Manufacturing can be a source of pollution, and the iconic image of manufacturing is the smokestack hurling smoke into the atmosphere. But in order to create a sustainable economy, we’re going to have to manufacture the necessary windmills, solar energy systems, trains, and electric vehicles. We have a negative demonstration of the necessity of manufacturing in yesterday’s Wall Street Journal, in an article entitled “Alternative Energy Hurt By a Windmill Shortage” (attention web surfers: the Wall Street Journal is free all day today!):
The race to build new sources of alternative energy from the wind is running into a formidable obstacle: not enough windmills.
In recent years, improved technology has made it possible to build bigger, more efficient windmills. That, combined with surging political support for renewable energy, has driven up demand. Now, makers can’t keep up — mostly because they can’t get the parts they need fast enough.
It turns out that mostly European utilities have locked up the consumption of most of the wind turbine builders in the world, so if in particular a small U.S. utility wants to expand its wind power base, it has one alternative: sell itself to a European utility. The wind turbine manufacturing capacity in the U.S. is so small that much of our wind turbine industry could soon be mostly European:
Today, states such as Iowa, Pennsylvania, Minnesota and Oregon have gone out of their way to lure foreign turbine makers. Suzlon is building a turbine plant in Minnesota. Siemens Wind and Acciona Energy SA of Spain both announced plans to open turbine factories in Iowa. Gamesa has three plants operating in Pennsylvania.
In a few years’ time, those new factories could help ease the current bottleneck. But in the short term, the supply crunch has shaken the economics of wind power.
European companies are estimated to own 20% of all the wind energy in the U.S.
There are two main problems: Wind turbine technology is very complex — high-tech, in fact — and U.S. government policy has not helped.
It’s actually a good thing that wind turbines are complex — they could support a vast range of manufacturing firms, the kind of firm that provides the basis for industry in general, such as machine tool makers, ball bearing makers, steel companies, etc:
Modern wind turbines are astonishingly complicated machines, containing more than 8,000 components and requiring special transformers to turn their spinning blades into electricity.
Though commonly called windmills, they’re technically wind turbines. Manufacturers depend on a network of component suppliers that, in turn, need years to ramp up production. That’s created a bottleneck for the turbine makers.
Miguel Salis, the head of the Madrid-based Eolia, a fund that supplies financing and development know-how to small wind-farm developers, says, “The biggest restriction right now to wind power’s growth — everywhere, not just in the U.S. — is the lack of turbines.” He says that so many developers have “projects under way but can’t get them completed, often because the turbine makers don’t give them the time of day.”
Makers need thousands of specially crafted parts, including gearboxes, blades and bearings, to build a turbine. Transformers vary depending on each country’s electrical grid … Modern machines are 10 to 20 times the size of the windmills first installed in California in the 1980s. Bigger machines have exponentially changed the economics of wind power because they take better advantage of the wind and work more hours than the smaller, older machines.
If governments at all levels gave wind energy a real boost, therefore, they could jump-start a manufacturing revival in this country by providing the necessary industrial base.
However, the Feds have been lax (of course):
In the U.S., there’s another potential threat to growth — erratic government support for wind power. Even though wind power has made technical strides recently, energy firms still rely on subsidies because it costs more to generate electricity with wind turbines than other power plants such as coal, natural gas or nuclear. Wind power requires intensive capital investment in a short period of time, and has added costs like upgrading transmission systems. According to the International Energy Agency in Paris, wind farms cost between four and 14 cents to generate a kilowatt hour; coal-fired plants cost between 2.5 and six cents.
Some 20 states now have price supports for wind-generated electricity, and there is a federal tax credit to encourage new wind-park development. But there is no federal requirement for utilities to buy green energy, as there is in the United Kingdom, Denmark and Germany. And the tax credit, started in 1992, depends on a biannual congressional approval. An effort to introduce federal support for wind power was shot down this month in the Senate.
Hopefully after the 2008 election, some serious efforts to vastly expand the deployment of wind power systems can get under way.
