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In this section, we describe several illustrative sustainable energy industries. For each, we ask these questions: What does the industry look like? How big is it? And how big is it likely to grow?
- The Energy Efficiency Industries10
There is no agreement on how to define the energy efficiency industry, and for that reason it is unwise to compare estimates directly. Nevertheless, growth in several energy efficiency technologies and in the energy service business will be appreciable. We offer here some brief estimates of this loosely defined sector's size and growth potential.
In 1997, one consulting firm reckoned the U.S. market for energy-saving and energy-efficient equipment at $34.6 billion, growing to $49.2 billion in 2002. Within the sector, they predicted the highest growth rates for efficient lighting ($1.5 to 2.4 billion) and HVAC ($10.2 to 17.5 billion), with strong but somewhat slower growth for efficient appliances ($14.5 to 20.1 billion). Sales of insulation, energy efficient windows, occupancy sensors and efficient office equipment will also grow notably.
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Electronic Ballasts:
A representative energy-efficient technology
Lighting accounts for about 40% of the cost of energy in commercial buildings. Conventional magnetic ballasts use transformers to activate and regulate fluorescent lamps. Electronic ballasts use solid-state components to produce the same light with less energy. They also extend lamp life, and reduce flicker, noise and operating temperature.
As of 1993, the U.S. electronic ballast industry employed 1,400 workers at 16 companies.
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In 1995, another firm estimated a global energy efficiency market of $80 billion/year in the private sector, plus $2 billion/year in government spending. In that year, the largest global markets were for industrial process controls (at least $4.5 billion); lighting for commercial buildings (at least $4.2 billion); envelopes for commercial and residential buildings (at least $3.3 billion each); high-efficiency commercial HVAC (at least $2.2 billion); and high-efficiency residential appliances (at least $2.2 billion). This survey found enticing potential: less that 1% penetration of efficient lighting into potential application; efficient motors and adjustable-speed drives in less than 3% of installed applications; and several thousand megawatts of untapped industrial and commercial cogeneration opportunities.
Energy service companies (ESCOs) represent another aspect of the loosely defined energy efficiency industry. The ESCO sector comprises hundreds of firms, with 30 handling most of the business. According to the National Association of Energy Service Companies in 1996, the installed cost of annual ESCO projects in the U.S. rose from perhaps $30 million in 1980, to over $450 million in 1994; about two-thirds of that figure refers to electrical measures, and the remainder to thermal measures. The World Energy Efficiency Association, citing a report by the U.S. Department of Energy, gives a higher figure of $500 million for U.S. ESCO projects in 1992, and suggested that by 1995 ESCOs had installed $2.3 billion in U.S. projects.
- The Fuel Cell Industry11
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In a fuel cell,
hydrogen (from fuel)
+ oxygen (from air)
= electricity
+ water + heat
Nothing is burned!
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A fuel cell combines hydrogen-bearing fuel with air-borne oxygen in the presence of a catalyst and an electrolyte to produce electricity, water and heat. The term encompasses several technologies at different stages of maturity: the proton exchange membrane (PEM) cell; the phosphoric acid cell; the molten carbonate cell; the solid oxide cell; and others. These varieties are distinguished by operating temperature, efficiency, ideal size, and other factors, suiting each to different applications.
Fuel cells enjoy enviable "buzz" in the energy industry and in the investment community, reflecting the technology's diverse applications, large potential markets and tempting collateral benefits. Because fuel cells do not burn anything, they release no toxic emissions. Separation of hydrogen fuel from hydrocarbon feedstock does produce carbon dioxide, the principal manmade greenhouse gas, but because fuel cells operate at high efficiencies-especially if the waste heat is used productively-they have a lighter greenhouse impact than fossil fuel-burning powerplants or internal combustion automobile engines.
What does the fuel cell industry look like? The fuel cell industry include several elements:
- Fuel companies supply hydrogen-bearing feedstock for fuel cells. This may be gasoline, natural gas, plant material or plant-derived fluids such as methanol, etc.
