Overview of Wind Energy Business

1. Overview of Wind Energy Business

First, there is the power of the Wind, constantly exerted over the globe
Here is an almost incalculable power at our disposal, yet how triing the
use we make of it.
Henry David Thoreau, American naturalist and author (1834)

1.1. Introduction
The energy of wind has been exploited for thousands of years. The oldest
applications of wind energy include extracting water from wells, making our
out of grain, and other agricultural applications. In recent times, the use of
wind energy has evolved to, primarily, generation of electricity.
The eld of wind energy blossomed in 1970s after the oil crisis, with a large
infusion of research money in the United States, Denmark, and Germany to
nd alternative sources of energy. By the early 1980s, incentives for
alternative sources of energy had vanished in the United States and,
therefore, the wind energy eld shrank signicantly. Investments continued
in Europe and, until recently, Europe led in terms of technology and wind
capacity installations.

1.2. Worldwide Business of Wind Energy

The data presented in this section is from the World Wind Energy Report
2009 by the World Wind Energy Association.

According to this report, in

2009, wind energy was a 50 billion Euro business in terms of revenue and it
employed about 550,000 people around the world.

Figure 1-1. Total installed capacity of wind power worldwide. 1 2010

data is a forecast.
Figure 1-1 shows the installed wind capacity in the world by year. In 2009,
159.2 GW of wind capacity was online. Figure 1-2 shows the new installed
capacity by year. The pace of growth of new installed capacity has increased.
In fact, the world market for wind capacity grew by 21.3% in 2004 and has
steadily increased to 31.7% in 2009.
Figure 1-3 illustrates the total wind capacity by country. The United States
leads in wind capacity installations with 35.1 GW, followed by China and
Germany at 26 and 25.7 GW, respectively. The UK leads in oshore
installations, with a total capacity of 688 MW followed by Denmark at 663 MW
(see Fig. 1-4).
In terms of penetration of wind energy in the total electricity supply,
Denmark leads with 20%, followed by Portugal, Spain, and Germany at 15, 14,
and 9%, respectively. Penetration in the United States is slightly below 2%.

Figure 1-2. New installed capacity of wind power worldwide 1 2010

data is a forecast.

Figure 1-3. Total installed capacity of wind power (GW) by country

for top ten countries. 1
The prominence of wind in the last half of the rst decade of the twenty-rst
century is evident in the fact that it is the leading source of newly installed
electricity generation capacity in the United States. In the United States, out
of a total of 20 GW of new electricity generation in 2008, 42% was from wind
energy.

The percentage has risen steadily since 2005, when wind was 12%

among generation types in annual capacity addition. From an energy

standpoint, the prominence of wind is even more impressive. The Lawrence
Berkeley National Laboratory (LBL) report

predicts, almost 60% of the

nations projected increase in electricity generation from 2009 through 2030

would be met with wind electricity. Although future growth trends are hard
to predict, it is clear that a signicant portion of the countrys new
generation needs is already being met by wind. The LBL report used
forecast data from Energy Information Administration of the US Department
of Energy (DOE).

Figure 1-4. Total installed capacity of oshore wind power (MW) in

the top ve countries. 1

1.3. Cost of Wind Energy

The cost of wind energy is comparable to fossil-fuelbased energy, when cost
of greenhouse gas emissions is taken into account. Average cost of energy

from coal is about 80 per MWh, while wind energy at a site with average
annual wind speed of 7 m/s is slightly less than 80 per MWh. Figure 1-5 is a
plot of levelized cost of energy from coal, natural gas, nuclear, and onshore
and o-shore wind for average wind speed in the range of 6 to 10 m/s.
Table 1-1 compares the components of cost of wind energy projects to other
source of electricity generation. Capital cost and O&M cost for onshore wind
projects are comparable to coal-red projects. The advantage of wind is that
it has no fuel cost.
According to the DOE report,

the amount of economically viable onshore

wind power is 8000 GW that can be produced at a cost of $85 per MWh or
less. Figure 1-6 is a plot of potential of wind energy and the cost of energy in
the United States, as a function of class of wind resource.

1.4. Benets of Wind Energy

The primary benets of wind energy are environmental and cost. Wind
energy production results in zero emissions. Compared to fossil fuelbased
energy generation, no pollutants are produced. In the United States every

megawatt-hour of wind energy production that is not produced by a

conventional source reduces greenhouse gas emission by an equivalent of
0.558 tons of CO 2. According to the DOEs 20% Wind Energy by 2030
Technical Report,

4 , 5

overall 25% of CO

emissions from the electricity

production sector can be reduced in the United States if 20% of electricity is

produced by wind energy. In the United States, wind energy production in
2007 reduced CO

emissions by more than 28 million tons.

