Making European-style community wind power development work in the US

Once primarily a European phenomenon, community wind power development—defined here as one or more locally owned, utility-scale wind turbines interconnected on either the customer or utility side of the meter—is gaining a foothold in an increasing number of states throughout the US. This article describes the various policies and incentives that Minnesota, Wisconsin, Iowa, and Massachusetts are using to support community wind power development, and how state and federal support influences the types of projects and ownership structures that are being developed. Experience in these states demonstrates that, with an array of incentives and creative financing schemes targeted at community-scale projects, there are opportunities to make community wind work in the US.     

Policies and market factors driving wind power development in the United States

In the United States, there has been substantial recent growth in wind energy generating capacity, with growth averaging 24 percent annually during the past five years. About 1700 MW of wind energy capacity was installed in 2001, while another 410 MW became operational in 2002. During 2003, development activity has remained strong, with an estimated 1600 MW of capacity installed. With this growth, an increasing number of States are experiencing investment in wind energy projects: currently about half of all States host at least one wind power project. This paper explores the key factors at play in the 12 States in which a substantial amount of wind energy capacity has been developed or planned. Some of the factors that are examined include policy drivers, such as Renewable Portfolio Standards (RPS), Federal and State financial incentives; as well as market drivers, such as consumer demand for green power, natural gas price volatility, and wholesale market rules.     

Pricing offshore wind power

Offshore wind offers a very large clean power resource, but electricity from the first US offshore wind contracts is costlier than current regional wholesale electricity prices. To better understand the factors that drive these costs, we develop a pro-forma cash flow model to calculate two results: the levelized cost of energy, and the breakeven price required for financial viability. We then determine input values based on our analysis of capital markets and of 35 operating and planned projects in Europe, China, and the United States. The model is run for a range of inputs appropriate to US policies, electricity markets, and capital markets to assess how changes in policy incentives, project inputs, and financial structure affect the breakeven price of offshore wind power. The model and documentation are made publicly available.     

Wind farm investment risks under uncertain CDM benefit in China

China has set an ambitious target to increase its wind power capacity by 35 GW from 2007 to 2020. The country’s hunger for clean power provides great opportunities for wind energy investors. However, risks from China’s uncertain electricity market regulation and an uncertain energy policy framework, mainly due to uncertain Clean Development Mechanism (CDM) benefits, prevent foreign investors from investing in China’s wind energy. The objectives of this paper are to: (1) quantify wind energy investment risk premiums in an uncertain international energy policy context and (2) evaluate the impact of uncertain CDM benefits on the net present values of wind power projects. With four scenarios, this study simulates possible prices of certified emissions reductions (CERs) from wind power projects. Project net present values (NPVs) have been calculated. The project risk premiums are drawn from different and uncertain CER prices. Our key findings show that uncertain CDM benefits will significantly affect the project NPVs. This paper concludes that the Chinese government needs revising its tariff incentives, most likely by introducing fixed feed-in tariffs (FITs), and re-examining its CDM-granting policy and its wind project tax rates, to facilitate wind power development and enable China to achieve its wind energy target.     

A review of wind project financing structures in the USA

The rapid pace of wind power development in the USA over the last decade has outstripped the ability of most project developers to provide adequate equity capital and to make efficient use of project‐related tax benefits. In response, the sector has created novel project financing structures that feature varying combinations of equity capital from project developers and third‐party tax‐oriented investors and, in some cases, commercial debt. While their origins stem from variations in the financial capacity and business objectives of wind project developers, as well as the risk tolerances and objectives of equity and debt providers, each structure is, at its core, designed to manage project risk and to allocate federal tax incentives to those entities that can use them most efficiently. This paper surveys the six principal financing structures through which most new utility‐scale wind projects (excluding utility‐owned projects) in the USA have been financed from 1999 to the present. These structures include simple balance sheet finance, several varieties of all‐equity special allocation partnership ‘flip’ structures and two leveraged structures. In addition to describing each structure's mechanics, the paper also discusses its rationale for use, the types of investors that find it appealing and why, and its relative frequency of use in the market. The paper concludes with a generalized summary of how a developer might choose one structure over another. Copyright © 2008 US Government Work.     

What are the barriers and incentives for community-owned means of energy production and use?

This paper on community-owned means of renewable energy production and use, reviews experience to date in the UK and the incentives for and barriers limiting current and future growth. A broad view is taken of what the meaning of ‘community-owned production and use’ might constitute, as there are different models of community ownership, different notions of community and different degrees of connection or disconnection between production and use.     

