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U.S. Ramping Up Wind Power Programs Even As Concerns Surface About Possible Declines In U.S. Wind Strength

Once again at DFW Airport, about to make my way back to Europe. So I will be offline for just a bit, but wanted to post the latest from Money Morning, which as I recently explained will be featured here whenever they have topical material to offer. As always, normal caveats apply: I am not an investment advisor. I don’t endorse any specific stocks mentioned in the following story nor the ad at the end of the story.

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U.S. Ramping Up Wind Power Programs Even As Concerns Surface About Possible Declines In U.S. Wind Strength

By William Patalon III – Executive Editor

Money Morning/The Money Map Report

Just as the United States is boosting its reliance on wind power, a new academic study set for release in August says that U.S. wind forces may be getting weaker.

Eugene S. Takle, a professor of atmospheric science at Iowa State University, and the director of the school’s “climate science initiative,” says the research study concluded that U.S. wind strength has potentially declined by 15% to 30% during the past 30 years – an average decline of as much as 1% a year.

While conducting the study – which will appear in the Journal of Geophysical Research – researchers reviewed wind data taken at airports around the United States, and then based their findings on two sets of figures: One set from 1973-2000, and the other from 1973-2005.

The study concluded that three factors could be contributing to the declines in U.S. wind strength: Land-use changes, a changing climate and changes in the kind of instruments used to measure the wind, Takle told MarketWatch.com.

“If there have been trees growing or new buildings constructed near airports, it could impact the speed of winds on airports,” Takle said. However, it is also “[basic] meteorology that the wind is driven by differences in temperature between the poles and the equator, and those differences have been narrowed by climate change.”

Tough Timing

The findings come at time when the United States is making a serious push to increase the amount of electricity that’s generated by wind turbines grouped into so-called wind-power “farms.” Attempts to harness the wind are part of a broader national – or even global – commitment to “green” energy sources as a way of reducing dependence on oil and other fossil fuels for power generation.

Other power sources include solar, geothermal, hydroelectric and nuclear for commercial electricity production, while automakers are looking at new types of batteries and such innovations as power-storing “fuel cells” as alternatives to the conventional internal combustion engines that power most of the world’s cars and trucks.

The objectives are twofold. By decreasing the U.S. reliance on foreign oil, the country is hedging against the time when global supplies of the “black gold” begin to dry up, an eventuality that will propel the prices of crude and gasoline skyward. Diversifying away from oil and, perhaps, even coal is also a way of reversing – or at least slowing – environmentally ruinous (and politically controversial) global warming.

President Barack Obama is attempting to use the ongoing financial crisis to create a sense of urgency about America’s energy future, a challenge that no prior administration has yet been able to meet.

About one-third of President Obama’s $800 billion-plus stimulus package will go to infrastructure, with $30 billion allocated for U.S. roads and highways and another $10 billion earmarked for railways and mass-transit systems.

President Obama has also proposed spending $150 billion “over the next 10 years to catalyze private efforts to build a clean energy future.” The administration also proposes to increase the amount of electricity that comes from renewable resources from 10% in 2012 to 25% by 2025, Wall Street 24/7 reported in early January.

Creating the power is only part of the problem. Delivering it will be a challenge, too, especially given the country’s aging power grid. Upgrading that aging equipment is expected to cost more than $880 billion, according to a November 2008 report from the Brattle Group.

An Energy Boon For Entrepreneur T. Boone?

In many cases, those federal outlays will serve only as seed capital. It will likely fall to innovators in the U.S. private sector to really energize the alternative-power market.

One key player is legendary oilman and venture capitalist T. Boone Pickens, who has unveiled a plan to cut U.S. dependence on foreign oil through the power of alternatives such as wind and natural gas, Money Morning reported last July.

