A Second Wind for Energy Industry

The mood was grim, funereal. Captains of the nation’s wind energy industry had gathered in San Francisco for their 1987 annual convention, but no one was having much fun.

No wonder. The American wind industry, hatched in a climate of giddy optimism in the early 1980s, had taken a frightful tumble. Lucrative federal and state tax credits, which prompted rows of windmills to sprout like wildflowers in California’s gusty passes, had expired, dramatically slowing new installations.

At the same time, companies that invested heavily in the largely untested technology were taking a beating as the temperamental windmills suffered chronic breakdowns requiring expensive repairs.

Bankruptcies were rampant, nasty lawsuits routine.

“Everyone was singing the blues that year,” recalled Frederick Noble, 50, who owns a cluster of wind parks near Palm Springs. “If you hadn’t gone under yet, you felt like death was right around the corner.”

Well, don’t recite the Requiem just yet. Today’s wind farmers--the vast majority of whom harvest breezes in California--have weathered the turbulent times and see bright skies ahead.

Evidence supporting this cheerfulness abounds. For starters, the productivity of “wind turbines” has tripled over the last decade, thanks to advances in design, improved operation and maintenance techniques and the increasingly sophisticated placement of machines in spots where they exploit the wind’s maximum potential.

Many utilities, once leery of the renewable energy source, are taking note of the advancements, with Northern California’s Pacific Gas & Electric Co. even forming a five-year, $20-million research and development partnership with the nation’s largest wind turbine manufacturer.

Venture capitalists are once again knocking at the door, lured in part by the bullish predictions of some experts that 40% of the country’s energy needs could ultimately be supplied by windmills. Institutional investors such as pension funds and insurance companies are now gamely financing projects as well.

Perhaps most promising, the cost of harnessing the wind to produce electricity has declined steadily, dropping as much as 300% since the first turbines rose in California. Some analysts predict that state-of-the-art turbine designs will soon make wind energy affordable enough to compete commercially with conventional sources.

“There is life after death,” said Thomas Gray, who runs an alternative energy research organization based in Arlington, Va., and who is the former executive director of the American Wind Energy Assn. “The strong have survived and investors don’t view us as some off-the-wall risky venture any more.”

Despite the turnaround, even the industry’s biggest boosters admit that problems remain.

In many areas, wind farmers face opposition from residents who find the mammoth, whirring machines offensive. A proposal to build Los Angeles County’s first wind farm on hilly pastureland near Gorman, for example, was killed earlier this year by critics who argued that the 458 turbines would hurt property values and mar the landscape.

Palm Springs, which is bordered by nearly 4,000 turbines clustered atop ridges and amid desert shrubbery, has also been less than hospitable. Mayor Sonny Bono, who has blamed a faltering tourist economy in part on the highly visible machines, traveled to Washington last summer to lobby for their removal. The city--through a newspaper advertisement--has even urged residents to write anti-windmill letters to the U.S. Bureau of Land Management, which owns much of the land on which the machines sit.

In the Bay Area’s Altamont Pass, home of the largest concentration of wind turbines in the world, biologists are investigating the deaths of eagles, hawks and other birds that inexplicably fly into the windmills’ blades. The deaths--99 have been tallied during an unofficial survey since 1986--have spurred protests from wildlife groups, and wind companies are now studying noisemakers, bright paint and other measures to keep the birds away from the machines.

More daunting, however, are challenges related to the industry’s ability to grow and compete with conventional energy sources such as coal, oil and natural gas.

Roughly 85% of the world’s wind energy is produced in California, where 16,000 turbines--most of them concentrated in Tehachapi, the Palm Springs area and the Altamont Pass--generate 2 billion kilowatt hours of electricity each year.

Even so, that amount (enough to power all the homes in a city the size of San Francisco) meets just 1% of the state’s energy needs. On a national scale, wind power production is virtually inconsequential.

While technological advances continue to bring production costs down and improve the turbines’ output, experts agree that wind will never be more than a minor, supplemental source of power here unless the nation alters its energy pricing system.

Specifically, analysts argue that environmental and social costs--such as air pollution, harmful health problems and phenomena such as the greenhouse effect--should be quantified and tacked onto the price charged for electricity from coal-fired, gas-fired, oil-fired or nuclear power plants. Wind and solar energy, conversely, should receive “credit” for being clean, non-polluting sources of power, they contend. This argument already is receiving considerable attention in Europe.

“The potential for wind in the United States is enormous,” said Robert Lynette, an energy consultant in Redmond, Wash. “But as long as the costs of coal and other fossil fuels are not computed to include the pollutants they emit and the long-term health and environmental problems associated with them, wind will have a hard time competing.”

Putting the wind to work is hardly a new idea. For centuries, wooden windmills have been used to pump water or turn mill wheels. In the United States, the windmill’s role historically was limited to generating small amounts of power for rural homes.

