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Technical Advancements and Public Policies Affecting Wind Power’s Role in a Low Carbon Future Costa Samaras December 1, 2005 Climate Decision Making Center NSF SES-034578 1 Photo Source: GE Energy Problem Statement Wind power is poised to be serious player in the electricity generation portfolio and play a role in a low carbon future. • What was the relative role played by governmental R&D, incremental innovations, and advances in and transfers from industries outside of wind energy in bringing wind to its current status? • How have different approaches in wind energy public policy affected the cost and adoption of wind generated electricity? 2 Agenda • • • • Introduction and research relevance Data and methods Capital costs and competition Wind energy R&D and public policies affecting wind power • Technological transfers • Summary and policy implications Photo Source: GE Energy 3 Research Relevance Climate policy and decision makers Future Climate System Technology Development (Supply & Demand) This work is the first step in a broader effort to try to understand which strategies work best for different technologies Electricity Industry 4 Wind energy worldwide growth Installed Capacity (MW) 50000 45000 40000 35000 30000 25000 2004 Cumulative MW ≅ 46,000 • Europe - 34,600 MW • U.S. - 6,700 MW • Rest of World – 5,100 MW • 28% avg. annual growth since 1995 20000 Europe 15000 10000 U.S. 5000 Other 0 1986 87 88 89 90 91 92 93 94 96 97 98 99 2000 01 02 03 04 Year Sources: NREL, BTM Consult Aps, March 2003, Windpower Monthly, January 2005, AWEA, IEA 95 Rest of the World North America Europe 5 Changes in Regional Share of Installed Wind Capacity Europe 80% 60% 40% 20% U.S. 04 99 20 00 01 98 97 96 Europe 95 94 93 92 91 90 89 88 87 19 86 North America 03 Other 0% 02 Regional Share (% of Installed MW) 100% Year Sources: NREL, BTM Consult Aps, March 2003 Windpower Monthly, January 2005, AWEA Rest of the World 6 Levelized Cost of Electricity, $/MWh Comparative Costs of Generating Options 100 90 IGCC w/o CSS Wind@29% Capacity Factor, $1200/kW Capital Cost 80 70 NGCC@$13 60 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges 7 Levelized Cost of Electricity, $/MWh Comparative Costs of Generating Options with Production Tax Credits (PTC) 100 IGCC w/o CSS 90 NGCC@$13 80 PTC 70 60 50 40 Wind@29% Capacity Factor, $1200/kW Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges 8 Levelized Cost of Electricity, $/MWh Sensitivity of wind power costs to capital cost 100 $1600/kW 90 $1200/kW 80 IGCC w/o CSS NGCC@$13 70 60 $800/kW 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges 9 Levelized Cost of Electricity, $/MWh Sensitivity of wind power costs to capacity factor 100 20% CF 90 IGCC w/o CSS NGCC@$13 29% CF 80 70 60 40% CF 50 40 Coal w/o CSS 30 0 10 20 30 40 50 Cost of CO2, $/metric ton Source: Original chart prepared by EPRI, Generation Options in a Carbon Constrained World 2005, NYMEX NG Futures Jan 2006, Assumes $850/kW for NGCC, wind cost is net of any transmission and/or intermittency charges 10 Data and Methods • Data – – – – – – Installed capacity, generation and capital cost data Capital cost breakdown by components over time Federal Wind R&D expenditures by country Patent data, US and abroad Policy timeline in U.S. and E.U. Academic, government, and trade literature, government and industry interviews • Methods – Quantitative and qualitative cost and policy analyses • Comparing governmental expenditures to expected outcomes – Technology tracing case studies 11 Cost of Wind Energy Declining 6,000 40.0 Installed Capacity Cost of Wind Power 35.0 5,000 30.0 4,000 25.0 3,000 20.0 15.0 15.00 2,000 10.0 10.00 Cost of Electricity ($2002 cents/kWh) U.S. Installed