We’re paying $700 billion a year for foreign oil. It’s breaking us as a nation,” Pickens said at the time. Former U.S. President Richard M. Nixon “said in 1970 that we were importing 20% of our oil and that by 1980 it would be 0%. That didn’t happen. It went to 42% in 1991 with the Gulf War. It’s just under 70% now. Where do you think we’re going to be in 10 years when our economy is busted and we’re importing 80% of our oil?”

Pickens wants to create what he calls a “bridge to the future” that will help cut slash the U.S. reliance on imported foreign oil by focusing on two specific alternatives:

  • Cars that burn natural gas instead of gasoline.
  • And electricity generated by wind power.

There’s a smooth and elegant logic to his strategy: By constructing electric-generating wind-power farms, the United States can free up natural gas supplies that currently generate 22% of the nation’s electricity. That natural gas can then be used to power cleaner-burning cars and trucks, thereby reducing our dependence on imported oil while also reducing the damage to the environment. This will also buy time for the development of other, even-greener, alternative sources of energy.

Pickens’ Wind Power Project

According to Pickens, wind power could eventually fulfill as much as 20% of the United States’ energy needs. Calling the Great Plains region of the United States the “Saudi Arabia of wind,” Pickens last summer launched plans for a $10 billion alternative energy project in the Texas panhandle that has the potential to one day become the world’s largest wind-power farm.

Picken’s Mesa Power LLP plans to purchase 667 wind turbines from U.S. industrial giant General Electric Co. (NYSE: GE). Each turbine can produce 1.5 megawatts of electricity – enough to provide the ongoing power needs of 360 to 600 U.S. homes, according to Money Morning calculations based on statistics provided by Oregon Power Solutions Inc., a Baker City, OR consulting firm.

The first phase of the Pickens project, already under construction, will produce 1,000 megawatts of electricity, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy. Overall, the “Pampa Wind Mill” project is expected to cost $10 billion and be completed in 2014.

Pickens has launched a “Pickens Plan” Web site, which is urges the country’s “energy army” to lobby Congress for funding and a commitment to green-energy projects.

Other Players Showing Interest

An Irish company – its interest in the U.S. alternative energy market piqued by the green-technology money included in the Obama administration’s stimulus package – on Monday acquired three Illinois wind farms located within 100 miles of Chicago, The Chicago Tribune reported.

Plans call for the Dublin-based Mainstream Renewable Power to invest $1.69 billion over four years to develop the wind farms. The purchase price was not disclosed.

“The U.S. market is of strategic importance to Mainstream, and the scale of the opportunity is strongly reflected in President Obama’s economic stimulus package, which includes $56 billion in grants and tax breaks for U.S. clean energy projects over the next 10 years and a budget of $15 billion a year to fund renewable energy programs,” Mainstream co-founder and Chief Executive Officer Eddie O’Connor said in a statement. “The administration’s goal of generating 25% of the nation’s electricity from renewable energy sources by 2025 will help revitalize the U.S. economy and protect consumers.”

The farms have the potential to generate 787 megawatts of electricity by 2013, The Tribune said. The most advanced is the 120-megawatt Shady Oaks project in Lee County. When finished next year, it should be able to generate enough electricity to power about 30,000 homes, Mainstream said.

The other two wind-power farms are the 467-megawatt Green River project, also in Lee County, and a 200-megawatt project set for Boone County. Construction on the Green River project will begin next year, while the Boone County project is still in is development stages.

This is Mainstream’s second North American deal in three months; it earlier announced a Canadian wind farm project. It has also announced plans to build a wind farm in Chile.

Founded a year ago, Mainstream was created to build and operate wind-energy, solar-thermal and ocean-current power plants in partnerships with government agencies, electric utilities, developers and investors in North and South America, Europe, and South Africa. Barclays Capital (NYSE ADR: BCS) has a 14.6% stake in Mainstream.

Going Global

As Mainstream’s proposed forays into South America, Europe and Africa demonstrate, the push to harness the wind isn’t limited to the United States.
As of the end of last year, worldwide wind-powered generators were capable of generating 121.2 gigawatts (GW) of electricity. Wind power produces about 1.5% of the world’s electricity and its use is surging: The amount of electricity generated by wind power doubled between 2005 and 2008 alone.