- Reformer companies make devices to isolate the feedstock's useful hydrogen from its carbon (generally released as carbon dioxide) and other compounds.
- Specialized component companies make the carbon graphite plates and membranes for proton exchange membrane fuel cells; the ceramic plates for solid oxide fuel cells; carbon fiber or metal hydride tanks for storing hydrogen at high pressure; etc.
- Commodity component companies supply solid or liquid electrolyte, such as phosphoric acid or carbonate; and the platinum, nickel or other catalyst material.
- Fuel cells manufacturers assemble complete cells.
- Potential users may participate in the industry as well. These include entities with a source of feedstock, such as breweries, landfills and wastewater treatment plants; automobile manufacturers seeking to integrate fuel cells into electric or hybrid vehicles; and others.
- Inverter manufacturers provide devices that convert the direct current generated by fuel cells into the alternating current used by most appliances and the national electric grid.
- Distributors may brand, sell and service fuel cells.
How big is the fuel cell industry, and how big is it likely to grow? Most fuel cell manufacturers plan to enter the market for stationary power as prices approach $1500/kW. (The cost may have to drop to $50-100/kW before fuel cells can compete economically with internal combustion engines.) At that price, purchasers will receive power at 9-10 cents/kWh, dropping to 5 cents/kWh after retirement of a short-term purchase loan. At quantities large enough to justify mass production, a small residential system is expected to cost $3,000 to $5,000. At these prices, fuel cells can compete for high-value niche applications, but not against grid-supplied commodity power in many parts of the country.
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In 10 years, annual fuel cell markets could total several billion dollars.
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According to one consulting firm, the market for fuel cells totaled around $355 million in 1998, and is set to grow by about 30% annually. Markets for relatively mature phosphoric acid cells will rise from $41 million in 1998 to $250 million in 2003; sales of PEM cells will grow from $80 million in 1998 to $450 million in 2003. Roughly corroborating that estimate, another consultancy opines that annual fuel cell markets will total several billion dollars by 2009, and suggests that fuel cells in small, residential applications could total several thousand megawatts (MW) by the same year. A third firm predicts that demand for fuel cells will reach between 2,500 and 6,000 MW by 2010.
As of mid-1999, there are a few hundred systems in operation worldwide; Toshiba claims to have sold 180 of its 200-kW PC25™ fuel cells. Many existing systems are used in industrial settings. For instance, Mitsubishi Electric has installed cells fueled by waste gas at Japan's Sapporo, Kirin and Asahi Breweries. International Fuel Cells (IFC, a subsidiary of United Technologies) in partnership with Toshiba has demonstrated for the U.S. Environmental Protection Agency a fuel cell driven by gas emitted by a wastewater treatment plant. IFC has also installed a system fueled by landfill gas. Industrial markets will continue to grow. Toshiba hopes to sell 10 systems fueled by landfill gas per year. Siemens Westinghouse, a leader in solid oxide cell technology, wants to market a system large enough to power 200 homes by 2001.
Fuel cells for residential use are less mature, but there is plenty of activity. Cinergy Corp. has committed to install systems totaling 1,400 MW by 2009; Cinergy and the French firm Alstom have placed advance orders for residential fuel cells from the most visible fuel cell manufacturer, Ballard Generation Systems. Early in 1998, Sanyo Electric Co., Ltd. said it would have natural gas-fueled, 1-kW cogenerating residential systems for sale by 2000. Plug Power has agreed with General Electric Co. to form GE Fuel Cell Systems, to market residential units by 2000. Cousin to the residential market, a market for fuel cell backup power is emerging as well: H Power Enterprises of Canada sells emergency power units ranging from 100 watts (W) to 1 kW; Dais Corp. of Florida and Warsitz each sell portable fuel cell units of between 6 and 100 W. These back-up power systems generally cost from $1,500 up.
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Hectic fuel cell developments in the automotive sector will complement those for stationary power.
