News Sustainable Biz Winds of change blow strange
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By Joe Boomgaard | MiBiz
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WEST MICHIGAN — The gales of the current recession make for a strong headwind in the alternative energy industry, particularly wind power.
U.S. wind installations in 2009 outpaced all previous years, but 2010 is shaping up to be a downer, according to industry reports.
“The recession has been a real drag. It’s ripped the guts out of this industry,” said Loch McCabe, president of Shepherd Advisors, an Ann Arbor-based consultancy focused on the commercialization of clean energy technology.
For one, when the economy brought down Bear Stearns, it also took away one of the primary funders of wind projects. As the financial crisis tightened the availability of capital, capital-intensive projects like wind farm development faltered.
Shepherd Advisors’ McCabe and Tim Kumbier spoke recently at a large-scale wind energy seminar held at Windemuller Electric Inc.
But even with strong headwinds, the industry continues to grow on a global basis.
“The financial markets are beginning to come back, but it’s taken a year for that to happen,” McCabe said. “The stimulus has been key to the market. (The American Recovery and Reinvestment Act) has led to a lot of financing in projects, manufacturing, R&D and transmission. Where people live and where the wind is isn’t the same place. There’s no infrastructure to do that.
“And another good sign is that the OEMs, which primarily aren’t U.S. companies, continue to build plants here. That’s hundreds of millions of dollars in investment. When you build here, you say you’re going to be in this for the long run,” he said, noting that the economy has slowed the companies from growing their domestic supplier list.
The National Renewable Energy Laboratory also revised its U.S. wind map in 2009 and looked at higher elevations to reflect the size of most turbines being installed in the country. Instead of 50 meters, the new map looked at available wind at a height of 80 meters. With the 30-meter jump, NREL estimates the country’s wind resource to be about three times that of previous estimates.
“There are large amounts of wind in places that are much more accessible,” McCabe said. “More areas of Michigan become viable if you go up another 30 meters. Now, project opportunities will not only be in the Great Plains, but closer to home.”
The key drivers of the domestic industry are mandates in some states that a portion of the state’s energy be derived from renewable resources. Michigan’s renewable portfolio standard (RPS) calls for 10 percent renewable energy by 2015.
“If you want a wind industry, you need to have a strong RPS,” McCabe said. “Michigan was both late and a laggard.”
California, for comparison, has on the books that it will get 30 percent of its power from renewable sources by 2030. Ohio has a pipeline of 13,000 megawatts of wind power, while Michigan has only 140 megawatts, he said.
That said, Indiana has no RPS, but installed more megawatts in one year than any other state, McCabe said.
“Overall, the growth remains robust (for large wind projects). It’s typical for the first two quarters to be down and the rest to be boon. That’s driven by the federal tax incentives that expire at the end of the year. There’s a big rush to the finish,” McCabe said.
Work on an energy bill for clearer guidance on future incentives has been slogged by partisan bickering in Washington, but McCabe noted that the Department of Energy vision released in 2008 has a road map to a national RPS of 20 percent by 2030, which would require an installed capacity of 305 gigawatts.
Even if the U.S. can’t get its act together, Michigan companies need only look across the border to Ontario — which has a provincial-wide feed-in tariff — to tap into a growing sector for opportunities, he said.
“Companies just need to be clear where the risks are and what the potential opportunities are,” McCabe said.
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