Wind Turbine Project

Vestas owns 22.2% of the world market share, while Enercon holds onto 18.5% .  Using the manufacturers’ revenues, one can estimate that NEG Micon and GE Wind Energy maintain a 13.5% and 10.4% world market share, respectively.   Gamesa’s market share could not be calculated.  These numbers further support the idea that only a few wind turbine manufacturers dominate the industry.  The top five manufacturers hold approximately 65-75% of the market share.

Currently, Europe produces about 75% of the world’s wind power electricity and the United States produces approximately 15%, leaving production of the remaining 10% divided among the rest of the world’s countries.   In the last five years, Europe’s wind market has grown by an average of 35%, compared to 24.5% in the U.S.   These numbers point to Europe as the most competitive market for turbines due to scale of production, rapid market growth and cheaper turbines due to local European manufacturing.

Manufacturers have traditionally found most of their business in Denmark and Germany, but these countries have almost run out of land for potential utility-scale wind projects.  Increasingly developers will look to offshore wind sites and other European countries for building.  Spain, especially, seems to offer a promising future market for wind power.

Competition in the U.S. depends mainly upon the policies of the U.S.’s national and state governments.  As mentioned in earlier section, if the legislature passes a 2-5 year federal tax bill, states continue to pass renewable portfolio standards and utilities offer more and more green pricing and tag programs, wind turbine manufacturers will find the U.S. market extremely lucrative and competitive .

Developing countries also offer increasingly more competitive markets.  As governments of developing countries build up their energy infrastructure, many attempt to leap frog unsustainable and environmentally degrading energy technologies such as coal and oil.  These forward thinking governments continue to pass bills that support a domestic wind turbine market.  The first mover wind turbine manufacturers could experience strong advantages from entering in the developing country markets before their competitors.

Competition Conclusion

Countries must utilize a combination of new energy production and increased efficiencies in transmission and consumption to meet the needs of their citizens.  Currently transmission and consumption inefficiencies appear the more cost effective sector, but working to eliminate these inefficiencies alone will not be enough to support the world’s economic and population growth.  Wind turbines offer an increasingly competitive option for utilities looking to increase their electric capacity.

Opportunity Assessment / Conclusions / Recommendations

ALL - market strategies for our turbine, what are the options for the WTC turbine: bids to competitors, what comes after the $7 million for the demo/pilot project, joint venture possibility with GE pumping money into WTC, licensing,  (non-compete, due diligence, no exclusive license to keep options open for WTC to license to someone else if GE tries to kill the two blade technology) this is where we recommend going after certain U.S. states and utilities, partnering with certain folks in Brazil and China to go after Prototype Carbon Fund money under the Clean Development Mechanism to get a pilot project installed, identify promising partners in China and Brazil.

Licensing and Development Opportunities

The U.S. market for wind power offers a great deal of promise for the WTC turbine. Licensing the technology would also prove financially productive in the developing world, particularly in China and Brazil.  Both countries are ideally suited to wind development, with China’s energy demands increasing exponentially and Brazil, long reliant on hydropower, looking to diversify its energy portfolio without becoming more beholden to oil and coal power generation.  These opportunities would further increase the value of the Wind Turbine Company technology, and with it, this investment opportunity. The Wind Turbine Company is an excellent investment for someone interested in participating in the advancement of wind turbine technology while also enjoying a financial profit as a result of his/her interest.  The WTC turbine provides an opportunity to take advantage of the current movement in the US wind industry towards low wind speed design, the yada yada in Brazil, and the yada yada in China.

The United States has barely begun to tap its powerful winds, which, according to federal studies, are ample enough to meet more than twice the nation’s total electricity demand.   Wind is an immense source of power waiting to be exploited.  There are many factors that must be accounted for in order to take advantage of this potential.  These factors include policy, market and competition, and technology issues.

Policy paragraph.
Market paragraph.

Technology paragraph.

