4 - Recent Market Developments
Danish wind turbines in a California
During the years 1973-1986, the commercial wind turbine market evolved from domestic and agricultural applications of small machines in the 1 to 25 kilowatt size range to utility interconnected wind farm applications of intermediate-scale machines of 50 to 600 kilowatts. Wind farms in California made up the majority of wind turbine installations until the early 1990s. In California, over 17,000 machines, ranging in output from 20 to 350 kilowatts, were installed in wind farms between 1981 and 1990. At the height of development, these turbines had a collected rating of over 1,700 megawatts and produced over 3 million megawatt hours of electricity, enough (at peak output) to power a city of 300,000.
The three major California wind plant areas in the 1980's (small dark green areas near the center of the circles) comprised a very small percentage of the state's total area.
the market in the United States was dominated by the emergence of the wind farm (at left).
This market was an almost totally unexpected phenomenon resulting from the coalescence of
several application-dependent, legislative, and economic factors. Power produced by wind
turbines in California was extremely attractive to utilities serving coastal cities
because periods of high winds over the coastal hills correlate fairly well with high
commercial and residential air conditioning loads in the summer. Among the key economic
factors were the federal energy credit of 15%, a 10% federal investment credit, and a 50%
California state energy credit. These, together with attractive rates offered by utilities
for power produced by alternative sources (mandated by state regulations), were packaged
into an attractive investment product by private financial firms and investment houses.
This boom was not expected to happen the way it did, demonstrating the futility of government forecasting and the ingenuity and cunning of investment bankers. The beneficiaries of the tax credits were supposed to be the large U.S. aerospace and construction firms who were developing the MOD-2, MOD-5 and MOD-6 (intermediate-scale) wind turbines. These firms had primarily been responsible for obtaining federal wind energy funding in the first place; although a mid-course correction had been managed by the smaller, "counter-culture" wind energy entrepreneurs and communes who organized the American Wind Energy Association in the mid-70's (resulting in the establishment of a small machine development program at Rocky Flats, Colorado.).
The notorious Transpower
|Setting the Stage
In 1980-81, several things happened simultaneously that caused the new wind energy tax legislation to emerge from Congress looking entirely different than even the wind industry had expected:
1) The large multi-megawatt turbines ran into predictable design problems because the development cycle was compressed by political impatience to an absurd 2-4 years instead of a more prudent 6-8 years;
2) An increase in federal military expenditures reduced the interest of aerospace firms in risky new business challenges like wind turbines,
3) the new laissez faire, de-regulating attitude of the in-coming Reagan administration toward the investment and banking community made it possible to invest large sums in suspect items like untested wind turbines, resulting in the erection of questionable systems like the Transpower "clothesline" machine (at left.)
4) Several firms appeared with apparently servicable wind turbines which looked--to the mood of the times--like giant killers, including a "half-baked" 50kW design marketed by U.S. Windpower.
5) Federal managers, correctly reading the new anti-regulatory winds, and fearful of losing funding and support in Congress (and from the new Reagan Administration), resisted calls from several quarters to establish a quality control program to screen wind turbines for eligibility in the federal tax program,
6) Not understanding the important distinctions between rated power capacity and energy output, and not wanting to establish an "expensive and bureaucratic" data reporting requirement, Congressional staffers ignored recommendations of the American Wind Energy Association and others and acceded to independent industry lobbyist's requests for tax credits based on installed generator capacity rather than energy output.
7) The obsession of the incoming Reagan Administration with "free and open" markets, driven by the need to find foreign investors to fund the national debt and reinforced by Reagan's own grandiose sentimentality, dictated that any tax credit legislation would provide absolutely no protection for U.S. businesses, allowing subsidized foreign companies to underprice U.S. firms, setting the stage for a flow of over a billion U.S. tax dollars to Europe.
8) Industry mistrust of federally-supported researchers who "dared" to question and discuss the unreliability of U.S. wind turbines and a corresponding over-enthusiasm on the part of these researchers to point out the failures and weaknesses of current hardware to justify their existence. These mutual reactions effectively drove a wedge between the U.S. industry and the federal wind program, which was the only source of objective knowledge and discipline that could help most U.S. companies achieve technical viability.
The stage was set for disaster. Which proceeded to happen.
Government field evaluations had
|A Wind Most Foul
By 1982, it was obvious to most observers that the U.S. wind farm market would soon be dominated by the Danes. Surveying the disastrous assortment of U.S. designs it was clear that the U.S. industry had oversold itself. Some U.S. designs -- such as the Mehrkam, shown under a gloomy sky at left -- were simply dangerous (inventor Terry Mehrkam died trying to stop a rotor overspeed somewhere in this Oak Creek wind farm.)
