Xcel Energy’s experience with wind energy is whipping up support for alternative fuels. A new study says that energy consumers in Colorado will save more than $251 million over the next 20 years because of the utility’s current fleet of wind plants.By today’s standards, wind is competitive with other forms of generation. But, even more compelling is the fact that its costs are more stable than natural gas. But if wind is to reach its full potential — the U.S. Department of Energy has its eyes on 20 percent of the nation’s generation mix in a couple decades — then some critical barriers must be overcome. And those primarily include the extension of transmission lines into remote areas where wind resources are plentiful. “Most utilities enter into a fixed and known price for wind or other renewables,” says Ryan Wiser, a researcher and analyst at Lawrence Berkeley National Laboratory. “Wind contracts are offered at known prices that may escalate with inflation. Conversely, most of the natural gas generation is indexed to the price of natural gas. And that imposes some risk to utilities and their rate payers.” Wiser, who has written extensively about wind as a hedging tool for utilities, goes on to add that while coal is relatively cheap at 5 cents per kilowatt hour, it may become subject to carbon caps that would increase its overall price. Natural gas, by comparison, is now about 6-8 cents a kilowatt hour, although it has sold for substantially more. Meanwhile wind energy is 4-7 cents per kilowatt hour. Wind’s predictability is a selling point. While the fastest growing fuel form is natural gas, wind is the second largest source for new power generation in the country for two years running, according to the U.S. Energy Information Administration. There are now 10,000 megawatts of installed wind capacity, representing about 0.6 percent of the nation’s generation mix. In Xcel’s case, the savings comes from operating wind plants instead of using natural gas. Beyond the economic value, the study released by Interwest Energy Alliance in Denver, says that by adding wind generation to its option, carbon dioxide emissions tied to global warming would be cut by 14.7 million tons. “Wind energy is providing new electricity supplies that work for our country’s economy, environment, and energy security,” says Randall Swisher, executive director of the American Wind Energy Association. “With its current performance, wind energy is demonstrating that it could rapidly become an important part of the nation’s power portfolio.” The Potential Swisher adds that wind’s growth can also be attributed to the renewal of the production tax credit, a federal incentive extended in the Energy Policy Act signed a year ago by President Bush. Previously, the credit had been allowed to expire three times in seven years, discouraging investment in wind turbine manufacturing. The association is calling for a long-term extension of the credit before it is scheduled to expire at the end of 2007. Increasing wind’s role is possible. Europe, which has inferior wind resources compared to this country, is a pacesetter. Germany and Spain, for example, are on route to producing at least 10 percent of their power generation from wind while Denmark has passed the 20 percent threshold. In this country, the potential is in those states with the greatest wind speeds and in those places that are dependent on gas but where it is in short supply. So what’s stopping development? At present, the demand for wind exceeds the supply of wind turbines and the various components that go into production. That’s why the price to generate wind has risen in the last few years. Manufacturers are cranking up production but it will take a few years to build up. At the same time — and more significantly — the transmission infrastructure is not adequate. That is, such places as North and South Dakota are rich with wind resources but are not able to harness the resource because would-be developers cannot connect to the grid. Despite some of the hurdles, about 20 percent of all utilities nationally in regulated markets now offer green energy options. Altogether, roughly 600 utilities give 40 million customers in 34 states the ability to purchase renewable energy to meet some portion of their electricity needs — a proposition that has resonated with some Wall Street analysts. Critics say, however, that the current build out of wind farms is a direct function of the lucrative tax breaks given to developers. Without those incentives, they add that wind would not be economically viable. Proponents are quick to counter that fossil fuels receive far more government support. But, moreover, wind advocates say that detractors are missing the point. That is, the overall push is to move toward more sustainable fuel sources and away from those with the greatest emissions. And like any emerging technology, wind power — for now — needs federal assistance to get it into the mainstream. “If you think of wind as an added variable — not something in isolation — but in the context of running an entire portfolio, it is attractive,” says Brian Parsons, with the National Renewable Energy Laboratory in Golden, Colorado. “We are displacing gas and other fuels. That’s the main value.” By today’s standards, 10,000 megawatts of wind power saves about 0.6 billion cubic feet per day, or about 3.5 percent of the natural gas used nationwide to generate electricity. Clearly, wind’s promise is derived from its potential economic value as well as its environmental benefits. Utilities know all too well that gas prices have gyrated while coal plants are under constant pressure to modernize. As such, utilities now see wind power as a tool to balance cost, reliability and fuel diversity. And if the use of wind energy is going to expand, then the technology to produce it must continue to advance while the country’s transmission infrastructure must accommodate an ever-increasing demand. About the Author… Ken Silverstein is an award-winning journalist who is the editor-in-chief of Energy Central’s new publication, EnergyBiz Insider. In that role, he examines a significant issue affecting the energy sector and explains its broader implications. With a background in economics and public policy, he has spent several years writing about the issues that touch the energy and financial sectors, and his work has been published in more than 100 periodicals. He has also been sourced in the New York Times, Washington Post, USA Today, National Public Radio and several newspapers and magazines in the United States and abroad. He is an invited speaker at a range of energy industry conferences and he has appeared on C-SPAN. He holds B.A. and M.B.A. degrees from Tulane University, and an M.A. from American University. Republished with permission from CyberTech, Inc. EnergyBiz Insider is published three days a week by Energy Central. For more information about Energy Central, or to subscribe to EnergyBiz Insider, other e-newsletters and EnergyBiz magazine, please go to http://www.energycentral.com/.