Capacity (MW) 38.00 8.00 1,000 6.00 4.00 5.0 5.0 4.00 0 0.0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Source: American Wind Energy Association, 2002 and NREL Renewable Electric Plant Information System (REPiS) Year 12 Rotor Diameter (m) Growth of Commercial Wind Turbines Sources: European Wind Energy Association (EWEA), Technology Factsheet, NREL Images: wikipedia.com, WQED 13 Public Wind Energy R&D 1974-2003 150 135 Wind Energy R&D (2003 $Million) 120 105 90 DOE / NASA MOD Program 75 NREL NWTC formed 60 45 United States Germany 30 Netherlands 15 Denmark 0 1974 Spain 1980 1986 1992 1998 2004 2010 Year Denmark Source: IEA R&D Database Germany Netherlands Spain United States 14 Public Wind Energy R&D 1974-2003 Wind Energy Cumulative R&D By Country 1974-2003 Wind Energy Cumulative R&D (2003 $Million) 1300 1200 United States $1200M 1100 1000 900 800 Germany $550M 700 600 500 Netherlands $310M 400 300 200 Denmark $170M 100 Spain $85M 0 1970 1975 1980 1985 1990 1995 2000 2005 Year Source: IEA R&D Database 15 Installed MW per $Million Wind R&D 1974-2003 Cumulative Installed Capacity per Cumulative $M Wind R&D Spain $75MW/$M Cumulative MW / Cumulative 2003 $Million Wind R&D 30 25 20 15 2003 Installed Capacity • Germany – 14,609 MW • U.S. - 6,700 MW • Spain – 6,203 MW • Denmark -3115 MW • Netherlands - 910 MW Germany Denmark 10 United States 5 Netherlands 0 1980 1985 1990 1995 2000 2005 Year Sources: IEA R&D Database, IEA - Electricity Information - 2004 European Wind Energy Association American Wind Energy Association NREL (REPiS) 16 Carbon Abatement Efficiency of R&D Expenditures Total Wind Energy Generated 1982-2003 (GWh) 120,000 100,000 2003 Major Wind Manufacturers • Germany – 4 • U.S. - 1 • Spain – 2 • Denmark -3 • Netherlands - 0 Germany U.S. 80,000 60,000 Denmark 40,000 Spain 20,000 Netherlands 0 $0 $20 $40 $60 $80 $100 $2003 Wind R&D per ton CO2 Avoided Data Source: IEA, EuroStat, EIA, California Energy Commission, Danish Wind Energy Association, Lewis and Wiser (2005) 17 U.S. Demand Pull Public Policies 6,000 40.0 Installed Capacity Cost of Wind Power 35.0 RPS 5,000 30.0 4,000 3,000 25.0 PTC set to expire Accelerated depreciation 20.0 PTC 15.0 15.00 2,000 1,000 Investment tax credit 10.0 10.00 Cost of Electricity ($2002 cents/kWh) U.S. Installed Capacity (MW) 38.00 8.00 6.00 4.00 5.0 5.0 4.00 0 0.0 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 Source: American Wind Energy Association, 2002 and NREL Renewable Electric Plant Information System (REPiS) Year 18 Renewable Portfolio Standards Nevada: 20% by 2015, solar 5% of annual New York: 24% by 2013 Minnesota: 19% by 2015* Iowa: 2% by 1999 Wisconsin: 2.2% by 2011 Illinois: 8% by 2013** Montana: 15% by 2015 Maine: 30% by 2000 MA: 4% by 2009 RI: 16% by 2019 CT: 10% by 2010 NJ: 6.5% by 2008 DE: 10% by 2019 Maryland: 7.5% by 2019 Washington D.C: 11% by 2022 California: 20% by 2017 Pennsylvania: 8% by 2020 Arizona: 1.1% by 2007, 60% solar New Mexico: 10% by 2011 Colorado: 10% by 2015 Hawaii: 20% by 2020 Texas: 5,880 MW (~4.2%) by 2015 21 States + D.C. *Includes requirements adopted in 1994 and 2003 for one utility, Xcel Energy. **No specific enforcement measures, but utility regulatory intent and authority appears sufficient. Source: Original slide prepared by Union of Concerned Scientists, www.ucsusa.org/clean_energy/clean_energy_policies 19 Distribution of Capital Costs Balance of Station (BOS) 30% Rotor 19% Rotor Nacelle Tower Tower 8% Control and safety system 1% Photo Source: GE Energy Drive train and nacelle 42% BOS 20 Wind power cost of energy ($/kWh) • Decreased capital and BOS costs • Longer lived capital in place • Favorable financing and ownership • Decreased O&M costs COE FCR (TCC BOS) ( LRC O&M) AEP • Larger rotors • Improved