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Although this report does not centrally consider transport-related topics, fuel cells represent an exception, since they are potentially a cross-cutting technology. Innovation and economies of mass production in one of these areas may spur growth in the other. As developments on the automotive side are, if anything, more hectic than those for stationary power, the following litany is likely incomplete and will soon be out of date.
The PEM fuel cell is generally considered best for automotive use, because it operates at a lower temperature, requires a shorter start-up time, and enjoys higher power density-i.e., it produces more power for its size than other varieties. BMW, however, is exploring solid oxide cells for automotive uses. In March of 1999, DaimlerChrysler unveiled a prototype PEM cell car; it plans to sell 100,000 units by 2004. Energy Partners of West Palm Beach, Florida, has also built a prototype fuel cell car. The Ford Motor Company has built a fuel cell concept car and a concept sport utility vehicle, using an engine built by dbb Fuel Cell Engines, a joint venture of Ballard, Ford and DaimlerChrysler; Ford has invested $420 million in this partnership. Nissan has built a fuel cell/battery hybrid with a Ballard cell. Many oil companies are exploring ways to use gasoline as the source of hydrogen for automotive fuel cells. For example, Atlantic Richfield, Shell Oil and Texaco are partners with Ford, DaimlerChrysler, Ballard and California's Air Resource Board in putting a fleet of 50 fuel cell vehicles on the road by 2003; the oil firms are responsible for alternative fuels and fuel infrastructure.
- The Geothermal Industry12
Geothermal technology exploits the heat of the earth, which increases with depth. Large geothermal plants use hot fluids for industrial process heat, or to drive electricity-producing turbine-generators, or both. Electric-powered geothermal heat pumps use the differential between the temperature of the earth and that of the ambient air to provide residential and commercial buildings with hot water, heat in the winter and cooling in the summer.
Because geothermal heat pumps are driven by electricity, their environmental impact is determined largely by the source of that electricity, and should be compared to the technology that would otherwise be used-for instance, gas-fired water heaters, or electric air conditioners. Indeed, some electric utilities promote geothermal heat pumps to boost electricity use.
What does the geothermal power industry look like? The geothermal power sector includes the following categories:
- Mechanical equipment and primary metal suppliers make casings for geothermal well shafts, drilling equipment, powerplant equipment, pumps, etc.
- General consultants and contractors search for heat resources and prepare simulations of resource availability so that developers can obtain financing.
- Drilling and well services firms use technology and expertise similar to that of the petroleum industry.
- Environmental services firms manage paperwork, permitting, well testing, water testing, air sampling and other tasks.
- Geothermal developers, under contract to a utility, government or other entity to develop a project, often act as general contractors and hire other firms to do the work.
- Powerplant ownership and operations firms may be electric utilities or independent power producers.
The geothermal heat pump sector includes:
- Manufacturers of geothermal heat pumps.
- Pipe suppliers, who make the (usually polyethylene) pipe through which hot fluids circulate from their underground source, to the pump's heat exchanger, and back.
- Installers and service firms dig trenches and wells, install pipe loops, perform necessary electrical or duct work, etc.
- Utilities may encourage the use of geothermal heat pumps, for example through marketing or rebate programs, to flatten demand peaks while (in some cases) building electricity use.
How big is the geothermal industry, and how big is it likely to grow? At the end of 1997, worldwide geothermal electrical generating capacity was just short of 8,000 MW, with major capacity in Costa Rica, El Salvador, Italy, Mexico, the Philippines, the U.S. and elsewhere. Countries making large direct use of geothermal heat include China, France, Hungary, Iceland, Japan, the U.S. and others. In 1997, U.S. geothermal electric capacity stood at 2,850 MW, with one-fourth of that at The Geysers in Northern California, with other significant generation along the California-Oregon border, in Southern California, in Arizona and in Nevada. The Geothermal Energy Association estimates that U.S. firms have participated in the development of 60% of world geothermal electric capacity.