Need to talk about WTC’s turbine’s potential to piggy back on existing wind sites.  Make the Midwest’s huge potential – WTC – low speed connection loud and clear.

Transition to international.

With a US government push to help China develop its wind resources through the exchange of information, the training and demonstration of both technical and economic feasibility aspects of wind power generation, the market is open and awaiting a new technological focus.  The WTC could use its extant relationship with NREL to be an integral part of the US push to “enhance (wind’s) commercialization in China for the benefit of both countries.”   Already, NREL is training Chinese engineers, financiers, and policymakers in various aspects of the industry; should WTC be accepted as a promising, next-generation technology, myriad doors would be opened in the Chinese market. 

References

Personal interviews with the following people:

1. Ken Deering, Vice President of Engineering at Wind Turbine Company, Bellevue, Washington
2. Cindy Crooks, Wind Power Construction division, FPL Energy, Juno Beach, Florida
3. Alan Laxson, National Wind Technology Center (NWTC) at the National Renewable Energy Laboratory (NREL), Golden, Colorado
4. Karen Conover, CEO, Global Energy Concepts, LLC, Kirkland, Washington
5. Mark Aalfs, Tacoma Power’s EverGreen Options program
6. Raquel Bennett, Seattle City Light
7. Chuck Collins, Department of Energy, Office of Energy Efficiency and Renewable Energy, Western Region

Bibliography

Krohn, Soren.  “Wind Energy Policy in Denmark Status 2002.”  Danish Wind Industry Association Homepage.  22 Feb. 2002.  http://www.windpower.dk/articles/energypo.htm
“Energy Policy Review 2001.”  Statement by the Minister for Environment and Energy pursuant to the Act on Energy Policy Measures.  Danish Eneryg Authority Homepage.   http://www.ens.dk/graphics/Publikationer/Energipolitik_UK/epr/ENPOLRE_engelsk_juni_2001.pdf
“Energia Eolica no Brasil.”  Centro Brasileiro de Energia Eólica.  O Povo: O Jornal do Ceará.  1 March 2003.  http://www.noolhar.com/opovo/cienciaesaude/229958.html
“Proposal for a Climate Strategy for Denmark.”  Danish Government.  February 2003.  Danish Environmental Protection Agency Homepage.  http://www.mst.dk/transport/pdf/proposal%20for%20a%20climate%20strategy%20for%20denmark.pdf
“Denmark’s Energy Policy.”  Danish Energy Authority Homepage.  June 2002.  http://www.ens.dk/sw1757.asp
“Energy Efficiency and Renewable Energy Technology Development in China.”  National Renewable Energy Laboratory – International Programs Homepage.  http://www.nrel.gov/international/china/wind_energy.html
http://wamani.wamani.apc.org/pipermail/eolica/2002-March/000109.html
Centro Brasileiro de Energia Eólica Homepage.  http://www.eolica.com.br/

“Energy Efficiency and Renewable Energy Technology Development in China.”  National Renewable Energy Laboratory – International Programs Homepage.  http://www.nrel.gov/international/china/pilot_projects.html

“Wind Energy Businesses in China.”  Source Guides Homepage.  http://energy.sourceguides.com/businesses/byGeo/byC/China/byP/wRP/wRP.shtml

“US-China Renewable Energy Cooperation.”  Office of Technology Access Homepage.  http://www.eere.energy.gov/power/tech_access/OTA_us-china-re.html

“Wind Energy and Wind Turbines.”  Green Nature Homepage.  http://greennature.com/article647.html

Renewable Energy Homepage.  http://www.renewableenergy.com/

Shapiro, Paul.  “Final Report:  Wind Energy Assessment in China.”  National Center for Environmental Research.  http://es.epa.gov/ncer/final/grants/95/incentive/rackstraw.html

“Renewable Energy.”  Sweden’s Royal Institute of Technology Library.  http://www.lib.kth.se/~lg/renew.htm

