GOVERNMENT SERIES

Energy:
Wind
The History of Wind Energy, Electricity
Generation from the Wind, Types of Wind Turbines,
Wind Energy Potential, Offshore Wind Technology,
Wind Power on Federal Land, Small Wind Turbines,
Economic and Policy Issues, Tax Policy
Compiled by TheCapitol.Net
GOVERNMENT SERIES
Energy:
Wind
The History of Wind Energy, Electricity
Generation from the Wind, Types of Wind Turbines,
Wind Energy Potential, Offshore Wind Technology,
Wind Power on Federal Land, Small Wind Turbines,
Economic and Policy Issues, Tax Policy
Compiled by TheCapitol.Net
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v 1
Energy: Wind, softbound:
ISBN: 158733-188-8
ISBN 13: 978-1-58733-188-6

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Chapter 1:
“History of Wind Energy,” U.S. Department of
Energy (DOE)—Energy Efficiency and Renewable
Energy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 2:
“Electricity Generation from Wind—
Basics: How Wind Turbines Work,”
U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 3:
“How Wind Turbines Work,” U.S. Department
of Energy—Energy Efficiency and Renewable
Energy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Chapter 4:
“Types of Wind Turbines—Basics,”
U.S. Energy Information Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter 5:
“Where Wind Power Is Harnessed—Basics,”
U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Chapter 6:
“Wind Power Today—Building a New
Energy Future,” U.S. Department of Energy—
Energy Efficiency & Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Chapter 7:
“Wind Power in the United States: Technology, Economic,
and Policy Issues,” by Stan Mark Kaplan, CRS Report
for Congress RL34546, October 21, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Chapter 8:
Estimates of Windy Land Area and Wind Energy Potential
by State for Areas >=30% Capacity Factor at 80m,
National Renewable Energy Laboratory, February 4, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Chapter 9:
“Distributed Wind Market Applications,”
by T. Forsyth and I. Baring-Gould, Technical
Report NREL/TP-500-39851, November 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
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Summary Table of Contents
iv Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Chapter 10:
“U.S. Energy: Overview and Key Statistics,”
by Carl E. Behrens and Carol Glover, CRS Report
for Congress R40187, October 28, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Chapter 11:
Testimony of Dr. Howard Gruenspecht, Acting Administrator,
Energy Information Administration, U.S. Department of Energy before the
Subcommittee on Energy and Environment of the Committee on Energy
and Commerce, U.S. House of Representatives, February 26, 2009 . . . . . . . . . . . . . . 243
Chapter 12:
Testimony of Ralph Izzo, President, Chairman and CEO,
Public Service Enterprise Group Incorporated before
the House Committee on Energy and Commerce,
Subcommittee on Energy and Environment, February 26, 2009 . . . . . . . . . . . . . . . . . . . . 261
Chapter 13:
Written Testimony of Edward C. Lowe, General Manager,
Market Development, Renewables, GE Energy Infrastructure before
the House Committee on Energy and Commerce, Subcommittee
on Energy and Environment. Hearing on “Renewable Energy:
Complementary Policies for Climate Legislation,” February 26, 2009 . . . . . . . . . . . . . 269
Chapter 14:
“Wind and Water Power Program—Wind Powering America” . . . . . . . . . . . . . . . . . . . . . . 285
Chapter 15:
“Wind and Water Power Program—About the Program,”
U.S. Department of Energy—Energy Efficiency
and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Chapter 16:
“Wind and Water Power Program—Related Wind Links,”
U.S. Department of Energy—Energy Efficiency
and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Chapter 17:
“Wind and Water Power Program—Wind Energy
Resource Potential,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Chapter 18:
“Wind and Water Power Program—Wind Power
Outreach and Education,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
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Chapter 19:
“Wind and Water Power Program—Environmental Impacts
and Siting of Wind Projects,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
Chapter 20:
“Wind and Water Power Program—Wind Energy for
Hydrogen Production,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
Chapter 21:
“Wind and Water Power Program—Wind Energy for
Hydropower Applications,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Chapter 22:
“Wind and Water Power Program—Distributed (Small)
Wind Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Chapter 23:
“Wind and Water Power Program—Large Wind
Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Chapter 24:
“Wind and Water Power Program—Supporting Wind
Turbine Manufacturing,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
Chapter 25:
“Wind and Water Power Program—Jobs and Economic
Development Impact Models,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Chapter 26:
“Wind and Water Power Program—Wind Economic
Development,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Chapter 27:
“Wind and Water Power Program—Offshore Wind
Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
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Chapter 28:
“Wind Energy: Offshore Permitting,” by Adam Vann,
CRS Report for Congress R40175, September 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
Chapter 29:
“Wind and Water Power Program—Renewable
Systems Interconnection,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Chapter 30:
“Wind and Water Power Program—Advantages and
Disadvantages of Wind Energy,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Chapter 31:
“Assessing the Potential for Renewable Energy on
National Forest System Lands,” U.S. Department of Energy,
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Chapter 32:
“Energy Projects on Federal Lands: Leasing and
Authorization,” by Adam Vann, CRS Report for
Congress R40806, September 8, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479
Chapter 33:
U.S. Senate Committee on Energy and Natural Resources
Hearing on Energy Development on Public Lands and
the Outer Continental Shelf, March 17, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Chapter 34:
U.S. Senate Committee on Energy and Natural Resources
Hearing to Consider Renewable Energy Production, Strategies,
and Technologies with Regard to Rural Communities,
Chena Hot Springs, AK, August 22, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
Chapter 35:
“20% Wind Energy by 2030—Increasing Wind
Energy’s Contribution to U.S. Electricity Supply,
Executive Summary,” December 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
Chapter 36:
“Wind Research—Department of Energy Releases
New Estimates of Nation’s Wind Energy Potential,”
National Renewable Energy Laboratory, February 26, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . 713
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com vii
Chapter 37:
“Visiting NREL—National Wind Technology Center,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715
Chapter 38:
“Wind Research—Large Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
Chapter 39:
“Wind and Water Power Program—Frequently Asked
Questions on Small Wind Systems,” U.S. Department
of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
Chapter 40:
“Wind Research—Small Wind Turbine Independent Testing,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
Chapter 41:
“Wind Research –Small Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731
Chapter 42:
“Wind and Water Power Program—Wind Powering America—
Small Wind for Homeowners, Ranchers, and Small Businesses”
U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . 733
Chapter 43:
“Wind Research—Midsize Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737
Chapter 44:
“Wind Research—Accredited Testing,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739
Chapter 45:
“Wind Research—Software Development, Modeling,
and Analysis,” National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
Chapter 46:
“Wind Research—Working with Us,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745
Chapter 47:
“Energy Tax Policy: Issues in the 111th Congress,”
by Donald J. Marples and Molly F. Sherlock,
CRS Report for Congress R40999, March 8, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747
Chapter 48:
“Renewable Energy and Energy Efficiency Tax Incentive
Resources,” by Lynn J. Cunningham and Beth A. Roberts,
CRS Report for Congress R40455, March 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777
Chapter 49:
Resources from TheCapitol.Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787
Chapter 50:
Other Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788
viii Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xix
Chapter 1:
“History of Wind Energy,” U.S. Department of
Energy (DOE)—Energy Efficiency and Renewable
Energy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Chapter 2:
“Electricity Generation from Wind—
Basics: How Wind Turbines Work,”
U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Chapter 3:
“How Wind Turbines Work,” U.S. Department
of Energy—Energy Efficiency and Renewable
Energy, Wind and Water Power Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Chapter 4:
“Types of Wind Turbines—Basics,”
U.S. Energy Information Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Chapter 5:
“Where Wind Power Is Harnessed—Basics,”
U.S. Energy Information Administration (EIA) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Chapter 6:
“Wind Power Today—Building a New
Energy Future,” U.S. Department of Energy—
Energy Efficiency & Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Building a New Energy Future
Boosting U.S. Manufacturing
Advancing Large Wind Turbine Technology
Growing the Market For Distributed Wind
Enhancing Wind Integration
Increasing Wind Energy Deployment
Ensuring Long-Term Industry Growth
Table of Contents
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com ix
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Chapter 7:
“Wind Power in the United States: Technology, Economic,
and Policy Issues,” by Stan Mark Kaplan, CRS Report
for Congress RL34546, October 21, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Introduction
Background
The Rise of Wind
Benefits and Drawbacks of Wind Power
Wind Resources and Technology
Wind Power Fundamentals
Physical Relationships
Wind Resources
Offshore Wind
Wind Power Technology
Types of Wind Turbines
Capacity Factor
Wind Research and Development Emphasis
Wind Industry Composition and Trends
Wind Turbine Manufacturers and Wind Plant Developers
International Comparisons
Wind Power Economics
Cost and Operating Characteristics of Wind Power
Wind Operation and System Integration Issues
Levelized Cost Comparison
Wind Policy Issues
Siting and Permitting Issues
Transmission Constraints
Federal Renewable Transmission Initiatives
Renewable Production Tax Credit
PTC Eligibility: IOUs vs. IPPs
Specific PTC Legislative Options
Carbon Constraints and the PTC
Alternatives to the PTC
Renewable Portfolio Standards
Federal RPS Debate
Conclusions
Figure 1. Cumulative Installed U.S. Wind Capacity
Figure 2. Wind Power Aerodynamics
Figure 3. U.S. Wind Resources Potential
Figure 4. Evolution of U.S. Commercial Wind Technology
Figure 5. Components in a Simplified Wind Turbine
Figure 6. Installed Wind Capacity By State in 2007
Figure 7. Existing and Planned North American Wind Plants by Size
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xi
Figure 8. U.S. Wind Turbine Market Share by Manufacturer in 2007
Figure 9. Global Installed Wind Capacity By Country
Figure 10. Component Costs for Typical Wind Plants
Table 1. Wind Energy Penetration Rates by Country
Table 2. Assumptions for Generating Technologies
Table 3. Economic Comparison of Wind Power with Alternatives
Table 4. Selected Wind Power Tax Incentive Bills Compared
Table A-1. Base Case Financial Factors
Table A-2. Base Case Fuel and Allowance Price Forecasts
Table A-3. Power Plant Technology Assumptions
Appendix. Financial Analysis Methodology and Assumptions
Chapter 8:
Estimates of Windy Land Area and Wind Energy Potential
by State for Areas >=30% Capacity Factor at 80m,
National Renewable Energy Laboratory, February 4, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Chapter 9:
“Distributed Wind Market Applications,”
by T. Forsyth and I. Baring-Gould, Technical
Report NREL/TP-500-39851, November 2007 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99
Chapter 1. Executive Summary
Chapter 2. Small-Scale Remote Or Off-Grid Power
Chapter 3. Residential Power
Chapter 4. Farm, Industry, and Small Business
Chapter 5. “Small-Scale” Community Wind Power
Chapter 10:
“U.S. Energy: Overview and Key Statistics,”
by Carl E. Behrens and Carol Glover, CRS Report
for Congress R40187, October 28, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 205
Introduction
Oil
Petroleum Consumption, Supply, and Imports
Petroleum and Transportation
Petroleum Prices: Historical Trends
Petroleum Prices: The 2004–2008 Bubble
Gasoline Taxes
Electricity
Other Conventional Energy Resources
Natural Gas
Coal
Renewables
xii Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Conservation and Energy Efficiency
Vehicle Fuel Economy
Energy Consumption and GDP
Major Statistical Resources
Energy Information Administration (EIA)
Other Sources
Figure 1. Per Capita Energy Consumption in Transportation
and Residential Sectors, 1949–2008
Figure 2. Electricity Intensity: Commercial, Residential,
and Industrial Sectors, 1949–2008
Figure 3. U.S. Energy Consumption, 1950–2005 and 2008
Figure 4. World Crude Oil Reserves, 1973, 1991, and 2008
Figure 5. U.S. Consumption of Imported Petroleum, 1960–2008 and
Year-to-Date Average for 2009
Figure 6. Transportation Use of Petroleum, 1950–2008
Figure 7. Nominal and Real Cost of Crude Oil to Refiners, 1968–2008
Figure 8. Nominal and Real Price of Gasoline, 1950–2008 and August 2009
Figure 9. Consumer Spending on Oil as a Percentage of GDP, 1970–2006
Figure 10. Crude Oil Futures Prices, January 2000 to September 2009
Figure 11. Average Daily Nationwide Price of Unleaded Gasoline,
January 2002–October 2009
Figure 12. U.S. Gasoline Consumption, January 2000–September 2009
Figure 13. Electricity Generation by Source, Selected Years, 1950–2007
Figure 14. Changes in Generating Capacity, 1995–2007
Figure 15. Price of Retail Residential Electricity, 1960–2007
Figure 16. Natural Gas Prices to Electricity Generators, 1978–2007
Figure 17. Monthly and Annual Residential Natural Gas Prices, 2000–June 2009
Figure 18. Annual Residential Natural Gas Prices, 1973–2008
Figure 19. U.S. Ethanol Production, 1990–2008
Figure 20. Wind Electricity Net Generation, 1989–2008
Figure 21. Motor Vehicle Efficiency Rates, 1973–2007
Figure 22. Oil and Natural Gas Consumption per Dollar of GDP, 1973–2008
Figure 23. Change in Oil and Natural Gas Consumption and Growth in GDP, 1973–2008
Table 1. U.S. Energy Consumption, 1950–2008
Table 2. Energy Consumption in British Thermal Units (BTU)
and as a Percentage of Total, 1950–2008
Table 3. Petroleum Consumption by Sector, 1950–2008
Table 4. U.S. Petroleum Production, 1950–2008
Table 5. Transportation Use of Petroleum, 1950–2008
Table 6. Electricity Generation by Region and Fuel, 2008
Table 7. Natural Gas Consumption by Sector, 1950–2008
Table 8. Coal Consumption by Sector, 1950–2008
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Chapter 11:
Testimony of Dr. Howard Gruenspecht, Acting Administrator,
Energy Information Administration, U.S. Department of Energy before the
Subcommittee on Energy and Environment of the Committee on Energy
and Commerce, U.S. House of Representatives, February 26, 2009 . . . . . . . . . . . . . . 243
Chapter 12:
Testimony of Ralph Izzo, President, Chairman and CEO,
Public Service Enterprise Group Incorporated before
the House Committee on Energy and Commerce,
Subcommittee on Energy and Environment, February 26, 2009 . . . . . . . . . . . . . . . . . . . . 261
Chapter 13:
Written Testimony of Edward C. Lowe, General Manager,
Market Development, Renewables, GE Energy Infrastructure before
the House Committee on Energy and Commerce, Subcommittee
on Energy and Environment. Hearing on “Renewable Energy:
Complementary Policies for Climate Legislation,” February 26, 2009 . . . . . . . . . . . . . 269
Chapter 14:
“Wind and Water Power Program—Wind Powering America” . . . . . . . . . . . . . . . . . . . . . . 285
Chapter 15:
“Wind and Water Power Program—About the Program,”
U.S. Department of Energy—Energy Efficiency
and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 289
Chapter 16:
“Wind and Water Power Program—Related Wind Links,”
U.S. Department of Energy—Energy Efficiency
and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 291
Chapter 17:
“Wind and Water Power Program—Wind Energy
Resource Potential,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295
Chapter 18:
“Wind and Water Power Program—Wind Power
Outreach and Education,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 297
Chapter 19:
“Wind and Water Power Program—Environmental Impacts
and Siting of Wind Projects,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 299
xiv Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Chapter 20:
“Wind and Water Power Program—Wind Energy for
Hydrogen Production,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 301
Chapter 21:
“Wind and Water Power Program—Wind Energy for
Hydropower Applications,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 303
Chapter 22:
“Wind and Water Power Program—Distributed (Small)
Wind Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Chapter 23:
“Wind and Water Power Program—Large Wind
Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 309
Chapter 24:
“Wind and Water Power Program—Supporting Wind
Turbine Manufacturing,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 315
Chapter 25:
“Wind and Water Power Program—Jobs and Economic
Development Impact Models,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 317
Chapter 26:
“Wind and Water Power Program—Wind Economic
Development,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 321
Chapter 27:
“Wind and Water Power Program—Offshore Wind
Technology,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 325
Chapter 28:
“Wind Energy: Offshore Permitting,” by Adam Vann,
CRS Report for Congress R40175, September 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 329
Jurisdiction Over the Ocean
State Permitting
Federal Permitting
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xv
Early Regulation and Litigation
The Energy Policy Act of 2005
EPAct Exemptions
Additional Regulation Under Existing Law
Conclusion
Chapter 29:
“Wind and Water Power Program—Renewable
Systems Interconnection,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 347
Chapter 30:
“Wind and Water Power Program—Advantages and
Disadvantages of Wind Energy,” U.S. Department of Energy—
Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351
Chapter 31:
“Assessing the Potential for Renewable Energy on
National Forest System Lands,” U.S. Department of Energy,
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 355
Chapter 32:
“Energy Projects on Federal Lands: Leasing and
Authorization,” by Adam Vann, CRS Report for
Congress R40806, September 8, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479
Introduction
Oil and Natural Gas Exploration and Production on Federal Lands
History and Background
Public Lands Subject to Oil and Natural Gas Leasing
Development of Resource Management Plans
Bureau of Land Management
U.S. Forest Service
The Competitive Leasing Process
The Noncompetitive Leasing Process
Lease Terms and Conditions
General Statutory Restrictions
Payment Terms: Rental Fees and Royalties
Lease Terms, Extensions, and Cancellations
Applications for Permits to Drill
Bureau of Land Management
U.S. Forest Service
Renewable Energy Projects on Federal Lands
Background
Geothermal Project Leasing
Background
xvi Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
The Leasing Process
Exploration and Production Under Geothermal Leases
Authorizations for Wind and Solar Energy Projects
Background
Title V of the Federal Land Policy and Management Act
Chapter 33:
U.S. Senate Committee on Energy and Natural Resources
Hearing on Energy Development on Public Lands and
the Outer Continental Shelf, March 17, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 501
Chapter 34:
U.S. Senate Committee on Energy and Natural Resources
Hearing to Consider Renewable Energy Production, Strategies,
and Technologies with Regard to Rural Communities,
Chena Hot Springs, AK, August 22, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 611
Chapter 35:
“20% Wind Energy by 2030—Increasing Wind
Energy’s Contribution to U.S. Electricity Supply,
Executive Summary,” December 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 685
Chapter 36:
“Wind Research—Department of Energy Releases
New Estimates of Nation’s Wind Energy Potential,”
National Renewable Energy Laboratory, February 26, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . 713
Chapter 37:
“Visiting NREL—National Wind Technology Center,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 715
Chapter 38:
“Wind Research—Large Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717
Chapter 39:
“Wind and Water Power Program—Frequently Asked
Questions on Small Wind Systems,” U.S. Department
of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 721
Chapter 40:
“Wind Research—Small Wind Turbine Independent Testing,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 729
Chapter 41:
“Wind Research –Small Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 731
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xvii
Chapter 42:
“Wind and Water Power Program—Wind Powering America—
Small Wind for Homeowners, Ranchers, and Small Businesses”
U.S. Department of Energy—Energy Efficiency and Renewable Energy . . . . . . . . . . . 733
Chapter 43:
“Wind Research—Midsize Wind Turbine Research,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 737
Chapter 44:
“Wind Research—Accredited Testing,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 739
Chapter 45:
“Wind Research—Software Development, Modeling,
and Analysis,” National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 741
Chapter 46:
“Wind Research—Working with Us,”
National Renewable Energy Laboratory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 745
Chapter 47:
“Energy Tax Policy: Issues in the 111th Congress,”
by Donald J. Marples and Molly F. Sherlock,
CRS Report for Congress R40999, March 8, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 747
Introduction
Economic Rationale for Intervention in Energy Markets
Rationale for Intervention in Energy Markets
Externalities
Principal-Agent and Informational Inefficiencies
National Security
Potential Interventions in Energy Markets
Taxes as a User Charge
Current Status of U.S. Energy Tax Policy
Fossil Fuel Production
Renewable Energy Production
Energy Conservation
Alternative Technology Vehicle Credits
Other Energy Tax Provisions
Energy Tax Legislation in the 111th Congress
The American Recovery and Reinvestment Act of 2009 (P.L. 111-5)
The President’s Fiscal Year 2010 and 2011 Budget Proposals
American Energy Production and Price Reduction Act (H.R. 3505)
Carbon Tax/Climate Change
The Tax Extenders Act of 2009
Enacted Legislation in the 110th Congress
Energy Independence and Security Act of 2007 (P.L. 110-140
Energy Tax Provisions in the Food, Conservation, and Energy Act of 2008 (P.L. 110-234)
The Emergency Economic Stabilization Act of 2008 (P.L. 110-343)
Table 1. Energy Tax Expenditures
Table 2. Energy Tax Provisions Enacted Under American Recovery
and Reinvestment Act of 2009
Appendix. Energy Tax Legislation Prior to the 110th Congress
Chapter 48:
“Renewable Energy and Energy Efficiency Tax Incentive
Resources,” by Lynn J. Cunningham and Beth A. Roberts,
CRS Report for Congress R40455, March 23, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 777
Full Text of Tax Incentive Legislation
Federal Incentives
State and Local Incentives
Incentives by Technology Type Biomass
Biomass
Geothermal
Solar
Wind
CRS Reports on Federal Incentives
Recent Legislation
General
Vehicles and Fuels
Wave, Tidal, In-Stream
Wind Power
Popular Incentives Tables
Grants Information
CRS Reports on Grants
Table 1. U.S. Code Citations and Expiration Dates for
Popular Renewable Energy an Energy Efficiency Tax Incentives/Credits
Table 2. Alternative Motor Vehicle Credit
Chapter 49:
Resources from TheCapitol.Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 787
Live Training
Capitol Learning Audio Courses
TM
Chapter 50:
Other Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 788
Internet Resources
Books
Videos and Movies
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Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com xix
Introduction
Energy: Wind
The History of Wind Energy, Electricity Generation from the Wind,
Types of Wind Turbines, Wind Energy Potential, Offshore Wind
Technology, Wind Power on Federal Land, Small Wind Turbines,
Economic and Policy Issues, Tax Policy
Since early recorded history, people have been harnessing the energy of the wind. In the United
States in the late 19th century, settlers began using windmills to pump water for farms and ranches,
and later, to generate electricity for homes and industry. Industrialism led to a gradual decline in
the use of windmills. The steam engine replaced European water-pumping windmills, and in the
1930s, the Rural Electrification Administration’s programs brought inexpensive electric power to
most rural areas in the United States. However, industrialization also sparked the development
of larger windmills, wind turbines, to generate electricity.
After experiencing strong growth in the mid-1980s, the U.S. wind industry hit a plateau during the
electricity restructuring period in the 1990s and then regained momentum in 1999. Industry growth
has since responded positively to policy incentives. Today, the U.S. wind industry is growing rapidly,
driven by sustained production tax credits (PTCs), rising concerns about climate change, and
renewable portfolio standards (RPS) or goals in roughly 50% of the states.
Although wind power currently provides only about 1% of U.S. electricity needs, it is growing
more rapidly than any other energy source. In 2007, over 5,000 megawatts of new wind generating
capacity were installed in the United States, second only to new natural gas-fired generating
capacity.
Wind power has negligible fuel costs, but a high capital cost. The estimated average cost per
unit incorporates the cost of construction of the turbine and transmission facilities, borrowed funds,
return to investors (including cost of risk), estimated annual production, and other components,
averaged over the projected useful life of the equipment, which may be in excess of twenty years.
Energy cost estimates are highly dependent on these assumptions so published cost figures can
differ substantially.
Modern wind turbines fall into two basic groups: the horizontal-axis variety (the blades circle
around a horizontal axis) and the vertical-axis design (the blades circle around a vertical axis).
Utility-scale turbines range in size from 100 kilowatts to as large as several megawatts. Larger
turbines are grouped together into wind farms which provide bulk power to the electrical grid.
Single small turbines (below 100 kilowatts) are used for homes, telecommunications dishes, or
water pumping. Small turbines are sometimes used in connection with diesel generators, batteries,
and photovoltaic systems. These systems are called hybrid wind systems and are typically used
in remote, off-grid locations where a connection to the utility grid is not available.
A key challenge for wind energy is that electricity production depends on when winds blow rather
than when consumers need power. Wind’s variability can create added expenses and complexity
in balancing supply and demand on the grid. Recent studies imply that these integration costs do
not become significant (5%-10% of wholesale prices) until wind turbines account for 15%-30%
of the capacity in a given control area.
Another concern is that new transmission infrastructure will be required to send the windgenerated
power to demand centers. Building new lines can be expensive and timeconsuming, and there
are debates over how construction costs should be allocated among endusers and which pricing
methodologies are best.
Opposition to wind power arises for environmental, aesthetic, or aviation security reasons. New
public-private partnerships have been established to address more comprehensively problems
with avian (bird and bat) deaths resulting from wind farms. Some stakeholders oppose the
construction of wind plants for visual reasons, especially in pristine or highly-valued areas.
A debate over the potential for wind turbines to interfere with aviation radar emerged in 2006,
but most experts believe any possible problems are economically and technically manageable.
Wind power has become “mainstream” in many regions of the country. Wind technology has
improved significantly over the past two decades, and wind energy has become increasingly
competitive with other power generation options. Federal wind power policy has centered primarily
on the production tax credit (PTC), a business incentive to operate wind facilities. The PTC was
extended through 2013. Analysts and wind industry representatives argue that the on-again off-
again nature of the PTC is inefficient and leads to higher costs for the industry. While wind energy
still depends on federal tax incentives to compete, key uncertainties like climate policy, fossil
fuel prices, and technology progress could dominate future cost competitiveness.
Links to Internet resources are available on the book’s web site at <TCNWind.com>.
xx Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Chapter 1: History of Wind Energy
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 1
U.S. Department of Energy - Energy Efficiency and
Renewable Energy
Wind and Water Power Program
History of Wind Energy
Since early recorded history, people have been harnessing the
energy of the wind. Wind energy propelled boats along the
Nile River as early as 5000 B.C. By 200 B.C., simple
windmills in China were pumping water, while vertical-axis
windmills with woven reed sails were grinding grain in Persia
and the Middle East.
Early in the twentieth century, windmills were commonly used
across the Great Plains to pump water and to generate
electricity.
New ways of using the energy of the wind eventually spread
around the world. By the 11th century, people in the Middle
East were using windmills extensively for food production;
returning merchants and crusaders carried this idea back to
Europe. The Dutch refined the windmill and adapted it for
draining lakes and marshes in the Rhine River Delta. When
settlers took this technology to the New World in the late 19th
century, they began using windmills to pump water for farms
Goverment Series: Energy: Wind
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and ranches, and later, to generate electricity for homes and
industry.
Industrialization, first in Europe and later in America, led to a
gradual decline in the use of windmills. The steam engine
replaced European water-pumping windmills. In the 1930s, the
Rural Electrification Administration's programs brought
inexpensive electric power to most rural areas in the United
States.
However, industrialization also sparked the development of
larger windmills to generate electricity. Commonly called wind
turbines, these machines appeared in Denmark as early as
1890. In the 1940s the largest wind turbine of the time began
operating on a Vermont hilltop known as Grandpa's Knob. This
turbine, rated at 1.25 megawatts in winds of about 30 mph, fed
electric power to the local utility network for several months
during World War II.
The popularity of using the energy in the wind has always
fluctuated with the price of fossil fuels. When fuel prices fell
after World War II, interest in wind turbines waned. But when
the price of oil skyrocketed in the 1970s, so did worldwide
interest in wind turbine generators.
The wind turbine technology R&D that followed the oil
embargoes of the 1970s refined old ideas and introduced new
ways of converting wind energy into useful power. Many of
these approaches have been demonstrated in "wind farms" or
wind power plants — groups of turbines that feed electricity
into the utility grid — in the United States and Europe.
Today, the lessons learned from more than a decade of
operating wind power plants, along with continuing R&D, have
made wind-generated electricity very close in cost to the power
from conventional utility generation in some locations. Wind
energy is the world's fastest-growing energy source and will
power industry, businesses and homes with clean, renewable
electricity for many years to come.
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Wind and Water Power Program Home | EERE Home | U.S. Department of Energy
Webmaster | Web Site Policies | Security & Privacy | USA.gov
Content Last Updated: 09/12/2005
Chapter 2: Electricity Generation from Wind—Basics: How Wind Turbines Work
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Electricity Generation from Wind –
Basics
How Wind Turbines Work
Diagram of Windmill Workings
Source: National Renewable Energy Laboratory, U.S. Department of Energy (Public
Domain)
Current Map of U.S. Wind Capacity
Note: See progress of installed wind capacity between 1999 and 2009
Source: National Renewable Energy Laboratory, U.S. Department of Energy (Public
Domain)
Like old fashioned windmills, today’s wind machines (also called wind turbines) use
blades to collect the wind’s kinetic energy. The wind flows over the blades creating lift,
like the effect on airplane wings, which causes them to turn. The blades are connected to
a drive shaft that turns an electric generator to produce electricity.
Goverment Series: Energy: Wind
4 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
With the new wind machines, there is still the problem of what to do when the wind isn't
blowing. At those times, other types of power plants must be used to make electricity.
Wind Production
In 2008, wind machines in the United States generated a total of 52 billion kilowatthours,
about 1.3% of total U.S. electricity generation. Although this is a small fraction of the
Nation's total electricity production, it was enough electricity to serve 4.6 million
households or to power the entire State of Colorado.
The amount of electricity generated from wind has been growing rapidly in recent years.
Generation from wind in the United States nearly doubled between 2006 and 2008.
New technologies have decreased the cost of producing electricity from wind, and growth
in wind power has been encouraged by tax breaks for renewable energy and green pricing
programs. Many utilities around the country offer green pricing options that allow
customers the choice to pay more for electricity that comes from renewable sources to
support new technologies.
Also on
Energy
Explained
x History of
Wind Power
x Wind Energy
and the
Environment
x Where Wind
Power Is
Harnessed
Learn More
x Wind Data —
http://www.eia.doe.gov/cneaf/solar.renewables/page/wind/wi
nd.html
Chapter 3: How Wind Turbines Work
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U.S. Department of Energy - Energy Efficiency and
Renewable Energy
Wind and Water Power Program
How Wind Turbines Work
Wind is a form of solar energy. Winds are caused by the uneven heating
of the atmosphere by the sun, the irregularities of the earth's surface, and
rotation of the earth. Wind flow patterns are modified by the earth's
terrain, bodies of water, and vegetation. Humans use this wind flow, or
motion energy, for many purposes: sailing, flying a kite, and even
generating electricity.
The terms wind energy or wind power describe the process by which the
wind is used to generate mechanical power or electricity. Wind turbines
convert the kinetic energy in the wind into mechanical power. This
mechanical power can be used for specific tasks (such as grinding grain
or pumping water) or a generator can convert this mechanical power into
electricity.
So how do wind turbines make electricity? Simply stated, a wind turbine
works the opposite of a fan. Instead of using electricity to make wind,
like a fan, wind turbines use wind to make electricity. The wind turns the
blades, which spin a shaft, which connects to a generator and makes
electricity. Take a look inside a wind turbine to see the various parts.
View the wind turbine animation to see how a wind turbine works.
This aerial view of a wind power plant shows how a group of wind
turbines can make electricity for the utility grid. The electricity is sent
through transmission and distribution lines to homes, businesses,
schools, and so on.
Goverment Series: Energy: Wind
8 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Learn more about wind energy technology:
x Types of Wind Turbines
x Sizes of Wind Turbines
x Inside the Wind Turbine
Many wind farms have sprung up in the Midwest in recent years,
generating power for utilities. Farmers benefit by receiving land lease
payments from wind energy project developers.
Types of Wind Turbines
Modern wind turbines fall into two basic groups: the horizontal-axis
variety, as shown in the photo, and the vertical-axis design, like the
eggbeater-style Darrieus model, named after its French inventor.
Horizontal-axis wind turbines typically either have two or three blades.
These three-bladed wind turbines are operated "upwind," with the blades
Chapter 4: Types of Wind Turbines—Basics
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Types of Wind Turbines – Basics
Horizontal-Axis Wind Machine
Source: National Energy Education Development Project (Public Domain)
Darrieus Vertical-Axis Wind Turbine in Martigny, Switzerland
Goverment Series: Energy: Wind
14 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Source: Lysippos, Wikimedia Commons author (GNU Free Documentation License)
(Public Domain)
There are two types of wind machines (turbines) used today, based on the direction of the
rotating shaft (axis): horizontal-axis wind machines and vertical-axis wind machines. The
size of wind machines varies widely. Small turbines used to power a single home or
business may have a capacity of less than 100 kilowatts. Some large commercial-sized
turbines may have a capacity of 5 million watts, or 5 megawatts. Larger turbines are often
grouped together into wind farms that provide power to the electrical grid.
need live links
Horizontal-axis Turbines Look Like Windmills
Most wind machines being used today are the horizontal-axis type. Horizontal-axis wind
machines have blades like airplane propellers. A typical horizontal wind machine stands
as tall as a 20-story building and has three blades that span 200 feet across. The largest
wind machines in the world have blades longer than a football field. Wind machines
stand tall and wide to capture more wind.
Vertical-axis Turbines Look Like Egg Beaters
Vertical-axis wind machines have blades that go from top to bottom. The most common
type — the Darrieus wind turbine, named after the French engineer Georges Darrieus
who patented the design in 1931 — looks like a giant, two-bladed egg beater. This type
Chapter 4: Types of Wind Turbines—Basics
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of vertical wind machine typically stands 100 feet tall and 50 feet wide. Vertical-axis
wind machines make up only a very small share of the wind machines used today.
Wind Power Plants Produce Electricity
Wind power plants, or wind farms, as they are sometimes called, are clusters of wind
machines used to produce electricity. A wind farm usually has dozens of wind machines
scattered over a large area. The world's largest wind farm, the Horse Hollow Wind
Energy Center in Texas, has 421 wind turbines that generate enough electricity to power
220,000 homes per year.
Many wind plants are not owned by public utility companies. Instead, they are owned and
operated by business people who sell the electricity produced on the wind farm to electric
utilities. These private companies are known as Independent Power Producers.
Also on Energy Explained
x History of Wind Power
x Wind Energy and the Environment
x Electricity Generation from Wind
Last Reviewed: January
26, 2010
http://www.eia.doe.gov/energyexplained/index.cfm?page=wind_types_of_turbines
Chapter 6: Wind Power Today—Building a New Energy Future
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1
BUILDING A NEW ENERGY FUTURE
We will harness the sun and the winds and the
soil to fuel our cars and run our factories. . . .
—President Barack Obama, Inaugural Address, January 20, 2009
I
n 2008, wind energy enjoyed another record-breaking year of
industry growth. By installing 8,358 megawatts (MW) of new
generation during the year, the U.S. wind energy industry took
the lead in global installed wind energy capacity with a total of
25,170 MW. According to initial estimates, the new wind projects
completed in 2008 account for about 40% of all new U.S. power-
producing capacity added last year. The wind energy industry’s
rapid expansion in 2008 demonstrates the potential for wind
energy to play a major role in supplying our nation with clean,
inexhaustible, domestically produced energy while bolstering
our nation’s economy.
To explore the possibilities of increasing wind’s role in our national
energy mix, government and industry representatives formed a
collaborative to evaluate a scenario in which wind energy supplies
20% of U.S. electricity by 2030. In July 2008, the U.S. Department
of Energy (DOE) published the results of that evaluation in a report
entitled 20% Wind Energy by 2030: Increasing Wind Energy’s
Contribution to U.S. Electricity Supply. According to the report,
the United States has more than 8,000 gigawatts (GW ) of available
land-based wind resources that could be captured economically.
In the early release of its Annual Energy Outlook 2009, the U.S.
Energy Information Administration (EIA) estimates that U.S. electricity
consumption will grow from 3,903 billion kilowatt-hours (kWh) in
2007 to 4,902 billion kWh in 2030, increasing at an average annual
rate of 1%. To meet 20% of that demand, U.S. wind power capacity
would have to reach more than 300 GW (300,000 MW). This growth
represents an increase of more than 275 GW within 21 years.
Although achieving 20% wind energy will have significant
economic, environmental, and energy security benefits, to make
it happen the industry must overcome significant challenges.
Stimulating Economic Growth
Achieving 20% wind energy by 2030 would have widespread
economic benefits. The American Wind Energy Association (AWEA)
reported that the wind industry employed about 85,000 workers
and channeled approximately $17 billion into the U.S. economy in
2008. Approximately 55 facilities for manufacturing wind-related
equipment were announced or opened in 2008. Under the 20% wind
energy scenario, the industry could support 500,000 jobs by 2030,
180,000 of which would be directly related to the industry through
construction, operations, and manufacturing.
In the decade preceding 2030, the 20% scenario would support
100,000 jobs in associated industries such as accountants, lawyers,
steelworkers, and electrical manufacturing, and it will generate much
needed income for rural communities. Farmers and landowners
would gain more than $600 million in annual land-lease payments
and regional governments would gain more than $1.5 billion
annually in tax revenues by 2030. Rural counties could use these
taxes to fund new schools, roads, and other vital infrastructure,
creating even more jobs for local communities.
Protecting the Environment
Achieving 20% wind by 2030 would also provide significant
environmental benefits in the form of avoided greenhouse gas
emissions and water savings. For example, a 1.5-MW wind turbine
can power 500 homes and displace 2,700 metric tons of carbon
dioxide (CO
2
) per year (the equivalent of planting 4 square kilometers
of forest every year). According to AWEA, by the end of 2008, wind
energy produced enough electricity to power approximately
7 million households and avoid nearly 44 million metric tons of
emissions—the equivalent of taking more than 7 million cars off
the road. Generating 20% of U.S. electricity from wind could avoid
Wind Energy Program Mission: The mission of DOE’s Wind
and Hydropower Technologies Program is to increase the
development and deployment of reliable, affordable, and
environmentally responsible wind and water power
technologies in order to realize the benefits of domestic
renewable energy production.
www1.eere.energy.gov/windandhydro/wind_2030.htm
Goverment Series: Energy: Wind
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2
approximately 825 million metric tons of CO
2
in the electric sector
in 2030.
In addition to emissions reductions, the increased use of wind
energy will reduce water consumption. Electricity generation
accounts for 50% of all water withdrawals in our nation. The 20%
wind scenario is projected to result in an 8% reduction (or 4 trillion
gallons) in cumulative water use by the electric sector from 2007
through 2030. In 2030, annual water consumption in the electric
sector will be reduced by 17%.
Meeting the Challenges
The 20% report concluded that, although achieving 20% wind
energy is technically feasible, it requires enhanced transmission
infrastructure, increased U.S. manufacturing
capacity, streamlined siting and permitting
regimes, and improved reliability and operability
of wind systems. To address these challenges,
the DOE Wind Program collaborates with federal,
state, industry, and stakeholder organizations
to lead wind-energy technology research,
development, and application efforts.
Enhancing Wind Integration
One of the challenges to meeting 20% of the
nation’s electricity demand with wind energy
is moving the electricity from the often remote
areas where it is produced to the nation’s urban
load centers. More transmission capacity and
more sophisticated interconnections across
the grid are needed to relieve congestion on
the existing system, improve system reliability,
increase access to energy at lower costs, and
access new and remote generation resources. The
Wind Program is working closely with the DOE
Office of Electricity Delivery and Energy Reliability
to effectively coordinate the DOE’s contributions
to the transmission planning efforts. This joint
program effort will focus on linking remote
regions with low-cost wind power to urban
load centers, allowing thousands of homes and
businesses access to abundant renewable energy.
In addition to the need for expanding and
improving the nation’s transmission system,
the natural variability of the wind resource can
present challenges to grid system operators
and planners with regard to managing
regulation, load following, scheduling, line
voltage, and reserves. Although the current
level of wind penetration in the United
States and around the world has provided
substantial experience for successful grid
operations with wind power, many grid
operators are still concerned about the
impacts that increasing the percentage
of wind in their energy portfolios will
have on system reliability. To increase
utility understanding of integration and
transmission issues associated with increased
wind power generation, Wind Program
researchers at the DOE national laboratories are working with
industry partners on mitigating interconnection impacts, electric
power market rules, operating strategies, and system planning
needed for wind energy to compete without disadvantage to serve
the nation’s energy needs.
Increasing the Manufacturing Capacity and
Growing a Skilled Workforce
Achieving 20% wind energy would also support an expansion
of the domestic manufacturing sector and related employment. To
keep pace with this rapid growth, manufacturers need to develop
robust and cost-effective manufacturing processes that incorporate
automated systems to reduce labor intensity and increase
Wind’s economic ripple effect
Induced Impacts
These jobs and earnings
result from the spending by
people directly and indirectly
supported by the project,
including benefits to grocery
store clerks, retail salespeople,
and child care providers
Indirect Impacts
These are jobs in and
payments made to supporting
businesses, such as bankers
financing the construction,
contractors and equipment
suppliers
Direct Impacts
On-Site
º Construction workers
º Nanadement
º Administrative support
º Cement truck drivers,
road crews,
maintenance workers
Off-Site
º Boom truck and
management, gas and
das station workers
º Nanufacturers (turoines,
olades, towers, etc.ì
º Hardware store purchases
and workers, spare parts
and their suppliers
Annual CO
2
emissions avoided with
2030 wind scenario
According to EIA, The United States annually emits approximately 6,000 million metric tons of
CO
2
.These emissions are expected to increase to nearly 7,900 million metric tons by 2030, with
the electric power sector accounting for approximately 40% of the total (EIA, 2007). Generating
20% of U.S. electricity from wind could avoid approximately 825 million metric tons of CO
2
in the electric sector in 2030. The 20% scenario would also reduce cumulative emissions from
the electric sector through that same year by more than 7,600 million metric tons of CO
2
(2,100 million metric tons of carbon equivalent).
Chapter 6: Wind Power Today—Building a New Energy Future
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3
production. To fill the jobs created by this expansion, training
programs are needed to provide a skilled workforce.
To facilitate this growth, the Wind Program is working with
universities and industry members to incorporate advanced
materials into wind turbine blades and investigate manufacturing
process automation and fabrication techniques to reduce product-
to-product variability and premature failure while increasing the
domestic manufacturing base. To grow the skilled workforce, the
program works with universities and K-12 schools to develop vibrant
wind energy educational programs in locations across the country.
Advancing Wind Energy Technology
DOE’s Wind Program has worked with industry for more than
25 years to advance both large and small wind energy technologies
and lower the cost of energy. For large wind technologies, these
industry partnerships have succeeded in increasing capacity factors
and dramatically reducing costs. Capacity factors have increased
from about 22% for wind turbines installed before 1998 to about
34% for turbines installed between 2004 and 2006. Costs have been
reduced from $0.80 (current dollars) per kilowatt-hour (kWh) in 1980
to between $0.05 and $0.08/kWh today, so that in some areas of the
nation, wind power has become the least expensive source of new
utility-scale electricity generation.
In order to increase industry growth, however, the technology
must continue to evolve, building on earlier successes to further
improve reliability, increase capacity factors, and reduce costs. To this
end, in 2008, DOE announced a Memorandum of Understanding
(MOU) designed to advance wind power technologies and increase
deployment. Under this MOU (http://www.energy.gov/media/DOE_
Turbine_Manufactures_MOU_5-31-08.pdf), DOE is cooperating with
six leading wind turbine manufacturers: GE Energy, Siemens Power
Generation, Vestas Wind Systems, Clipper Turbine Works, Suzlon
Energy, and Gamesa Corporation. The two-year collaboration is
designed to increase turbine performance and reliability.
DOE’s R&D Capabilities
To meet the many complex challenges facing the wind industry
today, DOE draws on the capabilities and technical expertise found
in nine of its national laboratories. The
laboratories include: Argonne National
Laboratory, Argonne, Illinois; Idaho
National Laboratory, Idaho Falls, Idaho; Los
Alamos National Laboratory, Los Alamos,
New Mexico; Lawrence Berkeley National
Laboratory, Berkeley, California; Lawrence
Livermore National Laboratory, Livermore,
California; National Renewable Energy
Laboratory, Golden, Colorado; Oak Ridge
National Laboratory, Oak Ridge, Tennessee;
Pacific Northwest National Laboratory,
Richland, Washington; and Sandia National
Laboratories, Albuquerque, New Mexico.
As the lead wind energy research facility,
the National Renewable Energy Laboratory
(NREL) conducts research across the broad
spectrum of engineering disciplines that
are applicable to wind energy, including:
atmospheric fluid mechanics and
aerodynamics; dynamics, structures, and
fatigue; power systems and electronics;
wind turbine engineering applications; and systems integration.
As the only facility in the United States accredited through the
American Association of Laboratory Accreditation (A2LA) to perform
several critical tests, NREL’s National WInd Technology Center
(NWTC) provides the high quality testing required by wind turbine
certification agencies, financial institutions, and other organizations
throughout the world. Tests accredited by A2LA to International
Electrotechnical Commission (IEC) Standards include wind turbine
noise, power performance, power quality, and several structural
safety, function, and duration tests.
The Idaho National Laboratory (INL) has more than 10 years of
experience in wind-radar interaction R&D. INL staff work with wind
Clipper Windpower’s wind turbine manufacturing facility in Cedar Rapids, Iowa.
NREL’s National Wind Technology Center provides high-quality testing for wind
turbine systems and components.
Goverment Series: Energy: Wind
26 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
4
developers and radar site managers to mitigate
wind-radar system interactions that may ultimately
affect the development of wind plants. INL’s wind-
radar interaction R&D efforts include conducting
site-specific assessments to develop guidelines;
improving radar software; improving hardware;
filtering algorithms, gap filling, and fused radar
systems; improving small plane detection;
providing better modeling techniques; and
developing computer modeling systems to
predict performance before construction.
Sandia National Laboratories (SNL) specializes in
all aspects of wind turbine blade design and system
reliability. Activities at SNL focus on reducing the
cost of wind generated electricity and improving
the reliability of systems operating nationwide.
Research disciplines include: materials, airfoils,
stress analysis, fatigue analysis, structural analysis,
and manufacturing processes. By partnering with
universities and industry, SNL has advanced the state
of knowledge in the areas of materials, structurally
efficient airfoil designs, active-flow aerodynamic
control, and sensors.
Lawrence Berkeley National Laboratory (LBL)
works with DOE, state and federal policymakers,
electric suppliers, renewable energy firms, and
others to evaluate state and federal renewable
energy policies and provide expert assistance
in policy design; analyze the markets for and
economics of various renewable energy sources;
and examine the benefits and costs of increased
market penetration of renewable energy
technologies with a focus on wind and solar
power. LBL also spearheads the program’s annual
production of the Annual Report on U.S. Wind
Power Installation, Cost, and Performance
Trends.
The Argonne, Los Alamos, Lawrence Livermore,
Oak Ridge, and Pacific Northwest National
Laboratories all provide support for the program’s
systems integration research.
t "SHPOOF /BUJPOBM -BCPSBUPSZ "/- JT EFWFMPQJOH
improved methodologies for wind forecasting and
working to increase the deployment of advanced
wind forecasting techniques that will optimize
overall grid reliability and system operations.
t -PT "MBNPT /BUJPOBM -BCPSBUPSZ -"/- JT
conducting power flow analysis of the western
interconnect of scenarios associated with 20%
electricity from wind by 2030 and of scenarios
to reach state renewable electricity standards.
t -BXSFODF -JWFSNPSF /BUJPOBM -BCPSBUPSZ --/-
is working to improve wind forecasting methods
through the analysis and validation of SODAR and
tall-tower data. Researchers at LLNL also work
with utilities to effectively integrate improved
wind forecasting information into control room
operations.
t 0BL 3JEHF /BUJPOBM -BCPSBUPSZ 03/- JT DPMMFDUJOH XJOE SFTPVSDF EBUB UP EFWFMPQ BO
archive that will provide information for wind energy research, planning, operations,
and site assessment. ORNL is also examining the issues involved in importing large
quantities of wind energy to the southeastern United States to satisfy possible
renewable portfolio standards.
t 1BDJGJD /PSUIXFTU /BUJPOBM -BCPSBUPSZ 1//- JT FWBMVBUJOH UIF FGGFDUJWFOFTT PG
integration strategies such as virtual balancing areas, sharing of regulation resources,
operating reserves, area control error, and control room use of forecasting to address
wind and load variability on the utility grid in the Pacific Northwest.
Sandia National Laboratories developed an advanced data
acquisition system (ATLAS II) on a GE Wind 1.5-MW wind
turbine. The turbine is part of a cooperative activity
involving SNL, GE Wind, and NREL.
Sandia researchers work with industry partners to
develop the advanced materials and manufacturing
processes required by longer blades.
Researchers at the NWTC structural test facility, which is
accredited by A2LA to perform blade tests in accordance
with IEC standards, conduct structural tests on full-scale
wind turbine blades for subcontractors and industry
partners. The facility can handle blades up to 45 meters
in length.
The NWTC has two dynamometer
test facilities—a 2.5-MW and a
225-kW—to help its industry
partners conduct a wide range of
tests on wind turbine drivetrains
and gearboxes.
Chapter 6: Wind Power Today—Building a New Energy Future
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5
T
he wind industry’s recent rapid growth has accelerated job
creation, particularly in manufacturing. In that sector, the share
of domestically manufactured wind turbine components has
grown from about 30% in 2005 to approximately 50% in 2008. To
ensure that this growth continues, the DOE Wind Program works
with U.S. manufacturers to develop advanced fabrication techniques
and automation processes that will enable them to increase their
component production capabilities.
The focus of the fabrication and materials research is to reduce the
rate of weight growth as the blades increase in size. Using advanced
materials such as carbon and carbon/glass hybrids will reduce the
weight of the blade while increasing its strength and flexibility. By
using advanced materials and optimized blade sensors to enhance
reliability and load control, researchers hope to extend the life of
blades as well as other turbine components to reduce repair and
replacement costs.
The Wind Program is also exploring methods of improving resin
transfer molding (RTM) and vacuum-assisted RTM manufacturing
processes for utility-grade blades that incorporate automated
processes to help manufacturers ensure consistent product quality
and reduce labor.
BOOSTING U.S. MANUFACTURING
More than 90% of these jobs will be in the private sector, jobs . . .
constructing wind turbines and solar panels.
—President Barack Obama, remarks to Congress and the American people, February 24, 2009
SNL works with industry partners to develop advanced fabrication techniques and automation processes.
Goverment Series: Energy: Wind
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6
During the past few years, the Wind Program has worked with
blade manufacturer Knight & Carver to develop an innovative wind
turbine blade design that is the first of its kind to be produced at
a utility-grade size, and which promises to be more efficient than
conventional designs. Made of fiberglass and epoxy resin, the Sweep
Twist Adaptive Rotor (STAR) blade is 27 m long—almost 3 m longer
than the blade it will replace. Instead of the traditional linear shape,
the blade curves toward the trailing edge, which allows it to respond
to turbulent gusts in a manner that reduces fatigue loads on the
blade. The STAR blade was specially designed for maximum energy
capture at low wind speed sites. Knight & Carver expects that STAR
will increase energy capture by 5% to 9%, significantly reducing
the cost of energy (COE) of wind turbines at low-wind-speed sites.
STAR can be deployed at sites with annual average wind speeds of
5.8 meters per second (m/s), measured at 10-m height. Such sites are
abundant in the United States. The ability to site turbines in these
areas would increase twentyfold the available land area on which
wind energy can be economically developed.
The Wind Program’s blade manufacturing research also includes
work to develop:
t .PSF FGGJDJFOU CMBEF TUSVDUVSFT TVDI BT UIJDL BJSGPJMT XJUI EFTJHOT
that fully integrate structure and aerodynamics, along with
slenderized blade geometries
t "EBQUJWF TUSVDUVSFT TVDI BT QBTTJWF CFOEUXJTU DPVQMJOH BOE
active-aero devices
t %FTJHO EFUBJMT UP NJOJNJ[F TUSFTT DPODFOUSBUJPOT JO QMZ ESPQ
regions (ply drop-off is a technique widely used to achieve gradual
thickness change in composite laminate, and it can be used to form
boundary tapering of a composite patch bonded
to a parent structure)
t -FTT FYQFOTJWF FNCFEEFE CMBEF SPPU BUUBDINFOU EFWJDFT
Creating Advanced Materials
Today’s utility-scale wind turbine blades are fabricated with
conventional composite materials such as fiberglass, polyester and
vinyl ester resins, and core (balsa or foam). They have a rotor diameter
span between 57 m and 90 m and have a power generation capacity
of between 1 MW and 3 MW. The newest turbine design concepts
will take wind power generation far beyond the 1-MW to 3-MW
range and will require much larger turbine blades with more efficient
architectures, load alleviation concepts, and a higher content of
carbon fiber and epoxy resins.
Wind Program researchers are developing several new blade
material options for wind turbine manufacturers, including carbon,
carbon-hybrid, S-glass, and other new material forms. They are
creating design details that minimize stress concentrations in ply
drop-off regions and are developing less expensive, embedded
blade attachment devices.
One of the program’s latest studies conducted by researchers
at SNL presents an overview of composite laminates for wind
turbine blade construction and summarizes test results for three
prototype blades that incorporate a variety of structural and material
innovations. The study examines recent SNL-sponsored material
fatigue testing performed at Montana State University and provides
highlights of the SNL/Global Energy Concepts Blade System Design
Study-Phase II research that tested a variety of carbon and carbon-
hybrid materials. The blades tested under this study survived 20-year
equivalent fatigue test loads thus demonstrating the value of
incorporating carbon into wind turbine blades. Although cost and
market stability remain as challenges for large implementation of
carbon in commercial designs, the methodologies developed by
these projects will enable blades to be lighter, stronger, and smarter.
For more information on the studies conducted at SNL visit www.
sandia.gov/wind/topical.htm.
The DOE Wind Program worked with Knight & Carver to develop an innovative
wind turbine blade that the company expects to increase energy capture by
5% to 9%. The most distinctive feature of the Sweep Twist Adaptive Rotor
(STAR) blade is its gently curved tip.
Chapter 6: Wind Power Today—Building a New Energy Future
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7
ADVANCING LARGE WIND
TURBINE TECHNOLOGY
We’ve also made the largest investment in
basic research funding in American history,
an investment that will spur not only new
discoveries in energy, but breakthroughs
. . . in science and technology.
—President Barack Obama, remarks to Congress and
the American people, February 24, 2009
T
hree decades of wind energy research have succeeded in greatly increasing wind turbine
size and capacity, from 100-kW machines with a 17-m rotor diameter to multimegawatt
machines with rotor diameters larger than 100 m, while greatly reducing the cost of wind
energy. Although these improvements in performance, reliability and cost have all contributed to
the success enjoyed by the wind industry today, to achieve 20% wind energy, the technology must
continue to evolve. Continued incremental improvements can further reduce system cost and
increase performance and reliability. These improvements can only be achieved through a systems
development and integration approach. No single component improvement in cost or efficiency can
achieve the cost reduction or improved capacity factor that system-level advances can achieve.
Capacity factors can be increased by using larger rotors on taller towers, which requires innovative
design approaches and advanced materials, controls, and power systems. Costs can be reduced and
Since 1980, wind turbines have grown in size and capacity, from 100-kW machines with a 17-m rotor diameter to multimegawatt machines with rotor diameters
larger than 100 m.
GE 1.5-MW wind turbine
Chapter 7: Wind Power in the United States: Technology, Economic, and Policy Issues
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CRS Report for Congress
Prepared for Members and Committees of Congress
Wind Power in the United States: Technology,
Economic, and Policy Issues
Stan Mark Kaplan
Specialist in Energy and Environmental Policy
October 21, 2008
Congressional Research Service
7-5700
www.crs.gov
RL34546
Goverment Series: Energy: Wind
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Wind Power in the United States: Technology, Economic, and Policy Issues