Large scale wind power integration in China: Analysis from a policy perspective

Between 2006 and 2010 the installed capacity of wind power in China has doubled and by 2010 China's cumulative installed capacity of wind power ranked the first in the world, surpassing the United States. However, the rapid expansion of installed capacity has not been matched by grid connection, and this deficiency has aroused the concern of both policy makers and scholars. Unlike most of the current studies which focus on technical strategies in China's wind power industry, this paper analyzes the problem from a policy perspective. The paper analyzes the four challenges that large scale wind power integration in China faces: the uncoordinated development between wind power capacity and power grids; the lack of suitable technical codes for wind power integration; the unclear nature of the grid companies’ responsibility for grid connection; and the inadequate economic incentives for grid enterprises. To address these problems, the paper recommends that the government: formulates policies to better coordinate the development of wind power and the planning and construction of power grids; establishes grid codes that reflect in particular the requirements to be met by users of power transmission and distribution networks; and integrates administrative intervention and economic incentive policies to stimulate the grid enterprises’ enthusiasm to absorb wind power generation.     

Queuing Up

The interconnection queue is the mechanism for grouping and ordering prospective generation projects for evaluating impacts on the bulk system. These days, with record-setting installations of wind generation capacity in the United States, it is difficult to find an interconnection queue that does not contain at least some wind generation projects; in the areas of the country with good or better wind resources, there may be dozens of prospective projects awaiting study. The result has been a much broader exposure within the electric power engineering community to the technical issues and challenges associated with wind generation.     

Winds of time: Lessons from Utö in the Stockholm Archipelago, 1990–2001

When investigating the success or failure of different wind power projects, it is essential to take into account how they were historically situated. This study focuses on attempts to develop wind power in an archipelago setting, at Utö in Sweden. It has been argued that the development of Swedish wind power slowed during the 1990s; by revisiting the early days of wind power, looking at resistance and support, and connecting success factors, this can be further investigated.Whereas earlier research pointed out institutional conditions and site-specific conditions as crucial for successful wind power development and acceptance, the picture can be made more complete by discussing how wind power projects are affected by time-specific historical conditions. In the case of Utö, these can partly be associated with a newly launched political support program that gave the project political legitimacy and added a “pioneering spirit” to the endeavor. Conversely, when wind power is not seen as “pioneering” or “experimental” any more, but as a mere industrial activity, other incentives may need to be offered to municipalities.     

世界各国加快氢能源市场化步伐——记第18届世界氢能大会(WHEC 2010)

2010年5月在德国埃森召开的"第18届世界氢能大会"上,来自美国、德国、日本、中国等国家的代表介绍了各自国家最新的氢能进展。中国科技部部长万钢出席大会并发言指出:中国要制订国家氢能规划,加大对氢能的投入,扩大氢能示范和应用,加强氢能的国际合作。美国能源部Nancy L Garland博士和Michacel Mills介绍了美国氢能的总体情况,指出:目前美国每年生产5000×104m3氢气,拥有氢气管道3000km以上,现有氢燃料电池轿车230多辆,氢燃料电池公共汽车130多辆,加氢站约200座。在燃料电池商业化方面,美国仍存在着技术上和经济性方面的障碍。在2007~2010财政年度,美国通过立法和各类货款、补贴,进一步加大了对氢能的扶持力度,美国能源部多次联合其他机构,召开氢能基础设施研讨会,就降低燃料电池成本、氢能政策、税收、碳税、氢能信息和教育、燃料电池革新方向,以及新的商业模式等进行讨论。目前,美国加州是美国最积极推进氢燃料电池技术与示范的州,该州预计于2016~2018年,其氢燃料电池轿车数量将达到54300辆,并计划进一步发展氢能高速公路。德国国家全资公司NOW公司总经理波霍夫博士等人介绍了德国的氢能进展。主要内容包括:德国准备到2015年,共建造1000座加氢站,将为10×104辆氢燃料电池车提供氢气;德国在氢气来源方面,2020年以前主要来源于副产氢气和天然气制氢,2030年以后主要依靠煤制氢(集合CO2捕集)、风能制氢、生物质能制氢等。日本为了尽快研发、推广燃料电池车,采取了全额投入经费的办法,委托日本产业省(METI)的全资公司VEDO公司负责管理"日本氢能和燃料电池示范项目(JHFC)",该项目的目标之一,就是到2025年,在全日本建立1000座加氢站。     

The rise of community wind power in Japan: Enhanced acceptance through social innovation

The purpose of this paper is to analyze the socio-economic dynamics that are brought about by renewable energy technologies. We call this dynamic “Social Innovation” as it changes the rules of risk–benefit distribution and the roles of social actors. For this purpose, we take up a typical case in Japan, community wind power in which the initial cost is funded by the investment of citizens. Through this case study, we examine how the citizens’ initiative can affect the social acceptance of renewable energy as well as social change. Based on interviews with those involved in these projects, we analyze the interests of the various actors involved in community wind power projects in a framework of “actor network theory”, which enables us to understand the detail of each actor's position. This study also involved a quantitative survey of investors. The case study clarified that there was a remarkable difference in the interests of the main actors in the community wind power projects, the networks are complex and actors share various interests such as economic interests and a sense of social commitment, participation and contribution. These incentives are also clarified in quantitative data. However, the variety of incentives differs in each project.     