As of 1995, the U.S. geothermal industry employed about 3,000 individuals in field operations, management, consulting, and research, generating a payroll of about $150 million. The industry contributes some $130 million annually in federal payroll, sales and other taxes, plus royalties for project development on Bureau of Land Management and U.S. Navy land.
The U.S. Energy Information Administration's (EIA) reference case forecast projects that geothermal electric capacity will grow by an average of 0.7% annually between 1997 and 2020, from 3,000 to 3,520 MW. EIA foresees slightly less geothermal growth (to 3,400 MW) in its high economic growth scenario, and somewhat more (3,670 MW) in its low-growth scenario. The "high renewables scenario" forecasts 4,930 MW in 2020, and 5,000 MW should a 5.5% renewable portfolio standard be passed.
More optimistic, a recent analysis sponsored by the Geothermal Energy Association (GEA) suggests that the U.S. could develop between 6,300 and 11,700 MW of geothermal electric power with today's technology, and between 15,100 and 25,400 MW with enhanced technology. The same survey suggests that more than half the power needs of Central and South America could be met by geothermal: 8,200 to 17,400 MW with today's technology, and 14,700 to 28,400 MW with enhanced tools.
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U.S. Neighbors that could Generate all their Power Geothermally:
Bolivia, Costa Rica, Dominica, El Salvador, Grenada, Guadeloupe, Guatemala, Honduras, Martinique, Montserrat, Nicaragua, Panama, Peru, St. Kitts & Nevis, St. Lucia and St. Vincent.
Neighbors that could be 20% Geothermal-Powered:
Argentina, Colombia and Mexico.
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A 1994 analysis estimates a multiplier of 2.5 for U.S. geothermal investment: that is, one dollar of investment in a geothermal venture produces $2.50 in economic activity through spending in supplier industries and other effects. Assuming 7,000 MW of U.S. geothermal electric capacity in 2010-more optimistic than the EIA projections but at the modest end of the GEA's estimation of geothermal potential with current technology-this study calculates $14 billion in economic activity due to direct investment in geothermal development, plus (using the 2.5 multiplier noted above) another $20 billion in indirect activity. The total $34 billion in economic activity translates to 680,000 person-years of employment from 1994 to 2010. The authors figure an annual salary plus overhead of $50,000 (1994 dollars) for these jobs. In addition, operating and maintaining (O&M) the 7,000 MW of capacity over each plant's 30-year lifetime will generate $525 million in economic activity, with 10,500 jobs associated with the plants themselves, plus 15,500 jobs associated with O&M equipment and services, for a total 765,000 person-years of O&M employment over the 30-year period.
The geothermal heat pump industry has installed 300,000 units worldwide; 3.5 million units may be in place nationally by 2010, with total direct employment of 350,000 person-years. Installation American manufacturers shipped almost 58,000 units in 1997, up 13% from the previous year. The Geothermal Heat Pump Consortium website lists 24 domestic manufacturers, as well as many dozens of related manufacturers and trade allies. Total industry revenue from manufacturing is probably around $420 million.
- The Microturbine Industry13
Microturbines incorporate the technology found in jet engines and their descendants, the aeroderivative, natural gas-fired turbine-generators that have come to dominate the market for new powerplants. The difference is size: at only 25 to 500 kW, microturbines are appropriate for distributed uses close to where customers use energy. One company, Capstone, advertises its model as "the size of a beer keg and no noisier than a vacuum cleaner." Natural gas is the most obvious fuel, although multi-fuel microturbines can burn biomass-derived fuels, kerosene, diesel, propane, flare gas and other fuels.
Because microturbines typically have a low air-intake temperature, they emit a very clean exhaust gas-i.e., low concentrations of nitrogen oxides. Thus, they can easily be used for cogeneration, potentially doubling efficiencies to as much as 60% and thereby lowering greenhouse impacts. And, with just one moving part, and air rather than oil-filled bearings, most models cost very little to maintain. A microturbine may cost between $20,000 and $75,000; one manufacturer claims that electricity from its units costs about 6.0 cents/kWh, including fuel, maintenance and the cost of financing. Cogeneration might lower the cost of energy to 3-4 cents/kWh. Another source predicts that be microturbines will be introduced to the market at $400-550/kW.