Congressional Research Service
Summary
Rising energy prices and concern over greenhouse gas emissions have focused congressional
attention on energy alternatives, including wind power. Although wind power currently provides
only about 1% of U.S. electricity needs, it is growing more rapidly than any other energy source.
In 2007, over 5,000 megawatts of new wind generating capacity were installed in the United
States, second only to new natural gas-fired generating capacity. Wind power has become
“mainstream” in many regions of the country, and is no longer considered an “alternative” energy
source.
Wind energy has become increasingly competitive with other power generation options, although
the impacts of the current financial crisis are uncertain. Wind technology has improved
significantly over the past two decades. CRS analysis presented here shows that wind energy still
depends on federal tax incentives to compete, but that key uncertainties like climate policy, fossil
fuel prices, and technology progress could dominate future cost competitiveness.
Akey challenge for wind energy is that electricity production depends on when winds blow rather
than when consumers need power. Wind’s variability can create added expenses and complexity
in balancing supply and demand on the grid. Recent studies imply that these integration costs do
not become significant (5%-10% of wholesale prices) until wind turbines account for 15%-30%
of the capacity in a given control area. Another concern is that new transmission infrastructure
will be required to send the wind-generated power to demand centers. Building new lines can be
expensive and time-consuming, and there are debates over how construction costs should be
allocated among end-users and which pricing methodologies are best.
Opposition to wind power arises for environmental, aesthetic, or aviation security reasons. New
public-private partnerships have been established to address more comprehensively problems
with avian (bird and bat) deaths resulting from wind farms. Some stakeholders oppose the
construction of wind plants for visual reasons, especially in pristine or highly-valued areas. A
debate over the potential for wind turbines to interfere with aviation radar emerged in 2006, but
most experts believe any possible problems are economically and technically manageable.
Federal wind power policy has centered primarily on the production tax credit (PTC), a business
incentive to operate wind facilities. The PTC is currently set to expire on December 31, 2009.
Analysts and wind industry representatives argue that the on-again off-again nature of the PTC is
inefficient and leads to higher costs for the industry. A federal renewable portfolio standard—
which would mandate wind power levels—was rejected in the Senate in late 2007; its future is
uncertain.
If wind is to supply up to 20% of the nation’s power by 2030, as suggested by a recent U.S.
Department of Energy report, additional federal policies will likely be required to overcome
barriers, and ensure development of an efficient wind market.
Chapter 7: Wind Power in the United States: Technology, Economic, and Policy Issues
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Wind Power in the United States: Technology, Economic, and Policy Issues