Several countries have already embraced wind power in a major way: As of last year, it accounted for 19% of electricity production in Denmark, 11% in both Spain and Portugal and an estimated 7% in both Germany and Ireland. As of this May, 80 nations around the world were using wind power on a commercial basis.

Not surprisingly, China is making a big push to commercialize wind power and by last year was already the world’s sixth-largest user of wind-generated electricity. The country’s largest manufacturer of wind turbines – Xinjiang Goldwind Science & Technology Co. Ltd. – went public last year, raising nearly $250 million. It has about 33% of China’s wind-power-equipment market, according to KGI Securities Co. Ltd., a Taiwan investment-banking and brokerage firm.

“As China’s wind power sector takes off, we think Goldwind is well positioned to become a major beneficiary, thanks to its strong brand and first mover advantage,” KGI wrote in a research report.

Not a Complete Answer

Although wind power has substantial promise, it’s not an infallible energy solution, and has some serious limitations – as the U.S. wind-power study shows. For one thing, although an estimated 72 terawatts of wind power on Earth can be potentially commercially viable – an amount that’s six times the estimated 15 terawatts of total power usage on earth – not all the wind energy flowing past any given point can be recovered.

Accoridng to a science axiom known as Betz’s Law – named for the German physicist, Albert Betz, who discovered the rule in 1919 – no turbine can capture more than 59.3% of the potential energy in wind.

And there are other challenges, some of which are caused by the natural lay of the land in a given location. In the United States, for instance, where there are now concerns about diminishing wind strength, some coastal areas may retain wind strength because of the greater temperature differences between the land and the ocean.

Given the growing importance of wind power, more study will be required.

Concludes the study: “Given the importance of the wind-energy industry to meeting federal and state mandates for increased use of renewable energy supplies and the impact of changing wind regimes on a variety of other industries and physical processes, further research on wind climate variability and evolution is required.”

[Editor’s Note: Is it a new bull market, or just a bear-market rally that’s going to separate investors from the last of their cash? For the shrewdest investors, it may not matter. A new offerfrom Money Morning is a two-way win for investors: Noted commentator Peter D. Schiff’s new book – “The Little Book of Bull Moves in Bear Markets” – shows investors how to profit no matter which way the market moves, while our monthly newsletter, The Money Map Report, provides ongoing analysis of the global financial markets and some of the best profit plays you’ll find anywhere – including such markets as Taiwan and China. To find out how to get both, check out our latest offer. ]

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June 22, 2009 - Posted by | guest post, investing, Money Morning, T. Boone Pickens, wind power

25 Comments

  1. Please don't spam the comments. Your link – which you have now posted twice – goes to a screen saver download. If you want to make some topical comments I don't mind you posting a link, but the link also needs to be topical.I am going to delete your comments shortly, because that screensaver link isn't at all topical. If you wish to retry with a topical link/comment, be my guest.RR

    Comment by Robert Rapier | June 22, 2009

  2. A partial solution is to go out on the water, such as into the Great Lakes. The wind on Lake Michigan is both fairly strong and steady 24 hours a day, just by going several miles offshore. U.S. Wind Resource Map Construction and the costs of the submarine cables needed to connect to the grid would be higher, but the almost steady state wind would solve many of the base load problems.

    Comment by Wendell Mercantile | June 22, 2009

  3. Okay, here is the plan: We get all the bloggers to point the same direction, and start talking away…move the windmills in front, and look out.

    Comment by Benny "Boom, No Doom" Cole | June 22, 2009

  4. The American Wind Association is not worried by the study's findingshttp://www.awea.org/blog/?mode=viewid&post_id=132"no, the wind industry is not in trouble… even the study’s authors are quick to point out, the conditions under which the wind measurements were taken do not mimic those found at wind farms. Measurements in the study were taken at heights of approximately 30 feet (often using anemometers—wind measuring instruments– located at airports). Measurements at 30-foot levels have long been discredited as predictive of the wind resource at the 300-foot height of modern wind turbines. Conversations with leading experts in the wind energy resource assessment field suggest a consensus that there has been no change in wind speeds at hub height."