“Comparison of Renewable Energy Policies of China and the United States.”  National Renewable Energy Laboratory – International Programs Homepage.  http://www.nrel.gov/china/pdfs/comparison_of_renewable_energy_policies_of_china_and_the_united_states.pdf

Lew, Debra, and Logan, Jeffrey, US Department of Energy.  “Energizing China’s Wind Power Sector.”  Greennature Homepage.  March 2001.  http://greennature.com/article600.html
American Wind Energy Association Homepage.  http://www.awea.org
National Renewable Energy Laboratory Homepage.  http://www.nrel.gov

Appendixes

Appendix A –  Supplementary Material for Market Analysis Section
Appendix B – Wind Turbine Glossary
Appendix C – United States & Brazil Wind Resource Maps
Appendix D – Josh's tables      
Appendix E – Interviews

Appendix A

Energy Wholesale Markets and Wind Energy
The following is a brief sketch of FERC regulations, wholesale markets and economic incentives for wind power.  U.S. federal regulations for wholesale electricity affect the entire energy market. Since the Energy Policy act of 1992, the Federal Energy Regulatory Commission has overseen the replacement of traditional cost-of-service regulation of wholesale power sales with a competitive model. The competitive model is problematic due to the lack of price transparency in the marketplace, and the fact that the demand for energy does not generally reduce when the price increases. This sends the wrong signal to suppliers and results in an incentive for suppliers to not spend large amounts of capital for extra generation capacity, for, suppliers would benefit from the higher prices resulting from low supply and high demand.  What the new regulations to ensure sufficient supplies of energy would mean for wind power could take shape in the form utilities hedging their bets by adding capacity with wind turbines, which have a higher capital cost at the outset, but reliable and steady operating costs that make wind turbines preferable to higher priced power supplied on the spot market during an energy crisis.  The regulations are intended to stimulate investments in generation by industry participants to make sure that sufficient generation capacity exists, especially when needed during a supply shortage, such as the recent lowest of the low water-line on Columbia River dams during the 2001 energy crisis. FERC's priorities are to clarify cost recovery to infrastructure investors, give full and fair consideration to environmental and community impacts of energy projects, and promote measures to improve security and safety of the energy infrastructure.

Supplementary Analysis of States
The Union of Concerned Scientists published a report grading states on

Appendix B

Wind Turbine Glossary

Source: NREL
Anemometer: Measures the wind speed and transmits wind speed data to the controller.
Blades: Most turbines have either two or three blades. Wind blowing over the blades causes the blades to "lift" and rotate.
Brake: A disc brake which can be applied mechanically, electrically, or hydraulically to stop the rotor in emergencies.
Controller: The controller starts up the machine at wind speeds of about 8 to 16 miles per hour (mph) and shuts off the machine at about 65 mph. Turbines cannot operate at wind speeds above about 65 mph because their generators could overheat.
Gear box: Gears connect the low-speed shaft to the high-speed shaft and increase the rotational speeds from about 30 to 60 rotations per minute (rpm) to about 1200 to 1500 rpm, the rotational speed required by most generators to produce electricity. The gear box is a costly (and heavy) part of the wind turbine and engineers are exploring "direct-drive" generators that operate at lower rotational speeds and don't need gear boxes.
Generator: Usually an off-the-shelf induction generator that produces 60-cycle AC electricity.
(Appendix B continued)
High-speed shaft: Drives the generator.
Low-speed shaft: The rotor turns the low-speed shaft at about 30 to 60 rotations per minute.
Nacelle: The rotor attaches to the nacelle, which sits atop the tower and includes the gear box, low- and high-speed shafts, generator, controller, and brake. A cover protects the components inside the nacelle. Some nacelles are large enough for a technician to stand inside while working.
Pitch: Blades are turned, or pitched, out of the wind to keep the rotor from turning in winds that are too high or too low to produce electricity.
Rotor: The blades and the hub together are called the rotor.
Tower: Towers are made from tubular steel (shown here) or steel lattice. Because wind speed increases with height, taller towers enable turbines to capture more energy and generate more electricity.
Wind direction: This is an "upwind" turbine, so-called because it operates facing into the wind. Other turbines are designed to run "downwind", facing away from the wind.
Wind vane: Measures wind direction and communicates with the yaw drive to orient the turbine properly with respect to the wind.
Yaw drive: Upwind turbines face into the wind; the yaw drive is used to keep the rotor facing into the wind as the wind direction changes. Downwind turbines don't require a yaw drive, the wind blows the rotor downwind.
Yaw motor: Powers the yaw

