By J. Matthew Roney (Dec 10, 2009)
Leadership of the global wind market is about to change hands. The United States—the birthplace of the modern wind industry—has held the top spot in new installations since 2005, growing at 50 percent a year and adding a record 8,540 megawatts of wind generating capacity in 2008. But if the credit-crunched U.S. industry adds only 8,000 megawatts in 2009, as anticipated, China’s new installations of some 10,000 megawatts will make it the world leader in annual additions. Having doubled its installed capacity in each of the last five years, this relative newcomer is now poised to dominate the wind energy industry for years to come.
Nowhere is China’s bid for wind supremacy more evident than in its new Wind Base program. In 2008, the National Energy Administration selected six wind-rich locations as sites for wind mega-complexes of between 10,000 and 30,000 megawatts each. A seventh has since been added to the list. In August 2009 construction began on the first project, a 13,000-megawatt complex in the northwestern province of Gansu. When completed, these Wind Bases will total more than 110,000 megawatts of capacity, the generating equivalent of 110 coal-fired power plants.
The emergence of China as the new world wind market leader in 2009 follows an extraordinary 2008, the latest year for which complete data are available. World wind generating capacity grew 29 percent, adding a record 27,000 megawatts to reach 121,000 megawatts installed worldwide, enough to satisfy the residential electricity needs of nearly 200 million people.
In 2008 the United States’ addition of more than 8,500 megawatts brought its total capacity to 25,400 megawatts. This allowed the United States to reclaim the top spot in overall capacity after being second to Germany since 1997. China ranked second in new capacity added with 6,300 megawatts and moved into fourth place in terms of total capacity. Rounding out the top five countries in new additions were India with 1,800 megawatts, Germany with 1,660, and Spain with 1,610. (See data.)
Europe, by far the leading region in cumulative wind capacity, added 8,800 megawatts in 2008. Traditionally, Germany, Spain, and Denmark—respectively getting 7, 12, and 21 percent of their electricity from wind—have been the only major players in European wind development. But the market is quickly becoming more diverse, with Italy, France, and the United Kingdom leading a “second wave” of wind expansion. With their help, wind was the leading source of new power added in the European Union in 2008.
Wind accounted for 42 percent of new electricity generating capacity from all sources in the United States in 2008, second only to natural gas for the fourth year running. Texas leads all states in total capacity; as of late 2009, it has almost 9,000 megawatts installed, nearly triple the capacity of second-place Iowa. If Texas were a country, it would be sixth on the list of world wind leaders.
Thirty-six states now have utility-scale wind farms. In west Texas, the German energy firm E.ON recently completed a 780-megawatt wind farm, the world’s largest. But this may soon be dwarfed by even bigger projects already in development. These include a 2,000-megawatt wind farm planned for Carbon County, Wyoming, and the aptly named Titan Wind Farm, a 5,050-megawatt project whose first phase is now under construction in South Dakota.
Now that China has overtaken the United States in annual additions, its explosive development will soon catapult it into the lead in cumulative installed capacity. China had fewer than 800 megawatts of wind power as of 2004, but it has grown an impressive fifteenfold since, reaching 12,200 megawatts at the end of 2008. But this is just the beginning of what is possible—a 2009 study in the journal Science reports that China’s onshore wind resources are enough to meet its current electricity needs seven times over.
The world’s offshore wind potential is vast as well, but efforts to harness it have trailed far behind those of land-based wind development. Just 2,100 megawatts have been installed, and all are in the waters off 10 European countries, China, and Japan. Still, the pace is picking up: more than half of this capacity was added since 2006. The U.K. leads, with 870 offshore megawatts installed, and will add another 1,000 megawatts with its London Array project in the Thames Estuary. The European Wind Energy Association reports that 100,000 megawatts of offshore wind projects are currently proposed or in development in Europe.
With some 30,000 megawatts slated to come online in 2009, world wind generating capacity will likely exceed 150,000 megawatts at year’s end. While this addition would top the record year for wind in 2008, it comes nowhere close to what it might have been without the worldwide financial crisis. After considerable deceleration in 2009, wind energy growth is expected to regain momentum. Analysts project that total installed capacity, buoyed by renewable energy standards and other pro-wind policies, including those contained in economic stimulus packages in the United States, China, and elsewhere, will more than double by 2013.
What is not yet clear is whether the United States will simply concede its leadership of the wind industry and the potentially vast economic benefits that come with it to China. If the United States decided to reverse its slide into second place, regaining and sustaining the top position would require bold action on many fronts. One is a long-term extension of the federal Production Tax Credit (PTC), the main policy instrument that has driven U.S. wind power development. Although in 2009 the American Recovery and Reinvestment Act extended the PTC until 2012, an extension to 2020 would provide lenders, developers, and manufacturers with the confidence needed for long-term investments.
A second beneficial policy move would be to establish a strong national renewable portfolio standard (RPS), a law requiring a certain share of electricity to come from renewable sources by a specified date. U.S. wind growth has been aided by state standards—29 states now have a mandatory RPS—but a robust national standard would help sustain rapid growth by attracting more investment capital and encouraging manufacturers to scale up U.S. operations.
The third initiative that would greatly facilitate U.S. wind growth is the accelerated upgrading and expansion of the nation’s electric grid. Transmission capacity in remote wind-rich areas cannot accommodate all the electricity that could be produced. Some 16 transmission development projects, with power lines able to accommodate 36,000 megawatts of new wind capacity, are in the pipeline and scheduled for completion by 2014. These projects are encouraging, but a far cry from what is needed to address the country’s huge transmission bottleneck—nearly 300,000 megawatts of wind projects under development are stuck in line, awaiting access to the grid.
Finally, putting a price on carbon would give wind yet another boost. Incorporating the climate costs of burning fossil fuels into electricity prices would make wind generated electricity much cheaper than electricity from coal, further enhancing wind’s appeal to investors.
The country leading the charge in wind energy development will reap enormous economic benefits as the world shifts from fossil fuels to renewable sources of electricity. As wind emerges as the centerpiece of the new energy economy, much is at stake in the battle for industry leadership, including millions of new jobs. With close to 300,000 megawatts of wind projects in queue and a sympathetic administration in the White House, the United States could regain its leadership role—if it chooses to do so.