Others, like the ESI-54 (lower left) were the products of enthusiastic but under-capitalized start-up firms forced to make quick profits for their investors. These machines embodied innovative design features that have only recently (2000) begun to be understood
The ESI-54, shown here at Altamont Pass, was an advanced design incorporating some of the features pioneered by Ulrich Hutter in the 1940's. Its tilt-down tower provided relatively easy access to the machinery. But the turbine was noisy, and had some abrupt and disturbing operational characteristics (for example, excessive blade flapping when the brakes were applied) that reduced its marketability.
|In contrast to American companies, Danish firms offered three-bladed upwind
machines derived from the Gedser mill design, a primitive and inefficient, but relatively
well-understood configuration, suddenly modernized with the addition of fiberglass blades.
They were armed with certification from the Danish
test center at Riso and with statistics that showed their designs were more reliable
(in terms of availability for energy production) than their U.S.
U.S. companies had balked at similar "Quality" standards when they were proposed, partly because they feared the standards would require costly and unnecessary design modifications to machines they considered "market-ready." By 1986, the Danes had captured 50% of the U.S. wind farm market and hundreds of inoperable, "market-ready" U.S. machines were cluttering the California landscape.
The brashness of U.S. designers was somewhat understandable, if unhelpful. A knowledgeable observer strolling through the Altamont Pass wind farms in 1983 would be struck by the primitive features of the early Danish designs. For example, most had root attachments that were totally round (as compared to the oblong shape of U.S. roots), indicating that no account of real blade root loads had been made. In fact, the early Danish rotors were so inefficient that the shape of the root attachments almost didn't matter. But these design shortcomings can't have helped when high California wind loads began to pulverize the poorly manufactured Danish blade roots, requiring an expensive "fix" for thousands of machines.
It was the misfortune of the U.S. wind industry to be twice-bitten by the Danish machines. In the early 1980's, they were dominated and beaten by the Danes in the marketplace. From then on, U.S. wind farm operators were saddled with the high maintenance costs and constant repairs required to keep these machines running. (Many observers have noted their admiration for these wind farm companies, who literally turned a sow's ear into a silk purse for their investors.)
The U.S. wind farm market demand for intermediate-size wind machines continued despite the end of the federal energy credits in 1984 and the phaseout of the California state credits shortly thereafter. Artificially high buyback rates continued into the 1990's, when many machines had long since been paid off.
There were many apparent success stories. For example, U.S. Windpower (after re-engineering their early units) manufactured and operated over 4100 100-kilowatt wind turbines in Northern California. And several large U.S.-based wind plant developers operated turbines of Danish, Dutch, German, Japanese, English, Irish, and U.S. origin in a profitable fashion all during the 1980s -- bouyed by attractive "buy-back" rates for power in California. Some of these firms (notably Zond Systems) comprised the core of the re-emergent U.S. wind industry in the 1990's.
Sales of small wind turbines during this period were very slow, but sufficient to provide business for several manufacturers of wind turbines designed for water pumping and remote installations, including World Power Technologies (recently purchased by Southwest Wind Power) and Bergey Windpower. In general, however, the U.S. market lagged and gradually declined during the 1980's and into the 1990s.
The Kappel wind farm on the Coast of Denmark. Europeans have consistently shown an ability to integrate wind energy into their culture and environment with a creativity that makes the United States look primitive and backward by comparison.
|The World Market Catches Up
In northern Europe and Asia, on the other hand, wind turbine installations increased steadily through the 1980s and 90s. The higher cost of electricity and excellent wind resources in northern Europe created a small, but stable, market for single, cooperative-owned wind turbines and small clusters of machines. After 1990, most market activity shifted to Europe and Asia. Driven by high utility power purchase rates, the installation of 50-kW, then 100-kW, then 200-kW, then 500-kW and now 1.5 megawatt wind turbines by cooperatives and private landowners in the Netherlands, Denmark, and Germany has been particularly impressive. The installation of over 10,000 megawatts of European wind capacity has helped support a thriving private wind turbine development and manufacturing industry. Until recently, this contrasted with the United States where low utility rates (primarily due to abundant, under-priced natural gas imported from Canada) and threatened deregulation of the utility industry virtually strangled wind energy development.
A large international market has long been predicted for small village power or "wind-hybrid" installations. Despite some promising pilot projects, the apparent interest of many countries and of many nongovernmental organizations (NGOs), and significant commitments from several wind turbine manufacturers and U.S. research laboratories (including Sandia National Laboratories and the National Renewable Energy Laboratory) this market has yet to emerge.
NEXT: The Future of Wind Power