What does the microturbine industry look like? The nascent microturbine industry include a small number of manufacturers, all of which are large industrial firms, or which have established partnerships with such firms. In addition, most manufacturers have partnerships in place with retail energy companies to market, distribute and service their products.
How big is the microturbine industry, and how big is it likely to grow? Most firms have sold only a few dozen units, projecting commercial production in 1999 or soon thereafter. Northern Research Engineering Corp., a subsidiary of Ingersoll-Rand, expects to have a commercial microturbine by 2001. Capstone Turbines has installed beta units that run on flare gas from a Canadian oil field, and waste gas from a Reno, Nevada wastewater treatment plant. In August, 1999, Capstone offered for sale what it claims to be the first commercial, stand-alone microturbine, sold with a battery pack and electronic controller. AlliedSignal claims to have installed the world's first grid-connected commercial unit at a restaurant in Bensenville, Illinois; McDonald's Corporation (which boasts 2,700 franchises in the U.S.) says that the unit can save the Bensenville location $1,100 per month. Walgreen's, Heinemann's Bakeries, Citigroup, Inc. and Federal Express Corporation are also reportedly considering the purchase of AlliedSignal microturbines. AlliedSignal, currently building one unit per day, expects to build 20-30 units per day by December of 1999.
One manufacturer projects an annual world market of 30,000 to 100,000 units by 2003. Another expects a $1-billion industry by 2004. An industry consultant predicts a combined market of $2.1 billion for reciprocating engines, combustion turbines and microturbines by 2004. Estimates of the ultimate market range as high as $10 billion annually.
- The Photovoltaic Industry13
Photovoltaic (PV) cells convert sunlight directly into electricity with no combustion and no byproducts. Composed of silicon-based semiconductors, with small but functionally important quantities of other elements, a cluster of PV cells is called a module; a PV system contains many modules, plus wires, inverters, transformers and sometimes batteries. While PV can be used in large, centralized arrays, the technology's economics (which offer economies of mass production rather than economies of scale) suit it for smaller systems, located close to the user. PV is especially apt for many uses remote from any electricity grid, for example village use in developing countries.
What does the PV industry look like? The photovoltaic industry includes the following tiers:
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Exports accounted for 73 percent of total American PV shipments in 1997.
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- Suppliers of primary metals and glass provide commodity materials for PV cell production. Semiconductor manufacturers can supply silicon for PV production.
- Manufacturers of PV manufacturing equipment.
- Suppliers of raw silicon,often firms in the computer industry, provide raw silicon, either from batches that fail that sector's higher purity requirements, or as the unused ends of silicon ingots.
- Manufacturers of PV cells may be vertically integrated from manufacture to distribution and installation, or they may serve as PV cell or module wholesalers.
- "Balance-of-system" suppliers make batteries, inverters, and wiring.
- System integrators assemble PV products for specific uses. Some also distribute systems, install them, and assist with servicing.
- PV system installers and servicers can overlap with integrators as well as manufacturers. Others are small businesses.
How big is the PV industry? Total shipments in 1998 topped 152 MW, 21 percent over 1997. Eighty percent of this growth reflects a vigorous subsidy program in Japan. That initiative aside, much pre-1998 growth (12 to 15 annually) went to off-grid applications. In the U.S., the largest markets for PV are remote applications; grid-connected use; telecommunications; and transportation (e.g., boats, RVs and support systems). The industrial sector (including nonutility electric generation) leads with 11.7 MW, followed closely by residential (11 MW) and commercial such as hospitals, office and retail buildings (8.1 MW).
