Wind is labor and capital intensive and the Federal Government has taken a keen interest in pushing policy through that fast-tracks construction on big complexes. A warm fuzzy hug from the Fed gives venture capitalists the security necessary to finance this uncharted American windmill wonderland. The result, however, is new facilities popping up like weeds that remain frozen due to transmission issues. The old grid simply cannot handle the load.
Rob Gramlich is Policy Director for the American Wind Energy Association and is primarily responsible for regulatory policy, AWEA's strategic plan, electric industry issues, and transmission issues. Prior to his work with AWEA, Rob has held positions in electric industry analysis and transmission policy for 15 years.
GA: One commonly known example of a public regulatory policy would be something like a speed limit, an instance where good and bad behavior can be clearly defined. Can you give an example of regulatory policy in the realm of renewable energy?
RG: Transmission policy is a big part of it, basically the rules of the road for who gets on the transmission grid and I think it's pretty widely understood and recognized now that the transmission grid is constrained and we're the newcomers. The wind generators are far and away the largest set of generators trying to get on the grid so these rules make a big difference for us. Another general area, for example, in state regulatory policy the state regulators have a responsibility for reducing the risks for electric consumers and wind energy is a stably priced generation option for many consumers and so the regulatory policies that take that into account are very important as opposed to fossil fuel generators where the prices may be known today but nobody knows what the prices are gonna be next year, 10 years, 20, 30 years out. How you balance stably priced generation versus risky generation is a regulatory policy that every state has to grapple with.
GA: Some of the heavyweight turbine manufacturers out like GE, Vestas, and Siemens are more in demand than ever. How do they stack up this year in turbine sales and market share?
RG: GE, the American wind turbine manufacturer, is still pretty far in the lead for wind energy deployment and then behind them there's a large group of companies. Vestas is a clear second place, they're I think the largest global supplier but they're second in the US. And then there's a long list that includes Siemens, Mitsubishi, Gamesa, Suzlon, Clipper, Atheona, and a couple others. So there's an increasingly competitive business for the very attractive American market. I think all of these companies, all of which started and grew in Europe are looking at the US as the best global wind energy market globally. Right now it has been and recently an aggregate, we took over the lead from Germany for the most megawatts installed. So there are a lot of companies looking to come here and our building manufacturing facilities here, there are 70 new manufacturing facilities over the last two years. Some of the companies like GE are American-owned, GE and Clipper for example, but a lot of them are really starting, even if they're European or Japanese, they're bringing their manufacturing to this country. There's over 8,000 parts that go into a turbine and over 50% are now coming from domestic content.
GA: In light of those manufacturing facilities, are there any areas of the country that we can expect to see some of these places cropping up?
RG: The states of course are very interested in this and so a lot of governors are actively recruiting these companies to come and bring manufacturing jobs to their states. There's a couple general dynamics that are driving where the facilities are winding up: One is that there's a very close overlap between the auto industry supply chain and the wind turbine supply chain. A lot of the bolts and gears and bearings, etc. that are useful in auto manufacturing are turning out to be very useful in wind turbine manufacturing. Ohio, Michigan, the states like that, Missouri, where they produce a lot of automobiles are getting a lot of supply chain development. And the second general dynamic is these are big facilities and expensive to transport so it makes sense to put the facilities close to where the market is. There's a big market in Texas which is still the lead in terms of wind energy development and then right up through that part of the country, through the middle of the country through the Dakotas there's a lot of wind energy development. Oklahoma, Kansas, the Dakotas, Iowa, Minnesota, there's a lot of development there and then a few spots on the coasts, New York and California are doing well...Illinois. So a lot of these states that are developing a lot of wind energy are also getting the manufacturing facilities.
GA: I was just wondering, is an offshore wind farm better than say a land-based production facility?
RG: There are definitely pros and cons to offshore verses onshore and of course almost all of what we have globally is onshore in Europe and the US. Europe has started going offshore and we're starting to go that way here in the US. Actually, two key Federal agencies just sort of opened the door for the permits for offshore development, that's the Department of Interior, Secretary Salazar, and the US Federal Energy Regulatory Commission with new chairman, Jon Wellinghoff. They just reached a critical agreement to allow for the permitting of these facilities. The pros and cons are as follows: On the offshore, first of all the winds are strong and steady so the wind is almost always blowing and so that's very helpful; you get a lot of kilowatt hours from a given facility. Number two, the electricity demand is very high so you think of the Northeast from Washington DC up through Boston, that entire Eastern Seaboard has a very high electricity demand and therefore very high electricity prices. It's hard to get too much power from the Midwest given transmission limitations so offshore has the opportunity of selling directly into that high-priced market. Those are the key advantages. The key disadvantage is really the cost. It is quite a bit more costly to erect a stable, large facility offshore and anchor it to the sea floor. Certainly you can do it and we're learning a lot from Europe and it's been very successful and I'm sure that over the next 10 years we will see a lot of development, especially along the Eastern Seaboard but it is a little bit more costly. In places like the Midwest where there is the Great Lakes opportunity but there's also a lot of available land there. There's gonna be a balancing where the utilities will weigh those pros and cons and choose onshore versus offshore.
GA: Jumping back a little to the transmission issues. I mean, we all want this, all the consumers want this and power companies have a stance, "Well, we're energy companies and we don't care where the energy's coming from," they just distribute it and that's it. Can you just enlighten us a little bit about specifically the problems with the current grid? Why can't consumers catch a break?
RG: Well, there's a number of problems and part if it is that it's complicated so nobody questions the authority of the utilities in this area and I really think it's time they should. We've been hearing for so long that our grid is antiquated and hasn't been developed over the last few decades. And if you look closely, one reason is the utilities, look where they make their money - they make their money on the generation. If you build transmission to access low-cost renewable resources say in the Midwest, the utilities lose money on their generation, they're getting competition from these low-cost resources. So we do need to challenge them and look at what's better for consumers here. So that's one issue, another issue is who pays? Everybody benefits from a reliable grid. We saw a few years ago that a tree in Ohio can cause a blackout sending people in to the subway in New York City and all across the Northeast from a blackout. It's an interconnected, interstate grid and we regulate it at a state level and I think we need to look at it much more in terms of a national interest and energy security benefits and have a robust regional grid, have all the beneficiaries across the whole region pay a share of the investment to upgrade the grid.blockquote>