capacity factor • Improved specific yield (kWh/m2) • Improved reliability Source: NREL, EPRI 21 Power from the wind: Increasing annual energy production Larger rotors Power ½ ΑV Cp 3 Higher towers Advanced airfoils and blade sections Better turbine siting Variable speed operation 22 Innovations and impacts Innovation Increases Reduces Decreases Reduces AEP O&M loads and capital failures cost Composite blades ● Variable speed drive ● Direct drive gearboxes Fiberglass manufacturing techniques ● ● ● SCADA/sensors Power electronics ● ● ● ● ● ● ● 23 Transfers from Other Industries • Boatbuilding • Pipe manufacturing • Steel and materials for high mast utility & light poles • Pipe manufacturing Photo Source: GE Energy • Fiberglass application • Carbon fiber • Tubular steel, high strength alloys • “Soft” towers • Variable speed operation • Permanent magnet generators • Direct Drive gearboxes • AC motor control • Hard disk industry • Utilities • IT • Traction power • Power electronics • Foundations • Logistics 24 Larger Rotors – increased area Composite Industry, Robotics, Power Electronics, Boatbuilding, pipe manufacturing •Tapered and twisted blades • Composite materials • Pitch control • Dynamic braking • Advanced airfoils • Advanced manufacturing • Structural integrity • Load Shedding • Lighter Larger Rotors & Rotor Swept Area Higher rated capacity / greater kWhs Photo Sources: NREL 25 Higher capacity factors AC motor control, Traction power industry Utility industries, Telemetry and oil and gas • Variable speed drives • Advanced power electronics • Direct drive • SCADA • Greater efficiencies • Greater energy capture in low speed areas • Turbine health monitoring • Greater availability • Lower O&M Costs • Higher capacity Factors More kWhs per project, Lower COE, Photo Sources: NREL 26 Borrowed Technology Boatbuilding Composites Material Science Aerodynamics Computer science, Data collection and testing Steel industry High strength alloys Aviation and helicopter design CFD and advanced Design models Oil and gas industry SCADA and Remote sensors IT and hard disk Permanent magnets Power Electronics Utilities Variable speed power conversion AC Motor control Power semiconductors Dynamic braking Fans and motors Soft-starting Source: Manwell, McGowan, Rogers (2002), Loiter and Norberg-Bohm (1999) 27 Capital Cost Influence Diagram Transfers from other industries Intra-industry advances Manufacturing Learning by Doing and Economies of scale Components Logistics and Installation Demand pull Public policies Federal R&D Capital Cost 28 Initial Findings • Only 30% of wind turbine components were traditionally manufactured solely for the wind industry1; blades are the primary component in this value • Wind power has evolved into commercial viability largely independent of governmental R&D • Previous literature2 and industry interviews offer similar conclusion 1 Neij (1999), NREL (1995), WindForce10 (1999) 2 Loiter and Norberg-Bohm (1999 &1997) Gipe (1995), Heymann (1998), Van Est (1999) 29 Policy Implications • Why is it that this technology has evolved and did it largely independently of governmental R&D? • Which technology policies caused either direct or indirect advances in wind power? • When does it make sense to offer demand-pull polices versus supply push policies in low carbon energy technologies? 30 Research Goals and Summary • We are attempting to gain insights about attributes of successful low carbon technologies – What can lead to path dependencies? – How do current climate models account for this? • In the long run we intend to compare other technologies • What portfolio of R&D, subsidies, taxes, or regulations are most appropriate for different technologies? 31 Questions and Comments Photo Sources: GE Energy 32