Congressional Research Service
Contents
Introduction ................................................................................................................................ 1
Background ................................................................................................................................ 2
The Rise of Wind .................................................................................................................. 2
Benefits and Drawbacks of Wind Power................................................................................ 4
Wind Resources and Technology................................................................................................. 7
Wind Power Fundamentals.................................................................................................... 7
Physical Relationships .................................................................................................... 7
Wind Resources .................................................................................................................... 8
Offshore Wind ................................................................................................................ 9
Wind Power Technology ..................................................................................................... 10
Types of Wind Turbines ................................................................................................ 11
Capacity Factor............................................................................................................. 13
Wind Research and Development Emphasis .................................................................. 13
Wind Industry Composition and Trends..................................................................................... 14
Wind Turbine Manufacturers and Wind Plant Developers.................................................... 17
International Comparisons................................................................................................... 18
Wind Power Economics ............................................................................................................ 21
Cost and Operating Characteristics of Wind Power.............................................................. 21
Wind Operation and System Integration Issues.............................................................. 23
Levelized Cost Comparison ................................................................................................ 24
Wind Policy Issues.................................................................................................................... 30
Siting and Permitting Issues ................................................................................................ 30
Transmission Constraints .................................................................................................... 33
Federal Renewable Transmission Initiatives .................................................................. 36
Renewable Production Tax Credit ....................................................................................... 36
PTC Eligibility: IOUs vs. IPPs ...................................................................................... 37
Specific PTC Legislative Options.................................................................................. 37
Carbon Constraints and the PTC ................................................................................... 38
Alternatives to the PTC................................................................................................. 39
Renewable Portfolio Standards............................................................................................ 39
Federal RPS Debate ...................................................................................................... 39
Conclusions .............................................................................................................................. 40
Figures
Figure 1. Cumulative Installed U.S. Wind Capacity..................................................................... 3
Figure 2. Wind Power Aerodynamics .......................................................................................... 7
Figure 3. U.S. Wind Resources Potential ..................................................................................... 9
Figure 4. Evolution of U.S. Commercial Wind Technology........................................................ 11
Figure 5. Components in a Simplified Wind Turbine ................................................................. 12
Figure 6. Installed Wind Capacity By State in 2007................................................................... 15
Figure 7. Existing and Planned North American Wind Plants by Size ........................................ 16
Goverment Series: Energy: Wind
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Wind Power in the United States: Technology, Economic, and Policy Issues

Congressional Research Service
Figure 8. U.S. Wind Turbine Market Share by Manufacturer in 2007......................................... 17
Figure 9. Global Installed Wind Capacity By Country ............................................................... 19
Figure 10. Component Costs for Typical Wind Plants ................................................................ 22
Tables
Table 1. Wind Energy Penetration Rates by Country.................................................................. 19
Table 2. Assumptions for Generating Technologies.................................................................... 25
Table 3. Economic Comparison of Wind Power with Alternatives.............................................. 29
Table 4. Selected Wind Power Tax Incentive Bills Compared .................................................... 38
Table A-1. Base Case Financial Factors..................................................................................... 43
Table A-2. Base Case Fuel and Allowance Price Forecasts......................................................... 44
Table A-3. Power Plant Technology Assumptions ...................................................................... 45
Appendixes
Appendix. Financial Analysis Methodology and Assumptions ................................................... 41
Contacts
Author Contact Information ...................................................................................................... 46
Chapter 7: Wind Power in the United States: Technology, Economic, and Policy Issues
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Wind Power in the United States: Technology, Economic, and Policy Issues

