Vancouver, Canada - Legendary Texas oilman T. Boone Pickens is no stranger to the art of picking winners and making money - lots of it. So when Pickens launched a multi-million dollar campaign to educate the American public about the Pickens Plan, a blueprint to reduce US dependence on oil, many previously skeptical investors began to take note. While Pickens and others champion the ‘green’ benefits of renewable energy, simple profit is really the force that is driving the world-wide surge in wind power spending.

To see how KLEAN TEAM is developing large scale wind power parks and unique wind power projects featured on National Geographic, please click here.

There are far more wind projects on the books and under development than anyone would have imagined even 5 years ago.  The Global Wind Energy Council (GWEC) reports that over 20,000 MW of new wind power capacity was installed in 2007, led by the US, China and Spain. This brought world-wide installed capacity to 94,123 MW, an increase of 31% over 2006. (For information, 1 megawatt (MW) of wind-generated power can supply electricity to approximately 240 to 300 households per year according to the American Wind Energy Association.)

"Globally, wind energy has become a mainstream energy source and an important player in the world’s energy markets, and it now contributes to the energy mix in more than 70 countries across the globe," noted GWEC Secretary General Steve Sawyer. The Council’s 2007 Report lists the top five countries in terms of installed capacity as: Germany (22.3 GW), the US (16.8 GW), Spain (15.1 GW), India (7.8 GW) and China (5.9 GW). In terms of generating equipment sales, the global wind market in 2007 was worth about US$ 37bn.

The US Market

As noted, the US led the world in 2007 in terms of new capacity addition - the third year in a row according to the American Wind Energy Association (AWEA). Interestingly America’s largest wind power market is the once oil-rich state of Texas, which added 1,618 MW in 2007, the most of any state by far, and another 1,200 MW was under construction as of early 2008.

Could wind power be the next big energy wave in America? Most definitely, notes AWEA Executive Director Randall Swisher. "Wind power is one bright spot in the American economy, helping to lower home energy bills, strengthen our energy security, create thousands of new manufacturing jobs and reduce global warming emissions while meeting growing demand for electricity across the nation. It’s time for a long-term, consistent federal policy for wind and other renewables to power a cleaner, stronger America," he writes in the Association’s 2008 Wind Power Outlook Report.

It’s a view shared by his new found ally T. Boone Pickens, who argues that in less than 10 years America could harness enough wind power to produce the 22% of US electricity now generated from natural gas. This would allow the country to use that gas as a much less costly transportation fuel.

In true Texas-style Pickens argues the United States is the Saudi Arabia of wind power. "America is in a hole and it’s getting deeper every day. We import 70% of our oil at a cost of $700 billion a year - four times the annual cost of the Iraq war. I’ve been an oil man all my life, but this is one emergency we can’t drill our way out of. But if we create a new renewable energy network, we can break our addiction to foreign oil", he stated at the press conference for the launch of his controversial renewable energy plan.

"Transmission is the single largest strategic constraint for wind … but Texas has probably the most innovative policy for getting transmission built; it is increasingly a model," says Swisher, commenting on a recent decision by the Public Utility Commission of Texas (PUCT) that effectively green-lights tens of billions of dollars more in wind development investment.

Swisher’s vision (shared by Pickens) is for a network of 19,000 miles (30,570 km) of 765-kilovolt power lines (which are bigger than most lines used today), to provide a more reliable, robust system to serve the entire electric industry, not just wind. Swisher argues the bigger lines would face fewer complaints from environmentalists than a maze of smaller lines, because they need less space.

Subsidies make the blades go round

Creating this renewable energy network would not come cheaply, which in part explains why both Pickens and Swisher argue that governments have a role to play by creating favourable tax conditions. Federal production tax credits have been the primary incentive for wind power so far in the US according to Swisher and industry growth has suffered whenever these incentives have been interrupted.

The issue of subsidies and incentives is never far from the surface when wind energy is discussed. A hotly debated editorial in the Wall Street Journal (May 12, 2008) cites a U.S. Energy Information Administration (EIA) analysis of the $16.6 billion spent on direct energy production subsidies, tax breaks, loan guarantees and the like in 2007, which when standardized per unit of energy produced, suggests wind energy is subsidized to the tune of $23.37 per megawatt hour, compared to solar at $24.34 and "clean coal" at $29.81. By contrast, the EIA notes that normal coal receives 44 cents, natural gas 25 cents, hydroelectric about 67 cents and nuclear power $1.59.

Further, notes the Journal, wind and solar have been on the subsidy take for years, but still account for less than 1% of total net electricity generation. Without a technological breakthrough, America’s dependence on fossil fuels will continue to dominate American energy production it notes: "They are extremely cost-effective. That’s a reality to keep in mind the next time you hear a politician talk about creating millions of "green jobs". Those jobs won’t come cheap, and you’ll be paying for them."