An offshore wind resource assessment study for New England

This paper gives a summary of ongoing work on the assessment of the wind energy resource off the coast of southern New England in the United States. This project was carried out to determine the potential for the near-term development of offshore wind energy projects in that region. The work summarized here consists of four aspects: (1) a review of existing offshore wind data, (2) the measurement of new data at an offshore site, (3) correlation and prediction of long-term data at a new offshore site by reference to a longer-term island site and (4) assessment of the overall coastal resource through the use of the MesoMap software.     

Costs of certified emission reductions under the Clean Development Mechanism of the Kyoto Protocol

This paper examines the cost structure of certified emission reductions (CERs) through various types of projects under the Clean Development Mechanism (CDM) of the Kyoto Protocol. Using the CDM project data, the costs of CERs and their variation across technology and over time and space are estimated by applying alternative functional forms and specifications. Results show that the average cost of CERs decreases with the project scale and duration, scale and duration effects significantly vary across project types, and there is an upward trend in costs. The results also show that the distribution of the projects in the CDM portfolio or a given location does not strictly follow the relative cost structure, nor does the distribution of the CDM projects in different host countries follow the principle of comparative advantage. More than 84% of the CDM portfolio consists of various energy projects with substantially higher costs of CERs than afforestation and reforestation, industrial and landfill gas reduction, and methane avoidance projects, which are only 12% of all projects. While per unit cost of abatement plays an important role in the bottom-up and top-down models to evaluate emission reduction potential and analyze policy alternatives, the findings contradict the presumption of such models that project investors seek out low-cost opportunities. At the aggregate level, the cost of CER by the projects in Asia and Europe is similar but higher than those hosted in Africa, Americas, and Oceania. Yet more than 83% of the projects in the CDM portfolio are located in Asia; more than 69% of the projects are in China and India alone. China appears to have a comparative advantage (i.e., lowest opportunity cost) in energy efficiency projects, while India has a comparative advantage in hydro power projects and Brazil has a comparative advantage in wind power projects. In contrast, energy efficiency category accounts for only 8% of the CDM projects in China, hydro power accounts for 12% of the projects in India, and wind power accounts for 18% of the projects in Brazil. The results provide a basis for evaluating the incentives that the mechanism offers as a cost effective policy instrument that balances greenhouse gas mitigation across sectors and regions, while fulfilling the objective of the convention.     

The offshore trend: Structural changes in the wind power sector

In recent years, the wind power sector has begun to move offshore, i.e. to use space and good wind speeds on the open sea for large scale electricity generation. Offshore wind power, however, is not just technologically challenging but also a capital intensive and risky business that requires particular financial and organizational resources not all potential investors might have. We therefore address the question, what impact offshore wind power may have on ownership and organizational structures in the wind power sector. We compare on- and offshore wind park ownership in Denmark, the UK and Germany. The analysis shows that offshore wind power in all three countries is dominated by large firms, many of which are from the electricity sector. In Denmark and the UK, also investors from the gas and oil industry play an important role in the offshore wind business. This development represents a major shift for countries such as Germany and Denmark, in which the wind power sector has grown and matured on the basis of investments by individuals, farmers, cooperatives and independent project developers. The structural changes by which offshore wind power is accompanied have consequences for turbine manufacturers, project developers, investors, associations and policy makers in the field.     

The role of taxation policy and incentives in wind-based distributed generation projects viability: Ontario case study

Taxation policy and incentives play a vital role in wind-based distributed generation projects viability. In this paper, a thorough techno-economical evaluation of wind-based distributed generation projects is conducted to investigate the effect of taxes and incentives in the economic viability of investments in this sector. This paper considers the effects of Provincial income taxes, capital cost allowance (CCA), property taxes, and wind power production Federal incentives. The case study is conducted for different wind turbines and wind speed scenarios. Given turbine and wind speed data, the Capacity Factor (CF) of each turbine and wind speed scenario was calculated. Net Present Value (NPV) and Internal Rate of Return (IRR) for different scenarios were then used to assess the project's viability considering Ontario Standard Offer Program (SOP) for wind power.     

