Opportunity and Controversy

Stuart Price

The worldwide wind energy industry is growing at 24 per cent per year. While this brings opportunities for OEMs and developers, public opposition to some projects remains strong, making investors reluctant to lend support.

Figure 1. LIPA will issue a bid before year-end to build 100 MW of wind energy capacity off Long Island
Click here to enlarge image

Nothing breeds interest like a new global market that has strong growth prospects, favourable opportunities, and an open playing field. For energy project developers, electric utilities, and investment banking groups, the wind energy business is just that.

On average, this $4 billion industry is growing at a rate of 24 per cent per year.

Consultants estimate that worldwide capacity will grow from today’s 25 000 MW (cumulative) to over 79 000 MW in 2006. Europe, of course, is the most significant market for wind energy products today. From 2001 to 2006, the European market may grow from 17 800 MW to 54 000 MW while the US market may grow from 4200 MW to about 14 600 MW. Looking at the field of play, fewer than 50 turbine manufacturers are supplying this business.

Figure 2. An artist’s impression of the Long Island offshore project
Click here to enlarge image

But at the same time, many people and community interest groups have raised staunch opposition and legal challenges to having wind energy systems erected in their neighborhoods or off their shorelines. Financial managers seeking to fund new energy operations know that investors are not fond of placing their resources in activities that look good on paper but which stir up controversies in the real world.

GE Wind Energy

The General Electric Corporation purchased certain Enron Wind Systems assets in summer 2002 and formed a new division ” GE Wind Energy. This purchase notably strengthened the global wind power market, especially in the US. GE estimates that the worldwide wind energy sector will grow by approximately 20 per cent per year, with the biggest growth in Europe, the US and Latin America.

GE is a world-renowned energy systems company with deep-seated roots in electrical systems, nuclear energy, power turbines, distributed power, energy services, and even oil and gas. By entering the wind market, GE brings its brand name, engineering expertise, electricity distribution know-how, marketing savvy, and investment capital to this emerging industry. Synergies from other GE companies ” including the plastics, transportation, gearing applications, and power control divisions ” can be applied to wind turbine technologies.

Steven Zwolinski heads the new company with a product line that includes 900 kW and 1.5 MW wind turbine systems. Products under development include a 3.6 MW prototype system currently operating in Spain and a 3.2 MW system. “We see tremendous opportunity for growth in the US wind power industry,” says Zwolinski. “With GE’s business synergies and quality processes, we are working to drive further improvements and cost savings for our wind turbine products. The worldwide sales staff of GE Power Systems is also focusing on the wind business.”

Other parties interested in advancing the wind energy market are also excited about GE’s commitment to this renewable energy market. “The entry of General Electric into the wind industry symbolizes the arrival of wind energy technology as an increasingly significant player in the global power generation market,” says Randy Swisher, Executive Director of the American Wind Energy Association (AWEA). “GE will be a strong competitor, and will add to the momentum surrounding wind power’s emergence as a multi-billion dollar industry.”

Northeastern winds

As a newly formed company, GE Wind Energy might consider strengthening its hand in the renewable energy market by bidding on a host of planned offshore wind energy projects in the northeastern states. For instance, Community Energy plans to build a coastal farm near Atlantic City, New Jersey. Atlantic Renewable Energy plans to construct an offshore farm off of New Jersey’s Barnegat Inlet.

AWEA, the industry trade association, formed the Wind Power New York Project to promote the development of New York’s wind-powered electricity generation. About 15 companies have assisted with this project and they include, in part, Atlantic Renewable Energy (a renewable energy project developer), Community Energy (an energy project developer), FPL Energy (a power producer and subsidiary of the FPL Group), PB Power (a renewable energy engineering company and a subsidiary of Parsons-Brinckerhoff), and Vestas American Wind Technology (a wind turbine manufacturer).

This group is interested in promoting one project involving the Long Island Power Authority. LIPA seeks to purchase electricity generated by offshore wind energy assets to be constructed off of the southern coast of Long Island, New York. Last summer, LIPA had to produce 6.6 million MWh, ten per cent more than the previous record established in 2001.

Richard Kessel, LIPA’s Chairman, noted that the summer’s peak was extraordinary due to heavy air conditioning uses by the authority’s 1.1 million customers. To avoid potential blackouts that recently plagued California, the authority stated that it would review plans to construct new plants and ramp up its capacity to meet even higher demands next year. This could involve the need to build another 200 MW of additional generating capacity.