Green Investing Gains Traction

Due to overall heightened interest in the environment, green investing has become widely popular across the globe in recent years, offering investors lucrative returns and an opportunity to become actively involved in social responsibility. An array of vehicles through which to back green initiatives drove robust growth in green sectors in 2007, such as mutual funds, ETFs and other pooled products, or alternative investments. The total investment in clean technology, for example, increased to $117 billion in 2007, up 41 percent from 2005, with notable strength in wind and solar segments.

Source: 12th Annual World Wealth report - Merrill Lynch

In fairness, nearly every source of energy, from coal to nuclear power, gets some sort of federal aid, and wind companies receive theirs in the form of tax credits, which enable them to line up investors and overcome enormous start-up costs. (Hundred-foot blades don’t come cheap.) The wind-energy tax credit pays developers about 2 cents for every kilowatt-hour of electricity they produce. In addition some U.S. states also provide tax incentives to wind developers.

Canada’s Wind Energy Market

Canada’s wind energy market also has grown rapidly over the past decade. Roughly 386 MW of new capacity was added in 2007, an increase of 26% over 2006, bringing total installed wind energy capacity to 1,846 MW. Three new projects in Alberta totaling 139 MW placed it as Canada’s leading jurisdiction with 524 MW of installed capacity. A 100 MW facility was commissioned in Anse-a-Valleau Quebec in 2007, the project that arose from Hydro-Quebec’s 1,000 MW request for proposals. The provincially-owned electric utility plans to purchase an additional 2000 MW by 2013.  Two new projects, totaling 77.6 MW were commissioned in Ontario bringing the province’s total installed capacity to 491 MW.

Contracts are in place for an additional 2,800 MW of wind energy in Canada, most of which is to be installed by 2010. Several new competitive calls for proposals are expected that will increase that total significantly. It is expected that Canada will have a minimum of 12,000 MW of installed wind energy capacity by 2016, enough to meet about 4% of the nation’s total anticipated electricity demand.

Like his counterpart below the border, Robert Hornung, President of the Canadian Wind Energy Association (CanWEA) is a staunch promoter of wind energy as a solution to Canada’s energy needs. "Canada has only just begun to tap into its massive wind energy potential" he noted in comments last year welcoming the federal government’s ecoEnergy Renewable Power program.

Wind energy has proven to be a clean, abundant and renewable source of energy that is reliable and economical to produce, notes Hornung. It is clean, does not contribute to climate change, acid deposition or produce hazardous waste by-products, he adds in a recent press release commending British Columbia’s Energy Plan, which requires all new electricity generation projects in the province to have zero net green house gas emissions. BC is the most recent addition to the list of provinces with active wind farm projects in place.

CanWEA represents more than 300 companies involved in Canada’s wind energy industry, including wind turbine manufacturers, component suppliers, wind energy project developers and owners, and a broad range of service providers to the wind industry

Hornung is correct in that electricity generated by wind turbines does not pollute the air or emit pollutants compared to electricity from fossil fuel energy sources. But while wind power plants have relatively little environmental impact compared to fossil fuel power plants, concerns do exist over impacts on wildlife habitat, noise produced by the rotor blades, aesthetic (i.e. visual) impacts, and bird and bat mortality.

Dealing with these and other essentially logistical details has created boom time conditions for an army of lawyers, real estate developers, financiers, site selection specialists as well as wind facility contractors and equipment manufacturers.  "Wind energy is the fastest-growing renewable energy type in the world," commented Andre Turmel in a recent National Post article. Turmel is an energy and climate change law specialist in Montreal with Fasken Martineau, which acts for a German wind turbine manufacturer supplying the Canadian market.

Rapid growth in the wind energy market has put enormous pressure on the supply chain. The high demand for wind turbines is causing a shortage of parts such as blades and gearboxes. Many project developers are securing positions in the parts manufacturing queue in order to ensure their projects can be completed within the parameters of their regulatory approvals or supply contracts.

Canada is currently experiencing an annual 30% growth rate in wind energy development, a rate comparable to other global markets. The Canadian Wind Energy Association’s goal is for 10,000 MW of installed wind energy in Canada by the year 2010, enough to supply 5% of Canada’s electricity needs. Achieving that target will require continuation of federal and provincial policy measures and other incentives that have been so important in fostering wind energy development in recent years.

And while Canada may not be the Saudi Arabia of wind power in keeping with T. Boone Pickens’ hyperbole, there is money to be made in the wind power sector, with no end of opportunity in sight.