Wind Energy Industry Growth Forecast in United States and EU

In 2006, total world wind generating electricity capacity was around 72,000 MW, producing some 160 terawatt-hours (TWh) per year of electricity. As of the end of 2006, the top wind producers were Germany, with 20,622 MW; Spain, with 11,615 MW; and the United States, with 11,575 MW.

Even so, wind accounts for only about 1 percent of the world’s total energy use. So the sky is the limit, given the enormous need to replace depleting traditional fuels. Wind is the fastest growing of all renewable power sources, increasing at a rate of about 25 percent per year worldwide in recent years. Since 1990, wind generating capacity has doubled roughly every three and a half years; that ’ s about a 20 percent per year growth rate. Worldwide wind energy capacity grew 27 percent in 2007, a record pace, to a total of 94 GW, according to a new report from the Global Wind Energy Council. New installations were up 30 percent over 2006, and the global wind market is now estimated to be worth about $ 36 billion per year in new generating equipment.

In economic natural resources terms, that s double the size of the wind industry in 2006, which stood at $ 17.9 billion according to a 2007 report by Clean Edge. They anticipated that the business would grow to $ 60.8 billion by 2016, which would represent a 13 percent annual growth rate over 10 years, but now that looks like an underestimate.

One important factor to bear in mind about the prospects for the wind industry is that, as far as we have seen, nobody takes into account fossil fuel depletion in their projections. Studies do place certain constraints on fossil fuels in their models, based on assumptions about the future of emissions reduction controls, geopolitical factors, climate change, historical production rates, industry investment, and so on, but it appears that most analysts have yet to fully grasp the coming energy crisis — or if they do, they aren’t saying so.

Consequently, we believe that for the next two decades or more, the growth of the industry will be strong and sustained, surpassing previous estimates. We estimate that, conservatively, we’ll continue to see 25 percent annual growth rates for the foreseeable future, creating more than $ 4 billion in new wind projects annually, until the resource is more fully exploited. At that point, the growth rate could slow down, but wind will still have to grow to compensate for the loss of other fuels.

A 2005 study from the Global Wind Energy Council is even more optimistic, showing that by the year 2020, when world electricity energy demand will have increased by two-thirds, wind could realistically meet 12 percent of world electricity demand — equivalent to powering 600 million average European households. By then, they believe the wind industry will be an € 80 billion (about $ 118 billion) annual business!

Wind Energy Industry in the United States

Europe has built a flourishing wind industry over the last decade, but the same explosive growth curve is just getting started here in the United States. If the grid were able to support it, the state of North Dakota alone could generate more wind power than all of Germany, but Germany has more installed wind capacity than the entire United States. Wind power currently supplies less than 1 percent of all electrical power in the United States, but our potential resources are much greater, especially in the Great Plains states.

Renewable energy business, wind energy in the United States resembles the early days of the European wind industry. “ There’s a lot of room for development there, and there is a lot of expertise here. ”

Not surprisingly, the U.S. wind market has been the fastest-growing wind power market in the world since 2005, accounting for 16 percent of new worldwide wind generating capacity in 2006 — more than the power equivalent of two nuclear reactors. In 2005, total generating capacity surged 27 percent to 9,100 MW. In 2006, wind grew by another 26 percent, adding 2,454 MW (surpassed only by new natural gas plants!), representing $ 4 billion in investment.
And in 2007, wind installations shattered expectations, adding an estimated 5,244 MW of new capacity, a 45 percent increase over 2006, representing $ 9 billion in investment. Growth in 2008 isn’t slowing down either, and is expected to match that of 2007. Sixty-one percent of the U.S. capacity in 2006 — over 7,300 MW — has been installed since 2001.

By the end of 2007, the installed wind capacity in the United States stood at over 16,800 MW.
Another 3,506 MW are already under construction as of January 2008. Wind farms are expected to generate an estimated 48 billion kilowatt - hours (kWh) of wind energy in 2008, enough to power over 4.5 million homes.

Texas, Washington, and California are leading the nation in new wind capacity growth. Somewhat ironically, given its long history of fossil fuel production, Texas is the largest and fastest-growing wind market in the country, boosting its wind capacity by 59 percent in 2007, to 4,356 MW.

The recent surge in Texas wind power has nothing to do with environmental perspectives issues or a sudden outbreak of “ green ” feeling. It ’ s simply a profitable business, especially in the coast and panhandle regions, where the wind blows reliably year-round. Russel E. Smith, executive director of the trade group Texas Renewable Industries Association, is bullish: “ At this point, we think 10,000 - plus megawatts in the next five to eight years is doable, ” he said.

The Horse Hollow Wind Energy Center is the latest in a series of mega-wind projects in Texas. At 47,000 acres and 735 MW, it’s the largest of its kind in the world. The operator, FPL Energy, is the largest owner and operator of wind turbines in the world, and generates more than 1,600 megawatts of wind power in Texas alone. Their total U.S. wind portfolio has 4,100 megawatts of capacity, enough to power more than a million homes. FPL Energy dropped $ 1 billion on wind power in Texas in 2006 alone, and they have grand plans for expansion.

In addition to such large, utility-scale wind projects, the residential wind market is gaining ground. Residents of windy states with at least half an acre (and friendly neighbors) spent more than $ 17 million on small wind-power systems in 2005, up 62 percent from 2004. Some reported a savings of 35 percent or more. As impressive as American wind energy production is, it ’ s really just getting started. According to a joint report issued in May 2007 by 18 organizations including trade associations, universities, research groups, and the U.S. government energy agencies, and coordinated by the American Council on Renewable Energy (ACORE), wind energy could supply the majority — 248 GW, or nearly 40 percent — of renewable energy produced in America by 2025.

The authors took pains to point out that long - term policy support from the government is key to the successful expansion of wind capacity. The American Wind Energy Association (AWEA) made a similar fore- cast in 2007, asserting that it’s both possible and affordable to supply 20 percent of the nation ’ s electricity with wind power by 2030. This would mean over a 20 - fold expansion, from 16.8 GW today to 350 GW. The grid would also need to be beefed up substantially to support the additional power transmission, generating new demand in everything from cables to transformers. This would be good for America, AWEA contends, by not only making a substantial reduction in emissions, but creating some three million jobs.

Combining the ACORE forecast and AWEA historical data, we see the amazing exponential growth for wind in the United States.

Wind Energy Industry in the EU

In Europe, where member countries have been far more aggressive about setting binding goals to decrease greenhouse gas emissions and increase renewable energy production, the wind industry is already huge, and poised for further growth.

Between 1994 and 2005, wind power in the European Union skyrocketed from 1,700 to 40,000 MW. Germany has been particularly aggressive, and now boasts more than 18,000 MW of capacity.

In January 2008, as part of a larger proposal to battle climate change, the European Commission presented draft laws setting a new, ambitious target calling for 20 percent of the overall energy mix to be provided by renewable energy by 2020, plus a 20 percent reduction in carbon emissions, with specific targets set for each of the EU’s 27 countries. Considering that only 8.5 percent of the EU’s energy consumption came from renewable in 2005, this means the sector will need to more than double within 12 years.

Most of that growth will come from wind. Europe has relatively abundant wind, compared to its solar, geothermal, and biomass resources. The British Wind Energy Association (BWEA) estimates that Britain could generate 25 percent of the country’s electricity from wind alone by 2020, increasing its number of onshore turbines from around 1,800 today to 5,000, and its offshore turbines from around 150 today to 7,000. This would increase Britain’s wind capacity 13-fold, from 2.5 GW to 33 GW.