PV plants located in the U.S. shipped 54 MW, or over a third of world shipments. Japan will likely surpass the U.S. for the global lead in PV shipped very shortly. However, if ownership rather than location of plants is considered, the U.S. already lags both Europe and Japan in PV production, as most U.S. facilities are foreign-owned. In addition, exports account for 73 percent of total American PV shipments (1997 data), with over half of that figure going to Japan and Germany. Mexico accounted for 4 percent of exports, or 1.3 MW. Exports represented virtually the entire annual growth in U.S. PV shipments from 1996 to 1997. At $6.25 per watt, as estimated by the National Renewable Energy Laboratory, firms based in the U.S. sold over $338 million in PV modules, not including profit margins, and not including other balance-of-system components of PV systems and associated profit margins.
One longtime observer of the PV industry estimates that PV shipments will grow from 153 MW in 1998 to 550 MW in 2005 and 1,700 MW by 2010. The estimates assume steady market growth in off-grid sectors similar to historical rates, continued subsidy programs in Europe, Japan and the U.S. for grid-connected markets, and concurrent reductions in PV costs due to expanding manufacturing and improved economies-of-scale.
According to the Solar Energy Industries Association, 3,800 jobs are created for every $100 million in PV sales. Combined with 1998 values of PV module shipments, the U.S. PV industry supports 12,768 jobs. A similar figure has been mentioned by the New York Times. There is substantial uncertainty, however. Greenpeace International states that current worldwide employment in the solar industry is roughly 12,000.
The U.S. Department of Energy estimates that 70,000 jobs would be created in the U.S. if it successfully implements the Clinton Administration's Million Solar Roofs program. And according to a European Commission 1996 White Paper, continuation of current growth rates in the solar industry would result in 453,000 jobs worldwide.
The PV industry requires skilled blue-collar labor not typically involved in electricity generation in the U.S. For example, distributed PV applications will increasingly require more glaziers, roofers, electricians, bricklayers and sheet-metal workers. For the buildings trades, PV represents a unique opportunity to create new jobs in the electricity sector. It is important to note that the labor intensity in PV manufacturing has declined three-fold from 0.11 person-years per peak kilowatt produced in 1991 to 0.04 person-years in 1996.
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The global photovoltaic industry is consolidating and integrating vertically.
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The overwhelming trend in the PV industry is consolidation and vertical integration across national borders. Large, well-capitalized firms seem determined to control multiple product chains in the PV market, and have begun to address two perpetually underfunded aspects of the PV business: the assembly of PV modules into useful products, and distribution. The merged firms also seem better placed to attack the overseas markets on which most U.S. PV firms now rely.
Progress in cost reductions and service has been slower for balance-of-system components. Batteries and some other elements are not keeping up with advances in PV cell efficiencies and cost, and hence make up a growing percentage of system cost.
- The Solar Water Heater Industry
Solar water heaters (SWH) use black, sunlight-absorbing collectors to heat water for direct use in homes, businesses or industry, or for subsequent additional heating in standard gas, propane or electric heaters. Some SWH include electric pumps.
Solar water heating can compete economically in many urban applications right now. For example, the Union of Concerned Scientists calculates that using solar water heaters in several Boston neighborhoods facing distribution line constraints would save about $10 million over a 20-year period, with most savings coming from multi-family housing and commercial establishments.14 In Florida, an installed residential solar water heating system can cost anywhere from $1,500 to $3,500, depending on the size of the family served , the size of the solar system, type of financing, type of roof, building code requirements, and professional versus do-it-yourself installation. According to the Florida Solar Energy Center, SWH can save state residents between 50 and 85% of the hot water portion of the monthly utility bill, or $200 to $300 per year for a family of four.
What Does the SWH Industry Look Like? The SWH industry includes the following tiers:
- Manufacturers
- Wholesalers
- Dealers
- Installers
- Repair companies
The SWH industry is segmented, with little vertical integration. There are about five healthy manufacturers, two with annual gross revenues over $2 million. Most manufacturers sell to regional distributors, which generally refrain from competing in neighboring territories.
