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ESAI Sees Renewable Portfolio Standards Driving $38B Investment in Wind

Energy Security Analysis Inc. (ESAI) is projecting a $38 billion investment in wind generation in the U.S. over the next 10 years, which will be driven by renewable portfolio standards (RPS) that have passed into law in 19 states. The standards require utilities to purchase a designated percentage of their energy from renewable energy resources.

"By 2010 we expect the amount of energy from nonhydro renewable energy sources to increase to 4.5% of U.S. energy production and account for 200,000 gigawatt hours of energy production per year," said Stephen Conant, a senior market analyst with ESAI. "That doubles the current percentage of 2.25%."

Most of the new nonhydro renewable energy capacity will be from wind generation, which is supported by federal tax credits, as well as state RPS goals. The increase in wind generation will result in a significant shift in where renewable generation comes from, according to ESAI. The percentage of generation from intermittent renewable resources such as wind will increase, while the percentage from baseload forms of generation, such as biomass, geothermal and municipal solid waste, will decrease.

The wind power industry is pushing federal lawmakers to put in place a more permanent production tax credit (PTC) as a way in which to provide stability to that sector. The current PTC for facilities that generate electricity from renewable energy sources expires at the end of this year.

"The shift in renewable generation from base load to intermittent resources has broader implications for the electricity grid and nonrenewable forms of generation," said Conant. "Areas with the highest wind production are often remotely located from areas with high-energy demand. Therefore, new transmission lines need to be constructed to bring the energy to where it is needed. Also, wind generation is greatest during off-peak hours, which means wind energy production is falling off in the morning hours, just as the system load is increasing."

Conant said the difficulty in forecasting wind generation "creates challenges for system operators who must constantly balance load and generation. It increases the importance of other nonrenewable forms of generation that have load-following capabilities."

Boulder, CO-based Global Energy Decisions last month released a report stating that state renewable portfolio standards will drive the demand for 52,000 MW of new renewable energy projects, which will require an estimated $53.4 billion in new investment.

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