    Comment by Clee | June 22, 2009

  5. "Although wind power has substantial promise, it's not an infallible energy solution, and has some serious limitations … For one thing, although an estimated 72 terawatts of wind power on Earth can be potentially commercially viable – an amount that's six times the estimated 15 terawatts of total power usage on earth – not all the wind energy flowing past any given point can be recovered.Accoridng to a science axiom known as Betz's Law – … – no turbine can capture more than 59.3% of the potential energy in wind."Of all the serious limitations of wind power, that's not one of them. Doesn't the 72 TW figure already take into account Betz's Law? Isn't that part of what it means to be potentially commercially viable? I wouldn't want a turbine to capture 100% of the wind energy. That could lead to negative side effects to the local weather.

    Comment by Clee | June 22, 2009

  6. Re: Irish company buying Illinois wind farms…You may also be interested to know that there is an organisation proposing to render Ireland completely energy self-sufficient by combining wind power with pumped-hydro, using the natural features of Ireland's west coast to reduce the costs normally associated with pumped hydro by a large percentage. (Their main problem IMHO is a starry-eyed approach to raising capital and distributing profits)http://www.spiritofireland.org/

    Comment by PeteS | June 23, 2009

  7. Hmmm… that wasn't a very user-friendly link. Here it is again.

    Comment by PeteS | June 23, 2009

  8. OT, but fun: LONDON, June 17 (Reuters) – A shoal of tankers has gathered around popular Mediterranean holiday spot Malta, storing enough oil to supply the EU's smallest island republic for nearly three years, Reuters data shows.Shallow water, mild weather and its sheltered central Mediterranean location is becoming haven for tankers hired by oil and gas firms to exploit the market structure caused by the biggest fall in global oil demand in about 20 years, amid economic slowdown.About six crude oil tankers, 20 oil product tankers and four liquefied natural gas (LNG) tankers are floating off Malta, the highest density of anchored tankers outside ports in the world, according to AISLive ship tracking data on Reuters.Imagine that: Even LNG tankers are sitting still. Of course, this indicates that the globe is using less oil and gas than it is producing–even after OPEC cut back. Now the forecasts are for the globe to use even less oil and gas going forward. That means producers have to cut back even more, or cut prices radically. However, since demand for oil is somewhat price inelastic, even cutting prices won't result in boosted sales.I wonder how much longer this can go on, this reality bulging supplies of fossil fuels and nowhere to put them. Soon, producers will just have to shut in production for lack of demand—sheesh, how far away is this reality from the predictions of a couple of years back, that there would be not enough oil, that cross-country driving (USA) would be a thing of the past?And new NG strikes seems to happening daily.–Benjamin

    Comment by Anonymous | June 23, 2009

  9. Where do you see "forecasts are for the globe to use even less oil and gas going forward?I see the EIA forecasts world natural gas consumption to continuously increase in Figure 2 of http://www.eia.doe.gov/oiaf/ieo/highlights.htmlThey do show a brief (few years) dip in "Liquids (Including Biofuels)", though they don't show petroleum oil separately.

    Comment by Clee | June 23, 2009

  10. Benjamin: OT, but fun: LONDON, June 17 (Reuters) – A shoal of tankers has gathered around popular Mediterranean holiday spot Malta…And for even more fun you can watch them live here.For the geographically challenged, you will need to zoom in on the Mediterranean area between the boot of Italy/Sicily and the African coast at Tunis. 😉

