Normally viewed as complementary, the natural gas and wind industries found themselves more at odds last week as the American Wind Energy Association (AWEA) kicked off its annual meeting in Anaheim, CA. Windpower 2011 was less bullish than in recent years in announcing growth in megawatts and jobs, and more adversarial on regional and national debates.
In the Pacific Northwest, the industry’s guns were trained on Bonneville Power Administration (BPA) for its cutbacks of wind supplies in the face of record hydroelectric supplies, and in Washington, DC, others within the wind space were loudly calling for a national energy policy that can square up the shale gas boom with continuing cries for more reliance on renewable-based power supplies.
Ignacio Galan, the CEO of one of the largest wind developers in the United States, Iberdrola Renewables, was quoted in the business press as saying shale gas production has “transformed” the U.S. energy landscape, driving down gas and electricity prices and making it tougher for new wind developments to pencil out. Skeptics point to the reduction of added wind megawatts last year compared to 2009 (10,000 MW in 2009 and 5,100 MW last year). Pessimists also reported that this year’s added wind development could drop to 3,000 MW, although others are predicting that the 5,000 MW/year level may stick around for the next few years.
But according to some of the speakers at the conference, there are other political and economic issues that are impacting the wind industry, including the need for a splintered Congress to extend the production tax credit and other subsidies that are set to expire the end of next year.
Rep. Earl Blumenauer (D-OR) said he thinks that within the current Congress “there should be an opportunity to put together a broad coalition to pass” an energy bill that would address all of the credits and subsidies for energy sources.
“We’re facing a situation where all of these expiring tax provisions as coming up right at the end of this Congress,” Blumenauer said. “So there is going to be a flurry of activity before the next election. I think that gives us opportunities as part of a broader piece of legislation like we have done in the past, or something that is narrower and more focused for a majority to move forward. I think there is going to be a point where people actually want something done.”
Blumenauer thinks that a national renewable portfolio standard (RPS) has some broad, bipartisan support. “When you get outside the Beltway, it is not controversial,” he said. “I am cautiously optimistic we can do something despite the controversies that exist.”
A panel of energy and technology executives last Tuesday reiterated the need for a national energy policy, saying it would help both traditional energy sources, such as natural gas, and various renewables, such as wind energy, which is experiencing a marked slowdown in its U.S. growth.
While statistics on the industry offered by AWEA showed a slowing industry in the U.S., representatives from General Electric, Google and wind developers all think renewable energy’s future can be as bright as that of the shale gas boom if policymakers create a cohesive energy plan.
“I don’t think it is just wind advocates that should be worried, I think we all should be worried that we don’t have a national energy policy,” said Steve Trenholm, the CEO of German-based E.ON’s climate and renewables operations in North America. “We really need a national policy to figure out how to best utilize all this natural gas.”
Trenholm called the shale boom “a great thing for the country” but added that the nation is not really making maximum use of it. For example, he said natural gas is “a great transportation fuel and can greatly relieve amounts of foreign oil that we rely on for our transportation needs.”
As a leading national legislative advocate for AWEA and his company’s interests in Washington, DC, Trenholm said more natural gas use in transportation is something he has been advocating in his lobbying efforts in the nation’s capital. “It takes advantage of this tremendous resource we have, and at the same time it supports the price of gas,” he said.
“We don’t want gas prices to go down too low; that doesn’t serve anyone’s purpose. And obviously it doesn’t help wind development either.
The wind industry accused the federal BPA of illegal and ill-advised moves in the face of record hydroelectric supplies this spring and summer, and it promised legal action to reverse the current operating decision by the Pacific Northwest’s major energy player. BPA was accused of ignoring contracts to slash its takes of wind-generated power while thermal generation plants using coal and natural gas were still operating unabated. A Portland, OR-based BPA spokesperson denied the charges, noting that wind supplies were the last nonhydroelectric source to be curtailed.
In response to an editorial critical of BPA in the Portland Oregonian, the head of the region’s Public Power Council, Scott Corwin, characterized the situation as a complex “overgeneration” problems for which the federal power agency had taken “bold steps” to resolve to maintain electric system stability.
In Anaheim, AWEA’s Rob Gramlich, senior vice president for public policy, said there likely will be legal and regulatory filings against BPA, which he alleges has broken the law. “No one is above the law or can break contracts as Bonneville has; commerce cannot exist without contract sanctity,” said Gramlich, predicting that the BPA moves to temporarily cut back on its takes of wind power will “chill” investment in the industry.
Both Gramlich and Blumenauer contended that BPA had other options and chose to ignore them. Similarly, Northwest advocates for protecting salmon warned that the giant federal power marketer/transporter misstated the situation when it said it traded extra wind power supplies in order to protect the fish in the region.
“BPA is calling this a wind power-versus-salmon issue, and that is factually wrong,” said Pat Ford, executive director of Save Our Wild Salmon. “This is a destructive approach if the goal is finding solutions that work for people, salmon and the West Coast economy.”
Sparks between AWEA and BPA have been flying since last Tuesday over the federal regional power giant’s interim decision to temporarily limit nonhydroelectric supplies, such as wind and natural gas-produced power, due to the region’s record-breaking levels of water (see NGI, May 23). If AWEA is correct, however, the wind sector alone is getting hurt, although that is something BPA maintains is not the case and its data on its website tends to support the agency
For the past seven days up until last Tuesday, BPA showed hydroelectric supplies ranging from 11,500 MW to 14,000 MW, while its demand was hovering at the 6,000 MW level. Wind supplies ranged from zero to 2,500 MW (there is a total of 3,500 MW of wind on the BPA system), and thermal supplies ranged from 100 to 500 MW, which is contrary to the impression left by AWEA and its supporters in fighting BPA.
“It is clear BPA is making the call in favor of preference customers at the expense of the emerging sector, such as wind,” said Blumenauer. “This is a chilling signal to people who would invest, or loan money, or make the long-term decision to develop wind projects.”
The importance of help from the federal policymakers for wind was a continuing theme among the AWEA speakers, as exemplified by Sonny Garg, president of Exelon Power, who said government regulation and legislation is critical to the types of projects in which his company is investing.
On the skeptical side was Montana Gov. Brian Schweitzer, who said the federal government and Congress are “better at motion than action.” While support for renewable energy standards continues in the states, the state delegations in Congress will often turn a deaf ear on proposals for a national standard.
“They support RPS standards at home and then go to Washington, DC, and take a powder when it comes to extending the production tax credit,” Schweitzer said. “It is pretty clear that the hydrocarbon industry will do everything it can to step on alternative energy for the time being. Washington, DC, responds best to crisis.”
Ever the optimist, AWEA CEO Denise Bode said in the weeks since California formalized its RPS at 33% for 2020 “the floodgates have been opened” in terms of new offices and companies from the wind industry coming into the state. “I have companies from all across the country opening new offices, and we have a significant number of Asian company representatives that have come here for this conference,” Bode said.
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