Figure 1-5. Levelized cost of energy from dierent sources. Costs are
in euros per MWh. Cost of wind energy is a function of wind speed.
3
Table 1-1. Total Installed Cost, Fuel Cost, and O&M Cost of Energy
from Dierent Sources

Technology

Installed
Cost, /kW

Gas-red

635875

Fuel Price,

O&M Cost,

/MWh

/kW

US: 16

1930

EU: 27
Coal-red

13002325

US: 12
EU: 18

3060

Nuclear

19503400

3.65.5

8096

Onshore

13001500

N/A

3350

3000

N/A

70

wind
Oshore
wind
Source: Milborrow, D. Annual Power Costs Comparison: What a
Dierence a Year Can Make. WindPower Monthly. 2010, January.

Figure 1-6. Estimated cost of energy production in the United States

based on wind classes. 4 Cost excludes cost of transmission and
integration.
Wind energy is among the cheapest sources of renewable energy. The cost of
electricity production using wind is comparable to fossil fuelbased
electricity production. In most cases, the cost is lower or about the same
when cost of greenhouse gas emissions are taken into account. In addition,
wind energy is available in abundance in most countries.
In addition to the above benets, wind energy provides income to farmers,
ranchers, and landowners that have sucient wind resources on their
property. The income is in terms of land lease payments, while majority of the
land is still available for other uses.
Wind turbine generators are available in wide range of capacities, from small

to utility scale. On small scale, wind energy can be used to power remote
locations that do not have access to an electricity grid.

1.5. Wind Energy Is Not a Panacea

Despite the signicant benets, wind energy is not a cure-all. The primary
disadvantages of wind are variability of the resource, requirement for large
investment in transmission, and impact on the environment.
Wind energy production depends on wind conditions. Unlike solar energy,
which is ubiquitous and can be produced in most locations, wind energy can
be produced economically only in areas that have average annual wind
speeds above 6.5 m/s at 50-m height. For instance, most of the southeast part
of the United States has no wind resources, other than in coastal areas. Even
in areas with abundant wind resources, there is a high degree of diurnal and
seasonal variability. When the wind is not blowing, there is no energy
production and other sources of electricity must be deployed.
People do not like to live in areas that have high wind. Therefore, high-wind
areas are usually far away from population centers. This implies electricity
generated from wind energy must be transported to population centers,
which requires expensive transmission lines. In conventional methods of
electricity generation, fuel is transported to a population center and
electricity is produced close to a population center. In contrast, wind
resource cannot be transported and long-distance transmission is required.
From an environmental perspective, wind farms can cause harm to birds,
bats, and other wildlife, although most studies suggest that the harm is
minimal. Aesthetic impact is another area of concern if the wind plant is
located in an area of scenic value. Wind farms require signicantly more land
per kilowatt compared to fossil fuelbased electricity plants; however,
continued use of the majority of the land mitigates this concern.
Other disadvantages of wind energy are reliance on government subsidies
and signicantly higher cost of small wind projects. Like other electricity
generation, wind relies on moderate to low-level subsidies from governments.
Over time, as the cost of greenhouse gas emission is built into the cost of
traditional forms of electricity generation, these subsidies may not be
required. Small winds projects (less than 100 kW), especially wind projects of

size 15 kW or less, are expensive. The capital cost per kilowatt may be 3 to 5
times the cost per kilowatt of a large wind farm.
In conclusion, any potential negative impacts should be rigorously analyzed
and strategies put in place to mitigate the impact. On balance, there is
compelling evidence that wind energy delivers signicant benets to the
environment and the economy.

References
[1] World Wind Energy Association . World Wind Energy Report 2009

, World

Wind Energy Association, Bonn, Germany, March, 2010.

[2] Wiser, R., and Bolinger, M. 2008 Wind Technologies Market Report ,
Lawrence Berkeley National Laboratory, Berkeley, CA, 2009.
[3] Milborrow, D. Annual Power Costs Comparison: What a Dierence a

Year Can Make , Windpower Monthly , 2010, January.

[4] Energy Eciency and Renewable Energy, US Department of Energy . 20%

Wind Energy by 2030 . US Department of Energy , Washington, DC, 2008.

www.nrel.gov/docs/fy08osti/41869.pdf. DOE/GO-102008-2567.
[5] American Wind Energy Association . 20% Wind Energy by 2030: Wind,

Backup Power, and Emissions , American Wind Energy Association ,

Washington, DC, 2009.
http://www.awea.org/pubs/factsheets/Backup_Power.pdf.
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Pramod Jain: Wind Energy Engineering. Overview of Wind Energy Business , Chapter
(McGraw-Hill Professional, 2011), AccessEngineering

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