Australia, Greece, and Israel have stronger SWH manufacturing capabilities, though they are still small-only 26 out of 150 European SWH firms have more than 30 employees-and few have automatic assembly lines. With European manufacturers developing their export potential, the resumption of a strong market in the U.S. may lead to foreign acquisition of U.S. firms.
How big is the SWH industry, and how big is it likely to grow? The U.S. SWH industry shipped 765,000 square feet of solar water heaters in 1996, a very modest increase over the prior year, and enough to supply the hot water needs of 76,500 Americans. Annual shipments have stagnated since 1991, due largely to the expiration of generous federal and state tax credits; in 1984, the industry's heyday, these incentives nourished 225 solar-thermal manufacturers (most of which produced systems to heat swimming pools, rather than buildings-related SWH, the topic of this review) selling 12 million square feet of SWH collectors.
The total value of SWH shipments in 1996 was approximately $11.4 million, at an average price of $14.48 per square foot, not including excise taxes and the cost of transport. Most systems (93%) were shipped to residential customers, with commercial customers accounting for most of the remainder. The U.S. market for solar thermal collectors is dominated by Florida (49%) and California (21%), with smaller amounts in Arizona, New York and Hawaii. The potential market for SWHs is huge, especially where high enrage prices, lots of sunlight and favorable policies intersect. Hoffman, Wells and Guiney estimate that the national replacement market for existing gas and electric water heaters is 6 to 9 million units per year. The European SWH industry has grown at 18 annually in the last ten years, and may see annual growth of 23% in the next decade.
The SWH industry could benefit greatly from partnerships with home builders to integrate SWH in original home designs, rather than retrofitting or replacing existing electric and gas water heaters: there are 1.1 million homes build annually in the U.S., with SWH capturing 0.2% of the water heater market. One promising initiative includes Sandia National Labs, Energy Labs, Inc. of Jacksonville, Fla., and a "major Southwest electric utility" is developing a low-cost SWH specifically for new construction markets. Another option, to date rarely pursued, would be to market SWH through local water heaters and plumbing businesses. For example, Hughes, a national plumbing supplier, has begun selling SWH in Tucson for the Civano sustainable development community.
In Europe, the IEA estimates 70,000 skilled jobs will be required to produce 5 million square meters of solar collectors (of which SWH are a subset) in 2005. This does not include associated job losses in competing technology sectors.
- The Wind Industry15
The most visible feature of the American wind industry is the large corporate windfarms-arrays of dozens or even hundreds of machines, ranging in capacity from a hundred kilowatts to over a megawatt-that supply wholesale power to the electric grid. The industry also produces smaller electricity-generating machines for home and village power, ranging from a few to a few dozen kilowatts in size, and small mechanical wind machines for water pumping and other purposes. In addition to the windfarm model, there is increasing American interest in the European approach to wind development, which features individual or clusters of machines, often owned by landowners or agricultural cooperatives.
While some wind projects present environmental disadvantages, for example the potential for bird kills and a highly visible impact on rugged landscapes, these can be minimized through careful siting and collaborative community planning processes. In general, the steadily improving economics of wind generation make it a preferred zero-emission technology.
What does the wind industry look like? The wind industry features the following sectors:
- Large wind turbine manufacturers and dealers produce electricity-generating wind turbines ranging from a hundred kilowatts to over a megawatt in capacity.
- Component manufacturers provide turbine manufacturers with gearboxes, blades, electronic systems, towers, brakes, generators, bolts and the like.
- Accessory equipment manufacturers make anemometers for wind measurement, cables, etc.
- Windfarm developers & operators manage large arrays of wind machines, selling the electricity wholesale to electric utilities, either to satisfy state mandates supporting renewable energy, or for retail sale as "green power." Some firms may contract out necessary maintenance services, such as blade cleaning or repair work.
- Resource assessment and mapping consultants, under contract to developers, prospect for sites where the wind blows strongly and reliably.
