2005 was a great year for wind power worldwide

click on this graph (and the others below) for larger version

As the graph above shows, 2005 was a banner year for wind power, with a 43% increase over 2004 in terms of new capacity built during the year.
The other good news is that the boom was spread more evenly around the world this year, with Asia becoming an increasingly significant market:

The North American market jumps sharply, following the devastating consequences of Congress diddling around with the PTC support mechanism in 2004, which pretty much killed the market for the year. 2005 has been a record year in both the USA and in Canada, with the USA becoming, as I predicted a few months back (USA to become world leader in wind power in 2005) the largest market this year.

The PTC mechanism has now thankfully been extended till end-2007, which gives the industry another 2 good years (3,000 MW are expected to be built this year in the USA, and even more in 2007), but the stop-and-go nature of the renewal of that law has created massive headaches for the industry (what kind of industrial capacity do you invest in to produce 2,000 MW one year, 5,00 MW the next, and 2,500 MW the year after?), with consequences worldwide (delays, quality problems, and losses for the manufacturers) and for the USA (an understandable reluctance by manufacturers to build industrial capacity in the USA, where it might stay idle half the time).

In this industry like others, good government matters – and smart regulations make or break an industry. Right now, wind turbine manufacturing is in Denmark, Germany, Spain, all countries with consistent policies – and India.

India is the surprising leader in this sector from the emerging world, and it even boasts a world-class manufacturer, Suzlon, but China is not far behind and windpower is likely to enjoy massive development in that country in the coming years.

I’ve written about the sector regularly (see the links at the end of the diary), but I’d like to state again a few things, for the record:

Wind is increasingly price-competitive

The numbers above, based on my own calculations but using mostly public data, show that wind is still a tad more expensive than the baseload energies we are using in the West: nuclear, coal and gas, and thus it still requires some support mechanisms, but that does not take into account the following:

nuclear is cheap in France because it was financed at sovereign interest rates. That’s the only thing that can male nuclear competitive: public long term funding. As it were, I personally think that it is a smart thing to do, and the State should be in the business of running nuclear plants – and should be the only one to do it. But private sector nuclear plants would likely come up with a price in the 5-7c/kWh range at best;
coal is cheap because the cost of cleaning up the coal and of carbon emissions is still ony very partially incorporated in that cost. Impose stringent environmental standards in coal production, transport and burning, and make the sector pay for its carbon emissions, and you add at least 4c/kWh to the cost of that electricity, and you end up in the same range as nuclear, i.e. 6-7c/kWh;
gas, at current natural prices (7c/mbtu today after an unexpectedly mild winter in the US, down from 15c/mbtu in December, but up from 2-3c/kWh when all the gas-fired plants were built a few years ago) is simply not competitive, as it adds 3-4c/kWh. Again, 6-7c/kWh production price.

Thus, wind power is, in reality, the cheapest power source today. It’s only because coal and nuclear get massive subsidies that they are still cheaper and that wind needs support in turn to be competitive.

In addition to these considerations:

wind power creates more jobs per kWh than other power sources, and these jobs are well paying manufacturing jobs and/or jobs situated within local communities (operations and maintenance);
wind power requires no imports from politically nasty countries. Today, the technology is to a large extent manufactured in Europe, and it can easily be brought into the US (and any other country that cares to develop its capacities) once a stable regulatory framework is put in place;
wind power sustains local communities. It brings income (land leases for the farmers whose lands are used – and which, remember, can still be used for farming apart from the few acres needed for access roads and the turbines themselves, local taxes, and local jobs). Managed smartly, as in Spain, it can bring manufacturing jobs to a number of places;
it has very few drawbacks. If you avoid particularly scenic areas, and bird migratory corridors, wind farms do no damage to the environment, bring tourism and, once installed, are very much appreciated by the local population.

If there is one cause that should be wholeheartedly supported by the progressives, this is it. Jobs, manufacturing competence, protection of the environment, support for local communities, and an end to dependence on nasty regimes around the world, it has no drawbacks. So I hope that, for once, this thread will not end up being dominated by those that say that it kills birds or that it is ugly.

See below (i) my links to the sector and (ii) some links on bird mortality.

Energy – some good news (for once)
Don Quixote meets Wall Street – financing wind farms
The future of power generation
Wind power: birds, landscapes and availability (I)
comment on PTC
Something to take your mind off indictments: Windfarm blogging
Wind power now CHEAPER for US retail consumers
USA to become world leader in wind power in 2005

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Author: Jerome a Paris

Energy banker based, yes, in Paris, France. Writing about energy, economics, international geopolitics, European and French stuff, and whatever else catches my attention. Very strongly pro-European. Liberal in the US, libéral in France and proud of both. View all posts by Jerome a Paris