A growing number of investors see a goldmine in green ventures, and they are pouring billions into alternative energy, namely wind. Rapid growth is predicted in the global wind market and the United States is one of three nation’s leading future growth in the industry, according to Reuters, citing a German research study. In fact, wind power is capable of becoming a major contributor to America’s electricity supply over the next three decades, according to a report released by the U.S. Department of Energy. Legendary oil executive, T. Boone Pickens, has already announced he’s sinking $2 billion into a wind farm in Texas. Meanwhile, international investment and specialized fund and asset management group, Babcock & Brown has begun construction on another wind farm in South Dakota which will be capable of powering 15,000 homes per year.
One industry veteran now recruiting for executive search firm, A.E. Feldman, says, “Very few people understand green technologies yet but the wealth of individuals and institutional investors getting involved is enormously high. There is a big rush of people and money into this area. It’s still very early, but interest in alternative energy is absolutely growing and attention to the sector will only increase.” As a result, the firm says investment professionals who understand the burgeoning industry and can funnel money into these businesses are hot commodities.
Global Wind Energy Market Booming
The global wind energy market is expected to surge in coming years. The world market volume of annual new installations is projected to grow to about five times its current size within 10 years, from about 20,000 MW in 2007 to about 107,000 MW in 2017, according to Reuters, citing a survey conducted by the German Wind Institute.
Germany was replaced by the U.S. as the world’s top market for newly installed wind turbines. Last year, global installations rose by 27%. The majority of new installations, 78%, were made in the United States, China, Spain, Germany and India, the study found.
U.S. Leading the Pack
In a recent report, the Department of Energy contends that wind power is capable of becoming a major contributor to America’s electricity supply over the next three decades. The DOE says that achieving a 20% wind contribution to U.S. electricity supply would:
- Reduce carbon dioxide emissions from electricity generation by 25% in 2030
- Reduce natural gas use by 11%
- Reduce water consumption associated with electricity generation by 4 trillion gallons by 2030
- Increase annual revenues to local communities to more than $1.5 billion by 2030
- Support roughly 500,000 jobs in the U.S.
Under the DOE’s 20% wind scenario, installations of new wind power capacity would increase to more than 16,000 megawatts per year by 2018, and continue at that rate through 2030.
Randy Swisher, Executive Director of the American Wind Energy Association, asserts that one-fifth of America’s electricity can come from wind by 2030 if a savvy strategy is executed, according to Renewable Energy World. Swisher also notes that achieving 20% would essentially end the mounting CO2 emissions from electric generation in the U.S. Looking ahead, Swisher also contends that wind will continue to assume the largest role in mitigating CO2 emissions following a 45% increase in new generating capacity added throughout the U.S. last year compared to 2006.
Investors Sinking Billions into Wind
Babcock & Brown, recently announced it has a completed the financing of its Wessington Springs Wind Project, located near the town of Wessington Springs, South Dakota. Babcock says the Wessington Springs Wind Project, with 34 new GE 1.5 megawatt (MW) wind turbines, will have a total production capacity of 51 MW, enough to power about 15,000 homes each year. Construction has already begun on the wind farm, which is expected to begin commercial operations by the end of the year.
“The start of construction at Wessington Springs Wind Project marks a major milestone in a development process that started from scratch three years ago,” said John Calaway, Chief Development Officer for Babcock & Brown’s North American Wind Energy Group. “We look forward to harnessing the wind of South Dakota to produce clean and renewable energy when Wessington Springs Wind Farm begins operating later this year.
Babcock currently operates 20 wind farms across nine states throughout the U.S., totaling more than 1500 MW of installed capacity. The Company also has more than 25 wind farms in various stages of development around the country.
Additionally, Mesa Power LLP, a company created by Pickens, has placed an order with General Electric to purchase 667 wind turbines capable of generating 1,000 megawatts of electricity, enough to power more than 300,000 average U.S. homes. In a statement, GE says the agreement represents the first phase of the four-phase Pampa Wind Project that will become the world’s largest wind energy project, with more than 4,000 megawatts of electricity, enough for 1.3 million homes. Pickens expects the first phase of the project will cost about $2 billion, and that electricity from the project will be on-line by early 2011. When all phases of the project are completed as projected in 2014, the wind farm will be five times as big as the nation’s current largest wind power project, covering some 400,000 acres in the Texas Panhandle.
Pickens believes that developing alternative energy projects is critical for the nation’s future. “You find an oilfield, it peaks and starts declining, and you’ve got to find another one to replace it. With wind, there’s no decline curve,” he says.
“T. Boone Pickens’ commitment underscores the ability of wind technology to help meet the country’s need for diverse sources of energy,” said Jeffrey R. Immelt, GE Chairman and CEO. “As America’s demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need.
Pickens says large scale renewable energy projects such as this are difficult to execute because they rely upon the Federal Production Tax Credit (PTC), which provides incentives for development of renewable energy. The problem lies in the fact that large scale renewable energy projects require commitments years in advance, while Congress has only extended the Production Tax Credit one or two years at a time.
“I believe that Congress will recognize that it is critical not only to this project, but to renewable energy in this country, that they enact a long-term extension of the Production Tax Credits,” says Pickens. “The development of alternative energy projects, especially renewable resources such as wind power, is critical for the future of the country in the face of declining world oil resources,” he adds.
Tackling Climate Change on Capitol Hill
The Senate is set to debate a bill that could cut total U.S. global warming emissions 66% by 2050, according to Reuters. Under the measure set for Senate debate, known as the Lieberman-Warner Climate Security Act, U.S. greenhouse gas emissions would drop by about 2% per year between 2012 and 2050, based on 2005 emission levels.
Senate Majority Leader Harry Reid has scheduled the bill for the first week in June. The coming debate represents a major turning point for the federal government, and a critical juncture for venture capitalists looking for support on Capitol Hill.
Presidential candidates on both ends of the political spectrum have voiced their support for issue. .” Both democratic presidential contenders Barack Obama and Hillary Clinton are vehement supporters of investment in renewable energies. Republican, John McCain has also recently recognized that climate change is a serious problem. In remarks at the Vestas Wind Technology training facility in Oregon, McCain stated, “Wind is a clean and predictable source of energy, and about as renewable as anything on earth. Along with solar power, fuel-cell technology, cleaner burning fuels and other new energy sources, wind power will bring America closer to energy independence.”
Renewable Energy World quotes John Coequyt, Senior Washington Representative in the Global Warming and Energy Program at the Sierra Club, as saying, “We have to set national goals for these technologies. I don’t want you to think that this is going to be easy. But no one should think that renewables are going to be only a small percentage of the future if we decide that is the future we want.”