- Environmental service consultants perform environmental impact assessments for planned developments, with a particular focus on avian impacts.
- Construction and development contractors build the access roads, etc. for large windfarms and erect turbines.
- Small wind turbine manufacturers and dealers produce electricity-generating machines under 50 kW in capacity for home, farm or village use; many have a strong export focus.
- Wind pump manufacturers and dealers make mechanical wind-driven pumps.
- Repowering firms have begun to replace older machines in existing windfarms with newer, more efficient models, thus taking advantage of existing permits and purchase contracts.
How big is the wind industry and how big is it likely to grow? In the spring of 1999, the global wind industry surpassed 10,000 MW of capacity, after growing since 1992 at 27% annually-the fastest rate of any energy technology. That growth has created 20,000 new jobs from 1993 to 1998; in 1998 equipment sales amounted to over $2 billion.
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Growing faster than any other generation technology, the global wind industry has surpassed 10,000 installed megawatts.
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Currently, 55% of the world's wind power is of Danish origin. Employing about 12,000 people, Danish industry members sold about 1,216 MW of turbines in 1998, compared to a total Danish market of 1,500 MW. Revenues for the Danish industry are expected to grow from about DKK7 billion (about $1 billion) in 1998 to DKK9 billion in 1999.
The U.S. wind industry hovered and backpedaled through much of the mid-1990s, largely due to the low cost of power from gas-fired powerplants, and regulatory uncertainty over the significance of electric sector restructuring. Due to the financial implosion of America's most visible wind turbine manufacturer and windfarm developer, Kenetech Windpower, the United States harbors only one manufacturer of large wind turbines, Enron Wind Energy (formerly Zond Windpower), which holds 2.4% of the world market.
Growth in the industry has picked up again; the American Wind Energy Association (AWEA) tallies 892 MW of new projects, plus 192 MW of refurbished existing projects, coming on line in the year ending 30 June 1999, beating the deadline of the (perhaps temporarily) expiring Production Tax Credit (see Section V). Associated investment equaled $1 billion. Whereas California hosted most of the wind capacity installed in 1980s, the new capacity will supply markets in twelve states in the Midwest and West.
According to the Energy Information Administration's (EIA, an agency of the U.S. Department of Energy) reference case forecasts, wind energy will have grown from 1,880 MW of installed capacity in the U.S. in 1997 to 2,800 MW by 2000, and thence to 3,610 MW by 2020-only 2.9% annual growth over the entire period, compared to current annual global growth of 27%.
According to law, EIA may not assume any future policy changes in its reference cases. To evaluate the effect of policy, EIA publishes "side cases." One such side case considers a 5.5% renewable portfolio standard, the figure suggested by the Clinton Administration's 1999 electric sector restructuring bill. EIA suggests that this policy would lead to 19,000 MW of wind installed by 2010, holding steady at that figure through 2020. Perhaps more indicative, EIA's "high renewables" case foresees growth in installed U.S. wind capacity from 1,880 MW in 1997 to 10,420 MW in 2010, and thence to 22,030 MW in 2020. Significantly, this case assumes only that the industry meets the Department of Energy's own technology projections-and as recent research by the Renewable Energy Policy Project has shown, the wind industry has met or beaten virtually all past projections of cost.16
The reappearance of American wind development has brought local employment benefits. NEG Micon USA's first American facility, recently opened in Champaign, Illinois, hosts 20 jobs, a number which the company believes will double or triple in the next several years. NEG Micon buys most of its towers from Thomas & Betts of Hagar City, Wisconsin, a firm employing 200 workers. Flender Corporation's gear factory in Elgin, Illinois employs about 170 people, about 10% of whom work on gearboxes for wind turbines. And, in a final example, LM Glasfiber has opened a plant in Grand Forks, North Dakota, for the fabrication of turbine blades, creating 130 jobs-for comparison, the state's entire lignite mining industry reportedly harbors employs 650 workers.
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