospheric pollutants

825 M tons (2030)

$98 billion

Reductions in water consumption 8% total electric

17% in 2030

Jobs created and other economic benefits

140,000 direct

$450 billion total

Reductions in natural gas use and price pressure

11%

$150 billion

Net Benefits: $205B + Water savings

Results: Results: CostsCosts & Benefits& Benefits

12 Key Messages 12 Key Messages

1. Wind energy provides multiple benefits at the national, regional, state, and local levels

2. Targeted messages and education are needed for the diverse set of stakeholder interests and perspectives, including regional variations in same.

3. Convergence of energy security, carbon liability and fuel uncertainty concerns is likely to transform the market for US electricity supply.

4. Federal and state policies are needed for a diversified and robust wind energy portfolio

5. Community and distributed wind are important building blocks for public acceptance of a 20% wind future.

6. Resource planning and procurement should maximize use of low marginal cost, zero-emissions energy resources, which displace more expensive fossil fuel

12 Key Messages con’t.12 Key Messages con’t.

7. All environmental (including water savings) and economic impacts and risks should be included in comparative resource economics.

8. Wind is the crop of the 21st Century for rural America, and the resulting economic benefits need to be included in comparative assessments of generation options.

9. Wind deployment can ramp up rapidly and incrementally to meet local and regional load growth.

10.The federal sector (both facilities and transmission) represents significant opportunities for leadership in use and transmission of wind.

11.Meeting most load growth with wind power buys time for the development and commercialization of advanced coal technologies able to sequester carbon.

12. In air quality markets, policies need to be crafted carefully to account for non-emitting technologies.

ConclusionsConclusions

• 20% wind energy penetration is possible• 20% penetration is not going to happen under business

as usual scenario• Policy choices will have a large impact on assessing the

timing and rate of achieving a 20% goal• Key Issues: market transformation, transmission, project

diversity, technology development, policy, public acceptance

• 20% Vision action plan: Spring 2008

Source: AWEA 20% Vision

MISO-PJM Wind Integration StudyMISO-PJM Wind Integration StudyNote: Nebraska and most of South Dakota are not in MISO, but are within the study footprint.

HighMediumLow

Wind Powering America Priority StatesWind Powering America Priority States

Regional Wind Energy Institutes (RWEI)Regional Wind Energy Institutes (RWEI)

Why is there no wind development in AZ, NV, UT, MI, IN, OH, MD, VA, NC?

Co-op/Local Utility

WTG Manufacturer

XYZ Company Sponsor

School Administration

State Energy Office

State Facilitator

WAC

DOE

Science Teacher

& Students

NREL/WPA

Community

Wind for Schools

Green Tags Marketer

RE Grant Funds

D – Data

$ – Funds Flow

– Knowledge

C – Coordination

G.T. – Green Tags

WTG – Wind Turbine

T/A – Technical Assistance

$

$

$

$

$

$

T/A

T/A

T/A

T/A

C

C

C

$

D

WTG

$

WPA State SummitWPA State Summit

“I think your annual states summit has evolved into one of the best – maybe even the best – wind-information-transfer events of the year. My guess is that it raises the productive energy level of all who participate.”

Ed DeMeo – June 12, 2007

“With public sentiment nothing can fail; without it, nothing can succeed.”

- A. Lincoln

Carpe Ventem

www.windpoweringamerica.gov