Congressional Research Service 1
Introduction
Rising energy prices and concern over greenhouse gas emissions have focused congressional
attention on energy alternatives, including wind power. Although wind power currently provides
only a small fraction of U.S. energy needs, it is growing more rapidly than any other electricity
source. Wind energy already plays a significant role in several European nations, and countries
like China and India are rapidly expanding their capacity both to manufacture wind turbines and
to integrate wind power into their electricity grids.
This report describes utility-scale wind power issues in the United States. The report is divided
into the following sections:
• Background on wind energy;
• Wind resources and technology;
• Industry composition and trends;
• Wind power economics; and
• Policy issues.
Three policy issues may be of particular concern to Congress:
• Should the renewable energy production tax credit be extended past its currently
scheduled expiration at the end of 2009, and, if so, how would it be funded? The
economic analysis suggests that the credit significantly improves the economics
of wind power compared to fossil and nuclear generation.
• Should the Congress pass legislation intended to facilitate the construction of
new transmission capacity to serve wind farms? As discussed below, sites for
wind facilities are often remote from load centers and may require new,
expensive transmission infrastructure. Texas and California have implemented
state policies to encourage the development of new transmission lines to serve
wind and other remote renewable energy sources. Legislation before the
Congress would create a federal equivalent.
• Should the Congress establish a national renewable portfolio standard (RPS)? As
discussed in the report, the economics of wind are competitive, but not always
compelling, compared to fossil and nuclear energy options, and because wind
power is dependent on the vagaries of the weather it is not as reliable as
conventional sources. Some benefits of wind power cited by proponents, such as
a long-term reduction in demand for fossil fuels, are not easily quantified. To
jump-start wind power development past these hurdles, many states have
instituted RPS programs that require power companies to meet minimum
renewable generation goals. A national RPS requirement has been considered
and, to date, rejected by Congress.
Other policy questions, such as federal funding for wind research and development, and siting
and permitting requirements, are also outlined.
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Figure 4. Evolution of U.S. Commercial Wind Technology
Source: L. Flowers, “Wind Energy Update,” National Renewable Energy Lab, February 2008.
Utility-scale wind turbines have grown in size from dozens of kilowatts in the late 1970s and
early 1980s to a maximum of 6 megawatts in 2008.
39
The average size of a turbine deployed in
the United States in 2007 was 1.6 megawatts, enough to power approximately 430 U.S. homes.
40
The average size of turbines continues to expand as units rated between 2 and 3 megawatts
become more common. Larger turbines provide greater efficiency and economy of scale, but they
are also more complex to build, transport, and deploy.
Types of Wind Turbines
Industrial wind turbines fall into two general classes depending on how they spin: horizontal axis
and vertical axis, also known as “eggbeater” turbines. Vertical axis machines, which spin about an
axis perpendicular to the ground, have advantages in efficiency and serviceability since all of the
control equipment is at ground level. The main drawback to this configuration, however, is that
the blades cannot be easily elevated high into the air where the best winds blow. As a result,
horizontal axis machines—which spin about an axis parallel to the ground rather than
perpendicular to it—have come to dominate today’s markets.
41
39
The German company Enercon is testing two different 6 megawatt turbines, although they are not yet available on
commercial markets. The largest commonly used commercial wind turbines are the 3.6 megawatt offshore units
produced by Siemens and General Electric.
40
This assumes a capacity factor (see following subsection) of 34% and an EIA estimate of the average U.S. household
consumption of 11,000 kilowatt-hours per year.
41
Horizontal turbines are further divided into classes depending on generator placement, type of generator, and blade
control. For example, downwind turbines have their blades behind the generator and upwind turbines, in front.
Generators can be asynchronous with the grid, or operate at the same frequency. Blade speed can be fixed or variable,
and controlled through pitch or stall aerodynamics. For a more complete discussion of wind turbine technical issues,
see P. Carlin, A. Laxson, and E. Muljadi, The History and State of the Art of Variable-Speed Wind Turbines, NREL,
February 2001.
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Asimplified diagram of a typical horizontal axis wind turbine is shown in Figure 5. The blades
connect to the rotor and turn a low-speed shaft that is geared to spin a higher-speed shaft in the
generator. An automated yaw motor system turns the turbine to face the wind at an appropriate
angle.
42
Figure 5. Components in a Simplified Wind Turbine
There are barriers to the size of wind turbines that can be efficiently deployed, especially at
onshore locations. Wind turbine components larger than standard over-the-road trailer dimensions
and weight limits face expensive transport penalties.
43
Other barriers to increasingly large turbines include (1) potential for aviation and radar
interference, (2) local opposition to siting, (3) erection challenges (i.e., expensive cranes are
needed to lift the turbine hubs to a height of 300 feet or more), and (4) material fatigue issues.
Some of these issues are discussed in more detail later.
42
Generally, the yaw control will position the turbine to face the wind at a perpendicular angle. The turbine can avoid
damage from excessive wind speeds by yawing away from the wind or applying the brake.
43
The standard trailer for an 18-wheel tractor trailer is approximately 12.5 feet high and 8 feet wide. Gross vehicle
weight limitations are 80,000 pounds, corresponding to a cargo weight of 42,000 pounds. According to NREL, the
trailer limitations have the greatest impact on the base diameter of wind turbine towers. R. Thresher and A. Laxson,
“Advanced Wind Technology: New Challenges for a New Century,” NREL, June 2006.
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Appendix. Financial Analysis Methodology
and Assumptions
The financial analysis of power plant costs in this report estimates the operating costs and
required capital recovery of each generating technology for an analysis period through 2050.
Plant operating costs will vary from year to year depending, for example, on changes in fuel
prices and the start or end of government incentive programs. To simplify the comparison of
alternatives, these varying yearly expenses are converted to a uniform annual cost expressed as
2008 present value dollars.
122
Similarly, the capital costs for the generating technologies are also converted to levelized annual
payments. An investor-owned utility or independent power project developer must recover the
cost of the investment and a return on the investment, accounting for income taxes, tax law
(depreciation rates), and the cost of money. These variables are encapsulated within an annualized
capital cost for a project computed using a “capital charge rate.” The financial model used for this
study computes a project-specific capital charge rate that reflects, for example, the assumed cost
of money and the applicable depreciation schedule.
In the case of publicly owned utilities the return on capital is a function of the interest rate. A
“capital recovery factor” reflecting each project’s cost of money is computed and used to
calculate a mortgage-type levelized annual payment.
123
Combining the annualized capital cost with the annualized cash flows yields the total estimated
annualized cost of a project. This annualized cost is divided by the projected yearly output of
electricity to produce a cost per Mwh for each technology. By “annualizing” the costs in this
manner it is possible to compare alternatives with different year-to-year cost patterns on an
apples-to-apples basis.
Inputs to the financial model include financing costs, forecasted fuel prices, non-fuel operations
and maintenance expense, the efficiency with which fossil-fueled plants convert fuel to
electricity, and typical utilization rates (see Table A-1, Table A-2, and Table A-3). Most of these
inputs are taken from published sources, such as EIA’s assumptions used to produce its 2007 and
2008 long-term energy forecasts. Overnight power plant capital costs—that is, the cost to
construct a plant before financing expenses—are estimated by CRS based on a review of public
information on recent projects.
122
Converting a series of cash flows to a financially-equivalent uniform annual payment is a two-step process. First, the
cash flows for the project are converted to a 2008 “present value.” The present value is the total cost for the analysis
period, adjusted (“discounted” using a “discount factor”) to account for the time value of money and the risk that
projected costs will not occur as expected. This lump-sum 2008 present value is then converted to an equivalent annual
payment using a uniform payments factor (the “capital recovery factor”). For a more detailed discussion of the
levelization method see, for example, Chan Park, Fundamentals of Engineering Economics, 2004, Chapter 6; or
Eugene Grant, et al., Principles of Engineering Economy, 6
th
Ed., 1976, Chapter 7.
123
For additional information on capital charge rates see Hoff Stauffer, “Beware Capital Charge Rates,” The Electricity
Journal, April 2006. The capital recovery factor is equivalent to the PMT function in the Excel spreadsheet program.
For additional information on the calculation of capital recovery factors see Chan Park, Fundamentals of Engineering
Economics, 2004, Chapter 2; or Eugene Grant, et al., Principles of Engineering Economy, 6
th
Ed., 1976, Chapter 4.
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Government incentives are also an important part of the financial analysis. EPACT05 created or
extended federal incentive programs for coal, nuclear, and renewable technologies. This study
assumes the following incentives:
• A renewable energy production tax credit of 2.0 cents per kWh, with the value
indexed to inflation. The credit applies to the first 10 years of a plant’s operation.
The Base Case analysis assumes that the tax credit, which is currently scheduled
to expire at the end of 2008, will be extended (as has happened in the past). The
credit is available only to wind power production that is sold to an unaffiliated
third party. Under most circumstances this requirement effectively limits the
production tax credit to independent power producers. A utility that owns a wind
plant and uses the power to serve its own load would not qualify.
124
The credit is
currently available to new wind, geothermal, and several other renewable energy
sources. New solar energy systems do not qualify, and geothermal systems can
take the production tax credit only if they do not use the renewable investment
tax credit (discussed below).
• A nuclear energy production tax credit for new advanced nuclear plants of 1.8
cents per kWh. The credit applies to the first eight years of operation. Unlike the
renewable production tax credit described above, the nuclear credit is not indexed
to inflation and therefore drops in real value over time. This credit is subject to
several limitations:
• It is available to plants that begin construction before January 1, 2014, and
enter service before January 1, 2021.
• For each project the annual credit is limited to $125 million per thousand
megawatts of generating capacity.
• The full amount of the credit will be available to qualifying facilities only if
the total capacity of the qualifying facilities is 6,000 megawatts or less. If the
total qualifying capacity exceeds 6,000 megawatts the amount of the credit
available to each plant will be prorated. For example, EIA assumes in its
2007 Annual Energy Outlook that 9,000 megawatts of new nuclear capacity
qualifies; in this case the credit amount drops to 1.2 cents per kWh.
125
The
Base Case for this study follows EIA in using the 1.2 cent per kWh
assumption for the effective value of the credit.
• Loan guarantees for carbon-control technologies, including nuclear power.
Under final DOE rules, the loan guarantees can cover up to 80% of the cost of a
project. Guarantees are made available based on a case-by-case evaluation of
applicants and are dependent on congressional authority (in April 2008, the
Department of Energy announced plans to solicit up to $18.5 billion in loan
guarantee applications for nuclear projects
126
). Entities receiving loan guarantees
must make a “credit subsidy cost” payment to the federal treasury that reflects
the net anticipated cost of the guarantee to the government, including a
124
See 10 CFR § 451.4.
125
For a discussion of the credit see EIA, Annual Energy Outlook 2007, p. 21.
126
DOE Announces Plans for Future Loan Guarantee Solicitations, Department of Energy press release, April 11,
2008. Loan guarantee authority of $18.5 billion for nuclear power plants is provided by P.L. 110-161.
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probability of default. The guarantees are, under current rules, unlikely to be
available to public power entities.
127
• Energy Investment Tax Credit. Tax credits under this program are available to
certain renewable energy systems, including solar and geothermal electricity
generation, and some other innovative energy technologies. Wind energy systems
do not qualify. The credit is 10% for systems installed after January 1, 2009.
Geothermal projects that take the investment tax credit cannot take the renewable
production tax credit.
128
The results of the analysis are shown in the main body of the report. Note that these estimates are
approximations subject to a high degree of uncertainty over such factors as future fuel and capital
costs. The rankings of the technologies by cost are therefore also an approximation and should
not be viewed as a definitive estimate of the relative cost-competitiveness of each option. Also
note that site-specific factors would influence an actual developer’s choice of generating
technologies. For example, coal may be less costly if a plant is close to coal mines, and the
economics of wind depend in part on the strength and consistency of the wind in a given area.
Table A-1. Base Case Financial Factors
Item Value Sources and Notes
Representative Bond Interest Rates
Utility Aa 2010: 6.8%
2015: 7.0%
2020: 7.0%
IPP High Yield 2010: 9.8%
2015: 10.0%
2020: 10.0%
Public Power Aaa 2010: 5.1%
2015: 5.4%
2020: 5.4%
Corporate Aaa 2010: 6.3%
2015: 6.5%
2020: 6.5%
When available, interest rates for investment grade bonds
with a rating of Baa or higher (i.e., other than high yield
bonds) are Global Insight forecasts. When Global Insight
does not forecast an interest rate for an investment grade
bond the value is estimated based on historical
relationships between bond interest rates (the historical
data for this analysis is from the Global Finance website).
High yield interest rates are estimated based on the
differential between Merrill Lynch high yield bond indices
and corporate Baa rates, as reported by WSJ.com (Wall
Street Journal website).
Cost of Equity—Utility 14.00%
Cost of Equity—IPP 15.19%
California Energy Commission,
“Comparative Cost of California Cental
Station Electricity Generating
Technologies,” December 2007, Table 8.
Debt Percent of Capital Structure Utility: 50%
IPP: 60%
Utility or IPP with
Northwest Power and Conservation
Council, “The Fifth Northwest Electric
Power and Conservation Plan,” May
127
Entities receiving loan guarantees must make a substantial equity contribution to the project’s financing. Public
power entities normally do not have the retained earnings needed to make such payments. The rules also preclude
granting a loan guarantee if the federal guarantee would cause what would otherwise be tax exempt debt to become
subject to income taxes. Under current law this situation would arise if the federal government were to guarantee public
power debt. For further information on these and other aspects of the loan guarantee program see U.S. DOE, final rule,
“Loan Guarantees for Projects that Employ Innovative Technologies,” 10 C.F.R. § 609 (RIN 1901-AB21), October 4,
2007 http://www.lgprogram.energy.gov/keydocs.html.
128
For additional information see the discussion of the investment tax credit in the federal incentives section of the
Database of State Incentives for Renewable Energy website, http://www.dsireusa.org/.
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Item Value Sources and Notes
federal loan
guarantee: 80%
POU: 100%
2005, Table I-1.
Federal Loan Guarantees
Cost of equity premium for entities
using 80% financing.
1.75 percentage
points
Credit Subsidy Cost 12.5% of loan value
Congressional Budget Office,
Nuclear Power’s Role in Generating Electricity,
May 2008, web supplement
(“The Methodology Behind the Levelized Cost
Analysis”), Table A-5 and page 9.
Long-Term Inflation Rate (change in
the implicit price deflator)
1.9% Global Insight
Composite Federal/State Income
Tax Rate
38% EIA, National Energy Modeling System
Documentation, Electricity Market
Module, March 2006, p. 85.
Notes: EIA = Energy Information Administration; IOU = Investor Owned Utility; POU = Publicly Owned Utility;
IPP = Independent Power Producer. For a summary of bond rating criteria see http://www.bondsonline.com/
Bond_Ratings_Definitions.php. “High yield” refers to bonds with a rating below Baa.
Table A-2. Base Case Fuel and Allowance Price Forecasts
Delivered Fuel Prices, Constant 2008$
per Million Btus
Air Emission Allowance Price,
2008$ per Allowance
Coal Natural Gas Nuclear Fuel Sulfur Dioxide Nitrogen Oxides
2010 $1.93 $7.51 $0.58 $249 $2,636
2020 $1.80 $6.41 $0.67 $1,074 $3,252
2030 $1.87 $7.48 $0.67 $479 $3,360
2040 $1.96 $9.17 $0.65 $158 $3,180
2050 $2.06 $11.24 $0.63 $52 $3,009
Sources: Forecasts are from the assumptions to the Energy Information Administration’s 2008 Annual Energy
Outlook, which assumes implementation of current law and regulation. The original values in 2006 dollars were
converted to 2008 dollars using the Global Insight forecast of the change in the implicit price deflator. The EIA
forecasts are to 2030; the forecasts are extended to 2050 using the 2025 to 2030 growth rates. The sulfur
dioxide and nitrogen oxides allowance forecasts are for the eastern region of the United States (allowance prices
are expected to vary regionally under the Clean Air Interstate Rule).
Note: Btu = British thermal unit.
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National Renewable Energy Laboratory
1617 Cole Boulevard, Golden, Colorado 80401-3393
303-275-3000 x www.nrel.gov
Operated for the U.S. Department of Energy
Office of Energy Efficiency and Renewable Energy
by Midwest Research Institute x Battelle
Contract No. DE-AC36-99-GO10337
Technical Report
NREL/TP-500-39851
November 2007
Distributed Wind Market
Applications
T. Forsyth and I. Baring-Gould
Prepared under Task No. WER6.7502
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Table of Contents
CHAPTER 1. EXECUTIVE SUMMARY.................................................................................................................1
I. SUMMARY OF MARKET POTENTIAL........................................................................................................................3
II. SUMMARY OF DOMESTIC MARKETS FOR DISTRIBUTED WIND TECHNOLOGIES .....................................................4
III. SUMMARY OF INTERNATIONAL MARKET FOR DISTRIBUTED WIND TECHNOLOGIES ............................................8
IV. MARKET-BASED BARRIERS TO THE DISTRIBUTED WIND MARKET....................................................................11
V. TECHNICAL BARRIERS TO THE DISTRIBUTED WIND MARKET .............................................................................12
VI. ACKNOWLEDGEMENTS ......................................................................................................................................13
VII. CONCLUSION ....................................................................................................................................................13
CHAPTER 2. SMALL-SCALE REMOTE OR OFF-GRID POWER..................................................................15
I. EXECUTIVE SUMMARY .........................................................................................................................................15
II. APPLICATION BACKGROUND...............................................................................................................................15
III. CURRENT STATUS OF SMALL-SCALE WIND .......................................................................................................16
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................17
Expected United States Market ..........................................................................................................................17
Expected International Market...........................................................................................................................17
Technology Adoption Timeframe .......................................................................................................................19
Non-Technical Barriers for Technology Adoption.............................................................................................20
Time-Critical Issues ...........................................................................................................................................22
Incentive Markets...............................................................................................................................................22
Utility Industry Perspectives ..............................................................................................................................22
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................23
Barriers for Small-Scale Turbines .....................................................................................................................23
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................26
Technical Challenges.........................................................................................................................................26
VII. CONCLUSIONS ..................................................................................................................................................30
VIII. REFERENCES ...................................................................................................................................................31
CHAPTER 3. RESIDENTIAL POWER .................................................................................................................32
I. EXECUTIVE SUMMARY .........................................................................................................................................32
II. APPLICATION BACKGROUND...............................................................................................................................33
III. CURRENT STATUS OF GRID-CONNECTED RESIDENTIAL DISTRIBUTED GENERATION .........................................34
The Future..........................................................................................................................................................34
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................35
Expected United States Market ..........................................................................................................................35
Expected International Market...........................................................................................................................39
Technology Adoption Time Frame.....................................................................................................................40
Non-Technical Barriers for Technology Adoption.............................................................................................41
Economics ..........................................................................................................................................................41
Lack of Incentives...............................................................................................................................................44
Subsidy Market for Residential Wind Distributed Generation...........................................................................46
Utility Industry Impact of Residential Distributed Generation..........................................................................46
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................49
Technology Barriers for Distributed Wind Generation .....................................................................................49
Expected Turbine Size for Residential Distributed Generation .........................................................................52
Required Cost of Energy ....................................................................................................................................53
Seasonality and Geographic Nature of Wind Resource.....................................................................................54
Impact of Intermittency on Residential Wind Energy.........................................................................................55
Interface between Turbine and Wind-Distributed Generation...........................................................................55
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................55
The Future..........................................................................................................................................................55
VII. CONCLUSIONS ..................................................................................................................................................58
VIII. ACKNOWLEDGEMENTS....................................................................................................................................59
IX. REFERENCES......................................................................................................................................................59
i
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X. BIBLIOGRAPHY ...................................................................................................................................................61
CHAPTER 4. FARM, INDUSTRY, AND SMALL BUSINESS ............................................................................61
I. EXECUTIVE SUMMARY .........................................................................................................................................61
II. APPLICATION BACKGROUND...............................................................................................................................62
III. CURRENT STATUS OF ACTIVITIES FOR THIS APPLICATION .................................................................................62
IV. MARKET BARRIERS ISSUES AND ASSESSMENT ..................................................................................................63
Expected Market in the United States ................................................................................................................63
Expected International Market...........................................................................................................................65
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................65
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................66
VII. CONCLUSIONS ..................................................................................................................................................67
VIII. REFERENCES ...................................................................................................................................................69
XI. BIBLIOGRAPHY ..................................................................................................................................................69
CHAPTER 5. “SMALL-SCALE” COMMUNITY WIND POWER ....................................................................70
I. EXECUTIVE SUMMARY .........................................................................................................................................70
II. APPLICATION BACKGROUND...............................................................................................................................71
III. CURRENT STATUS OF COMMUNITY WIND..........................................................................................................72
IV. MARKET BARRIERS ISSUES &ASSESSMENT ......................................................................................................74
Expected U.S. Market for “Small-Scale” Community Wind Applications.........................................................74
Expected International Market for “Small-Scale” Community Wind Applications...........................................75
“Small-Scale” Community Wind Technology Adoption Time Frame................................................................76
Non-Technical Barriers for “Small-Scale” Community Wind Technology Adoption........................................78
Time-Critical Nature of “Small-Scale” Community Wind Technology .............................................................80
Subsidy Market for “Small-Scale” Community Wind........................................................................................82
Utility Industry Impact of “Small-Scale” Community Wind..............................................................................82
V. TECHNICAL BARRIERS ISSUES AND ASSESSMENT ...............................................................................................83
Technology Barriers for “Small-Scale” Community Wind................................................................................83
Complexity of “Small-Scale” Community Wind Technology Barriers ..............................................................85
Expected Turbine Size to Meet “Small-Scale” Community Wind Market .........................................................85
Required Cost of Energy to Compete in “Small-Scale” Community Wind Market ...........................................86
Seasonality and Geographic Nature of Wind Resource.....................................................................................86
Impact of Intermittency ......................................................................................................................................86
Interface for “Small-Scale” Community Wind ..................................................................................................87
VI. RECOMMENDED AREAS OF TECHNICAL CONCENTRATION.................................................................................88
The Future..........................................................................................................................................................88
VII. CONCLUSIONS ..................................................................................................................................................91
VIII. ACKNOWLEDGEMENTS....................................................................................................................................91
IX. REFERENCES......................................................................................................................................................92
X. BIBLIOGRAPHY ...................................................................................................................................................93
XI. APPENDIX A......................................................................................................................................................95
ii
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Table of Figures
Figure E.1. Overview of market segments and commercial wind turbines ........................................ 3
Figure E-2. Market projections using number of units installed in the United States ........................ 5
Figure E.3. Incremental domestic installed capacity by sector through 2020 .................................... 7
Figure E.4. Potential capacity variation for all domestic market segments........................................ 8
Figure E.5. Incremental international installed capacity by sector through 2020 without data for
off-grid or small-system segment (which is too large to show graphically)................................. 10
Figure E.6. Potential capacity variation for all international market segments .................................. 10
Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey ...... 36
Figure 3-2. Renewable energy end-user information from Home Power readers survey .................. 38
Figure 3-3. Constructing a demand curve for DWT – experience from PV [27] ............................... 44
Figure 3-4. United States residential average retail price of electricity by state, 2004 (cents/kWh).. 54
Figure 5-1. United States large- and small-scale community wind energy market upper-bound
growth forecast.............................................................................................................................. 72
Table of Tables
Table E.1. Market Projections of Domestically Installed Units ......................................................... 5
Table E.2. Projected Domestic Installed Capacity (MW) by Sector through 2020............................ 6
Table E.3. Cumulative Installed International Capacity in MW by Sector through 2020.................. 9
Table 2-1. Electrical Access in Developing Countries by Region (Year 2000) ................................. 20
Table 2-2. Summary Information Table: Small-Scale Remote Power (Residential or Village) ........ 29
Table 3-1. 2006 Survey Responses on Grid-Connected Residential Wind Market Barriers.............. 43
Table 3-2. Small Wind Programs by State.......................................................................................... 48
Table 3-3. 2006 Grid-Connected Survey Responses .......................................................................... 51
Table 3-4. Average Customer Load in kWh/year, by State and Segment .......................................... 53
Table 3-5. Summary Information Table: Residential Power .............................................................. 57
Table 4-1. Summary Information Table: Farm, Industry, and Small Business .................................. 68
Table 5-1. 2006 Survey Responses on “Small-Scale” Community Wind Market Barriers................ 80
Table 5-2. 2006 Survey Responses on “Small-Scale” Community Wind Technical Barriers ........... 84
Table 5-3. Summary Information Table: “Small-Scale” Community Wind Power ........................... 90
Table 5-4. Community-Owned Wind Projects Utilizing Turbines from 100 kW to 1,000 kW ......... 95
iii
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Chapter 1. Executive Summary
The Executive Summary will discuss the distributed wind market potential from a domestic and
international perspective with greater confidence in the number of units installed for the
domestic market. The market potential discussion will be followed by a summary of information
provided in each chapter, including regions of market interest for both the domestic and
international market, key market and technical barriers, time-critical issues for market
development, technology adoption timeframe, and recommended areas of concentration.
Distributed wind energy systems provide clean, renewable power for on-site use and help relieve
pressure on the power grid while providing jobs and contributing to energy security for homes,
farms, schools, factories, private and public facilities, distribution utilities, and remote locations.
America pioneered small wind technology in the 1920s, and it is the only renewable energy
industry segment that the United States still dominates in technology, manufacturing, and world
market share.
The series of analyses covered by this report were conducted to assess some of the most likely
ways that advanced wind turbines could be utilized as an option to large, central station power
systems. Each chapter represents a final report on specific market segments written by leading
experts in each sector. As such, this document does not speak with one voice but rather a
compendium of different perspectives from the U.S. distributed wind field.
For this analysis, the U.S. Department of Energy (DOE) Wind and Hydropower Technologies
Program and the National Renewable Energy Laboratory’s (NREL’s) National Wind Technology
Center (NWTC) defined distributed applications as wind turbines of any size that are installed
remotely or connected to the grid but at a distribution-level voltage.
Distributed wind systems generally provide electricity on the retail side of the electric meter
without need of transmission lines, offering a strong, low-cost alternative to photovoltaic (PV)
power systems that are increasingly used in urban communities. Small-scale distributed wind
turbines also produce electricity at lower wind speeds than large, utility-grade turbines, greatly
expanding the availability of land with a harvestable wind resource. These factors, combined
with increasingly high retail energy prices and demand for on-site power generation, have
resulted in strong market pull for the distributed wind industry, which is poised for rapid market
expansion.
Seven market segments were identified for initial investigation. These market segments,
documented in this report, include small-scale remote or off-grid power; residential or on-grid
power; farm, business, and small industrial wind applications; and “small-scale” community
wind. A summary of the market for remote wind-diesel applications is also included in this
summary, although a full report was never completed. The remaining two market segments,
water pumping for large-scale irrigation and water desalination, are currently being assessed as
part of other program activities and are not included at this time. While some of these market
applications have existed for some time, others are just beginning to emerge as part of distributed
wind power. A short introduction to each of these assessments is provided below.
x Small-scale remote or off-grid power (residential or village): Supplying energy to
rural, off-grid applications in the developed and developing world. This market
1
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encompasses either individual homes or small community applications and is usually
integrated with other components, such as storage and power converters and PV systems.
x Residential or on-grid power: Small wind turbines used in residential settings that are
installed on the house side of the home electrical meter using net metering to supply
energy directly to the home. Excess energy is sold back to the supplying utility.
x Farm, business, and small industrial wind applications: Supplying farms, businesses,
and small industrial applications with low-cost electric power. The loads represented by
this sector are larger than most residential applications, and payback must be equivalent
to similar expenditures (4 to 7 years). In many cases, businesses are not eligible for net
metering applications; thus the commercial loads must use most of the power from the
turbine.
x “Small-scale” community wind: Using wind turbines to power large, grid-connected
loads such as schools, public lighting, government buildings, and municipal services.
Turbines can range in size from very small, several-kW turbines to small clusters of
utility-scale multi-megawatt turbines. The key, defining factor is that these systems are
owned by or for the community.
x Wind/diesel power systems: Providing power to rural communities currently supplied
through diesel technology in an effort to reduce the amount of diesel fuel consumed. The
rising cost of diesel fuel and increased environmental concerns regarding diesel fuel,
transportation, and storage have made project economics more sensible.
x Irrigation water pumping: Using wind turbines to supply energy for agricultural
applications. Current applications are powered by grid electricity, diesel, gasoline,
propane, and particularly natural gas. Wind or hybrid systems allow farmers to offset use
of high-priced fossil fuels.
x Water desalination: Using wind energy to directly or indirectly desalinate sea or
brackish water using reverse osmosis, electrodialysis, or other desalination technologies.
The economic and technical performance of wind-powered desalination depends on the
configuration and placement of wind resource with regard to the impaired water and
existing energy resources. Water desalination works well with the wind resource found in
coastal or desert environments.
In these analyses, the DOE Wind and Hydropower Technology Program is assessing two new
segments that have not historically been classified under the distributed wind banner: farm/
commercial and the “small-scale” community wind market. Both of these markets struggle to
find commercial turbines to meet their needs, demonstrating opportunity for the development of
U.S. turbines.
These two emergent market segments combined with the existing small wind market result in
three conglomerated turbine capacities. The first is the residential and smaller business sector at
roughly 0 kilowatt (kW) to 100 kW capacity. The second sector is the farm/commercial market
sector that includes farm, industrial, and wind/diesel from 100 kW to 500 kW. The last market
sector for distributed wind is the “small-scale” community wind sector, which has been
estimated to be 500 kW to 1 megawatt (MW). Although not covered specifically within this
analysis, there is also likely a need to develop methodologies to lower the cost of power from
large, multi-megawatt turbines that are installed in distributed community applications. Further
hardware development in all of these sectors would help meet the desires of Americans to
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provide their own electricity, whether for a residence, farm, or business in rural America where
zoning challenges are minimized.
This study identifies and describes how the distributed wind industry can overcome long-
standing barriers and play an important role (in the United States and the international arena) in
supplying power near the point of end use or behind the meter.
I. Summary of Market Potential
Authors were asked to conservatively assess the potential market size for the five market
segments in terms of the number of units expected to be installed in 5-year increments through
2020. Additionally, authors were asked to recommend the expected turbine size that would be
most applicable to meet the proposed markets. Figure E.1 shows an overview of the different
market segments, the kilowatt capacity of the turbines for each market segment, and the existing
turbines available within each distributed market segment.
Market Segments
Small-Scale Remote Power
Residential Power
Farm/Business/Ind Power
Wind/Diesel Power
““Small-Scale” ” Community Power
300W 300W
DOE Size Categories
US Commercial Products
Non-US Commercial Products*
Refurbished Refurbished
1 kW 5 kW
10
kW
20
kW
50
kW
65
kW
100kW 200kW 300kW 400kW 500kW 600kW 700kW +
-
1 kW 5 kW
10
kW
20
kW
50
kW
65
kW
100kW 200kW 300kW 400kW 500kW 600kW 700kW +
Net Billing, on site
Irrigation, Industrial
US
International
Distributed Wind Turbine Commercial/Farm Small-Scale Community
-
Commercial Commercial
* - Currently sold in the US
4/27/06
* - Currently sold in the US
4/27/06
Prototype Prototype
Figure E.1. Overview of market segments and commercial wind turbines
From a manufacturing perspective, the strongest market segment is turbines smaller than 10 kW
in size, with 20 domestic or internationally manufactured turbines to choose from. The number
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of turbine choices between 20 kW and 100 kW is quite limited, and turbines between 100 kW to
1 MW are practically nonexistent.
It should be noted that the re-powering of wind farms in Europe and the United States has made
available re-manufactured turbines that are being used to supply many current distributed
applications. Although generally inexpensive compared to existing new turbine models, most of
these are based on significantly outdated technology. Turbine design, reliability, and energy
capture have been improved over the intervening time, resulting in current projects with reduced
energy capture than would be expected from projects with turbines incorporating current
technology and design practices.
II. Summary of Domestic Markets for Distributed Wind Technologies
Teams of technical experts with knowledge of their market segments provided the market
projections summarized below. Each of these experts was asked to provide a conservative
estimate to ensure the report validity in retrospect. It should be noted that NREL did not attempt
to validate the expected market data from these market summary reports.
The benefits from distributed wind projects are minimized when quantified using total
megawatts of installed capacity, especially for the smaller distributed turbines. However, the use
of a simple number of units produced reduces the visibility of the mid-size turbines used in the
farm/commercial, wind/diesel, and “small-scale” community wind segments. For this reason, the
summary results are presented in terms of both the number of units and total installed capacity. It
should be noted that the estimates of the number of units and thus the total installed megawatts
are very rough and should only be considered in relative terms. The DOE Wind and Hydropower
Program is in the process of conducting more detailed market assessments for the segments that
show the most promise.
Table E.1 summarizes the cumulative number of expected domestic turbine sales over the five
market segments. Note that the table also presents the turbine size for each market segment.
Currently the largest sector in terms of the number of installed units is the small-scale remote or
off-grid power market segment. The majority of these off-grid units have a lower capacity, with
a typical turbine size in the range of a few kilowatts or less. All market segments combine to a
potential total of 680,000 installed units by the end of 2020.
There are several market niches within the domestic off-grid segment, specifically in Alaska and
Native American communities. An example is the Navajo Nation—approximately one-third of
the 250,000 people on the reservation lack electricity.
The estimated market growth across 15 years to 2020 is 11% per year for the small-scale remote
or off-grid market segment; 22% per year for the residential or on-grid segment; 48% across the
farm, business, and small industrial segment; 26% per year for the wind/diesel segment; and 23%
per year for the “small-scale” community segment.
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Small wind turbine systems are typically procured by property owners. Manufacturers market
their systems through distributors, dealers, and directly to customers. Local dealers or installers
typically install grid-connected systems, although some customers install their own systems with
inspections conducted by certified electricians. The wind resource, turbine size and model,
micro-siting, and installation requirements such as tower height and foundation are site-specific.
Many states, counties, and utilities are promoting distributed wind generation for its clean energy
benefits and contribution to renewable portfolio standards, energy reliability, and energy
independence.
Widespread deployment of small wind turbines can increase the public’s familiarity with wind
turbine visual impacts, attract mainstream media coverage, and pave the way for local
community support for larger wind developments. Small turbines, in particular installations at
schools and other high-visibility locations, can become an important asset in reducing fears about
unfamiliar technology, which in turn can help reduce the expense and unpredictable nature of
siting and permitting large wind developments. Small turbines can be installed in selected
neighborhoods to increase public awareness of residential wind options and provide an additional
benefit by educating students on how electricity is made and the benefits of wind power.
Neighborhood DWT installations can also help utilities increase customer interest and
participation in voluntary green power programs and provide local “advertisements” of utilities’
involvement in renewable energy.
III. Current Status of Grid-Connected Residential Distributed Generation
The Future
Residential DWT installed capacity has historically comprised less than 5% of total sales of
small wind turbines (up to 100 kW) [worldwide]. However, manufacturers expect that portion to
grow to more than 20% by 2020 [2]. The U.S. Department of Energy Renewable Energy Plant
Information System (REPiS) has documented nearly 1,200 small wind turbines (up to 100 kW)
totaling 16 MW as of 2005 in 45 states. Approximately 70% of the DWT systems and 40% of
the DWT capacity documented in the REPiS database are estimated to be grid-connected
residential applications [3].
Based on a review of available market data, this study estimates that approximately 700 wind
turbines totaling 3.5 MW were sold worldwide for residential grid-connected applications during
2005, with 500 of these totaling 2.5 MW sold in the United States. This study estimates that the
cumulative grid-connected residential installed capacity was 2,900 units totaling 14.5 MW
worldwide as of 2005, with 1,800 of these units totaling 9 MW installed in the United States.
Market challenges. Because economics are a significant barrier to market adoption and growth
of grid-connected DWT, it is important to examine factors contributing to turbine system costs.
Key determining factors include turbine size (rotor diameter, rated capacity), average wind speed
at hub height, power output control/limitation technology, and applied grid control technology.
External factors include infrastructure and transport logistics costs, permitting costs and time,
and other location-specific conditions.
From the perspectives of power generation potential (kWh/kW), return on investment, and cost
of energy (cents/kWh), current small turbine designs are at a disadvantage compared with much
larger utility-scale wind turbines. Small turbines are relatively more expensive to manufacture
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(both materials and labor) and their limited hub heights (because of cost, setback requirements,
aesthetics, etc.) result in comparatively less energy production. In addition, their low volume
currently manufactured impede cost reductions with series-scale production [4]. The lack of
performance standards, independent testing and consistent ratings for DWT contribute to product
reliability concerns in the market. Complex interconnection standards and the reluctance of
utilities to adopt net metering and DWT incentive programs further constrain the market and
hinder market efficiencies. Dealers and installers increasingly report that the insurance industry
is requiring additional insurance coverage for DWT owners. Finally, small wind turbines are not
consistently addressed in state renewable portfolio standards (RPS), incentive policies, and
consumer education campaigns.
In the United Kingdom, the most commonly perceived barriers to residential distributed
generation are permitting, expensive metering, lack of installation targets and incentives, high
cost, and low consumer awareness. As in the United States, the United Kingdom experiences a
high correlation between incentives and installations [5].
Utility acceptance. The market for grid-connected residential wind is primarily rural
homeowners and small businesses. Many domestic residential sites appropriate for wind power
are served by rural electric co-ops (RECs), which typically view net metering and distributed
generation as cross-subsidies and inconsistent with co-op principles that members share equally
in the investment, risk, and benefits of the co-operative [6]. The official position of the National
Rural Electric Co-operative Association (NRECA) is that net metering results in reduced co-op
revenue while the fixed costs remain the same and that the co-op’s other consumers ultimately
subsidize the self-generating consumer [7]. While RECs do hold a large territory, many other
utilities in more populated areas do not oppose net metering. However, most utilities still require
significant education, softening of interconnection requirements, and generally an improved
understanding of the benefits of capturing consumer investments in DWT.
Potential new market segments. While the rural residential market has been the primary target
for United States grid-connected small wind systems, new initiatives are exploring the urban and
suburban markets. Among others, a U.S. manufacturer is aggressively pursuing small wind for
the suburban residential market with new turbine technology and shorter towers. It can be
anticipated that at least 1 year of market experience will be required to determine if this is a
viable market segment for DWT and to identify the key technical and market barriers for this
market segment, as well as the best practices for suburban residential market penetration.
Several efforts are underway internationally to develop roof-top mounted [8] and building-
integrated DWT designs [9], but so far none have proven commercially viable. It is premature to
anticipate the feasibility of such designs, especially until extensive testing establishes that they
pose no potential threat to the integrity of the structures on which they are mounted. The
concepts are mentioned simply as examples of enabling technologies that may have the potential
to significantly augment the distributed generation market in the future.
IV. Market Barriers Issues and Assessment
Expected United States Market
Market targets. Historically, rural properties have been the primary market for residential-scale
wind distributed generation systems. The industry is increasingly focused on the rural residential
market, with new attention on the large-lot suburban residential market. As shown below in
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Figure 3-1, a 2004 survey of readers of Home Power Magazine (3,573 respondents) indicated
that 38% intended to utilize renewable energy in a rural home, 27% in a suburban home, and
16% in an urban home, with more than 40% of respondents planning to install wind turbines
[10].
Figure 3-1. Renewable energy system end-use information from Home Power readers’ survey
Market potential. The growth potential of the U.S. residential DWT market presents a unique,
timely opportunity. Moreover, trends show that growth may occur at significantly increased rates
if critical market barriers are overcome. A new market survey of the grid-connected residential
wind market was conducted for this study in January 2006
1
. This most recent survey found that
the leading U.S. DWT manufacturers are projecting an average annual growth rate of 32% for
the U.S. grid-connected market through 2020, with their potential domestic market share as high
as 9,500 units totaling 26 MW in 2010, 21,000 units totaling 70 MW in 2015, and 41,000 units
totaling 130 MW in 2020. These projections provide an aggressive outlook for the DWT market
and signify that manufacturers are confident that the market is poised for strong growth.
It is important to note that predictions about the percentage of future DWT market growth vary
greatly and often depend heavily on the degree of expected state and federal support for DWT.
The DWT market study conducted by the American Wind Energy Association (AWEA) in the
spring of 2005 [11] found that in ideal market conditions (i.e., with sufficient policy support),
annual U.S. sales of DWT could reach $55M by 2010. The same study forecasts a slow growth
scenario based on scaled-back projections from only the established industry players, estimating
annual U.S. sales at $27M in 2010 if the key barriers are not addressed. These estimates
represent higher and lower bound average annual growth rates of 24% and 9%, respectively;
however, some industry members believe that these projections are too conservative. With
increased monitoring of these market trends, it is becoming increasingly evident that the DWT
industry has the potential to become one of the leading renewable energy distributed system
industries for residential homes in the United States.
1
See the Acknowledgements section for a list of survey participants.
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In 2002, AWEA set a bold industry goal of installing 50,000 MW of total DWT capacity (3% of
domestic electricity demand) by 2020 based on census data for appropriately sized lots and
acreages, and put the total potential domestic market at 15.1 million homes
2
. The AWEA report
estimated that more than 80% of the United States DWT market will be grid-connected
residential systems with an average turbine size of 7.5 kW. Reaching 50,000 MW by 2020 would
require average annual growth of around 60% over the next 15 years. Although this is an
ambitious goal, given the recent annual market growth of 40% [12], it may be obtainable with
adequate incentives, research and development (R&D) funding, and other policy support at state
and federal levels.
In consideration of these studies and familiarity with current industry trends, this study
conservatively estimates that cumulative U.S. on-grid residential wind turbine installations in
2010 will have a lower bound of 5,100 units totaling 29 MW and an upper bound of 7,400 units
totaling 44 MW, with average annual growth rates of 9% and 28%, respectively. An increase in
the average turbine size for this sector from 5 kW in 2005 to 9 kW in 2020 is projected as a
result of the availability of new products. As shown in the Summary Information Table (Table 3-
5), assuming the same growth rates in the number of units, this study’s lower and upper bound
United States estimates are 10,000-26,000 units totaling 72-211 MW in 2015 and 18,000-92,000
units totaling 170-1,000 MW in 2020, resulting in a midpoint forecast for the United States grid-
connected residential market sector of 55,000 units totaling 590 MW in 2020.
One of the conclusions of this study is that the residential wind industry would benefit from a
new, detailed potential market analysis. An in-depth market study focused on consumer
motivations would provide valuable information to inform research, product development,
marketing, and policy decisions.
Regions of interest. The criteria for states in the United States with strong residential DWT
markets include high residential electricity rates and/or loads, adequate wind resources, financial
incentives, clear and reasonable permitting requirements, positive public perception of small
turbines, state or utility public education and awareness campaigns, and simplified
interconnection processes.
Taking into consideration relevant economic variables, a 2004 study by Lawrence Berkeley
National Laboratory calculated simple payback for DWT break-even turnkey costs in the United
States [13]. The top ten states for DWT simple payback at $2.50/W were reported to be
California, New York, New Jersey, Rhode Island, Vermont, Hawaii, Montana, Maine, Alaska,
and Illinois.
3
Since then, California and Illinois rebate funding levels have declined, and
Massachusetts and Washington have introduced significant DWT incentive programs. Fifteen
states have renewable energy funds with $3.5 billion in aggregate for renewable energy from
1998 to 2010: California, Connecticut, Delaware, Illinois, Maine, Massachusetts, Minnesota,
Missouri, New Jersey, New York, Ohio, Oregon, Pennsylvania, Rhode Island, and Wisconsin
[14]. However, so far only a few of these have established funding mechanisms for DWT.
2
The 2002 AWEA Roadmap estimated that by 2020 there will be 43.2 million homes with more than 0.50 acre of land
and that 35% of these homes will have a sufficient wind resource to generate electricity from DWT.
3
The model assumed a 10-kW system, 25-year system lifetime, 8% IRR on investment, operating and maintenance
at 1.5¢/kWh, cash payment, and wind production valued at full average residential electricity rate.
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Responses to the survey conducted for this study confirm that the states of specific interest for
the grid-connected residential market fall into three primary regions:
x West Coast (California and Washington State)
x Northeast and Mid-Atlantic (New York, Massachusetts, Pennsylvania, Vermont)
x Midwest/Central (Texas, Ohio, Minnesota, Iowa, Wisconsin, Colorado).
Correlations to residential PV. Considerable market information is available for the residential
PV industry that could be useful to the DWT industry. Examples include trends in grid-
connected PV installations and forecasts,
4
cost of energy, consumer demographics, purchase
criteria, effectiveness of incentives and market drivers, and potential applications and market size
for hybrid wind/PV systems. This insight can help inform marketing and technology decisions
for the potentially large suburban residential market that some small wind turbine manufacturers
are beginning to target.
Figure 3-2. Renewable energy end-user information from Home Power readers survey
4
The U.S. Department of Energy’s Energy Information Administration (EIA) forecasts residential grid-connected PV
to be 127 MW of installed capacity in 2010, 141 MW in 2015, and 157 MW in 2020. The calculations are based on 2-
kW residential systems.
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It is also important to note that the PV industry has significant public support and resources to
advance policy incentives, obtain research funding, and conduct public education and awareness
campaigns. Coordination between the DWT and PV industries based on similar interconnection
technologies and overlapping target markets could prove effective for developing
recommendations beneficial to both industries. Customer motivations and resource information,
such as that collected by Home Power Magazine in a 2003 reader’s survey (Figure 3-2) can
provide important insights for marketing both PV and DWT.
Expected International Market
U.S. DWT manufacturers are in an excellent position to take advantage of the international DWT
market. AWEA estimates that more than 40% of U.S.-manufactured DWT are exported [15].
Currently, two U.S. manufacturers, Bergey Windpower and Southwest Windpower, are both
recognized as the world’s dominant market leaders in terms of sales volume [16]. A recent study
conducted by Marbek for the Canadian Wind Energy Association indicated that 96% of reported
sales in Canada are attributed to three U.S. manufacturers: Bergey Windpower, Southwest
Windpower, and Aeromax [17]. The international export market, therefore, presents a
considerable economic opportunity for U.S. manufacturers, both for grid-connected residential
DWT as well as off-grid, remote applications.
The 2006 market survey conducted for this study confirms a robust international export growth
outlook. The leading U.S. DWT manufacturers are projecting an average annual growth rate of
34% for the non-U.S. grid-connected market through 2020, indicating a potential U.S. export
market of 3,200 units totaling 11 MW in 2010, 10,000 units totaling 31 MW in 2015, and 22,000
units totaling 66 MW in 2020.
Other estimates of the international DWT market come from AWEA’s 2005 DWT market study
and a 2002 study by Garrad Hassan Consulting. The AWEA study estimates that the
international small wind market is roughly the size of the total domestic market and that 40% of
DWT manufactured in the United States are exported. A 2002 article in REFOCUS magazine by
United Kingdom-based Garrad Hassan Consulting projects a five-fold increase from 2002 for
global small wind sales. This estimate equates to 150 MW/year, or 150,000 turbines/year
assuming $5/W total installed costs and an average turbine size of 1 kW [18].
A number of countries have shown considerable interest in DWT technologies. In 2005, Canada
and the United Kingdom published studies about their potential markets for small wind. A 2005
United Kingdom study on “microgeneration” anticipates up to 5 GWh of energy from residential
wind by 2030 (1.5-kW systems), with a doubling by 2050 and with small wind supplying 4% of
United Kingdom’s electricity requirement [19]. The study, commissioned by the UK Department
of Trade and Industry, estimates an upper bound of nearly 120 MW and a lower bound of 20
MW of installed DWT capacity by 2020, depending on the amount of government support.
The Canadian study reports a total potential of 120,000 units for grid-connected residential, 3-
kW average capacity, and total capacity of 360,000 kW. The study references U.S. programs and
market adoption rates and concludes that the Canadian DWT market requires incentives in four
areas: market development (federal rebate and provincial incentives), policy development (net
metering and streamlined environmental processes), technology development (standardized
testing and demonstration programs), and education and awareness-raising (model
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interconnection agreements and installation guidelines for siting, zoning, permitting, and
interconnection) [20].
Lawrence Berkeley National Lab reports that China manufactured 12,000 small wind turbines in
2000 and that the Chinese market has been strongly supported by government policies and
incentives [21]. In February 2005, China passed a groundbreaking law to promote renewable
energy. However, while China has a great potential for wind, as in much of the world, its
primary market is off-grid rural electrification [22].
In consideration of these studies, the large DWT market share held by U.S. manufacturers, and
familiarity with current industry trends, this study conservatively estimates lower and upper
bound international annual growth rates of 11% and 28%, respectively. These rates are slightly
higher than those estimated for the domestic residential DWT market as a result of the likelihood
that new international residential markets will continue to emerge and expand. As with the U.S.
market, the average international turbine size for this sector is expected to increase from 5 kW in
2005 to about 9 kW in 2020 as a result of the availability of new products.
As shown in the Summary Information Table (Table 3-5), using these estimated growth rates for
the number of units, cumulative international on-grid residential wind turbine installations in
2010 are estimated to have a lower bound of 2,500 units totaling 14 MW and an upper bound of
3,300 units totaling 19 MW. Lower and upper bound international grid-connected residential
wind installation estimates are 4,800-11,000 units totaling 34-86 MW in 2015 and 8,700-37,000
units totaling 82-410 MWin 2020, resulting in an international mid-point forecast for this sector
of 23,000 units totaling 250 MW in 2020.
Regions of interest. Responses to the survey conducted for this study indicate that the major
international markets for grid-connected residential wind fall in these three regions:
x Asia (Japan, China, India)
x Europe (United Kingdom, Spain, Italy, Germany, Netherlands, Greece)
x Central and South America.
Technology Adoption Time Frame
There are some technologies on the horizon that could stymie the implementation of worldwide
residential DWT. Fuel cells are often cited as a potential future example. However, commercially
available fuel cells that do not rely on ever-tighter supplies of natural gas will not be available
for several decades. By contrast, the recent United Kingdom “microgeneration” study forecasts
mass-commercialization of DWT in 2015, with electricity prices the most important market
change for small wind [23].
A much more immediately available technology, and one that “competes” with small wind in
various applications today, is PV. Given the current public benefits programs, PV is more
competitive than wind in the 1- to 3-kW category. In addition, currently PV systems can be
ordered, permitted, and installed in a fraction of the time that is required to install a comparably
sized residential wind turbine. However, in areas that do not have incentives for PV, residential
wind is cost-competitive and easily installed for those facing reasonable zoning, permitting, and
interconnection requirements. While PV is often viewed as a competitor, market growth can be
anticipated in hybrid wind/PV systems.
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That said, there are still pressing hurdles that the DWT industry needs to overcome to reduce
consumer hesitation with the technology, specifically in regard to reliability and timeframe for
installation. In addition, the limited availability of cost-effective, state-of-the-art, synchronous
inverters is a constraint to 3-kW (and larger) grid-connected variable-speed turbine types. While
the manufacturers of these inverters also manufacture products for the grid-tied PV market, the
inverter itself controls DWT generators differently than PV systems. When a small wind turbine
manufacturer develops a new turbine model, inverter manufacturers may find it risky to invest in
a new product line without the prospect of selling substantial numbers. Inverters and system
electronics continue to be the least reliable component of small wind technology, which in turn
has stalled innovation [24]. Some companies, such as SMA of Germany and Magnetek of the
United States, have designed inverters for a number of residential wind turbines.
Development of new small wind turbines that do not require an inverter for grid-intertie
applications is another direction being pursued by a few designers. This would bypass the above-
mentioned dilemma. However, current development on these concepts has been greatly slowed
by lack of R&D funding. Multiple paths for inverterless small wind turbines should be employed
to seek the best solution to connecting DWT to the grid in a timely manner, including direct-
drive induction generators and gear-driven systems.
Another significant time-sensitive barrier to current small wind turbine designers is the lack of
effective computer modeling covering all components of a small wind turbine, in a variety of
wind conditions including furling wind speeds. Quickly addressing this need could expedite
crucial design improvements to help meet required cost targets during this critical window of
opportunity to maintain U.S. dominance in this sector.
Towers are one of the greatest challenges for DWT. Towers for large wind turbines are generally
less than 20% of the hardware cost. For small wind turbines, towers often comprise 40%-80% of
the hardware cost. A concerted effort to develop more cost-effective designs with composites or
other materials should be explored.
Non-Technical Barriers for Technology Adoption
The January 2006 survey (Table 3-1) conducted for this study indicates that economics, lack of
incentives, zoning, public perception challenges, and interconnection issues are the most
significant barriers to residential DWT market adoption. Up-front costs also are rated as the key
decision-making factor in a recent Canadian DWT market study [25].
Economics
Most consumers carefully weigh the economics of DWT systems, taking into consideration total
installed costs, out-of-pocket costs, perception of value and return on investment. Factors
contributing to DWT system costs are listed above in the market challenges section. Reductions
in total residential DWT installed costs from the current range of $4-7/W to $2-3/W after
incentives will be necessary for significant market expansion in the U.S. grid-connected market
[26]. This estimate is based on an analysis of PV module shipments vs. price (Figure 3-3) and an
assumption that since PV and small wind are competitors in the grid-connected market, small
wind must be priced competitively with PV.
Lengthy and costly permitting processes, requirements to access state incentive funds
(environmental analyses, site assessments, installation inspections, lengthy applications), and
other site-related processes also drive up total installed costs because dealers and installers
41
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typically assist consumers with these steps. Inconsistent “rated output” turbine model
designations may be an additional factor in reducing consumer confidence and perceived value.
42
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Chapter 4. Farm, Industry, and Small Business
Prepared by:
Ken L. Starcher and Vaughn C. Nelson, West Texas A&M University, Alternative Energy
Institute
Robert E. Foster and Luis Estrada, New Mexico State University, Southwest Technology
Development Institute
I. Executive Summary
Wind energy has proven to be one of the most economical, modular, and readily connected
renewable technologies. Its use in agricultural, production plants, and small business/home
applications will continue to grow for the next 20 years and beyond.
This report is a summary of the expected growth areas, the growth rates, the necessary turbine
style/sizes, and the barriers to sustainable market growth for the farm, industry, and small
business wind market sector.
The prime barrier is cost. Too few turbines are currently produced to obtain the economies of
scale through volume production. Thus, favorable life-cycle costs will not be realized to sell
these mid-size turbines alone. The economic payback has to be on the order of 4 to 7 years to be
attractive compared to other similarly sized investments for agribusiness. The cost of energy
(COE) is in direct competition to that of utility-provided energy at $10–$15/MWh.
The second barrier is lack of installed infrastructure for the ongoing sales and maintenance of a
distributed array of many types of turbines. Enough income must exist within 150 miles of a
central service site to support $1 million/year in sales (20-25 turbines/year of 50-kW units). An
installed base of 300 turbines is needed for an area to support a maintenance facility fulltime.
However, a model of similar scale exists for the large farm implement market, covering the same
size area, expected sales per year, and installed repair/re-supply base.
The lack of enough matching turbines to the loads is the third most important barrier to the
implementation of wind for the farm and small-business market. A 10-kW unit will meet all
small loads. These units are available and easily connected through net billing laws in most states
already allowing this size unit. Likewise, 50-kW turbines are in production and can help meet the
farm-ranch-small irrigation market. Unfortunately, 100- to 250-kW units for center-pivot
irrigation and agri-processing industry are very limited. And the 250- to 500-kW units for large
industrial loads are no longer made in any significant quantities.
One way to improve the potential sales is not to focus on turbine sales alone, but to develop the
market in combination with demand-side energy management and full service of the turbines
after installation. This would reduce owners’ worries regarding long-term O&M and also ensure
that energy produced was used at the best value to the turbine owner (displacing energy that
would have been purchased at retail rates from the utility).
61
Chapter 10: U.S. Energy: Overview and Key Statistics
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CRS Report for Congress
Prepared for Members and Committees of Congress
U.S. Energy: Overview and Key Statistics
Carl E. Behrens
Specialist in Energy Policy
Carol Glover
Information Research Specialist
October 28, 2009
Congressional Research Service
7-5700
www.crs.gov
R40187
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U.S. Energy: Overview and Key Statistics