That began to change in the 1970s, when the oil crisis, subsequent gasoline lines and the nation’s evolving environmental conscience made renewable energy sources such as wind and solar power attractive.

To encourage the development of wind power, Congress in 1978 passed a law requiring utilities to buy electricity from independent producers. The legislation was vital to the birth of wind farms because it guaranteed vendors a market for their product.

To help ease the financial risk of investing in unproven technology, federal and state lawmakers also provided hefty tax credits for wind park developers. Equally important, the California Public Utilities Commission required utilities to negotiate contracts with wind companies that established favorable, fixed purchase prices for 10 years.

“That was crucial, because it gave investors and banks an assured revenue flow and thus some confidence in their investment,” said Michael DeAngelis, research and development manager for the California Energy Commission.

The result was a Gold Rush-like explosion in wind farming. In what seemed a mere instant, forests of windmills--some spindly replicas of the Eiffel Tower, others beefy monstrosities mounted on thick tubular stems--began spreading through mountain passes, sites identified as promising by $1-million worth of state-funded studies.

“The tax credits were extremely successful,” said Paul Gipe, executive director of the Kern Wind Energy Assn. in Tehachapi. “They created an entire industry almost overnight.”

The rapid dash to market, however, was not trouble-free.

While many of the pioneering companies were run by legitimate business people committed in principle to wind energy, other developments were built hastily and carelessly by speculators who soon moved on to other tax shelters--often leaving defunct machines behind.

“There was definitely a climate of ‘Get them up quick, ask questions later,’ ” said Miles Barrett, 34, vice president of Palm Springs-based Wintec Ltd. “You had a lot of people in the industry just looking to get rich. They’ve been weeded out, but they gave us a black eye.”

The industry spawned such enmity in Palm Springs that the city sued to force developers to dismantle some of the 100-foot-tall machines, described by one resident as “tin skeletons.” The lawsuit was eventually settled, with wind companies agreeing to follow guidelines governing the turbines’ size and location.

An image problem, however, was a small worry compared to the technological headaches of the early years. In their rush to satisfy the growing appetite for equipment, many manufacturers produced turbines that were untested and, it turned out, riddled with problems.

Mechanical failures were compounded by a lack of technicians capable of remedying the problems.

Many utilities, meanwhile, had launched experimental projects of their own. But relentless operational problems led to disillusionment. Southern California Edison Co. invested $20 million in a pilot project in the desert before closing it at the end of 1986.

At the same time, the federal government--initially a friend of the industry--began to give it the cold shoulder, slashing the Department of Energy’s research budget for wind power. The coup de grace came in 1986, when the last of the tax credits that had propelled the industry to such an auspicious start expired.

Still, predictions that the industry would shrivel up and die without props such as the tax credits proved unfounded. Many companies did go under, and a flurry of bitter lawsuits were filed by those who lost their shirts.

But some hung on and have spent the last several years immersed in self-examination--tinkering with turbine design, operation techniques and other questions central to the industry’s ability to survive.

Much of the early progress was made on such prosaic topics as turbine maintenance. For example, the productivity of many machines increased roughly 25% when operators began cleaning their blades of dirt, dead bugs and other debris.

More significant advancements have come in the shape and pitch of blades and the use of computers to control the machines and alert operators the instant a problem surfaces.

Today, research is focused on how to build a turbine that is more “utility-friendly,” said Edgar DeMeo, manager of solar power programs for the Electric Power Research Institute in Palo Alto. The “garden variety turbine does not produce super-clean energy like the utilities get from a conventional plant,” he said. Advancements in power electronics are viewed as a key to overcoming that problem.

The acknowledged leader in this area is U.S. Windpower of Livermore, the largest turbine manufacturer in the world. The company’s president, Dale Osborn, said U.S. Windpower is about to sign an agreement with PG&E; to develop a so-called “utility grade” windmill. A prototype, 300-kilowatt machine--which has three times the generating capacity of the company’s standard turbine--is already up and running.

The historic accord, experts say, proves that many utilities have new-found confidence in wind.

Osborn said the firm has projects under way in Spain, Taiwan and Inner Mongolia and is engaged in talks with India, China and 23 other nations.

Closer to home, a subsidiary of Hawaii’s major utility operates wind farms that produce 1% of the energy used on Oahu and 15% of the power used on the island of Hawaii.

In the first venture of its kind, Wintec Ltd. of Palm Springs is funding an experimental project on the Pine Ridge Indian Reservation in South Dakota. Last month, a delegation from the reservation visited California. Gerald Big Crow, a member of the Sioux Tribal Council, said there is “great excitement” about wind power on the reservation, where tribal members now spend half of their income on electricity during wintertime.

“I find them fascinating,” Big Crow said, peering skyward as the blades on a 65-kilowatt machine twirled with a low hum overhead. “You can feel that power, you can really feel it.”