    Comment by PeteS | June 23, 2009

  11. Pete S.-I am very geographically challenged, so I think I should visit those shoaled tankers in person. Wish I could convince the boss and the missus about this plan….Clee-I was referencing new gloomy World Bank forecasts that the global economy (sadly) will continue to shrink for another year. It is my contention that the price spike of 2008 spoooked oil consuming markets, and they may be years and years in recovering. Businesses and consumers alter their behavior if they see price spikes. My own feeling is that crude oil demand won't recover to 2007 levels for perhaps 10 years, being 2017. That happened after the 1979 price spike. Yeah, yeah China, but China is a mercantile, fascist nation. If China decides it wants to produce energy domestically, they will. A few policy fiats in China, and their oil demand moderates–and we are seeing they are moving to e-bikes, and NG busses already.They have CTL going, and are experimenting with huge jatropha plantings. Meanwhile, long-term, I expect USA demand to drift south, for decades. The new CAFE standards are stupid, but I suppose they will have some effect. Europe will continue south, as will Japan. Japan may go completely into PHEVs and nukes, and who could blame them?

    Comment by Benny "Boom, No Doom" Cole | June 23, 2009

  12. Robert. There is an old addage in the stock market and it goes something like this: "Buy on the bad news and sell on the good news"This recent post is like a number of your recent "stock market oriented posts". It simply ignores reality snd instead fixates on fears stirred up by "bad news".In this case it is "supposed "declining wind resources."What you fail to see is that money is made in the stock market in a large part through volatility. The actual value of most companies on the NYSE/Nasdaq does NOT change that much from day to day,But when you look at buy/sell orders you see that they are driven not by fundamentals but by crowd psychology. Good news stirs up buy orders and bad news depresses the stock,irregardless on the inherent value of the company,One day Intel sells at $14.98 and two weeks later it is at $17.01 even though there has been absolutely no changes in fundamental benchmarks governing the true value of the company.The reason is simply that stocks are not just a reflection of true value but are also a commodity whose price can be influenced, even manipulated by supposedly "good" or "bad" news.The wind is not going to stop blowing and the sun is not going to stop shinning despite what worry-warts on Wall Street say or don't say based on the latest so called "scientific study"John n fesard bsdrf on z"bad nres".. In

    Comment by Anonymous | June 23, 2009

  13. Something like, but not quite. I always heard the adage as "Sell on the news", sometimes preceded by "Buy on the rumor". Didn't matter whether it was good news or bad.

    Comment by Clee | June 24, 2009

  14. “The wind is not going to stop blowing and the sun is not going to stop shinning”Really! Maybe Clee can explain Murphy’s Law to John.We went sailing yesterday afternoon. Very nice wind. Then something happened. The sun stopped shining. We call it night but it made it easier to view the milkey way. This morning the wind stopped blowing. So much for a morning sail.The wind does stop blowing and the sun does stop shinning mostly following the laws of Murphy. I checked all my favorite places in the US and with the exception of SF and Clee’s backyard, it is good day to sit in the shade with an electric fan. I am also wondering what Wendell has against the Great Lakes. Ever notice no one wants to put wind turbines SF Bay. That place is surrounded by cities and freeways. There is no longer a place there with natural beauty in California so let them build the windmills in their cities.

    Comment by Kit P | June 24, 2009

  15. Let's enliven Roberts blog.Thanks Gentlemen….Glad to see you are "on your toes" with ready responses.The main thing I was trying to say to Robert has nothing to do with wind or solar as a potential "future power source'" What I was trying to say was that the stock market is not solely governed by fundamentals (i.e. P/E ratios, earnings growth, cash on hand. etc.It really didn't have much to do with specifics about solar or wind.Nebertheless, I stand by what I said" "The wind will not stop blowing and the sun will not stop shinning."John

    Comment by Anonymous | June 24, 2009

  16. Robert. Mr. Pickens did not say he wanted to power U.S. cars on natural gas. He said he wanted to power America's Semi trucks on natural gas and the cars on electricity. J.C., Sr.