Congressional Research Service
Summary
Energy supplies and prices are major economic factors in the United States, and energy markets
are volatile and unpredictable. Thus, energy policy has been a recurring issue for Congress since
the first major crisis in the 1970s. As an aid in policy making, this report presents a current and
historical view of the supply and consumption of various forms of energy.
The historical trends show petroleum as the major source of energy, rising from about 38% in
1950 to 45% in 1975, then declining to about 40% in response to the energy crisis of the 1970s.
Significantly, the transportation sector has been and continues to be almost completely dependent
on petroleum, mostly gasoline. The importance of this dependence on the volatile world oil
market was revealed over the past five years as perceptions of impending inability of the industry
to meet increasing world demand led to relentless increases in the prices of oil and gasoline. With
the downturn in the world economy and a consequent decline in consumption, prices collapsed,
but the dependence on imported oil continues as a potential problem.
Natural gas followed a similar pattern at a lower level, increasing its share of total energy from
about 17% in 1950 to more than 30% in 1970, then declining to about 20%. Consumption of coal
in 1950 was 35% of the total, almost equal to oil, but it declined to about 20% a decade later and
has remained at about that proportion since then. Coal currently is used almost exclusively for
electric power generation.
Nuclear power started coming online in significant amounts in the late 1960s. By 1975, in the
midst of the oil crisis, it was supplying 9% of total electricity generation. However, increases in
capital costs, construction delays, and public opposition to nuclear power following the Three
Mile Island accident in 1979 curtailed expansion of the technology, and many construction
projects were cancelled. Continuation of some construction increased the nuclear share of
generation to 20% in 1990, where it remains currently. The first new reactor license applications
in nearly 30 years were recently submitted, but no new plants are currently under construction or
on order.
Construction of major hydroelectric projects has also essentially ceased, and hydropower’s share
of electricity generation has gradually declined, from 30% in 1950 to 15% in 1975 and less than
10% in 2000. However, hydropower remains highly important on a regional basis.
Renewable energy sources (except hydropower) continue to offer more potential than actual
energy production, although fuel ethanol has become a significant factor in transportation fuel,
and wind power has recently grown rapidly. Conservation and energy efficiency have shown
significant gains over the past three decades and offer encouraging potential to relieve some of
the dependence on imports that has caused economic difficulties in the past, as well as the
present.
After an introductory overview of aggregate energy consumption, this report presents detailed
analysis of trends and statistics regarding specific energy sources: oil, electricity, natural gas, coal
and renewable energy. A section on trends in energy efficiency is also presented.
Chapter 10: U.S. Energy: Overview and Key Statistics
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U.S. Energy: Overview and Key Statistics

Congressional Research Service
Contents
Introduction ................................................................................................................................ 1
Oil .............................................................................................................................................. 6
Petroleum Consumption, Supply, and Imports....................................................................... 7
Petroleum and Transportation.............................................................................................. 10
Petroleum Prices: Historical Trends..................................................................................... 12
Petroleum Prices: The 2004-2008 Bubble............................................................................ 15
Gasoline Taxes ................................................................................................................... 18
Electricity ................................................................................................................................. 18
Other Conventional Energy Resources ...................................................................................... 22
Natural Gas......................................................................................................................... 22
Coal .......................................................................................................................................... 26
Renewables............................................................................................................................... 27
Conservation and Energy Efficiency ......................................................................................... 29
Vehicle Fuel Economy........................................................................................................ 29
Energy Consumption and GDP ........................................................................................... 30
Major Statistical Resources ....................................................................................................... 32
Energy Information Administration (EIA) ........................................................................... 32
Other Sources ..................................................................................................................... 33
Figures
Figure 1. Per Capita Energy Consumption in Transportation and Residential Sectors,
1949-2008................................................................................................................................ 3
Figure 2. Electricity Intensity: Commercial, Residential, and Industrial Sectors, 1949-
2008 ........................................................................................................................................ 4
Figure 3. U.S. Energy Consumption, 1950-2005 and 2008........................................................... 6
Figure 4. World Crude Oil Reserves, 1973, 1991, and 2008......................................................... 7
Figure 5. U.S. Consumption of Imported Petroleum, 1960-2008 and Year-to-Date
Average for 2009 ................................................................................................................... 10
Figure 6. Transportation Use of Petroleum, 1950-2008.............................................................. 12
Figure 7. Nominal and Real Cost of Crude Oil to Refiners, 1968-2008...................................... 13
Figure 8. Nominal and Real Price of Gasoline, 1950-2008 and August 2009.............................. 14
Figure 9. Consumer Spending on Oil as a Percentage of GDP, 1970-2006................................. 15
Figure 10. Crude Oil Futures Prices, January 2000 to September 2009 ...................................... 16
Figure 11. Average Daily Nationwide Price of Unleaded Gasoline, January 2002-October
2009 ...................................................................................................................................... 17
Figure 12. U.S. Gasoline Consumption, January 2000-September 2009..................................... 18
Figure 13. Electricity Generation by Source, Selected Years, 1950-2007 ................................... 19
Figure 14. Changes in Generating Capacity, 1995-2007 ............................................................ 20
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U.S. Energy: Overview and Key Statistics

Congressional Research Service
Figure 15. Price of Retail Residential Electricity, 1960-2007..................................................... 22
Figure 16. Natural Gas Prices to Electricity Generators, 1978-2007........................................... 24
Figure 17. Monthly and Annual Residential Natural Gas Prices, 2000-June 2009....................... 25
Figure 18. Annual Residential Natural Gas Prices, 1973-2008................................................... 26
Figure 19. U.S. Ethanol Production, 1990-2008......................................................................... 28
Figure 20. Wind Electricity Net Generation, 1989-2008 ............................................................ 29
Figure 21. Motor Vehicle Efficiency Rates, 1973-2007 ............................................................. 30
Figure 22. Oil and Natural Gas Consumption per Dollar of GDP, 1973-2008............................. 31
Figure 23. Change in Oil and Natural Gas Consumption and Growth in GDP, 1973-2008.......... 32
Tables
Table 1. U.S. Energy Consumption, 1950-2008........................................................................... 2
Table 2. Energy Consumption in British Thermal Units (BTU) and as a Percentage of
Total, 1950-2008...................................................................................................................... 5
Table 3. Petroleum Consumption by Sector, 1950-2008 .............................................................. 8
Table 4. U.S. Petroleum Production, 1950-2008.......................................................................... 9
Table 5. Transportation Use of Petroleum, 1950-2008............................................................... 11
Table 6. Electricity Generation by Region and Fuel, 2008 ......................................................... 21
Table 7. Natural Gas Consumption by Sector, 1950-2008.......................................................... 23
Table 8. Coal Consumption by Sector, 1950-2008..................................................................... 27
Contacts
Author Contact Information ...................................................................................................... 34
Key Policy Staff........................................................................................................................ 34
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U.S. Energy: Overview and Key Statistics

Congressional Research Service 1
Introduction
Tracking changes in energy activity is complicated by variations in different energy markets.
These markets, for the most part, operate independently, although events in one may influence
trends in another. For instance, oil price movement can affect the price of natural gas, which then
plays a significant role in the price of electricity. Since aggregate indicators of total energy
production and consumption do not adequately reflect these complexities, this compendium
focuses on the details of individual energy sectors. Primary among these are oil, particularly
gasoline for transportation, and electricity generation and consumption. Natural gas is also an
important energy source, for home heating as well as in industry and electricity generation. Coal
is used almost entirely for electricity generation, nuclear and hydropower completely so.
1
Renewable sources (except hydropower) continue to offer more potential than actual energy
production, although fuel ethanol has become a significant factor in transportation fuel, and wind
power has recently grown rapidly. Conservation and energy efficiency have shown significant
gains over the past three decades, and offer encouraging potential to relieve some of the
dependence on imports that has caused economic difficulties in the past as well as the present.
To give a general view of energy consumption trends, Table 1 shows consumption by economic
sector—residential, commercial, transportation, and industry—from 1950 to the present. To
supplement this overview, some of the trends are highlighted by graphs in Figure 1 and Figure 2.
In viewing these figures, a note on units of energy may be helpful. Each source has its own unit
of energy. Oil consumption, for instance, is measured in million barrels per day (mbd),
2
coal in
million tons per year, natural gas in trillion cubic feet (tcf) per year. To aggregate various types of
energy in a single table, a common measure, British Thermal Unit (Btu), is often used. In Table
1, energy consumption by sector is given in units of quadrillion Btus per year, or “quads,” while
per capita consumption is given in million Btus (MMBtu) per year. One quad corresponds to one
tcf of natural gas, or approximately 50 million tons of coal. One million barrels per day of oil is
approximately 2 quads per year. One million Btus is equivalent to approximately 293 kilowatt-
hours (Kwh) of electricity. Electric power generating capacity is expressed in terms of kilowatts
(Kw), megawatts (Mw, equals 1,000 Kw) or gigawatts (Gw, equals 1,000 Mw). Gas-fired plants
are typically about 250 Mw, coal-fired plants usually more than 500 Mw, and large nuclear
powerplants are typically about 1.2 Gw in capacity.
Table 1 shows that total U.S. energy consumption almost tripled since 1950, with the industrial
sector, the heaviest energy user, growing at the slowest rate. The growth in energy consumption
per capita (i.e., per person) over the same period was about 50%. As Figure 1 illustrates, much of
the growth in per capita energy consumption took place before 1970.
1
This report focuses on current and historical consumption and production of energy. For a description of the resource
base from which energy is supplied, see CRS Report R40872, U.S. Fossil Fuel Resources: Terminology, Reporting,
and Summary, by Gene Whitney, Carl E. Behrens, and Carol Glover.
2
Further complications can result from the fact that not all sources use the same abbreviations for the various units.
The Energy Information Administration (EIA), for example, abbreviates “million barrels per day” as “MMbbl/d” rather
than “mbd.” For a list of EIA’s abbreviation forms for energy terms, see http://www.eia.doe.gov/neic/a-z/a-z_abbrev/a-
z_abbrev.html.
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U.S. Energy: Overview and Key Statistics

Congressional Research Service 2
Table 1 does not list the consumption of energy by the electricity sector separately because it is
both a producer and a consumer of energy. For the residential, commercial, industrial, and
transportation sectors, the consumption figures given are the sum of the resources (such as oil and
gas) that are directly consumed plus the total energy used to produce the electricity each sector
consumed—that is, both the energy value of the kilowatt-hours consumed and the energy lost in
generating that electricity. As Figure 2 demonstrates, a major trend during the period was the
electrification of the residential and commercial sectors and, to a lesser extent, industry. By 2007,
electricity (including the energy lost in generating it) represented about 70% of residential energy
consumption, about 80% of commercial energy consumption, and about a third of industrial
energy consumption.
3
Table 1. U.S. Energy Consumption, 1950-2008
Energy Consumption by Sector
(Quadrillion Btu)
Consumption Per Capita
(Million Btu)
Resid. Comm. Indust. Trans. Total
Population
(millions) Total Resid. Trans.
1950 6.0 3.9 16.2 8.5 34.6 152.3 227.3 39.4 55.8
1955 7.3 3.9 19.5 9.6 40.2 165.9 242.3 44.0 57.6
1960 9.1 4.6 20.8 10.6 45.1 80.7 249.6 50.2 58.7
1965 10.7 5.8 25.1 12.4 54.0 94.3 278.0 55.0 64.0
1970 13.8 8.3 29.6 16.1 67.8 205.1 330.9 67.3 78.5
1975 14.8 9.5 29.4 18.2 72.0 216.0 333.4 68.7 84.5
1980 15.8 10.6 32.1 19.7 78.1 227.2 343.8 69.5 86.7
1985 16.1 11.4 28.9 20.1 76.5 237.9 321.5 67.6 84.4
1990 17.0 13.3 31.9 22.4 84.7 249.6 339.1 68.2 89.8
1995 18.6 14.7 34.0 23.8 91.2 266.3 342.4 69.8 89.6
2000 20.5 17.2 34.8 26.6 99.0 282.2 350.7 72.6 94.1
2005 21.7 17.9 32.5 28.4 100.5 295.6 340.0 73.4 96.0
2006 20.8 17.7 32.5 28.8 99.9 298.4 334.7 69.6 96.7
2007 21.6 18.3 32.5 29.1 101.6 301.3 337.1 71.8 96.7
2008P 21.6 18.5 31.2 27.9 99.3 304.1 326.6 71.2 91.8
Source: Energy Information Administration (EIA), Annual Energy Review 2008, Tables 2.1a and D1.
Per capita data calculated by CRS.
Notes: Data for 2008 are preliminary.
3
In calculating these percentages, “electric energy consumption” includes both the energy value of the kilowatt-hours
consumed and the energy lost in generating that electricity.
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U.S. Energy: Overview and Key Statistics

Congressional Research Service 3
Figure 1. Per Capita Energy Consumption in Transportation and Residential
Sectors, 1949-2008
0
20
40
60
80
100
120
1949 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999 2004
M
i
l
l
i
o
n
B
T
U
C
o
n
s
u
m
e
d
p
e
r
C
a
p
i
t
a
Residential
Transportation
2008P
Source: Energy Information Administration (EIA), Annual Energy Review 2008, Tables 2.1a and D1. Per capita
data calculated by CRS.
Notes: Data for 2008 are preliminary.
Chapter 11: Testimony of Dr. Howard Gruenspecht, Energy Information Administration
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Testimony of
Dr. Howard Gruenspecht
Acting Administrator
Energy Information Administration
U.S. Department of Energy
before the
Subcommittee on Energy and Environment
Committee on Energy and Commerce
U.S. House of Representatives
February 26, 2009
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Mr. Chairman, and members of the Committee, I appreciate the opportunity to appear before you
today. My testimony reviews the role of renewable electricity generation in the Energy
Information Administration’s (EIA) Annual Energy Outlook 2009 (AEO2009) projections,
provides a brief overview of the renewable resource base, and discusses key findings from earlier
EIA analyses of proposals for a Federal renewable portfolio standard.
EIA is the independent statistical and analytical agency within the Department of Energy. We are
charged with providing objective, timely, and relevant data, analyses, and projections for the use
of the Congress, the Administration, and the public. Although we do not take positions on policy
issues, we do produce data and analyses to help inform energy policy deliberations. Because we
have an element of statutory independence with respect to this work, our views are strictly those
of EIA and should not be construed as representing those of the Department of Energy or the
Administration.
Renewable Electricity Generation in the AEO2009 Early Release Reference Case
The projections in EIA’s AEO2009, which extend through 2030, are intended to represent an
energy future based on given technological and demographic trends, current laws and
regulations, and consumer and supply behavior as derived from known data. EIA recognizes that
projections of energy markets are highly uncertain and are subject to political disruptions,
technological breakthroughs, and other unforeseeable events. In addition, long-term trends in
technology development, demographics, economic growth, and energy resources may evolve
along a different path than expected in the projections. The complete AEO2009, which EIA will
2
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release in the coming weeks, includes a large number of alternative cases intended to examine
these uncertainties.
Projections for electricity sales and generation in the AEO2009 reference case reflect both
market and policy drivers. Projected electricity sales are sensitive to changes in projected
electricity prices, which reflect fuel prices, economic growth, and policies that promote energy
efficiency, including recently enacted lighting and appliance standards. The projected generation
mix reflects fuel prices, the impact of concerns regarding greenhouse gas (GHG) emissions on
investment behavior, and the projected growth in sales. Several policy factors play an important
role, notably the renewable portfolio standards (RPS) enacted in 27 states and the District of
Columbia. AEO2009 also reflects Federal policies that promote renewable generation sources,
including the production tax credit (PTC) for wind through the end of 2009 and for other eligible
resources through 2010, as well as investment tax credits for solar photovoltaics (PV) through
2016, reflecting provisions of the Energy Improvement and Extension Act of 2008. The
AEO2009 reference case does not, however, include the further 3-year extension of the PTC and
other provisions to promote renewable energy and energy efficiency that were enacted earlier
this month as part of the American Recovery and Reinvestment Act of 2009. EIA is currently
analyzing the impact of these provisions, which are expected to raise the projected amount of
renewables.
Spurred by State renewable incentive programs, tax incentives for renewables, and projected
prices for natural gas and other fuels, the AEO2009 reference case projects that renewable energy
sources will play a growing role in electricity generation (Figures 1 and 2). In absolute terms,
the largest growth in nonhydroelectric renewable generation is projected to come from biomass
3
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and wind power. Between 2007 and 2030, generation from biomass power—both co-firing in
existing coal plants and the addition of new plants—increases by more than 500 percent, while
generation from wind power increases by more than 300 percent. While solar power is expected
to remain a relatively small part of the overall renewable generation mix, it is projected to
increase by more than 1600 percent between 2007 and 2030. The growth in solar power is
spurred by the State renewable programs and the investment tax credit provisions in the Energy
Improvement and Extension Act of 2008 that extended the credit through 2016 and removed the
cap on the size of the credit.
Overall, the projected growth in nonhydropower renewable generation in the AEO2009 reference
case constitutes 52 percent of overall projected growth in electricity sales through 2020 and 38
percent of growth in electricity sales through 2030.
Another perspective on projected renewable generation in the AEO2009 focuses on its share of
electricity sales. Share calculations relevant to consideration of any particular RPS proposal
must be constructed to reflect its design features. RPS credits available to renewable generators
depend on which renewables count and whether there are double or triple credits for some
specified renewables, such as distributed PV and wind, or for renewables in specified locations,
such as Indian lands, which affect the numerator in the RPS share calculation. Some proposals
that EIA has analyzed also allow credits for efficiency programs to count towards meeting the
RPS target up to a specified percentage, at the option of State governments. Exclusions from the
RPS, another key design feature, affect the denominator of the RPS share calculation. Several
past RPS proposals have exempted utilities below a specified sales cutoff value, existing
4
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hydropower and municipal solid waste (MSW) generation, and sales from cooperatives and/or
municipal utilities from RPS coverage.
Some sample calculations based on the AEO2009 illustrate how design features affect RPS share
calculations. For example, if existing hydropower and MSW are not eligible for RPS credits, as
in many RPS proposals that EIA has analyzed in the recent past, and no electricity sellers are
exempted from the RPS, RPS eligible generation projected in the AEO2009 reference case
provides 7 percent of total electricity sales in 2020 and 9 percent of total electricity sales in 2030.
The same calculation done in a manner that provides triple RPS credits for distributed wind and
solar and provides an exemption from RPS coverage for the same categories of electricity sellers
exempted from coverage by the RPS proposal in H.R. 890 shows RPS credits from the same
AEO2009 generation profile equal to 9.6 percent of covered sales in 2020 and 11.6 percent of
covered sales in 2030. These sample calculations do not represent the full range of possibilities,
since they do not consider the possibility of credits for efficiency or double credits for
renewables in certain locations.
The AEO2009 RPS share, calculated in accordance with the crediting and coverage rules in any
specific RPS program design and adjusted for the projected impact of the American Recovery
and Reinvestment Act on the energy sector, characterizes the projected starting point for
compliance. Some combination of additional generation from RPS-eligible sources, credits for
efficiency (if allowed under the RPS program), or RPS credits purchased from the government if
a safety valve provision is included in the program and comes into play, would then be required
to close the gap between this starting point and the RPS targets.
5
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Renewable Resources
The National Energy Modeling System (NEMS), used to produce the AEO2009, represents the
major renewable energy resources with significant mid-term potential to contribute to U.S.
electricity markets. These include resources for onshore and offshore wind, biomass, solar,
geothermal, landfill gas, and hydroelectricity. EIA represents the total quantity of technically
recoverable resources and, where applicable, the increasing cost of exploiting resources that are
less accessible or of lower quality.
The wind resources included in NEMS are derived from work done at the National Renewable
Energy Laboratory (NREL) to characterize the location, extent, and accessibility of the U.S.
wind resource base, as shown in Figure 3. Land-based wind resources vary significantly in
development cost and economic performance, based on average wind speed, distance from
transmission lines and from demand centers, and even the roughness of terrain and access to
construction infrastructure and other factors. In addition, some resources may be in aesthetically
or environmentally sensitive areas with high mitigation or opportunity costs for development.
EIA estimates that wind resources in excess of 15.7 miles per hour annual average wind speed at
50 meters altitude could, in theory, accommodate 3,700 gigawatts of wind capacity, compared to
a current installed capacity base of approximately 25 gigawatts. The estimated cost to develop
these resources ranges from about $2,000 per kilowatt to more than $6,000 per kilowatt, with
about 250 gigawatts estimated to be available at a cost of less than $2,400 per kilowatt.
However, much of this resource is concentrated in areas away from the bulk of the U.S.
population. In some regions, the available resource is in excess of local demand or grid
capacities to absorb the intermittent output of wind generators, while in others the available
6
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resource can serve only a small fraction of load. NEMS allows for the construction of some
interregional transmission, but this projected transmission construction adds additional cost to
the wind development and may not entirely alleviate the problem.
Offshore wind resources are potentially more productive than onshore resources and are
generally located closer to major population centers. While there is significant uncertainty over
the cost of exploiting this resource, EIA estimates that it is significantly higher than the cost of
onshore development, based on the limited data available from Europe. Like onshore resources,
the cost of the offshore resources increases with increasing utilization of the resource, in part
influenced by the same factors that increase the cost of onshore resources, such as distance to
load centers, environmental or aesthetic concerns, variable terrain/seabed, and also by water
depth.
Biomass can be converted to electricity in either dedicated plants or co-fired as a small fuel
fraction in existing plants. Some types of biomass may also be suitable for producing liquid
fuels such as ethanol. NEMS represents four distinct types of biomass material available to the
electric power sector: forestry residues, urban wood waste and mill residues, agricultural
residues, and energy crops. As with most renewable resources, availability varies significantly
by region. Based largely on recent work from the University of Tennessee, costs are estimated to
rise with increasing supply, as shown in Figure 4. This reflects the value of some feedstocks to
alternative uses, increasing collection and separation costs, and the value of energy crop lands for
other uses such as food and feed production. Energy crops are not yet commercially established
in the United States, and EIA assumes that their development will take some time. As a result,
the supply of agricultural residues and energy crops varies over time in the AEO2009
7
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0
1,000
2,000
3,000
4,000
5,000
6,000
1990 2000 2010 2020 2030
Coal
Natural Gas
Nuclear
Renewable
Oil & Other
Figure 1. Electricity Generation mix gradually
shifts to lower carbon options
billion kilowatthours billion kilowatthours
Projections
History
0
50
100
150
200
250
300
350
400
450
500
1990 2000 2010 2020 2030
Biomass
Wind
Solar
Waste
Geothermal
Figure 2. Nonhydropower renewable power meets
38% of total generation growth between 2007 and
2030
billion kilowatthours billion kilowatthours
History Projections
Source: Energy Information Administration, National Energy Modeling System run AEO2009.D112408B.
17
Goverment Series: Energy: Wind
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Figure 3. Onshore and Offshore Wind Resources
Figure 4 – Cumulative Supply of Biomass
Feedstock in 2020
0
2
4
6
8
10
12
0 2000 4000 6000 8000 10000 12000
Trillion Btu
P
r
i
c
e
(
2
0
0
7
d
o
l
l
a
r
s
p
e
r
m
i
l
l
i
o
n
B
t
u
Source: Energy Information Administration, National Energy Modeling System
Urban Wood Waste
Forestry Residues
Agricultural Residues
Energy Crops
18
Chapter 12: Testimony of Ralph Izzo, Public Service Enterprise Group Incorporated
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TESTIMONY OF RALPH IZZO
PRESIDENT, CHAIRMAN AND CEO
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
HOUSE COMMITTEE ON ENERGY AND COMMERCE
SUBCOMMITTEE ON ENERGY AND ENVIRONMENT
FEBRUARY 26, 2009
Mr. Chairman, Congressman Upton and Members of the Subcommittee, my name is
Ralph Izzo and I am President, Chairman and CEO of Public Service Enterprise Group.
Our family of companies distributes electricity and natural gas to more than two million
utility customers in New Jersey, and owns and operates approximately 17,000 megawatts
of electric generating capacity concentrated in the Northeast, Mid-Atlantic and Texas.
I appear before you this morning to express my strong desire to see this Congress adopt a
national Renewable Electricity Standard. I applaud Chairman Markey for his leadership
on this issue, as well as New Jersey Congressman Frank Pallone, who has championed
renewable energy for as long as I’ve known him.
I support a national RES as a citizen who is deeply concerned about climate change; as an
investor who sees exciting opportunities in the renewable sector; and as the head of a
company concerned about its customers and their ability to pay for green investments,
particularly in this economic environment.
1
Goverment Series: Energy: Wind
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The reports of how our climate is already changing are increasingly alarming.
Temperatures are rising, and the Arctic ice sheet and glaciers around the world are
melting even faster than anticipated.
Global warming is the most important environmental challenge of our time. To avoid
catastrophic impacts from climate change, most scientists agree that we must achieve
carbon emission reductions of 80% by 2050. To reach this target, we urgently need
decisive federal action – not a patchwork of state and regional fixes, but a strong,
progressive national energy policy.
PSEG has advocated a three-pronged approach to reduce carbon emissions.
x Conservation through energy efficiency improvements.
x Development of renewable energy resources.
x And an expansion of clean, zero- and low-carbon central station electric
generation, such as nuclear power.
Putting a price on carbon with a cap-and-trade program will help make progress toward
all of these goals. However, effectively combating global warming will require a
comprehensive package of policy solutions.
Meeting our carbon reduction targets will require that we electrify our transportation
sector and decarbonize our electric generation. This cannot be achieved if we only focus
on short-term, least-cost carbon reduction measures. We need policies aimed directly at
2
Chapter 12: Testimony of Ralph Izzo, Public Service Enterprise Group Incorporated
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driving these transformations, and a federal RES will create demand for technologies that
will transform the way we generate electricity.
With America’s skilled workforce and entrepreneurial spirit, we should be leading this
charge. But today we are playing catch up with other nations in developing renewable
energy industries.
With the right national policy, America can develop the world’s leading clean energy
industry. We will create jobs. And we will develop new technologies that we can export
all over the world. Investment in renewable energy is a strategy for long-term growth.
As an investor and businessman, I believe the adoption of a federal RES would create
tremendous opportunities. PSEG is already beginning to invest heavily in alternative
energy. Two weeks ago, our utility filed a proposal with New Jersey regulators to invest
almost $800 million in solar generation over the next five years. Under this program, we
will install solar generation on brownfields, low-income housing and government
buildings. It also will include roughly 200,000 solar installations on our utility poles.
This is in addition to the more than $100 million our utility is already investing in solar
generation.
Our merchant renewable generating company is also developing solar, offshore wind and
other alternative energy projects. Most notable among these is a joint venture with
Deepwater Wind to build a 350 megawatt wind generation facility roughly 17 miles off
3
Chapter 13: Written Testimony of Edward C. Lowe, GE Energy Infrastructure
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 269
+RXVH&RPPLWWHHRQ(QHUJ\DQG&RPPHUFH
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Februdrv 26, 2009

vriIIen 1esIimonv of
£dwdrd C. Lowe
Cenerdl Mdndger, MdrkeI DevelopmenI
Renewdbles
C£ £nergv lnfrdsIrucIure

Mr. Chdirmdn dnd members of Ihe CommiIIee, l dm £dwdrd Lowe,
Cenerdl Mdndger for Renewdbles MdrkeI DevelopmenI dI C£ £nergv
lnfrdsIrucIure. l dpprecidIe Ihe opporIuniIv Io IesIifv on Ihe poIenIidl
impdcIs of d Federdl Renewdble £lecIriciIv SIdnddrd lR£Sì, pdrIiculdrlv
regdrding new job credIion. C£ believes IhdI d Federdl R£S is Ihe single
mosI imporIdnI sIep IhdI Congress cdn Idke Io ldv Ihe long-Ierm
founddIion for d "green-colldr" workforce dnd d domesIic renewdble
energv mdnufdcIuring bdse. C£ dlso believes IhdI ddopIion of d
Federdl R£S is dbsoluIelv essenIidl for Ihe UniIed SIdIes Io mdinIdin d
leddership posiIion in Ihe globdl renewdble energv indusIrv. Findllv, C£
believes IhdI d Federdl R£S is dn excellenI exdmple of Ihe
"complemenIdrv" policies IhdI dre needed Io dddress climdIe chdnge
bv dccelerdIing Ihe nedr-Ierm deplovmenI of commercidllv dvdildble
Iechnologies Io reduce greenhouse gds emissions. l dcknowledge
Chdirmdn Mdrkev for his leddership on Ihis imporIdnI ndIiondl issue.