 Appendix C – United States and Brazil Wind Resource Maps

Appendix E – Interviews

Interview with Cindy Crooks of FPL Energy
April 25, 2003
by Gabriel Scheer and Alice Slovic

FPL Energy Background/Operations
FPL Energy first got into wind back in the 1980s with some joint venture projects.  Their involvement died down (because of loss of federal tax incentives) and then picked back up again in 1997-98.  Will definitely take another hit if tax credit is not extended.
Within FPL Energy, wind and natural gas are separate groups who do compete but only on the basis that all projects must meet internal criteria to be able to move forward.
FPL Energy is an independent company in the FPL group – it is an unregulated subsidiary.  It can build anywhere in US except Florida because of sister company.
FPL Energy has a direct contract with PPM who acts as an intermediate to sell the power at State Line to utilities.
FPL Energy contracts with people who do wind research to help them find sites.
Developers sometimes approach FPL Energy with sites, etc. already selected.
FPL Energy buys turbines from everyone: GE (only US manufacturer), Vesta, Bonus?, MHI, NEG-Micron, and they will buy from these new companies: Modea? (Spanish), Gamacy? (Spanish), some Indian company.
FPL Energy’s 5-year plan includes expansion into Europe and Canada.  No plans yet for South America but that would be a likely market due to company ties and proximity. 
FPL Energy has not developed anything lower than a Class 3.

Wind Costs
Believes wind energy is more competitive nowadays especially because its competitiveness is a function of gas prices and gas is high right now.
Wind capital costs are declining.
Turbines are getting larger, more efficient, and therefore less costly.  You don’t have to install as many to get the desired power output.  The “norm” now is around 1 MW but the industry is moving towards 2 and 3 MW being the norm. 
The tax credit is still a necessary incentive, but Cindy believes that it may not be necessary in 5 years.

Site Selection / Development Issues
There is a trade-off between how many MWs you want from a wind farm and how many turbines the site can fit.
How pick a site?  Wind data (years worth) is really important.  Also want nearby transmission lines.
Turbines must be spaced a certain distance apart (1.5 to 4 rotor diameters is a general rule of thumb) to prevent turbulence and wake effect from interfering with turbine performance.
Some turbines are more suitable for certain Classes.  FPL Energy knows all of the turbines’ capabilities – has the power curves for all of them.  Combined with wind data for a site, they can internally select the most appropriate turbine.  They purchase from all companies – Vestas, Bonus, NEG Micon, Mitsubishi, Made, Gamesa, Suslon. 

•  
• Obstacles

Biggest Obstacle/Limitation: Need consistency – if we knew that the tax credit would stay in place (for say 5 consecutive years at least), then there would be more wind power out there.  *Need to be able to have long term planning capabilities.*
More consistency would see Vestas production in the US, lowering costs for US producers to buy turbines, thus lowering costs to consumers. 
Crane limitations and road restrictions are big issues in terms of being cost factors but they are not deal breakers – they do not prevent wind farms from being built.  The larger the turbine, the higher it has to be (presently 40m is the biggest blade).  Expects towers to remain as steel.  Doesn’t see composite materials being viable for at least a few more years.  There are no road restrictions in Europe like here.  Here, can get the turbines on specialized trailers (another cost) to where they need to go, but usually requires a circuitous route which is more costly.

