Wind Energy: Change Is in the Air : Pollution Concerns Seen as Boon for Alternative Power Sources

The wind-energy industry, born in the petroleum crisis and raised on subsidies, sees a new future in the concern for air quality.

The clean-air agenda announced recently by President Bush will help. So will the hard-nosed 20-year clean-air plan of California’s South Coast Air Quality Management District.

In the final analysis, wind-energy managers hope that the urgency of health will translate into an adjustment in the pricing of energy that will take social costs into account.

The social costs of the traditional coal-fired, gas-fired, oil-fired or nuclear plants usually fall into the bailiwicks of someone other than the electricity ratepayers. These include all of the ill effects of pollution, hazardous wastes and the like.

No Social Costs Claimed

Paul Gipe of the American Wind Energy Assn. said wind power causes none of these social costs, nor do solar or geothermal power sources.

Gipe said that if the social costs of polluting were added to the sales price of electricity from traditional sources, the wind-energy industry “would be able to compete with the government-subsidized hydroelectric and other plants.”

“The challenge is finding ways to get from here to there in terms of utility pricing . . . where the market is more equitable. When we do it, it will make good business sense,” Gipe said in a recent interview.

Wind power will never wholly replace traditional sources. There is not enough wind in locations suitable for power production. But it can help reduce social problems in the most critical places.

Wind energy was hardly an industry when it responded to the petroleum crises that began in the early 1970s. Encouraged by favorable federal rate-fixing legislation and federal and state tax incentives, the industry grew from almost nothing to nearly 16,000 windmills in California, supplying about 1% of the total amount of electricity generated in the state. The goal of the state Energy Commission is 10% by the year 2000.

Gipe said the 1% is enough for the residential power needs of a city the size of San Francisco. He said it replaces 3 million barrels or 12 tankers full of oil a year, sparing the California atmosphere 11 million pounds of air pollutants from oil and natural gas.

Also, based on Brookhaven National Laboratory estimates of mortality from pollutants from various fuel types, Gipe estimated that wind power in California should already be saving 30 lives a year.

He also cited a German study that says the social benefits of wind energy are worth more than the cost of the windmills, technically known as turbines.

Turbines are still going up in California despite the end in 1985 of the subsidies after having cost the federal government about $800 million and the state $528 million.

Market Guaranteed

Most of the turbines being installed are those for which the electricity buyers--the utilities--had signed contracts before April 17, 1985. These old contracts are favorable contracts, written under federal legislation guaranteeing a market for electricity generated by independent or third-party producers.

Most of these old contracts guaranteed fixed prices for the first 10 years of actual operation and a floating “avoided cost” price for the next 20. The “avoided cost” is what the utility would have to pay to produce the electricity itself or buy it elsewhere.

These fixed prices were based on the high cost of gas and oil in the early 1980s, together with the forecasts of consumption and utility production efficiency. Therefore, they ranged around 7 and 8 cents per kilowatt hour in 1982 but have since dropped to less than 3 cents.

Fixed-price contracts are what the developers needed to show to the banks. And Julian Ajello of the state Public Utilities Commission said that when the utilities again need new electricity, they will again write them.

But no more electricity is now needed in California, except perhaps in the San Diego area. The current surplus of generating capacity and the low price of petroleum explain a lot about the wind industry’s search for growth.

In addition to the clean-air market, some companies are looking to the windier parts of the United States. But obstacles there include cheap local coal and government-built hydroelectricity projects.

Third World countries are considered likely prospects for wind power, but the competition is high from European firms.

Petroleum Crisis

Another possibility is a new petroleum crisis. If that happens, a powerful response could be expected from a far more sophisticated and mature wind industry than the one that answered the call in the 1970s and early ‘80s. The same could be said for the solar people, the geothermal people and the other third-party producers of electricity from biomass, cogeneration, rice hulls, old tires, waterfalls and all the rest.

Some third-party executives say they are the forerunners of a revolution in the power industry. This is because the risk has grown so high for the traditional central power plants that the utilities are looking for third parties with which to share it.

Third-party operations are not regulated as severely as the utilities. Some big utilities are going so far as to form non-regulated subsidiary corporations to cultivate them.

Under usual regulation--and sometimes protests--it takes eight to 10 years to move from the planning stage of a central plant to power production. And currently, neither the state California Public Utilities Commission nor the State Energy Commission has any plan under consideration.

Nuclear Plant Closure

The capacity in California of traditional central power plants seems actually to be diminishing. A campaign led by Tom Hayden’s Campaign California, which he describes as the state’s largest progressive political organization, recently led to the closure of a 15-year-old nuclear plant, the 813-megawatt Rancho Seco near Sacramento. An eventual restart is problematical at this point.

But don’t worry, said an executive of a large wind-energy company who asked that neither his nor the firm’s name be used: “We can install 40 to 50 megawatts of new generating capacity a year without any problem, and we’re only one company.”