Is wind power being blown off?

Timon Singh

In the US, wind power has been credited as the renewable energy that offers the most potential and recently that seemed to be the case, with the Cape Wind farm being green-lit and others planned for the areas around the Great lakes, but according to the American Wind Energy Association it seems the air has been taken out of wind power's sails.

In a report, the AWEA stated that due to the high cost of constructing wind farms and transmitting the electricity to population centres, which in addition has been hit with reduced price advantages, the wind power industry has slowed nationwide. In fact, in the first quarter of the year only 539 megawatts of wind power were added to the US power grid, the lowest levels since early 2007.

So why is this? According to Michael O'Sullivan, senior vice president of NextEra Energy Resources, formerly Florida Power & Light, it all comes to down to price.

"Everybody wants to buy wind, but not at the price we're offering today. We have to get our costs down."

Cost is key - over the past four years, the cost to build a wind farm has doubled due to increases in steel and copper prices as well as currency fluctuations. The global recession has hurt growth even more, with creditors opting to tighten their belts instead of investing.

Natural gas threat

However there is another threat to wind power - low prices for natural gas. With the Gulf of Mexico oil spill darkening oil companies, natural gas companies have seen a boon, not to mention other renewable form of energy.

Currently in the US, natural gas sells for $4 per million British thermal units and because of that, wind power has lost the big price advantage it had when natural gas traded near $10 two years ago. Huge deposits of shale deposits could keep this price low for years to come.

It has hit wind producing states such as Texas hard, as the power market uses natural gas prices as the benchmark to pay power producers no matter what type of power they're adding to the state's electric grid - clean or otherwise. Hence wind power is suffering hard compared to natural gas.

Reliability has also hit wind hard; Texas has some of America's best wind acreage, but the wind blows hardest and most often during times of the day when Texas needs power the least. As such, it seems the best aid to wind power could come from Congress as it debates legislation containing variations of the Renewable Electricity Standard that would require 20 percent of power to come from renewable sources by 2020.

Until then, wind power producing companies are going to have an uphill struggle, despite recent headlines darkening the name of oil companies.

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