International
Europe has largely run out of available land (all the prime land sites have already been developed), providing a strong market for offshore wind farms.
She didn’t know anything about Brazil.
“Wind industry was born in Denmark.”  Much different over there than here.  Will develop 1, 2, or 3 turbines on small parcels of land.  Groups can collectively own a turbine and sell the power to the grid.

•  
• Domestic

She predicts future for low-speed turbines in New England, in particular. 
Utilities in US generally want power that’s generated w/in their grid.  That is, a utility in NY isn’t likely to want to sell power generated by wind in Iowa.  Once you feed electricity to the grid, you don’t know where it goes. 
The US has more market for land-based turbines than ocean-based, due to cheaper and more available land for development.  The NE US, however, may sustain more expensive offshore turbines due to higher power costs and demands. 

•  
• Miscellaneous

FPL Energy answers utilities’ requests for power – main customer.
Vesta is waiting to see what happens with the federal tax credit decision in order to decide whether or not to build a plant in Portland.  Have already moved their US HQ from CA to Portland.
If Vesta were in the US, costs would be lower to FPL and therefore eventually lower to the rate payers.
Stateline is a Class 2.
The use of WindFarmer and WindPro software is prevalent in the industry.  Software includes prevalent wind data.
Has heard of Wind Turbine Company but doesn’t know anything about them.

Interview with Karen Conover of Global Energy Concepts

April 29th, 2003

by Catherine Pappas and Josh Cochran

Comments on "mass deployment"

• Utility scale wind farms operating under a structure of leasing land from farmers have the greatest potential to raise farm incomes, whereas small systems are not considered to be revenue generators.
• Small systems are 50% to 100% more expensive to operate per kW than larger turbines.
• The advantage of the midwestern market over the eastern market is that there are open tracks of land that can be used for large wind farms. The disadvantages are the low price midwesterners pay for energy and the lack of transmission lines. The leasing arrangement generates revenue on the order of $2,000 or $3,000 per year, which amounts to a significant economic development opportunity for midwestern landowners.
• Utilities are deregulating and as this occurs you have groups that do just generation and just transmission. This might make it harder for investment in new transmission lines, which is a barrier to the large-scale wind farms that would be located in an area with smaller transmission lines.
• Some problems exist with the Northeast U.S. as a market for wind turbines: there is not enough land because of the high population density and people are worried about the visual obscurement the turbines may cause.
• Islands, cabins and radar offer opportunities for wind power to serve people or machines that are not connected to the grid due to their remote conditions.  Currently, most of these locations are powered with diesel fuel, which is not as cost effective as wind turbines.

Tariffs and wind

• In legislation regarding the use of transmission lines, there is no technology specific language about charging for use. The states that have an RPS diversification make wind power more feasible; it is an important distinction. (if gas prices rise, consumers won't get a huge bill because the energy that would have come from gas can be produced by renewables - on the spot market)

Low wind turbine technologies

• Solicitation for small wind and low wind technology is geared toward residential isolated groups under 100-10 kW range.  Currently, most low wind speed turbines are 10kW, some are 50kW.
• Goals: 3 cents/kWh by 2010 in low wind sites (5.8 m/s at 10 m above ground)
• Design ideas: taller towers, smarter controllers, different types of material. With variations on the product there is less risk associated with this. If you refine a product that is already demonstrated to have worked, but make it more efficient, the risk adverse financiers will have an easier time accepting it than a completely new design.
• There has been a precedent for new technologies not to work.  This is in part due to California’s wind reputation.

Comments on Brazil

• The government's policy mechanism makes up the difference with the going price. The way it works is the utility puts out a solicitation under an order from the government that it has to get a certain percentage of its MW from wind. There is a competitive element as developers bid for the right to sell the power, taking a cut from the bid. If the going rate is 3 cents the developers come up with a bid of 4 cents, 5 cents, 6 cents and the government chooses the lowest bidder.
• In the northeast of Brazil there is a focus on supplementing hydroelectric power with wind power. The two can share the large transmission lines from hydro. The problem is that the rates the utilities would pay are too low. This stunts the growth of the market and necessitates the government subsidy.
• Under the Clean Development Mechanism, if money is used to get a handful of solid operating projects, this might prove that wind is cost effective and we would hope it would be enough to stimulate the market to grow independently.
• Brazil is an attractive place for the wind industry.
• Although Brazil has a territory larger than the United States, the U.S. market for wind power is larger.