C£ £nergv lnfrdsIrucIure is d Iechnologv ledder wiIh more Ihdn l00
vedrs of indusIrv experience. Our globdl Iedm of 65,000 emplovees
operdIes in more Ihdn l40 counIries. C£ £nergv's businesses offer d
diverse porIfolio of producIs dnd services including fossil power
generdIion, gdsificdIion, nucledr, oil & gds, wdIer, Irdnsmission, smdrI
meIers, dnd renewdble energv Iechnologies such ds wind, soldr, dnd
biomdss. C£ is d reldIive newcomer Io renewdble energv, hdving
enIered Ihe wind business in 2002 dnd Ihe soldr business in 2004. 8uI
Renewdbles hdve quicklv become dn imporIdnI conIribuIor Io our
Goverment Series: Energy: Wind
270 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
2
£nergv lnfrdsIrucIure business dnd one of Ihe mosI exciIing growIh
sIories dI C£.

5HQHZDEOHHQHUJ\LQWKH86

1he record-seIIing growIh of renewdble energv hds been one of Ihe
brighI spoIs of Ihe US economv. According Io Ihe Americdn vind
£nergv AssocidIion lAv£Aì, Ihe US insIdlled 8,358 Mv of wind power in
2008, seIIing dnoIher record for dnnudl growIh. 1his growIh incredsed
insIdlled wind cdpdciIv bv 50 percenI Io 25,l70 Mv, enough Io power 7
million households, dnd sIimuldIed $l7 billion of invesImenI in Ihe
economv.
l
1he US is now Ihe globdl ledder in wind power, hdving
surpdssed Cermdnv ldsI vedr in boIh wind energv generdIion dnd wind
insIdlled cdpdciIv.

ln 2008, wind dccounIed for 42 percenI of dll new US ndmepldIe
insIdlled cdpdciIv, second onlv Io ndIurdl gds dI 46 percenI. Av£A
esIimdIes IhdI Ihe wind indusIrv emplovs over 85,000 people direcIlv
dnd indirecIlv, wiIh l3,000 mdnufdcIuring jobs credIed in 2008 dlone.
vhen one includes Ihe induced economic effecI of new workers
spending monev on goods dnd services, Ihe number of wind-supporIed
jobs dpprodches l85,000.
2
Soldr power is dlso experiencing record growIh in Ihe US. According Io
Ihe Soldr £nergv lndusIries AssocidIion lS£lAì, Ihe growIh of soldr
phoIovolIdics lPvì doubled in 2008, wiIh dpproximdIelv 600 Mv
insIdlled. S£lA esIimdIes IhdI Ihe soldr indusIrv lwhich includes soldr
Pv, concenIrdIed soldr Ihermdl, dnd soldr wdIer hedIer Iechnologiesì
direcIlv or indirecIlv emplovs over 80,000 people in direcI dnd indirecI
jobs, wiIh l5,000 jobs ddded in Ihe ldsI Iwo vedrs.
3
1he IoIdl number of
soldr-supporIed jobs is close Io l50,000.
4
l
Americdn vind £nergv AssocidIion lAv£Aì, "vind £nergv Crows 8v Record 8,300 Mv in 2008,"
press reledse, 27 Jdnudrv 2009.
2
£sIimdIe is bdsed on NdvigdnI ConsulIing dndlvsis prepdred for Av£A, November 2008, which
uses US DepdrImenI of £nergv lUS DO£ì Jobs dnd £conomic DevelopmenI lmpdcI lJ£Dlì model.
3
Av£A/Soldr £lecIric lndusIries AssocidIion lS£lAì, "Soldr dnd vind Reddv Io Ledd New Cledn
£nergv £conomv," press reledse, 9 Jdnudrv 2009.
4
£sIimdIe is bdsed on NdvigdnI ConsulIing, (FRQRPLF,PSDFWVRI([WHQGLQJ)HGHUDO6RODU&UHGLWV, l5
SepIember 2008. ReporI uses US DO£ Jobs dnd £conomic DevelopmenI lmpdcI lJ£Dlì model.
Chapter 13: Written Testimony of Edward C. Lowe, GE Energy Infrastructure
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 279
ll
Figure 2.
PoIenIidl soldr Pv job impdcI of dccelerdIed policv scendrio l20l6ì

Soµrce. Novigont 2008. 0sed with permission.
OpponenIs of d Federdl R£S drgue IhdI noI dll sIdIes hdve ddequdIe
renewdble energv resources Io meeI poIenIidl R£S requiremenIs. 1he
dnswer Io Ihis, we believe, is dssuring Ihe eligibiliIv of d rdnge of
resources. For exdmple, NorIh Cdrolind's RPS hds esIdblished specidl
supporIs for soldr Pv dnd biomdss resources such ds swine dnd poulIrv
wdsIe. According Io d NdvigdnI ConsulIing reporI prepdred for Ihe
sIdIe of Floridd dnd Ihe Ldwrence 8erkelev NdIiondl LdbordIorv, Ihe
sIdIe hds ddequdIe renewdble resource poIenIidl-including soldr
energv dnd biomdss sources such ds dgriculIure dnd foresIrv residues
dnd energv crops-Io provide ds much ds l8 gigdwdIIs of cdpdciIv or
27 percenI of uIiliIv reIdil sdles bv 2020.
l3

Federdl R£S criIics poinI Io Ihe poIenIidl cosI impdcI, pdrIiculdrlv Ihe
effecI on elecIriciIv cusIomers. 1o ddIe, however, Ihe price impdcIs of
sIdIe RPS progrdms hdve been modesI. According Io Ihe NdIiondl
Renewdble £nergv LdbordIorv, sIdIe RPS policies conIribuIed Io rdIe
incredses of l percenI or less in 2007-d number IhdI is bidsed upwdrd

l3
NdvigdnI ConsulIing, llorido Renewocle fnergv Potentiol Assessment, Prepdred for Floridd Public
Service Commission, Floridd Covernor's £nergv Office, dnd Ldwrence 8erkelev NdIiondl LdbordIorv,
24 November 2008.
Chapter 17: Wind and Water Power Program—Wind Energy Resource Potential
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U.S. Department of Energy - Energy Efficiency and Renewable Energy
Wind and Water Power Program
Wind Energy Resource Potential
The United States has enough wind resources to generate electricity for every home
and business in the nation. But not all areas are suitable for wind energy
development. The Wind Energy Program measures the potential wind energy
resources of areas across the United States in order to identify ideal areas for project
development.
For information on the program's mapping activities and individual state maps, visit
the Wind Powering America Web site.
Wind Energy Resource Potential and Wind Energy
Projects
One of the first steps to developing a wind energy project is to assess the area's wind
resources and estimate the available energy. Correct estimation of the energy
available in the wind can make or break the economics of a project.
To help the wind industry identify the areas best suited for development, the Wind
Energy Program works with the National Renewable Energy Laboratory (NREL) and
other organizations to measure, characterize, and map wind resources 50 meters (m)
to 100 m above ground.
This map shows the annual average wind power estimates at 50 m above ground. It
combines high and low resolution datasets that have been screened to eliminate land-
based areas unlikely to be developed due to land use or environmental issues. In
many states, the wind resource has been visually enhanced to better show the
distribution on ridge crests and other features.
Goverment Series: Energy: Wind
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Estimates of the wind resource are expressed in wind power classes ranging from
Class 1 to Class 7, with each class representing a range of mean wind power density
or equivalent mean speed at specified heights above the ground. This map does not
show Classes 1 and 2 as Class 2 areas are marginal and Class 1 areas are unsuitable
for utility-scale wind energy development.
Skip footer navigation to end of page.
Wind and Water Power Program Home | EERE Home | U.S. Department of Energy
Webmaster | Web Site Policies | Security & Privacy | USA.gov
Chapter 18: Wind and Water Power Program—Wind Power Outreach and Education
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U.S. Department of Energy - Energy Efficiency and
Renewable Energy
Wind and Water Power Program
Wind Power Outreach and
Education
The Wind and Water Power Program works to remove barriers
to wind power deployment and to increase the acceptance of
wind power technologies by enhancing public acceptance and
engaging key stakeholders. This page describes the program's
efforts to increase the deployment of wind energy nationwide,
its goals, and where you can find more information about the
program's major outreach initiative, Wind Powering America.
Goal
The program conducts outreach activities to overcome market
and regulatory barriers at the national, state, and local levels,
which is essential to making progress toward significant
increases in the use of wind energy. Reaching an installed
capacity threshold of 100 Megawatts (MW) in a state has been
used as an important indicator that wind is being accepted as a
large-scale generating option by that state's utilities, regulators,
and investors. When the program launched Wind Powering
America in 1999, only four states boasted more than 100 MW
of installed wind capacity. By 2008, 22 states had more than
100 MW and seven states had more than 1000 MW. The
program's goal for technology acceptance is for 30 states to
have 100 MWof wind installed by 2010.
Accelerating the Use of Wind
Technologies
The program develops and disseminates credible information
on a range of wind technologies and issues to national, state,
and local stakeholders and decisionmakers. Through the Wind
Powering America initiative, team members work at the state
and regional levels to promote wind energy, placing an
emphasis on states with good wind resource potential but little
Chapter 27: Wind and Water Power Program—Offshore Wind Technology
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U.S. Department of Energy - Energy Efficiency and Renewable
Energy
Wind and Water Power Program
Offshore Wind Technology
Offshore wind energy installations have the potential to meet a significant
portion of the future energy needs of the United States. Offshore wind
resources provide an opportunity for the production of power close to coastal
cities that are major electricity users. However, the commercialization of new
offshore wind power technologies faces technical, regulatory, socioeconomic,
and political challenges, many of which can be mitigated through targeted
long-range research and development efforts.
Goal
The program's offshore wind goal is to reduce the cost of electricity from
large wind systems in shallow water (less than 100 feet) in Class 6 winds
(17.9-19.7 miles per hour) to 7 cents per kilowatt-hour (kWh) by 2014, from
a baseline of 9.5 cents/kWh in 2005. The program's strategic objective is to
reduce barriers to deployment of offshore wind energy in the near term and
establish the U.S. as a leader in this growth industry.
Research Project Highlights
Developing Offshore Technologies
Wind turbines installed offshore can be much larger than those installed on
land because the wind resource is extensive and transportation is not
constrained. However, because of the harsh marine environment, offshore
wind turbines must be more rugged and reliable, and wind turbines installed
in deeper waters farther from shore will require new foundation and platform
technologies over the next decade.
To address some of the new technological challenges posed by offshore wind,
the program provides research assistance aimed at reducing costs for
foundations, electrical grids, operations and maintenance, and installation and
staging. Concepts for floating wind turbine platforms are also being
investigated.
Goverment Series: Energy: Wind
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The Wind Program conducts research on offshore wind technologies for
shallow water, transitional depth, and deepwater.
Measuring Offshore Wind Resources
The program works to provide the best possible information to potential
offshore U.S. wind developers. As part of this effort, program researchers are
working with AWS Truewind to assess offshore wind resources, using
mesoscale models to generate 200-m x 200-m resolution wind data out to 50
nautical miles from shore.
Investigating Offshore Standards
The program works with the Minerals Management Service, the Department
of Energy's national laboratories, and industry experts to review existing
national safety certification standards and how they will apply to U.S.
offshore wind turbines and structures. These standards will ensure the safe
installation and operation of wind turbines in U.S. coastal waters.
Chapter 28: Wind Energy: Offshore Permitting
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CRS Report for Congress
Prepared for Members and Committees of Congress
Wind Energy: Offshore Permitting
Adam Vann
Legislative Attorney
September 3, 2009
Congressional Research Service
7-5700
www.crs.gov
R40175
Goverment Series: Energy: Wind
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Wind Energy: Offshore Permitting

Congressional Research Service
Summary
Technological advancement, tax incentives, and policy concerns have driven a global expansion
in the development of renewable energy resources. Wind energy, in particular, is now often cited
as the fastest growing commercial energy source in the world. Currently, all U.S. wind energy
facilities are based on land. However, multiple offshore projects have been proposed and are
moving through the permitting process.
The United States has the authority to permit and regulate offshore wind energy development
within the zones of the oceans under its jurisdiction. The federal government and coastal states
each have roles in the permitting process, the extent of which depends on whether the project is
located in state or federal waters. Currently, no single federal agency has exclusive responsibility
for permitting related to activities on submerged lands in federal waters; authority is allocated
among various agencies based on the nature of the resource to be exploited and the type of
impacts incidental to such exploitation. The same is true for offshore wind energy context, where
several federal agencies have a role to play in permitting development and operation activities.
Section 388 of the Energy Policy Act of 2005 (EPAct; P.L. 109-58) addressed previous
uncertainties regarding offshore wind projects. This provision retained a role for the Army Corps
of Engineers in permitting under the Rivers and Harbors Act but grants ultimate authority over
offshore wind energy development to the Secretary of the Interior. The provision also contained
various exemptions from the regulatory regime it establishes for projects that received certain
permits prior to the enactment of the Energy Policy Act of 2005. The Minerals Management
Service (MMS), an agency within the Department of the Interior (DOI), has issued regulations
that implement the statutory authority under Section 388.
This report supersedes CRS Report RL32658, Wind Energy: Offshore Permitting, by Adam Vann.
Chapter 28: Wind Energy: Offshore Permitting
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Wind Energy: Offshore Permitting

Congressional Research Service
Contents
Jurisdiction Over the Ocean ........................................................................................................ 1
State Permitting .......................................................................................................................... 3
Federal Permitting....................................................................................................................... 4
Early Regulation and Litigation............................................................................................. 4
The Energy Policy Act of 2005.............................................................................................. 6
EPAct Exemptions ................................................................................................................ 9
Additional Regulation Under Existing Law......................................................................... 10
Conclusion................................................................................................................................ 14
Contacts
Author Contact Information ...................................................................................................... 14
Goverment Series: Energy: Wind
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Wind Energy: Offshore Permitting

Congressional Research Service 1
echnological advancements and tax incentives have driven a global expansion in the
development of renewable energy resources. Wind energy, in particular, is now often cited
as the fastest growing commercial energy source in the world.
1
Currently, unlike much of
Europe,
2
all wind power facilities in the United States are based on land. However, multiple
offshore projects have been proposed in recent years, including the Cape Wind project off the
coast of Massachusetts; Winergy’s proposals off the coasts of Massachusetts, New York, New
Jersey, Delaware, Maryland, and Virginia; and a Galveston-Offshore Wind, LLC project in a
portion of the Gulf of Mexico under the jurisdiction of Texas.
3
The focus of this report is the current law applicable to siting offshore wind facilities, including
the relationship between state and federal jurisdictional authorities.
4
This report also discusses the
court challenges to early federal offshore wind energy permitting authorities and the effect that
the Energy Policy Act of 2005 has had on the regulatory environment.
Jurisdiction Over the Ocean
The jurisdiction of coastal nations over the world’s oceans extends across various adjoining and
overlapping zones by operation of international conventions and by the domestic laws and
proclamations of individual governments. The United States has varying degrees of authority over
four functional areas: the Territorial Sea, the Contiguous Zone, the Exclusive Economic Zone
(EEZ), and state-controlled waters. The federal government has differing levels of authority in
each of these zones vis-à-vis the states and other nations. Even within these zones, all nations
enjoy freedom of navigation and overflight as well as other internationally lawful uses of the sea,
subject to certain regulatory authority reserved to the coastal nation.
5
However, it seems relatively
clear that the United States would have sufficient jurisdiction over each of its zones to authorize
the construction and operation of offshore wind projects.
United States authority in the oceans begins at its coast—called the baseline—and extends 200
nautical miles out to sea. The first 12 nautical miles comprise the U.S. territorial sea.
6
Under the
1982 United Nations Convention on the Law of the Sea
7
(UNCLOS III), a coastal nation may
claim sovereignty over the air space, water, seabed, and subsoil within its territorial sea.
8
U.S.
1
See Mass. Tech. Collaborative, U.S. Dep’t of Energy, & General Electric, A Framework for Offshore Wind Energy
Development in the United States at 9 (September 2005); U.S. Dep’t of Energy & U.S. Dep’t of the Interior, White
House Report in Response to the National Energy Policy Recommendations to Increase Renewable Energy Production
on Federal Lands at 6 (August 2002).
2
For an overview of offshore wind farm regulation in the United Kingdom, see Nathanael D. Hartland, The Wind and
the Waves: Regulatory Uncertainty and Offshore Wind Power in the United States and United Kingdom, 24 U. Pa. J.
Int’l Econ. L. 691 (2003).
3
Betsie Blumberg, Wind Farms: An Emerging Dilemma for East Coast National Parks, in National Park Service,
Natural Resource Year in Review—2003 63 (March 2004); see Texas General Land Office, Offshore Wind Energy
(available at http://www.glo.state.tx.us/news/archive/2005/events/offshorewind.html).
4
For a discussion of policy and other issues related to wind energy, see CRS Report RL34546, Wind Power in the
United States: Technology, Economic, and Policy Issues, by Stan Mark Kaplan.
5
Restatement (Third) of the Foreign Relations Law of the United States, § 514 (1986).
6
Proc. No. 5928 (December 27, 1988).
7
United Nations Convention on the Law of the Sea, December 10, 1982, 21 I.L.M. 1261 (entered into force November
16, 1994) (hereinafter UNCLOS III).
8
UNCLOS III arts. 2.1, 2.2, 3; see also United States v. California, 332 U.S. 19 (1947); Alabama v. Texas, 347 U.S.
(continued...)
T
Chapter 28: Wind Energy: Offshore Permitting
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Wind Energy: Offshore Permitting

Congressional Research Service 2
Supreme Court precedent and international practice indicate that this sovereignty authorizes
coastal nations to permit offshore development within their territorial seas.
9
The U.S. contiguous zone extends beyond the territorial sea to 24 nautical miles from the
baseline. In this area, a coastal nation may regulate to protect its territorial sea and to enforce its
customs, fiscal, immigration, and sanitary laws.
10
The U.S. EEZ extends 200 nautical miles from
the baseline. In accordance with international law, the United States has claimed sovereign rights
to explore, exploit, conserve, and manage EEZ natural resources of the seabed, subsoil, and the
superadjacent waters.
11
United States jurisdiction also extends over “other activities for the
economic exploitation and exploration of the zone, such as the production of energy from the
water, currents and winds”
12
and, subject to some limitations, “the establishment and use of
artificial islands, installations and structures; marine scientific research; and the protection and
preservation of the marine environment.”
13
In almost all situations, the U.S. EEZ overlaps
geographically with the Outer Continental Shelf (OCS), a geologically distinct area of
appurtenant seabed referenced in several federal laws.
14
The relative jurisdiction of the federal government with respect to individual states is also of
importance. The Submerged Lands Act of 1953
15
assured coastal states title to the lands beneath
coastal waters in an area stretching, in general, three geographical miles from the shore.
16
Thus,
states may regulate the coastal waters within this area, subject to federal regulation for
“commerce, navigation, national defense, and international affairs” and the power of the federal
government to preempt state law.
17
The remaining outer portions of waters over which the United
States exercises jurisdiction are federal waters.
18
It would seem relatively clear that the federal government would have permitting authority for
offshore wind farms, to the outer boundaries of its EEZ, and that this authority would be
supported by international treaty. However, federal authority would be limited by the
internationally recognized right of free passage and by the jurisdiction granted to the states under
(...continued)
272, 273-274 (1954).
9
See United States v. California, 436 U.S. 32, 36 (1978); United States v. Alaska, 422 U.S. 184, 199 (1975); Alabama
v. Texas, 347 U.S. 272, 273-274 (1954); United States v. California, 332 U.S. 19 (1947).
10
UNCLOS III art. 33.
11
UNCLOS III arts. 56, 58; Exclusive Economic Zone of the United States of America, Proclamation No. 5030, 48
Fed. Reg. 10,605 (March 14, 1983); Territorial Sea of the United States of America, Proclamation No. 5928, 54 Fed.
Reg. 777 (December 27, 1988); Contiguous Zone of the United States, Proclamation No. 7219, 64 Fed. Reg. 48,701
(August 2, 1999).
12
UNCLOS III art. 56.1 (emphasis added).
13
Id. at art. 56.1(b).
14
See U.S. Commission on Ocean Policy, An Ocean Blueprint for the 21
st
Century: Final Report of the U.S.
Commission on Ocean Policy, Primer on Ocean Jurisdictions: Drawing Lines in the Water, Pre-Publication Copy 41-44
(2004), available at http://www.oceancommission.gov/documents/prepub_report/primer.pdf.
15
43 U.S.C. §§ 1301-1303, 1311-1315.
16
Id. at § 1301(a)(2). State jurisdiction typically extends three nautical miles (approximately 3.3 miles) seaward of the
coast or “baseline.” Texas and the Gulf Coast of Florida have jurisdiction over an area extending 3 “marine leagues” (9
nautical miles) from the baseline. 43 U.S.C. § 1301(a)(2).
17
Id. at §§ 1314(a), 1311(a)(2).
18
Id. at § 1302.
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Wind Energy: Offshore Permitting

Congressional Research Service 3
the Submerged Lands Act. The scope of this federal authority is discussed in greater detail later in
this report.
State Permitting
States may play a regulatory role when a wind energy project is proposed for construction in
federal or state waters. State jurisdiction over projects located in federal areas is substantially
circumscribed; however, under the Coastal Zone Management Act
19
(CZMA), states are explicitly
granted some regulatory authority. In general, the CZMA encourages states to enact coastal zone
management plans to coordinate protection of habitats and resources in coastal waters.
20
The
CZMA establishes a policy of preservation alongside sustainable use and development
compatible with resource protection.
21
State coastal zone management programs that are approved
by the Secretary of Commerce receive federal monetary and technical assistance. State programs
must designate conservation measures and permissible uses for land and water resources
22
and
must address various sources of water pollution.
23
The CZMA also requires that the federal government and federally-permitted activities comply
with state programs.
24
Responding to a Supreme Court decision that excluded OCS oil and gas
leasing from state review under the CZMA, Congress amended the “consistency review”
provision to include the impacts on a state coastal zone from actions in federal waters.
25
Thus,
states have some authority to demand that federally-permitted projects in federal waters will not
result in a violation of state coastal zone management regulation.
In addition to consistency review, projects to be constructed in state waters, including any cables
that would be necessary to transmit power back to shore, are subject to all state regulation or
permitting requirements. Coastal zone regulation varies significantly among the states. The
CZMA itself establishes three generally acceptable regulatory frameworks: (1) “State
establishment of criteria and standards for local implementation, subject to administrative review
and enforcement;” (2) “[d]irect State land and water use planning and regulation;” and (3)
regulation development and implementation by local agencies, with state-level review of program
decisions.
26
Within these frameworks, several states, such as New Jersey, California, and Rhode Island,
centralize authority for their programs in one agency.
27
In New Jersey, for instance, the state
19
16 U.S.C. §§ 1451-1464.
20
Coastal U.S. states and territories, including the Great Lakes states, are eligible to receive federal assistance for their
coastal zone management programs. Currently, there are 33 approved state and territorial plans. Of eligible states, only
Illinois does not have an approved program. See National Oceanic and Atmospheric Administration, Office of Ocean
and Coastal Resource Management, State and Territory Coastal Management Program Summaries, available at
http://coastalmanagement.noaa.gov/mystate/welcome.html.
21
Id. at § 1452(1), (2).
22
Id. at § 1455(d)(2), (9)-(12).
23
Id.at § 1455(d)(16).
24
Id. at § 1456(c).
25
Id.; Sec’y of the Interior v. California, 464 U.S. 312, 315 (1984).
26
16 U.S.C. § 1455(d)(11).
27
See Rusty Russell, Neither Out Far Nor In Deep: The Prospects for Utility-Scale Wind Power in the Coastal Zone, 31
(continued...)
Chapter 28: Wind Energy: Offshore Permitting
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Wind Energy: Offshore Permitting

Congressional Research Service 4
Department of Environmental Protection (through the Coastal Management Office within the
Commissioner’s Office of Policy, Planning, and Science) is the lead agency for coastal zone
management under several state laws.
28
The majority of states, however, operate coastal zone
management programs under “networks” of parallel agencies, with various roles defined by
policy guidance and memoranda of understanding (MOUs).
29
Based on a series of MOUs, each
agency is obligated to issue and apply state regulations and permits consistently with the state’s
coastal zone management program.
30
Thus, depending on the state with jurisdiction, offshore
wind energy projects could be subject to comprehensive regulation with permitting authority
spread among multiple state and local agencies.
Federal Permitting
Use of federal and federally-controlled lands, including the OCS, requires some form of
permission, such as a right-of-way, easement, or license.
31
For onshore wind projects on federal
public lands, the Department of the Interior (DOI), through the Bureau of Land Management, has
created a regulatory program under the Federal Land Policy and Management Act,
32
but a federal
statute expressly governing offshore wind energy development was not enacted until August 2005
as part of the Energy Policy Act of 2005 (EPAct). Before enactment of EPAct, some permitting in
support of offshore wind energy development had taken place under laws existing at that time.
Use of these authorities proved controversial and was the subject of a lawsuit challenging
preliminary permitting actions. The previous regulatory regime, the conflicts it engendered, and
EPAct legal authority are discussed below.
Early Regulation and Litigation
Prior to enactment of EPAct, the Army Corp of Engineers (Corps) took the lead role in the federal
offshore wind energy permitting process, claiming jurisdiction pursuant to section 10 of the
Rivers and Harbors Act (RHA),
33
as amended by the Outer Continental Shelf Lands Act
(...continued)
B.C. Envtl. Aff. L. Rev. 221, 240-241 (2004).
28
E.g., Freshwater Wetlands Protection Act, N.J.S.A. 13:9B; Flood Hazard Area Control Act, N.J.S.A. 58:16A;
Wetlands Act of 1970, N.J.S.A. 13:9A; Waterfront Development Act, N.J.S.A. 12:5-3; NJ Water Pollution Control Act,
N.J.S.A. 58:10A; Coastal Area Facility Review Act (CAFRA), N.J.S.A. 13:19; Tidelands Act, N.J.S.A. 12:3.
29
Russell, supra note 27, at 241.
30
Id. at App. E.
31
Several federal laws would appear to indicate that Congress intends the OCS to be used only when permission has
been expressly granted. See 43 U.S.C. § 1332(1), (3) (“the subsoil and seabed of the outer Continental Shelf appertain
to the United States and are subject to its jurisdiction, control, and power of disposition.... ”); see also 42 U.S.C. §
9101(a)(1)(stating that the purpose of the Ocean Thermal Energy Conversion Act is to “authorize and regulate the
construction, location, ownership, and operation of ocean thermal energy conversion facilities.”).
32
43 U.S.C. §§ 1701 et seq.
33
33 U.S.C. §§ 407-687. Section 10 was enacted in 1899, and its text has not changed substantively since that time. It
states:
The creation of any obstruction not affirmatively authorized by Congress, to the navigable capacity
of any of the waters of the United States is prohibited; and it shall not be lawful to build or
commence the building of any wharf, pier, dolphin, boom, weir, breakwater, bulkhead, jetty, or
other structures in any port, roadstead, haven, harbor, canal, navigable river, or other water of the
United States, outside established harbor lines, or where no harbor lines have been established,
(continued...)
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Wind Energy: Offshore Permitting