Long Island bid

LIPA is a corporate municipal agency of the State of New York that manages power needs on Long Island ” that area located in the Atlantic Ocean directly east of New York City. LIPA sells power to Long Island customers and the authority contracts with energy companies (like KeySpan Energy) that own and maintain power generating assets.

Figure 3. Opposition to wind projects leads to delays, a discouraging factor for investors
Click here to enlarge image

According to Bert Cunningham, LIPA’s Vice President of Communications, the authority will issue a bid in late 2002 for a vendor to build 100 MW of wind energy assets off of Long Island. Because available space is in extremely short supply on Long Island, LIPA is looking to install these assets offshore.

Securing offshore wind energy systems is a new endeavor for energy players in the US. In August 2002, LIPA released a Request for Information (ROI) to wind energy companies to gather details that would allow the authority to issue a subsequent Request for Proposals (RFP) to secure offshore wind energy bids.

In its ROI, LIPA spelled out that the offshore facilities would probably be erected in a 813 km2 area parallel to the southern shore of Long Island. The projected region would have a minimum average wind speed of 29 km/h, an ocean depth of less than 30.5 m, and would be away from primary shipping lanes. While LIPA’s initial project will involve 100 MW of capacity, the designated region could conceivably support up to 5200 MW in assets.

Assuming a 138 kV transmission cable, a plant capacity of 100-140 MW, and onshore connections, LIPA expects to pay between $40-70 million for interconnection costs. This would link the proposed wind energy assets with the LIPA electricity grid onshore. In its planned power purchase agreement, LIPA would probably want to control emissions credits made available by the wind energy operations.

As of October 2002, over 20 players had submitted potential offshore wind energy systems in response to the LIPA ROI. While the authority was legally prevented from divulging which manufacturers had proffered their systems for consideration, these multiple respondents probably included GEWE (with its 1.5 MW and 3.6 MW systems) and American Vestas (with its 2 MW system).

GE Wind Energy and Vestas Wind Systems are established wind system manufacturers that may bid on the LIPA offshore wind energy project.

GEWE’s offshore wind systems include the 1.5 MW and 3.6 MW systems. These three-bladed rotor systems operate during established wind speeds, and they continually adjust blade speed to maximize aerodynamic efficiency and lift. Hundreds of 1.5 MW systems have been installed around the world; the world’s first megawatt offshore wind power project, constructed 13 km off Sweden in 2000, includes 1.5 MW machines.

Vestas Wind Systems manufactures two 2.0 MW systems ” the V66 and the V80. The V66 has three rotor blades, a 66 m diameter, and a tower height up to 78 m. Vestas completed the construction phase of its eightieth 2.0 MW wind system off Denmark in summer 2002 (pending actual turbine selection), and it has secured a contract to supply 30 Vestas V80 turbines for the first major offshore wind farm in the UK.

Addressing concerns

While many people support the notion of obtaining electricity by farming the wind, others oppose it. LIPA realizes that it needs to secure community support to make this project a success. In its ROI, the authority states that it will need to work with the construction company to address:

  • Public safety concerns
  • Wind farm security measures
  • Tourism factors and aesthetic concerns
  • Impact to local economies (including local fishing industries and real estate|Environmental impact
  • Impact on navigation.

Local chambers of commerce are committed to furthering the economic health of their communities, and these organizations are particularly well suited to voice community support or concerns regarding local issues ” like highly visible wind turbines. Long Island embraces a host of distinct chambers (for example, the Wantaugh Chamber of Commerce, the Southampton Chamber of Commerce, and the Montauk Chamber of Commerce) but, as of September 2002, no chamber had developed a position (pro or con) regarding LIPA’s proposed windfarm.

But looking just north of Long Island, several community leaders have spoken out against building similar windfarms off the New England coast.

Public opposition in Cape Cod

Private companies (including Winergy and Cape Wind Associates) have proposed erecting offshore wind turbines in the Cape Cod section of New England ” a region rich with Yankee Americana. One proposal that calls for building 170 offshore wind turbines would be the first offshore wind energy complex in the US.