Comments on WTC

• WTC’s goal is to bring down the cost of wind power by lowering the cost of the wind structure itself, the most expensive element.
• A warranty would make it easier for new technology like WTC’s to attract the risk adverse financing industry and other potential investors like MNE’s. 

On warranties

• Mitsubishi had a warranty to cover 95% of their wind turbines’ performance. This was important for the company because although it did not have a good turbine, people were willing to purchase from Mitsubishi. Risk adverse financiers need warranties, without them, there is little will to risk the capital.

Alan Laxson from ??????????

May 6, 2003

By ????????

Why low wind speed turbines?

• That’s where the power is.
• Class 6 sites (avg 6.7 m/s @ 10 m) – not a lot of these sites around/available
• There are 20x more Class 4 (low wind) sites than high speed sites.
• Most Class 6 sites have been developed or are too inaccessible
• Class 4 sites are closer to load centers

Why are current turbines not cost-competitive in a low wind speed site?

• Most turbines are designed for high wind speeds – therefore they include higher design margins.
• But the real issue is tip speed ratio design.

                  Tip Speed Ratio = actual velocity of tip of blades / wind speed

• High wind designs must be designed one way.  For example, gearboxes are configured a certain way for higher velocities.
• In a low wind speed, if have the generator and gearbox of a high speed wind turbine, then would need a bigger rotor diameter to capture the same power
• Distribution of wind is an important difference between high and low wind sites – how often is the wind blowing @ any given velocity – the peak velocity is its class rated average – wind blows at that speed almost all the time
• Rayleigh Distribution: wind velocities vs. time – how fast it blows and how often
• Class 4 and 6 can have similar distribution shapes, but different peaks – the class 6 site gets more power at its peak.
• The rated speed for turbine is where it reaches its peak power.
• Capacity factor = how much a turbine actually produces/potential power at peak rating
• High speed turbine will work in a low speed site, but struggles – over designed.
• Low speed turbine in a high speed site runs fine, but will have to be designed with a larger rotor diameter in order to capture that extra power.  But will also reach max capacity sooner (generator limited) and then the extra rotor diameter is wasted.
• Say wind is 4 m/s but the generator is rated for maximum power at 12 m/s.  Therefore it is operating at 30% capacity – this is inefficient.  Research is exploring generators that can be more efficient that this example while operating at less than rated capacity.
• Low wind speed turbines will end up running at below rated speed more often.  Need turbine and generator designed to match low wind.

Technology Issues/Miscellaneous

• Wind shear = higher up above ground, the higher the wind velocity
• Low wind speed sites have higher wind shears than high speed sites – ie get even more power at a low speed site when tower height is increased.
• GE is working on a 3.6 MW, 100 meter tall turbine
• Renting a crane for a 1.5 MW, 100 meter tall turbine costs more than the turbine
• Does low wind speed mean small turbines (low output)?  No!  But do require bigger rotors to have the same rating.  Low speed 1.5 MW turbine = 80-85 m rotor diameter.  High speed 1.5 MW turbine = 70 meter rotor diameter.
• GE and a company in Santa Barbara, Clipper, are building prototypes for NREL.  Other contracts were awarded to companies to work on components (drive trains, etc,)
• Variable speed drives are possible – generator changes rpm to match the changing tip speed ratio of the blades.

Wind Turbine Company and its two-blade design

• It has some interesting characteristics and methods to reduce loads
• Everybody wants something that reacts to loads.
• Has shown promise in reducing loads.
• Its problems are not with the technology, but the business side.
• They need $$!  They haven’t been able to get it to a demonstrable scale in order to prove it/sell it.