Congressional Research Service 5
(OCSLA).
34
The Corps has jurisdiction under these laws to permit obstructions to navigation
within the “navigable waters of the United States” and on the OCS.
35
In addition to reviewing offshore construction for potential obstructions to navigation, the Corps
examined wind energy-related development pursuant to the National Environmental Policy Act
(NEPA), which generally requires analysis of the environmental impacts of federal actions.
36
Thus, pursuant to the RHA and NEPA, the Corps may have examined many of the salient issues
present in an offshore wind energy proposal. Controversy arose, however, with respect to two
primary issues that were litigated in Alliance to Protect Nantucket Sound v. United States
Department of the Army.
37
First, it was unclear whether Corps jurisdiction pursuant to the RHA
and the OCSLA extended to all offshore structures or only to those otherwise permitted for
energy or mineral development pursuant to other OCSLA provisions. On the basis of the
language of the statutes at issue, their legislative history, and Corps regulations and guidance, a
federal district court and the First Circuit Court of Appeals held that the Corps was authorized to
exercise RHA section 10 authority for any offshore structure, regardless of purpose, in state or
federal waters.
38
The second issue in the Alliance case was whether a section 10 RHA permit was sufficient to
authorize the siting, construction, and operation of an offshore wind energy facility. Because any
wind turbines would be attached to the seabed of the OCS, some authorization to occupy the
submerged lands of the OCS would be required before construction could legally take place.
39
Use or occupancy of the OCS without such authorization arguably may constitute common law
trespass.
40
Questions over the type of authorization a section 10 permit encompasses spring, in
part, from Corps regulations, which state:
(...continued)
except on plans recommended by the Chief of Engineers and authorized by the Secretary of the
Army; and it shall not be lawful to excavate or fill, or in any manner to alter or modify the course,
location, condition, or capacity of, any port, roadstead, haven, harbor, canal, lake, harbor or refuge,
or inclosure within the limits of any breakwater, or of the channel of any navigable water of the
United States, unless the work has been recommended by the Chief of Engineers and authorized by
the Secretary of the Army prior to beginning the same. 33 U.S.C. § 403.
34
43 U.S.C. §§ 1331-1356a.
35
33 U.S.C. § 403. Corps regulations define the “navigable waters of the United States” as “those waters that are
subject to the ebb and flow of the tide and/or are presently used, or have been used in the past, or may be susceptible
for use to transport interstate or foreign commerce.” 33 C.F.R. § 329.4. Under the RHA, navigable waters “includes
only those ocean and coastal waters that can be found up to three geographic miles seaward of the coast.” Alliance To
Protect Nantucket Sound, Inc. v. U.S. Dept. of Army, 288 F.Supp.2d 64, 72 (D.Mass. 2003) (hereinafter Alliance I),
aff’d, 398 F.3d 105 (1
st
Cir. 2005) (hereinafter Alliance II); see also 33 C.F.R. § 329.12(a). On the OCS, however, the
Corps’ regulatory jurisdiction extends beyond that three-mile limit for, at least, certain purposes. 43 U.S.C. §
1333(a)(1), (e).
36
42 U.S.C. §§ 4321 et seq.
37
Alliance I, 288 F.Supp.2d at 64.
38
Id. at 75.
39
See 43 U.S.C. § 1333(a)(2)(A) (applying the criminal and civil laws of states adjacent to the OCS as federal law); see
also Guy R. Martin, The World’s Largest Wind Energy Facility in Nantucket Sound? Deficiencies in the Current
Regulatory Process for Offshore Wind Energy Development, 31 B.C. Envtl. Aff. L. Rev. 300, n.96 (2004).
40
The Court of Appeals for the Fifth Circuit has held that because the United States does not own the OCS in fee
simple, it cannot claim trespass based on unauthorized construction on OCS. On the other hand, the court stated that
“[n]either ownership nor possession is, however, a necessary requisite for the granting of injunctive relief,” because the
United States has paramount rights to the OCS and an interest to protect. Thus damages available under trespass may
not be available for unauthorized construction on the OCS, while injunctive relief would appear possible even under
(continued...)
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A - 1
Appendix A
U.S. Renewable Resource GIS Maps
with High Potential Screening and
Comparative Analysis Results
Solar CSP Analysis: Annual Resource >=.5.0 kWh/m
2
/day A – 2
Solar CSP Analysis: Slope <=5% A – 3
Solar CSP Analysis: Within 25 Miles of Graded Roads or Railroads A – 4
Solar CSP Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 5
Solar CSP Analysis: Compatible National Forest System Lands A – 6
Solar CSP Analysis: Screened Results A – 7
Solar CSP Comparative Analysis: Results by National Forest Unit A – 8
Solar PV Analysis: Annual Resource >=5.0 kWh/m
2
/day A – 9
Solar PV Analysis: Slope <=5% A – 10
Solar PV Analysis: Within 25 Miles of Graded Roads or Railroads A – 11
Solar PV Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 12
Solar PV Analysis: Compatible National Forest System Lands A – 13
Solar PV Analysis: Screened Results A – 14
Solar PV Comparative Analysis: Results by National Forest Unit A – 15
Wind Analysis: Annual Resource >=Class 3 at 50 m A – 16
Wind Analysis: Within 25 Miles of Graded Roads on National Forest System Lands A – 17
Wind Analysis: Within 25 Miles of Transmission Lines Between 69 and 345 kV A – 18
Wind Analysis: Compatible National Forest System Lands A – 19
Wind Analysis: Screened Results A – 20
Wind Comparative Analysis: Results by National Forest Unit A – 21
NFS Units with the Highest Potential for Solar CSP, Solar PV, and Wind A – 22
Chapter 31: Assessing the Potential for Renewable Energy on National Forest System Lands
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2
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3
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4
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2
1
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Appendix D
State Policies and Financial Incentives
for Renewable Energy
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D - 2
Federal Policies
Modified Accelerated Cost Recovery System (MACRS) with 50% Bonus
Depreciation
Under the Modified Accelerated Cost Recovery System (MACRS), businesses can recover
investments in solar, wind, and geothermal property through depreciation deductions. The
MACRS establishes a set of class lives for various types of property, ranging from 3 to 50 years,
over which the property may be depreciated. For solar, wind, and geothermal property placed in
service after 1986, the current MACRS property class is 5 years.
In addition to the MACRS depreciation, Section 101 of the Job Creation and Worker Assistance
Act of 2002 (http://frwebgate.access.gpo.gov/cgi-
bin/getdoc.cgi?dbname=107_cong_public_laws&docid=f:publ147.107.pdf) added Subsection
168(k) to the tax code relating to the accelerated cost-recovery system. This provision allowed
businesses to take an additional 30% depreciation on solar, wind, and geothermal property in the
first year. In May 2003, The Job Creation and Tax Relief Reconciliation Act of 2003 was signed
into law, increasing the bonus depreciation to 50% in the first year that the equipment is
purchased and placed into service.
Note that many states either have not adopted the federal bonus depreciation or have specifically
“uncoupled” their state tax depreciation schedules from the new federal rules.
Renewable Electricity Production Tax Credit
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass,
Geothermal Electric, Municipal Solid Waste, Cogeneration, Refined Coal, Anaerobic Digestion,
Small Hydroelectric
Amount: 1.8 cents/kWh for wind, solar, geothermal, closed-loop biomass; 0.9 cents/kWh for
others
Terms: First 10 years of operation for wind, closed-loop biomass; first 5 years for other
technologies
Website: http://www.irs.gov/pub/irs-pdf/f8835.pdf
Note, however, that owners of solar and geothermal projects who claim the 10% federal business
energy tax credit
(http://www.dsireusa.org/library/includes/incentive2.cfm?Incentive_Code=US02F&State=Feder
al&currentpageid=1) may NOT also claim this production tax credit.
Solar and Geothermal Business Energy Tax Credit
Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Solar
Thermal Process Heat, Photovoltaics, Geothermal Electric
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D - 3
Amount: 10%
Max. Limit: $25,000 per year, plus 25% of the total tax remaining after the credit is taken
Terms: Credit may be carried back to the three preceding years and then carried forward for
15 years
State Policies
Arizona
Production Incentive – Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Generation Disclosure
The Arizona Corporation Commission adopted disclosure provisions as part of its 1996 Retail
Electric Competition Rules. Under the disclosure provisions, all retail suppliers of electricity
must disclose composition, fuel mix, and emissions characteristics upon request.
Green Power Purchasing
Scottsdale – local government buildings using photovoltaics
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D - 4
Net Metering
Salt River Project
Tucson Electric Power Company
Renewables Portfolio Standard
Under the Environmental Portfolio Standard (EPS), regulated utilities in the state are required to
provide a certain percentage of their electricity from renewable energy. The standard begins with
0.2%renewables for 2001 and increases to 1.1% renewables in 2007 through 2012. Of these
amounts, solar-electric must make up 50% in 2001, increasing to 60% for 2004 through 2012.
Applicable technologies include solar-electric (PV), solar water heating and solar air
conditioning, landfill gas, wind, and biomass. Arizona Public Service Company requested and
received a rule waiver that would allow it to meet a portion of its EPS requirements from
geothermal resources.
California
Corporate Solar and Wind Energy Tax Credit
California's Solar or Wind Energy System Credit (SB17x2) was approved by the Governor on
October 8, 2001. The law provides personal and corporate income tax credits for the purchase
and installation of photovoltaic or wind-driven systems with a peak generating capacity of up to
200 kilowatts. After January 1, 2004, and before January 1, 2006, the tax credit is equal to 7.5%
of the net installed system cost after deducting the value of any municipal-, state-, or federal-
sponsored financial incentives, or $4.50 per watt of rated peak generating capacity, whichever is
less. A 15% tax credit was available January 1, 2001, through December 31, 2003. A 5-year
warranty is required of each system. Taxpayers claiming the credit cannot sell the electricity
produced by the system, but may utilize California’s net metering law, if eligible.
Production Incentive – Supplemental Energy Payments
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Landfill Gas, Wind, Biomass,
Hydroelectric, Geothermal Electric, Fuel Cells, Municipal Solid Waste, Anaerobic Digestion,
Tidal Energy, Wave Energy, Ocean Thermal
Amount: For above-market costs as compared to a market-price referent (subject to
determination by the Energy Commission)
Terms: Three- to 10-year contracts
Website: http://www.energy.ca.gov/portfolio/
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D - 5
Solar Property Tax Exemption: According to the California Revenue and Taxation Code,
section 73, active solar energy systems installed between January 1, 1999, and January 1, 2006,
are not subject to property taxes.
Generation Disclosure
California’s energy suppliers must disclose to all customers the energy resource mix used in
generation. Providers must use a standard label created by the California Energy Commission
(CEC), and this information must be provided to end-use customers at least four times per year.
Green Power Purchasing
Davis – local government buildings using photovoltaics
Los Angeles – local government buildings
San Diego – local government buildings using solar water heat, solar thermal electric,
photovoltaics, landfill gas, wind, biomass, geothermal electric, fuel cells, municipal solid waste,
digester gas, small hydroelectric, tidal energy, wave energy, and ocean thermal
Santa Monica – local government buildings using geothermal electric
Net Metering
California's net-metering law requires that all three of California’s investor-owned electric utilities
(PG&E, SCE, and SDG&E) and rural cooperatives, allow net metering for all customer classes
for systems up to 1,000 kW (1 MW). Municipal utilities are allowed to permit either net-metering
or co-metering. Net-metering customers are allowed to carry forward kWh credits for up to 12
months. Any net excess generation at the end of each 12-month period is granted to the utility.
Customers subject to time-of-use (TOU) rates are entitled to deliver electricity back to the system
for the same time-of-use (including real-time) price that they pay for power purchases. However,
TOU customers choosing to net meter must pay for the metering equipment capable of making
such measurements. Eligible technologies include photovoltaics, landfill gas, wind, fuel cells,
anaerobic digestion.
Public Benefits Fund
California set the bar for all other renewable energy funds with the creation of a $540 million fund
for renewables with its electric industry restructuring legislation (AB 1890) back in 1996. The
success of that program lead to legislation to extend that fundingʊat the same annual
levelsʊanother 10 years, through 2012, creating an additional $1.35 billion in renewables funding.
This extended funding was enabled through Assembly Bill 995, which passed in September
2000. The California Energy Commission’s (CEC) authority to administer the extended fund was
established in 2002 by Senate Bill 1038. The initial funding was collected from 1998 to 2001
from customers of the state’s three investor-owned utilitiesʊSDG&E, SCE, and PG&Eʊwhich
must pay specified amounts each year. The extended funding continues to be collected from the
same entities. The CEC manages the renewables funds.
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D - 6
Renewables Portfolio Standard
Legislation enacting California's Renewable Portfolio Standard (RPS) (SB 1078) was signed by
the Governor of California on September 12, 2002. This legislation, which requires retail sellers
of electricity to purchase 20% of their electricity from renewable sources by 2017, establishes
California as having the most aggressive RPS in the country. Renewable sources include
biomass, solar thermal, photovoltaics, wind, geothermal, fuel cells using renewable fuels, small
hydropower of 30 MW or less, digester gas, landfill gas, ocean wave, ocean thermal, and tidal
current. Municipal solid waste is generally only eligible if it is converted to a clean burning fuel
using a non-combustion thermal process. There are restrictions for some of these technologies.
Colorado
Production Incentive – Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999 or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green tags RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Generation Disclosure
Colorado is one of several states to require disclosure without having restructured its electricity
market. In January 1999, the Colorado Public Utility Commission (PUC) adopted regulations
requiring the state's investor-owned utilities (IOUs) to disclose information regarding their fuel mix
to retail customers. Utilities with a total system load of more than 100 MW are required to provide
this information as a bill insert or as a separate mailing twice annually, beginning October 1999.
The PUC provided a suggested format for the disclosure. Fuel mix percentages are to be based
on the power supply mix for the previous calendar year. Supporting documentation concerning
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D - 7
the calculations used to determine the power supply mix percentages must be submitted to the
PUC for approval.
Green Power Purchasing
Aspen – local government buildings using wind
Boulder – local government buildings using wind
Net Metering
Aspen Electric/Holy Cross Electric
Fort Collins Utilities
Gunnison County Electric
Xcel Energy
Renewables Portfolio Standard
State
The initiative requires Colorado utilities with 40,000 or more customers to generate or purchase
a percentage of their electricity from renewable sources according to the following schedule:
x 3% from 2007 through 2010
x 6% from 2011 through 2014
x 10% by 2015 and thereafter.
Of the electricity generated each year from renewable sources, at least 4% must come from solar
technologies. At least one-half of this percentage must come from solar systems located on-site
at customers’ facilities. Other eligible technologies include wind, geothermal heat, biomass
facilities that burn nontoxic plants, landfill gas, animal waste, small hydroelectric, and hydrogen
fuel cells. Energy generated in Colorado is favored: each kWh of renewable electricity generated
in-state will be counted as 1.25 kWh for the purposes of meeting this standard.
Fort Collins
Electric Energy Supply Policy - Standard: Additional 2% by 2004; 15% by 2017
Georgia
Production Incentive - Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
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D - 18
of this generation from large-scale hydroelectric facilitiesʊso the RPS target will require an
additional 3,700 MW of renewable resource generation capacity.
Nevada
Production Incentives
Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Renewable Energy Credits
Nevada's Renewable Energy Portfolio Standard requires the state's two investor-owned utilities
to derive a minimum percentage of the electricity they sell from renewable energy resources.
Included in the standard is a REC program. The PUC is in the process of drafting the permanent
regulations for RECs. Starting January 1, 2003, Nevada's renewable energy producers can earn
RECs, which can then be sold to utilities that are required to meet Nevada's portfolio standard.
One REC will represent a kilowatt-hour of electricity generated from a renewable energy system,
with the exception of PV, which counts as 2.4 kWh per AB 296 of 2003. The value of a REC is
market-driven. RECs are issued by Nevada’s PUC and are valid for 5 years.
Renewable energy is defined as biomass, geothermal energy, solar energy, wind, and
waterpower. Solar energy includes any displacement of fossil energy use and could include
(solar daylighting, solar water heating, etc.)
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Renewable Energy Producers Property Tax Exemption
Enacted by SB 227 on June 1, 2001, this statute allows certain new or expanded businesses a
50% property tax exemption for real and personal property used to generate electricity from
renewable energy. The exemption may be taken over a 10-year period by a business that uses
renewable energy as its primary source of energy and that has a generating capacity of at least 10
kW. Renewable energy includes biomass, solar, and wind.
Renewable Energy Systems Exemption
This statute states that any value added by a qualified renewable energy source shall be
subtracted from the assessed value of any residential, commercial, or industrial building for
property tax purposes. Qualified equipment includes solar, wind, geothermal, solid waste, and
hydro. This exemption applies for all years following installation.
Renewable Energy/Solar Sales Tax Exemption
The sales/use tax rate for any sales, storage, consumption, or use of products or systems designed
or adapted to use renewable energy to generate electricity and all of its integral components is
2% in all counties for those purchases made from January 1, 2002, through June 30, 2005.
Renewable energy means a source of energy that occurs naturally or is regenerated naturally,
including without limitation biomass, fuel cells, geothermal energy, solar energy, waterpower,
and wind. Biomass includes agricultural crops, wastes, and residues; wood, wood wastes, and
residues; animal wastes; municipal wastes; and aquatic plants. SB 489 of 2003 extended this
exemption to solar water heating and solar lighting systems, as well as extending the expiration
date to July 1, 2005. Systems designed or adapted to use renewable energy to generate electricity
means a system of related components from which at least 75% of the electricity generated is
produced from one or more sources of renewable energy and that is designed to work as an
integral package such that the system is not complete without one of its related components.
Generation Disclosure
Beginning January 2002, each electric utility must disclose certain information to its customers,
according to regulations established by the Nevada PUC. The disclosure must be in a standard
format, provided in bill inserts twice a year, as well as on utility web sites. The disclosure must
include the average mix of fuel sources used to create electricity, average emissions, customer
service information, and information on low-income energy programs.
Net Metering
In 1997, Nevada enacted a law allowing investor-owned utility customers who generate up to 10
kW of solar or wind power to net meter. In 2001, AB 661 removed the limit on the amount of
energy a utility can receive through net metering. In 2003, AB 429 increased the limit on system
size from 10 kW to 30 kW and added waterpower (restricted to certain types) to the definition of
renewable energy, which already includes biomass, geothermal energy, solar energy, and wind.
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Also in 2003, per AB 296, in complying with a portfolio standard, each 1 kWh of electricity
generated from solar photovoltaics counts as 2.4 kWh, if the electricity is generated on the
premises of a retail customer who uses at least 50% of the electricity.
Customer generators are billed monthly except in situations in which the customer and the utility
agree on annual billing. Net excess generation is credited to the utility and is considered
renewable energy that the utility has generated to fulfill its renewable energy portfolio. Utilities
are required to supply a two-way meter to measure flow in both directions, and utilities are
prohibited from adding any additional charges to the bills of those customers participating in net
metering. Furthermore, utilities cannot place any additional standards or requirements on
customer generators beyond those requirements established by the National Electric Code
(NEC), Underwriters Laboratories (UL), and the Institute of Electrical and Electronic Engineers
(IEEE).
Renewables Portfolio Standard
As part of its 1997 restructuring legislation, the Nevada legislature established an RPS. Under
the standard, the state's two investor-owned utilities, Nevada Power and Sierra Pacific Power,
must derive a minimum percentage of the total electricity they sell from renewable energy
resources. In 2001, the legislature revised the minimum amounts to increase by 2% every 2
years, starting with a 5% renewable energy requirement in 2003 and achieving a 15%
requirement by 2013 and each year thereafter. Not less than 5% of the renewable energy must be
generated from solar renewable energy systems.
North Carolina
Production Incentives
Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
Goverment Series: Energy: Wind
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D - 21
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
TVA – Green Power Switch Generation Partners Program
Eligible Technologies: PV, Wind
Amount: $500 (residential only) plus $0.15 per kWh for 10 years (residential and commercial)
Terms: $500 payment available until the program capacity reaches 150 kW
Website: http://www.gpsgenpartners.com
TVA and participating power distributors currently offer a dual-metering option to residential
and small-commercial consumers (non-demand-metered) through the Green Power Switch
Generation Partners program. The output (green power) generated from this program will be
counted as a TVA Green Power Switch resource.
Through this program, TVA will purchase the entire output of a qualifying system at $0.15 per
kWh through a participating power distributor, and the consumer will receive a credit for the
power generated. Participation in this program is entirely up to the discretion of the power
distributor. As of June 2004, about a dozen distributors have signed up for the program. Thus far,
the program includes several residential solar participants and one 20-kW wind project.
Energy Improvement Loan Program
The Energy Improvement Loan Program (EILP) is available to North Carolina businesses, local
governments, public schools, and nonprofit organizations that demonstrate energy efficiency, use
of renewable energy resources, energy cost savings, or reduced energy demand. Loans with an
interest rate of 1% to a maximum limit of $500K are available for certain renewable energy and
energy recycling projects. Eligible renewable energy projects generally include solar, wind, small
hydro (less than 20 MW), and biomass. A rate of 3% is available for projects that demonstrate
energy efficiency, energy cost-savings, or reduced energy demand. In order to qualify for an EILP
low-interest loan, a project must (1) be located in North Carolina; (2) demonstrate energy
efficiency, use of renewable energy resources, or result in energy cost savings; (3) use existing
reliable, commercially available technologies; (4) meet federal and state air and water quality
standards; and (5) be able to recover capital costs within the loan's maximum term of 10 years
through energy cost savings.
North Dakota
Production Incentive – Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
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D - 22
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Large Wind Property Tax Reduction
North Dakota modified its property tax incentives for large wind systems with its 2001 bill that
reduces property taxes by 70% for wind facilities of 100 kW or larger. To be eligible,
construction must begin by January 1, 2011. The state also has a sales tax exemption for these
systems.
Geothermal, Solar, and Wind Property Tax Exemption
North Dakota exempts from local property taxes any solar, wind, or geothermal energy device.
Qualifying systems can be stand alone or part of a conventional system, but in the case where the
solar, wind, or geothermal system is part of a conventional energy system, only the renewable
energy portion of the total system is eligible. This exemption is applied only during the 5-year
period following installation. To apply for this exemption, system owners must contact their
local tax assessor or their county director of tax equalization.
Large Wind Sales Tax Exemption
North Dakota's large wind sales tax exemption applies to the owner of a wind-powered electrical
generating facility that has at least one single electrical energy generation unit with a nameplate
capacity of 100 kW or more. The exemption will apply to building materials, production
equipment, and other tangible personal property used in the construction of the facility. The
exemption applies to any sales or use tax that would be due in the construction of the facility
between July 2001 and January 2011.
Net Metering
Passed in 1991 by the North Dakota PUC, this net-metering ruling applies to both renewable
energy generators and cogenerators up to 100 kW in capacity. Net metering is available to all
customer classes, and there is no statewide limit to the capacity signed up for net metering. When
customers have excess generation in a monthly billing period, utilities must purchase net excess
generation at the avoided cost.
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Oklahoma
Zero-Emission Facilities Production Tax Credit
Starting January 1, 2003, an income tax credit is available to producers of electric power using
renewable energy resources from a zero-emission facility located in Oklahoma. The zero-
emission facility must have a rated production capacity of 50 MW or more. Renewable energy
resources include wind, moving water, sun, and geothermal energy. The construction and
operation of the zero-emission facility must result in no pollution or emissions that are or may be
harmful to the environment, as determined by the Department of Environmental Quality.
The amount of the credit varies depending on when the electricity is generated. For electricity
generated after January 1, 2004, but prior to January 1, 2007, the amount of the credit is $0.005
per kilowatt-hour for electricity generated by zero-emission facilities. For electricity generated
after January 1, 2007, but prior to January 1, 2012, the amount of the credit is $0.0025 per
kilowatt-hour of electricity generated by zero-emission facilities.
Credits may be claimed over a 10-year period, and non-taxable entities may transfer the tax
credit to taxable entities.
Production Incentive – Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Net Metering
Net metering has been available in Oklahoma since 1988 under Oklahoma Corporate
Commission Order 326195. This ruling requires investor-owned utilities and rural cooperatives
under the Commission's jurisdiction to file net-metering tariffs for customer-owned renewable
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D - 24
energy and cogeneration facilities at 100 kW or less in capacity. The program is available to all
customer classes, and there is no statewide limit to the amount of net-metering capacity.
Utilities are not allowed to impose extra charges for customers signed up for net metering, nor
are they allowed to require new liability insurance as a condition for interconnection. Utilities are
also not required to purchase net excess generation from customers. The ruling, however, does
allow customers to request that utilities purchase the net generation. In this case, the utility
purchases the generation at the utility's filed avoided cost. Although all renewable energy
sources are eligible, only wind-generating systems have used net metering in Oklahoma to date.
In most cases, customer generation does not exceed demand.
Oregon
Business Energy Tax Credit
Eligible Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar
Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation
Fuels, Geothermal Electric, Geothermal Heat Pumps, Municipal Solid Waste, Cogeneration,
Hydrogen, Refueling Stations, Ethanol, Methanol, Biodiesel, Fuel Cells (Renewable Fuels),
Energy Efficiency
Amount: 35% of project costs
Max. Limit: $10,000,000 per project
Terms: Distributed over 5 years; 8-year carry forward
Website: http://www.energy.state.or.us/bus/tax/taxcdt.htm
Renewable Energy Grant
Using revenues generated from the sales of Green Tags, Bonneville Environmental Foundation
(BEF), a not-for-profit organization, accepts proposals for funding for renewable energy projects
located in the Pacific Northwest (Oregon, Washington, Idaho, Montana). Any private person,
organization, local or tribal government located in the Pacific Northwest may participate.
Projects that generate electricity are preferred. Acceptable projects include solar PV, solar
thermal electric, solar hot water, wind, hydro, biomass, and animal waste-to-energy.
BEF may deliver funding through various means, including grants, loans, convertible loans,
guarantees, and direct investments in renewable energy projects. BEF renewable-energy grants
and investments may range from a few thousand dollars for small installations, to significant
investments in central station grid-connected renewable energy projects. If a BEF grant is
requested for a generating project, the BEF share will not exceed 33% of total capital costs and
0% of operating costs.
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D - 25
Production Incentives
Solar Starters
The Bonneville Environmental Foundation (BEF) and the Northwest Solar Cooperative have
joined together to help reduce the costs of small residential and commercial photovoltaic systems
in parts of Oregon and Washington; systems up to 5 kW are approved automatically; larger sizes
may be acceptable. The Northwest Solar Cooperative will sign 5-year agreements with the
owners of new photovoltaic systems and will pay them an annual amount equivalent to 10¢/kWh
for the environmental attributesʊor Green Tagsʊproduced by the solar systems. System owners
will be paid annually. BEF will then purchase the Green Tags from the Northwest Solar
Cooperative and sell them to its wholesale customers and on its web site
(https://www.greentagsusa.org/GreenTags/index.cfm). The first phase of the project is projected
to include 30 to 50 small photovoltaic systems. There are 36 participants in the program.
Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1 to $100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
New Renewable Energy Resources Grants
This program is designed to support renewable energy projects that do not already have an
established incentive program developed and launched by the Energy Trust of Oregon. They
expect to reserve 10% of the Renewable Energy program budget, which is about $1 million
annually, for open solicitation incentives. Projects will generally be awarded in the areas of small
wind, solar PV, biomass, biogas, small hydro, and geothermal electric.
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D - 26
Small Scale Energy Loan Program (SELP)
Eligible Technologies: Passive Solar Space Heat, Solar Water Heat, Solar Space Heat, Solar
Thermal Electric, Photovoltaics, Wind, Biomass, Hydroelectric, Renewable Transportation
Fuels, Geothermal Electric, Municipal Solid Waste, Cogeneration, Waste Heat Recovery
Applicable Sectors: Commercial, Industrial, Residential, Nonprofit, Schools, Local
Government, State Government, Tribal Government, Rural Electric Cooperative
Amount: Typically $20,000 to $20 million
Max. Limit: None
Terms: Repayment to match term of bonds
Website: http://www.energy.state.or.us/loan/selphme.htm
Generation Disclosure
Under Oregon’s 1999 electric utility restructuring legislation, electricity suppliers are required to
disclose their fuel mix and emissions. Beginning March 1, 2002, disclosure must be supplied
using a format prescribed by the Oregon PUC. Power source and environmental impact
information must be provided to all residential consumers at least quarterly.
Green Power Purchasing
Portland: municipal buildings using PV, wind, biomass, geothermal electric, and anaerobic
digestion
Net Metering
Oregon's net metering law, HB 3219 of July 1999, allows net metering for customers with solar,
wind, or hydropower systems up to 25 kW. All customer classes are eligible, but enrollment is
limited to a total installed capacity of 0.5% of a utility's historic single-hour peak load. Above
this installed capacity, net-metering eligibility can be limited by regulatory authority. Net excess
generation is either purchased at avoided cost or credited to the customer’s next monthly bill. At
the end of an annual period, any unused credit is granted to the electric utility. This credit is then
either granted to customers enrolled in the utility's low-income assistance programs, credited to
the generating customer, or “dedicated to other use.”
In 1996, the City of Ashland enacted a net-metering law establishing a simple grid
interconnection policy. It encourages the adoption of solar energy systems by allowing net
metering and committing the City to purchase, at full retail price, up to 1,000 kWhs of excess
electricity per month from small wind or solar energy systems.
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D - 27
Public Benefits Fund
Eligible Technologies: Solar Water Heat, Solar Space Heat, Solar Thermal Electric,
Photovoltaics, Wind, Biomass, Hydroelectric, Geothermal Electric, Direct-Use Geothermal
Energy, Fuel Cells (Renewable Fuels)
Types: Renewables, Efficiency, Low Income, Schools
Total Fund: $10 million for renewables/year
Charge: 3% paid by certain electricity users
Website: http://www.energytrust.org/Frames/Frameset.html?mainFrame=http%3A//www.energ
ytrust.org/Pages/renewable_energy_programs/index.html
South Dakota
Production Incentive – Green Tag Purchase Program
Eligible Technologies: Solar Thermal Electric, Photovoltaics, Wind, Biomass, Geothermal
Electric, Small Hydroelectric, Renewable Fuels
Amount: $1-$100 per MWh total production; varies by technology and contract length
Terms: Any size system, grid tied, new renewable (January 1, 1999, or later)
Website: http://www.mainstayenergy.com/
Mainstay Energy is a private company offering customers who install, or have installed,
renewable energy systems the opportunity to sell the green-tag RECs associated with the energy
generated by these systems. These green tags will be brought to market as Green-e*
(http://www.green-e.org/) certified products. Through the Mainstay Energy Rewards Program,
participating customers receive regular, recurring payments.
The amount of the payments depends on the type of renewable energy technology, the
production of electricity by that system, and the length of the contract period. Mainstay offers 3-,
5-, and 10-year purchase contracts. The longer the contract period, the greater the incentive
payment on a $/kWh basis. Payments are made quarterly.
Wind Energy Property Tax Exemption
This wind energy property tax exemption bill requires that all commercial wind-power
production facilities, regardless of ownership, now be assessed at the local level. Previously,
some facilities were centrally assessed for tax purposes at the state level. The assessment is for
the base, foundation, tower, and substations, which are considered real property. It doesn't
include the generator and turbine blades, which are considered personal property.
Chapter 32: Energy Projects on Federal Lands: Leasing and Authorization
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CRS Report for Congress
Prepared for Members and Committees of Congress
Energy Projects on Federal Lands:
Leasing and Authorization
Adam Vann
Legislative Attorney
September 8, 2009
Congressional Research Service
7-5700
www.crs.gov
R40806
Goverment Series: Energy: Wind
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Energy Projects on Federal Lands: Leasing and Authorization