Public opposition against these projects, however, has been stiff. On September 24, 2002, a Superior Court Judge issued a Temporary Restraining Order against the US Army Corps of Engineers and Cape Wind Associates in response to a taxpayers’ suit.

Most people see wind energy as a clean means of generating electricity that ” unlike its fossil fuel counterparts ” does not carry greenhouse gas emissions baggage. Others, however, are not so sanguine about this resource. Wind energy opponents claim:

  • Wind turbines are unsightly and just too tall
  • Wind farms take up too much space in previously undeveloped areas
  • Wind turbines are bird killers
  • Wind turbines are too noisy
  • In winter months, wind rotors might throw off dangerous chunks of ice
  • Livestock and humans can be affected by stray voltage and electrical pollution from wind stations
  • Wind turbines affect the health of farm animals.

    While many may question the validity of these complaints, wind energy proponents have to regularly address these issues at public forums, political events, and in the news media.

    The four-count complaint, brought by attorney John W. Spillane, a citizen taxpayer group, and several fishing and boating concerns, charges that the Army Corps unlawfully and arbitrarily issued Cape Wind Associates a permit to construct a 61 m data tower in Nantucket Sound in violation of their own regulations and environmental law.

    The suit also argues that, while the test tower and project site lie outside the three-mile state coastal zone, the state enjoys jurisdiction within Nantucket Sound to protect the regional fisheries and the environment. Further, the complaint alleges potential economic harm to the Nantucket Sound fishery and to the ability of boaters to safely navigate the waters near the towers.

    The Cape Cod Chamber of Commerce also has opposed these efforts. In a local newspaper editorial, chamber officials state that an offshore wind farm would be unsightly, would detract from the local colour, and would restrain the tourist market. Further, the chamber contends that the proposed wind systems would be able to produce only a tiny fraction of the electricity needed to power the local economy.

    According to the chamber’s Paul Rumul and Wendy Northcross, the New England economy requires over 26 000 MW of generating capacity and the proposed wind farm would be able to provide just 170 MW. To contribute a substantial amount of power, the proposed wind farm would have to cover 52.5 km2 of ocean. In their opinion, providing this amount of electricity is not worth marring the New England oceanscape.

    Similar opposition in the UK

    Organized groups in Cape Cod are not the first ones to raise objections to offshore wind farms. Many have voiced opposition against offshore wind farm projects along the British Isles. One organized effort has protested the erection of up to 85 turbines, each about 61 m tall, off the north coast of Northern Ireland. This protest has involved the “Save our Seacoast Campaign” and the Limavady Council.

    Members of these groups contend that the wind turbines would have a disastrous affect on one of the land’s most precious resources ” its regional seascapes ” and the subsequent income from tourism in the area.

    Other organizations have also raised concerns about the visual quality of the contemporary windmills. Real estate and tourist bureaus have cited their beliefs that these large mechanical units would detract from the region’s beauty and discourage people looking to vacation or relocate to the area. This would, of course, be in addition to putting off current residents. This single project might cost over à‚£200 million ($312 million) and could be completed by 2005.

    These objections come despite the fact that these offshore wind power facilities could generate enough electricity to power over a quarter of the homes in Northern Ireland and help meet Kyoto Protocol goals to reduce carbon dioxide emissions.

    Community relations

    The northeast is traditionally one of the most significant regions in the US, and it looks like this could be the launching point for a national offshore wind energy industry. Before the industry can really be deemed a success, though, the community relation factor needs to be resolved.

    While it may be difficult for those of us in the energy field to realize, not everyone lives on a steady diet of MW, energy regulations, transmission concerns, siting options, environmental advantages, and the latest generation technologies. Most citizens want to limit their energy expertise to knowing how to turn on a power switch. And if they think a new energy plant, like an offshore wind station, will mar the beauty of their community, they will quickly reach out to their local politicians and community leaders to stop the project.

    Getting excited about a major energy development project, only to have it held up by community protest or citizen lawsuits, does not make investors happy. After all, these delays cost money (despite what some players may say, these disputes do not mysteriously arise from the dark; they should not catch project planners by surprise).

    To prevent such disputes from reaching the point of project delay and discouraging project investors, energy players might want to sit down with persons who may be disgruntled by proposed projects and if necessary, make compromises before their proposed plans are 95 per cent complete.

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