    Comment by Anonymous | June 24, 2009

  17. Kit,Last time I drove through Palm Springs — Nothing but windmills. Also, the Joshua Trees Forrest in California –nothing but windmills.Windmills probably not the answer.John

    Comment by Anonymous | June 24, 2009

  18. "About six crude oil tankers, 20 oil product tankers and four liquefied natural gas (LNG) tankers are floating off Malta, the highest density of anchored tankers outside ports in the world …"Quick check. A barrel of oil sold today for immediate delivery fetches $68.62. A barrel of oil sold today for delivery in December fetches $70.77. If you owned a tanker load of oil, would you be in a hurry to unload the ship?Seems like the people who are putting their money on the line are expecting the price of oil to rise. Not quite what we would expect if the Age of Oil were coming to an end.

    Comment by Kinuachdrach | June 24, 2009

  19. Kinu-The tankers are not lollygagging around Malta for the beaches and girls (although I would). There is nowhere to put the oil. There are no buyers. The world is producing too much oil and refined products. This situation could persist for years. Unhappily, the World Bank put out a gloomy forecast recently, stating that the global economy was not recharging, but slowly declining. Demand for oil is sinking. OPEC has sliced production, but demand keeps falling. And by the time demand recovers? Who knows, PHEVs and CNG cars may be up and running. We may have seen all-time Peak Demand in 2007. It may never be that high again, or it may recover in 10 years. I would not expect it to recover in any time less. It will take a good five years of cheap oil to revive oil demand, That might not happen. OPEC and oil-quislings have go their hand on the NYMEX. I think we are watching the Oil Age pass right before our eyes. The oil thugs screwed with consumers one time too many.

    Comment by Benjamin | June 24, 2009

  20. So bizarre that Kit P has to bring up my back yard. It was a sunny day in the 80s in my backyard with nice big shade trees. It was not a Spare the Air day here in San Mateo County. The air quality score was a decent 38, where 0-50 is Good-No Health Effects. So I have no idea why Kit P thinks it would have not been a good day to sit in the shade. I'd skip the electric fan though. And I think I would not allow Kit P into my back yard.

    Comment by Clee | June 24, 2009

  21. Let me help Clee hone his reading skills, Kit wrote,“with the exception of SF and Clee’s backyard”Sorry to inform you Clee, it was my backyard before it was yours. In 1960, my Dad moved to Redwood City. The last place I moored by sail boat was the marina just south of Candlestick Park. I bring this up because sailors watch the wind very closely. My boat has a white deck. The black grime that I had to wash was a good indicator of Clee’s poor air quality. My boat is now in Washington State. Wheat dust is sometimes a problem.When we moved to Washington State were no wind farms in the PNW. To get to my boat I can now observe the wind farm that ENRON built and EnergyNorthwest built. When the blades are turning, electricity is being produced, when they are not electricity is being consumed. There is a difference between the ENRON built and EnergyNorthwest built windfarns. The first was built to scam California, the latter supplies Washington State customers.

    Comment by Kit P | June 24, 2009

  22. Here is a link to my favorite ‘wind cam’:http://www.iwindsurf.com/windandwhere.iws?regionID=219&siteID=244&Isection=Windcam A beautiful morning with the sun rising on Mount Hood but not enough wind to be useful. With a predicted high of 95 and no wind, the river belongs to power boats and PWC, noise stink boxes that they are.

    Comment by Kit P | June 24, 2009

  23. Hi,We have just added your latest post "R-Squared Energy Blog" to our Directory of Science . You can check the inclusion of the post here . We are delighted to invite you to submit all your future posts to the directory and get a huge base of visitors to your website.Warm RegardsScienz.info Teamhttp://www.scienz.info

    Comment by quba | June 26, 2009

  24. Beyond a decline in wind measurement decline why are we not talking about the 30% output/ to capacity ratio that should handcuff the wind industry. SO if winds not a viable option for base-loading what do people propose. I have to go nuclear on this one.

    Comment by bogged down | June 29, 2009

  25. biomass, geothermal & small hydro

    Comment by Anonymous | June 29, 2009


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