风力发电项目多目标决策研究

随着风力发电技术的不断发展,风力发电已成为我国重点发展的可再生能源产业。如何科学有效地选择风电项目,既关系到投资商的切身利益,也关系到风能的有效开发利用。文章利用层次分析法,在分析风电项目关键影响因素的基础上,建立多目标决策的风电项目评价模型,以帮助开发商选择合适的风电场项目,促进风能的开发利用。     

Policy stakeholders and deployment of wind power in the sub-national context: A comparison of four U.S. states

As climate change mitigation gains attention in the United States, low-carbon energy technologies such as wind power encounter both opportunities and barriers en route to deployment. This paper provides a state-level context for examining wind power deployment and presents research on how policy stakeholders perceive wind energy in four states: Massachusetts, Minnesota, Montana, and Texas. Through semi-structured interviews, state-level energy policy stakeholders were asked to explain their perceptions of wind energy technology within their state. Interview texts were coded to assess how various drivers promote or hinder the deployment of wind power in sub-national contexts. Responses were dominated by technical, political, and economic frames in all four states, but were often driven by a very different rationale. Environmental, aesthetic, and health/safety frames appeared less often in the discourse. This analysis demonstrates that each state arrived at its current level of deployment via very different political, economic, and technical paths. In addition to helping explain why and how wind technology was – or was not – deployed in each of these states, these findings provide insight into the diversity of sub-national dialogues on deployment of low-carbon energy technologies.     

Evaluation of methodologies for remunerating wind power's reliability in Colombia

Colombia strives to have enough firm capacity available to meet unexpected power shortages and peak demand; this is clear from mechanisms currently in place that provide monetary incentives (in the order of nearly US$ 14/MW h) to power producers that can guarantee electricity provision during scarcity periods. Yet, wind power in Colombia is not able to currently guarantee firm power because an accepted methodology to calculate its potential firm capacity does not exist. In this paper we argue that developing such methodology would provide an incentive to potential investors to enter into this low carbon technology. This paper analyzes three methodologies currently used in energy markets around the world to calculate firm wind energy capacity: PJM, NYISO, and Spain. These methodologies are initially selected due to their ability to accommodate to the Colombian energy regulations. The objective of this work is to determine which of these methodologies makes most sense from an investor's perspective, to ultimately shed light into developing a methodology to be used in Colombia. To this end, the authors developed a methodology consisting on the elaboration of a wind model using the Monte-Carlo simulation, based on known wind behaviour statistics of a region with adequate wind potential in Colombia. The simulation gives back random generation data, representing the resource's inherent variability and simulating the historical data required to evaluate the mentioned methodologies, thus achieving the technology's theoretical generation data. The document concludes that the evaluated methodologies are easy to implement and that these do not require historical data (important for Colombia, where there is almost no historical wind power data). It is also found that the Spanish methodology provides a higher Capacity Value (and therefore a higher return to investors). The financial assessment results show that it is crucial that these types of incentives exist to make viable wind projects in Colombia at US$ 2000/installed kW. With the absence of these incentives the Project's NPV would be negative before and after-taxes. Additionally, it is demonstrated that wind power projects would only be viable in Colombia if the price of CERs is at least US$ 20/CO₂e ton. Furthermore, it is concluded that income tax exemptions are not enough to encourage wind power development in Colombia.     

Understanding the variability of wind power costs

Wind power has a significant contribution to make in efforts to abate CO₂ emissions from global energy systems. Currently, wind power generation costs are approaching parity with costs attributed to conventional, carbon-based sources of energy but the economic advantage still rests decidedly with conventional sources. Therefore, there is an imperative to ensure that wind power projects are developed in the most economically optimal fashion. For wind power project developers, shaving a few tenths of a cent off of the kilowatts per hour cost of wind power can mean the difference between a commercially viable project and a non-starter. For civic authorities who are responsible for managing municipally supported wind power projects, optimizing the economics of such projects can attenuate stakeholder opposition. This paper attempts to contribute to a better understanding of how to economically optimise wind power projects by conflating research from the fields of energy economics, wind power engineering, aerodynamics, geography and climate science to identify critical factors that influence the economic optimization of wind power projects.     

Place-making and trust-building: The influence of policy on host community responses to wind farms

This article assesses the impact of wind energy policy choices on host community responses. Two key explanations (place-making and trust-building) for host community responses are identified from the substantial social science literature investigating local community reaction to wind farms. The relationship between these two key factors and policy choices is explored through a comparative case study of five wind farms during a time of major policy change in Ontario, Canada. These five wind projects are all located within a 50 km of each other but are built under different policy regimes, with different ownership arrangements and are of different sizes. They provide a basis to assess the impact of three specific policy elements – approval authority, community benefit arrangements and spatial restrictions of turbine placement – on the place-making and trust-building potential of wind projects in the host communities. We identify a wide range of interactions and conclude that the policy choice to elevate project approval to a central authority has had the most damaging effect.