Congressional Research Service
Summary
Avariety of statutes and agency regulations govern leasing and permitting for energy projects,
including oil and natural gas development as well as alternative energy projects, on federal lands.
This report explains the legal framework for energy leasing and development on federal lands.
The report reviews laws and regulations affecting leasing of federal lands for exploration and
production of oil and natural gas, which have evolved under a complex leasing system over the
last century. The report also addresses existing laws and regulations that affect the use of federal
lands for renewable energy projects, including geothermal, wind, and solar energy.
Chapter 32: Energy Projects on Federal Lands: Leasing and Authorization
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Energy Projects on Federal Lands: Leasing and Authorization

Congressional Research Service
Contents
Introduction ................................................................................................................................ 1
Oil and Natural Gas Exploration and Production on Federal Lands.............................................. 1
History and Background........................................................................................................ 1
Public Lands Subject to Oil and Natural Gas Leasing ............................................................ 2
Development of Resource Management Plans ....................................................................... 2
Bureau of Land Management .......................................................................................... 2
U.S. Forest Service ......................................................................................................... 3
The Competitive Leasing Process.......................................................................................... 4
The Noncompetitive Leasing Process .................................................................................... 5
Lease Terms and Conditions.................................................................................................. 6
General Statutory Restrictions ......................................................................................... 6
Payment Terms: Rental Fees and Royalties...................................................................... 6
Lease Terms, Extensions, and Cancellations .................................................................... 7
Applications for Permits to Drill ........................................................................................... 8
Bureau of Land Management .......................................................................................... 8
U.S. Forest Service ......................................................................................................... 9
Renewable Energy Projects on Federal Lands............................................................................ 10
Background ........................................................................................................................ 10
Geothermal Project Leasing ................................................................................................ 11
Background .................................................................................................................. 11
The Leasing Process...................................................................................................... 11
Exploration and Production Under Geothermal Leases .................................................. 13
Authorizations for Wind and Solar Energy Projects ............................................................. 14
Background .................................................................................................................. 14
Title V of the Federal Land Policy and Management Act ............................................... 15
Contacts
Author Contact Information ...................................................................................................... 18
Goverment Series: Energy: Wind
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Energy Projects on Federal Lands: Leasing and Authorization

Congressional Research Service 1
Introduction
Avariety of interrelated statutes and agency regulations govern leasing and permitting for energy
exploration and production on federal lands.
1
Generally, these projects can be divided into two
categories, each of which is governed by its own set of statutes and regulations. The first category
is the exploration for and production of fossil fuels, including oil and natural gas. Oil and natural
gas exploration and production on federal lands are generally governed by the Mineral Lands
Leasing Act of 1920 and subsequent amendments to that act, as administered by the Bureau of
Land Management, an agency that is part of the U.S. Department of the Interior. Generally, the
lessee is authorized to explore for and ultimately produce oil or natural gas on federal lands in
exchange for lease payments and royalties paid to the U.S. government on the production.
Exploration and production activities under a lease must be authorized independently by the
Bureau of Land Management.
The second category pertains to renewable energy projects that are permitted under rights-of-way
or similar property interests granted to applicants in accordance with the Federal Land Policy and
Management Act of 1976. Under that act, these projects are often undertaken pursuant to a right-
of-way or similar property interest. However, geothermal energy projects are considered mineral
projects and thus are leased under a separate set of laws and regulations in a manner similar to oil
and natural gas project leasing.
Oil and Natural Gas Exploration and Production on
Federal Lands
History and Background
At the start of the 20
th
century, private entities could explore, develop, and purchase federal lands
containing oil with relative ease. Oil and natural gas resources on these federal lands were
transferred to full private ownership pursuant to the terms of the Mining Law of 1872. This
process was known as “patenting.” Under the patenting process, full ownership of oil lands
“could be obtained for a nominal amount.”
2
However, Congress eventually decided that oil and natural gas resources on onshore federal lands
should remain under federal ownership. The enactment of the Mineral Lands Leasing Act of 1920
(MLA) ended the private acquisition of title to onshore federal oil lands by authorizing the
Secretary of the Interior to issue permits for exploration and to lease lands containing oil and
natural gas and other defense-related minerals.
3
The MLA thus allowed the federal government to
maintain ultimate control over these federal lands while leasing them to oil and natural gas
1
This report provides a discussion of energy projects on onshore federal lands (i.e., “public lands,” as that term is
defined in the Federal Land Policy and Management Act of 1976). For discussion of offshore energy projects, see CRS
Report RL33404, Offshore Oil and Gas Development: Legal Framework, by Adam Vann; CRS Report R40175, Wind
Energy: Offshore Permitting, by Adam Vann; and CRS Report RL34741, Drilling in the Great Lakes: Background and
Issues, coordinated by Pervaze A. Sheikh.
2
See Pan Am. Petroleum & Transp. Co. v. United States, 273 U.S. 456, 486 (1927) (internal citation omitted).
3
Mineral Lands Leasing Act of 1920 41 Stat. 4373 (1920), codified at 30 U.S.C. §181 et seq.
Chapter 34: Renewable Energy Production, Strategies, and Technologies
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S. HRG. 111–130
RENEWABLE ENERGY PRODUCTION, STRATEGIES,
AND TECHNOLOGIES
HEARING
BEFORE THE
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
TO
CONSIDER RENEWABLE ENERGY PRODUCTION, STRATEGIES, AND
TECHNOLOGIES WITH REGARD TO RURAL COMMUNITIES
CHENA HOT SPRINGS, AK, AUGUST 22, 2009
(
Printed for the use of the
Committee on Energy and Natural Resources
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(II)
COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico, Chairman
BYRON L. DORGAN, North Dakota
RON WYDEN, Oregon
TIM JOHNSON, South Dakota
MARY L. LANDRIEU, Louisiana
MARIA CANTWELL, Washington
ROBERT MENENDEZ, New Jersey
BLANCHE L. LINCOLN, Arkansas
BERNARD SANDERS, Vermont
EVAN BAYH, Indiana
DEBBIE STABENOW, Michigan
MARK UDALL, Colorado
JEANNE SHAHEEN, New Hampshire
LISA MURKOWSKI, Alaska
RICHARD BURR, North Carolina
JOHN BARRASSO, Wyoming
SAM BROWNBACK, Kansas
JAMES E. RISCH, Idaho
JOHN MCCAIN, Arizona
ROBERT F. BENNETT, Utah
JIM BUNNING, Kentucky
JEFF SESSIONS, Alabama
BOB CORKER, Tennessee
ROBERT M. SIMON, Staff Director
SAM E. FOWLER, Chief Counsel
MCKIE CAMPBELL, Republican Staff Director
KAREN K. BILLUPS, Republican Chief Counsel
Chapter 34: Renewable Energy Production, Strategies, and Technologies
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(III)
C ONT E NT S
STATEMENTS
Page
Dodson, Jim, President & CEO, Fairbanks Economic Development Corpora-
tion, Fairbanks, AK ............................................................................................. 44
Donatelli, Barbara, Senior Vice President, Administration and Government
Relations, Cook Inlet Region Inc., Anchorage, AK ............................................ 39
Haagenson, Steve, Executive Director, Alaska Energy Authority, and State-
wide Energy Coordinator, Anchorage, AK ......................................................... 10
Hirsch, Brian, Senior Project Leader, Alaska National Renewable Energy
Laboratory, Chena Hot Springs, AK .................................................................. 5
Holdmann, Gwen, Director, Alaska Center for Energy and Power, University
of Alaska, Fairbanks, AK .................................................................................... 16
Johnson, D. Douglas, Director of Projects, ORPC Alaska, LLC, Anchorage,
AK .......................................................................................................................... 49
Karl, Bernie, Proprietor, Chena Hot Springs Resort and Geothermal Power
Generation Facility, Chena Hot Springs, AK .................................................... 36
Meiners, Dennis, CEO, Intelligent Energy Systems, Anchorage, AK ................. 52
Murkowski, Hon. Lisa, U.S. Senator From Alaska ............................................... 1
Rose, Chris, Executive Director, Renewable Energy Alaska Project (REAP),
Chena Hot Springs, AK ....................................................................................... 20
APPENDIX
Responses to additional questions .......................................................................... 63
[Due to the large amount of materials submitted, additional documents and state-
ments have been retained in committee files.]
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(1)
RENEWABLE ENERGY PRODUCTION,
STRATEGIES, AND TECHNOLOGIES
SATURDAY AUGUST 22, 2009
U.S. SENATE,
COMMITTEE ON ENERGY AND NATURAL RESOURCES,
Chena Hot Springs, AK
The committee met, pursuant to notice, at 10:22 a.m. at Chena
Hot Springs Resort, Milepost 56.5, Chena Hot Springs Road, Hon.
Lisa Murkowski presiding.
OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S.
SENATOR FROM ALASKA
Senator MURKOWSKI. All right. Good morning. We will call to
order this hearing, this field hearing of the Senate Energy and
Natural Resources Committee. The hearing this morning is con-
cerning the potential importance of renewable energy power
sources to meet our Nation’s energy needs.
It’s wonderful to be here at Chena Hot Springs. It’s wonderful to
be outside, even if we are in a tent, but being here on a Saturday
morning on a glorious Interior day is terrific.
What we will focus on today is the importance of renewable en-
ergy power sources, as I say, to meet our Nation’s energy needs,
what types of technology we should be working to foster, what fi-
nancial assistance may be needed from Congress to make these dif-
fering types of energy expand nationwide. Of course, of particular
interest at this hearing is the use of renewable energy in high-cost
rural areas.
Before I move further into my opening comments, I want to rec-
ognize a few individuals. First, my colleague, Senator Stevens, has
joined us here this weekend. Senator Stevens has long been a lead-
er in advancing energy issues in this State, and I’m delighted that
he is with us today. We have Representative Paul Seaton from
Homer who is with us. We also have Representative John Harris—
actually Speaker John Harris has joined us. As others come into
the room, I’ll hopefully be able to acknowledge them as well.
We know that renewable energy has been a topic, a very popular
topic, in recent years in Congress. Back in 2005 we passed the En-
ergy Policy Act. We provided in that act a host of research and de-
velopment grants and tax aid for renewables. Then in 2007, in the
Energy Independence and Security Act, we went even further, pro-
viding more aid for geothermal and for ocean energy projects, and
earlier this year we extended the renewable tax credits for a num-
ber of years. This winter the Obama administration suggested that
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2
this country should be spending $15 billion a year to expand re-
newable energy production.
We know that we’ve got a long ways to go when it comes to fur-
thering the use of renewal energy. Petroleum last year accounted
for 39 percent of our total energy needs, natural gas accounted for
23 percent, coal 22 percent, and nuclear power was at 8 percent.
All renewables together accounted for just 7 percent of our Nation’s
total energy production, and what we think of as new renewable,
which is the wind, the solar, the geothermal, and new forms of bio-
mass, this is just at about 3 percent. So we’ve got a long ways to
go.
But it is a real improvement in the past 5 years. Since 2003
we’ve seen wind energy generation triple, up above 1 percent of
total energy generation. Biomass still leads all renewables, ac-
counting for 53 percent of renewable energy with hydropower in
second place at 36 percent. Wind and geothermal are holding in
there at about 5 percent, solar electricity accounts for 1 percent of
renewable energy, and ocean marine energy development is barely
a rounding error at this point in time.
But as Alaskans we know that renewable energy offers great po-
tential in this State, where we see—particularly during the winter,
our electricity from diesel generation costing about—an average of
about 65 cents per kilowatt hour. I was in Newtok yesterday.
They’re sitting at about 85 cents a kilowatt hour. Given those
prices, anything that supports free fuel may produce real cost sav-
ings, if the capital construction costs can be financed and can be
controlled.
About 40 percent of the State might benefit from geothermal en-
ergy, either shallow vent geothermal, or the future enhanced geo-
thermal systems that are now under study.
Right now about 24 percent of our State’s total electricity comes
from hydropower. There’s about 28 hydroprojects that are currently
producing electricity statewide. But we’ve got about another 250
projects that are already identified sites for hydroelectric genera-
tion from lake taps to water diversion from streams and rivers.
We lead the Nation here in Alaska in the amount of power that
we could gain from ocean marine hydrokinetic projects, using the
waves, using the currents to produce our power. Just the State’s
southern coast theoretically could produce 1,250 terawatts of power
a year. This is 300 times more power than Alaskans use each year.
We also lead the Nation here in Alaska in traditional per capita
biomass. Alaskans are burning about 100,000 cords of firewood
each year for space heat. The State is already burning 8 million
gallons of fish oil a year down in Kodiak to power boilers to dry
fish meal, and using some of that for electricity generation.
We generate 650,000 tons of garbage a year, which Fairbanks is
already planning to convert into energy. Anchorage is underway on
generating 2.5 megawatts of electricity from methane gas produced
by the Anchorage landfill. This is enough to power 2,500 homes.
None of these forms of biomass take into account the 9.5 million
acres of timber lands in the Tongass National Forest in the South-
east, or the lands and timber lands in the Chugach National Forest
down in Southcentral.
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3
We all know about our enormous wind potential here in the
State. Kotzebue has 17 wind turbines that are currently producing
about 8 percent of the community’s power. There’s more wind tur-
bines already erected in dozens of villages in rural Alaska. Most of
southern and western Alaska possess the best wind potential in the
whole country. We’ve got the Fire Island wind farm that’s on the
threshold of construction in Anchorage, there are good wind sites
south of Fairbanks, and AVEC, the Alaska Village Electric Co-op
hopes to install more than 50 turbines in 36 rural villages, if they
can find the money, it’s always about the money. But the plan is
out there.
All of these sites, particularly the large geothermal sites in the
Aleutians and the hydro sites, offer the possibility of using renew-
able energy to generate hydrogen fuel or ammonia fuel that hope-
fully, someday, we could export, like we export our oil today, to fuel
Alaska’s economy of the future.
Now, this hearing is meant to focus on the renewables, to look
at what the development can mean for the State, and especially to
look at the very innovative ways that technology can be used to
generate renewable energy and energy efficiencies that will ulti-
mately lower consumers’ costs.
You know, I mentioned the high prices that we’re paying. When
we think about what happened last year when Alaska as a State—
actually the country as a whole, but more particularly the remote
villages just got nailed with the high prices of fuel, and, you know,
we don’t have a lot of margin for error there.
We’ve had congressional hearings back in Washington DC. Some
of you have had an opportunity to speak at them. The congres-
sional hearings are a little bit different breed than what you may
have experienced if you have gone down to Juneau. Congressional
hearings almost never permit unlimited verbal testimony, although
someone can submit written testimony for the hearing record. I’ll
give you the address later if you would like to submit some testi-
mony if what you hear today prompts something that you would
like to submit.
Today at the hearing we’ve got two panels of witnesses intended
to provide a host of information. The witnesses will cover an over-
view of renewables, their need and potential, and what the Federal
Government should be doing to increase their energy generation. I
expect we’re going to hear some innovative suggestions. I hope we
will get some innovative suggestions for the technology in the fu-
ture, and perhaps better information than what we get in Wash-
ington for how renewables can be harnessed to generate the power
while we’re producing less carbon.
We have a court reporter here today, and everything that is said
will be part of the record to be taken back to DC, and this testi-
mony from the hearing will be made available to other Senators on
the Energy Committee hearing. So the good ideas that are pre-
sented today will be reviewed and studied by the Senate members
and staff. So I’m hopeful that this hearing will be a useful spring-
board to advance renewable energy development, both here in Alas-
ka and nationwide.
So hopefully, we’re counting on it being a good sounding board
to hear what we in Congress should be doing when it comes to both
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4
a policy and a financial aid standpoint to help renewable energy
development.
The sites today—when I spoke with Senator Jeff Bingaman, who
is the chairman of the Energy Committee, and indicated that we
wanted to hold this field hearing at the Chena Energy Fair—we in-
dicated that this was the perfect place to do it. Chena is the first
site in the country, first site in the country, to sport a working low-
temperature geothermal power plant. As you know, the plant is
powering the PA system here this afternoon and everything else
from the ice museum’s chiller system to the greenhouse fans and
lights.
Then later this afternoon I will be participating, as I’m sure
many of you will, in the christening of the first truly mobile, self-
contained geothermal power plant. It’s been built here, and it’s
awaiting field testing in Florida.
The innovations here at Chena that have been developed by Ber-
nie Karl, who will be one of our witnesses on the second panel, and
those who have helped him, are truly an inspiration for a host of
renewable projects that are under consideration throughout the
State. Whether it’s the Fire Island wind project or Mount Spurr or
Naknek, Manley Hot Springs, or Atukan, geothermal projects.
Whether it’s the hydroprojects that we’re talking about, Lake
Chakachamna, Susitna, the Grant Lake hydropower near
Dillingham, we’ve got Thayer Creek down in Angoon. There’s so
much out there.
So I’m hopeful that with this hearing and what we gather today,
we’re going to be moving toward the day when there are the re-
sources at the Federal, State, and local level to make these projects
proceed. Later this afternoon at the energy fair, I’ll talk a little bit
more about what the Federal aid is and what’s out there and avail-
able to further renewables. But right now I would like to hear from
our witnesses about what more we should be doing to spur our re-
newable power generation, where we should be focusing those lim-
ited resources.
So today, this morning, we have on our first panel Mr. Brian
Hirsch. He’s the senior project leader in Alaska for the U.S. De-
partment of Energy’s National Renewable Energy Lab. We also
have a gentleman that is familiar to so many in the energy world,
Steve Haagenson, who’s the director of the Alaska Energy Author-
ity. We have Gwen Holdman. Gwen has taken me around Chena
here numerous occasions explaining all the wonders of what goes
on. Gwen is now the director of the Alaska Center for Energy and
Power at the University of Alaska Fairbanks. We also have Chris
Rose. Chris has truly been a leader in renewable energy. He’s the
executive director of the Renewable Energy Alaska Project.
So, ladies and gentlemen, it’s a pleasure to welcome you here
today. Without further adieu, why don’t we start with you, Mr.
Hirsch, and just go down the line. We’d ask you to try to limit your
comments to about 5 minutes. Your full written statement will be
included as part of the record. So if you want to summarize or add
on anything, we’d certainly appreciate it. But welcome to you.
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5
STATEMENT OF BRIAN HIRSCH, SENIOR PROJECT LEADER,
ALASKA NATIONAL RENEWABLE ENERGY LABORATORY,
CHENA HOT SPRINGS, AK
Mr. HIRSCH. Thank you, Senator. Thanks for the opportunity to
discuss renewable energy technology and development, especially
as it pertains to rural energy in Alaska, and the U.S. Department
of Energy’s involvement in these issues.
As you stated, I am Brian Hirsch, on assignment here in Alaska
with the National Renewable Energy Laboratory, which is the U.S.
Department of Energy’s primary National Laboratory for research
and development on energy efficiency and renewable energy issues.
In recent years DOE and NREL has been called upon to provide
on location technical assistance and support to State and local enti-
ties, especially in locations like Alaska where there’s high costs,
complexities, and challenges around logistics and rugged climates.
We face many challenges here in providing energy for the State
and the Nation. My testimony here will look primarily at what
we’ve been able to accomplish, and challenges and opportunities for
the future.
Alaska’s well known for our substantial fossil fuel resources. We
are less well known for our renewable energy opportunities, but
they are equally abundant. We believe that with proper develop-
ment, they can support vibrant communities, help the environ-
ment, and a prosperous future. We need look no further than
Chena Hot Springs, as you mentioned.
The U.S. Department of Energy has been involved very much
with everything from the very initial wells and development of the
lowest temperature electricity producing geothermal systems here,
as well as the mobile geothermal system that will be unveiled
today, and an experimental 3,000 foot well that is also looking at
enhanced geothermal production that may have broader application
throughout Alaska and the country.
As you mentioned, Alaska has substantial tidal and wave poten-
tial. The Electric Power and Research Institute estimates that
Alaska has 80 percent of tidal and 50 percent of wave potential for
the entire country. Just harvesting a small portion of that would
more than meet Alaska’s needs and allow us to export and support
energy needs in the Lower 48 and elsewhere and become a renew-
able energy exporting State, as well as a fossil fuel exporting State.
Challenges associated with that have to do with converting the
energy, delivering it to shore, and where it’s needed, and storing
it for the time of year. Because of our extreme seasonality, Alaska
is the most challenged of any State in the country on these issues.
These are the areas of our focus.
So, for example, we’ve been partnering with the Denali Commis-
sion on an emerging energy technology grant program that both
the National Renewable Energy Laboratory and the National En-
ergy Technology Laboratory combined establishing the Arctic En-
ergy Office is on the review committee, and we are targeting exper-
imental technologies that really have the most potential benefit for
Alaska around these storage and delivery issues.
Alaska has considerable wind resources, as you mentioned. The
U.S. Department of Energy has a cost share with the State of Alas-
ka on an anemometer loan program that can measure the wind re-
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20/ w|no Eneroy oy 20J0. Exeour|ve $ummary 1
Executive Summary & Overview
INTRODUCTION AND COLLABORATIVE APPROACH
Energy prices, supply uncertainties, and
environmental concerns are driving the
United States to rethink its energy mix
and develop diverse sources of clean,
renewable energy. The nation is
working toward generating more energy
from domestic resources—energy that
can be cost-effective and replaced or
“renewed” without contributing to
climate change or major adverse
environmental impacts.

In 2006, President Bush emphasized the
nation’s need for greater energy
efficiency and a more diversified energy
portfolio. This led to a collaborative
effort to explore a modeled energy
scenario in which wind provides 20% of
U.S. electricity by 2030. Members of
this 20% Wind collaborative (see 20%
Wind Scenario sidebar) produced this
report to start the discussion about
issues, costs, and potential outcomes
associated with the 20% Wind Scenario.
A 20% Wind Scenario in 2030, while
ambitious, could be feasible if the
significant challenges identified in this
report are overcome.
This report was prepared by DOE in a
joint effort with industry, government,
and the nation’s national laboratories
(primarily the National Renewable
Energy Laboratory and Lawrence
Berkeley National Laboratory).
1
The
report considers some associated
challenges, estimates the impacts, and
discusses specific needs and outcomes in the areas of technology, manufacturing and
employment, transmission and grid integration, markets, siting strategies, and
potential environmental effects associated with a 20% Wind Scenario.

In its Annual Energy Outlook 2007, the U.S. Energy Information Administration
(EIA) estimates that U.S. electricity demand will grow by 39% from 2005 to 2030,

1
This is the executive summary of the full report entitled 20% Wind Energy by 2030: Increasing Wind
Energy’s Contribution to U.S. Electricity Supply, available at www.nrel.gov/docs/fy08osti/41869.pdf.
Chapters and appendices referenced herein can be found in the full report.
20% Wind Scenario:
Wind Energy Provides 20% of
U.S. Electricity Needs by 2030
Key Issues to Examine:
x Does the nation have sufficient wind energy
resources?
x What are the wind technology requirements?
x Does sufficient manufacturing capability exist?
x What are some of the key impacts?
x Can the electric network accommodate 20% wind?
x What are the environmental impacts?
x Is the scenario feasible?

Assessment Participants:
x U.S. Department of Energy (DOE)
í Office of Energy Efficiency and Renewable Energy
(EERE), Office of Electricity Delivery and Energy
Reliability (OE), and Power Marketing
Administrations (PMAs)
í National Renewable Energy Laboratory (NREL)
í Lawrence Berkeley National Laboratory (Berkeley
Lab)
í Sandia National Laboratories (SNL)
x Black & Veatch engineering and consulting firm
x American Wind Energy Association (AWEA)
í Leading wind manufacturers and suppliers
í Developers and electric utilities
í Others in the wind industry
Chapter 35: 20% Wind Energy by 2030—Increasing Wind Energy’s Contribution
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2 20/ w|no Eneroy oy 20J0. Exeour|ve $ummary
reaching 5.8 billion megawatt-hours (MWh) by 2030. To meet 20% of that demand,
U.S. wind power capacity would have to reach more than 300 gigawatts (GW) or
more than 300,000 megawatts (MW). This growth represents an increase of more
than 290 GW within 23 years.
2
The data analysis and model runs for this report were concluded in mid-2007. All
data and information in the report are based on wind data available through the end
of 2006. At that time, the U.S. wind power fleet numbered 11.6 GW and spanned 34
states. In 2007, 5,244 MW of new wind generation were installed.
3
With these
additions, American wind plants are expected to generate an estimated 48 billion
kilowatt-hours (kWh) of wind energy in 2008, more than 1% of U.S. electricity
supply. This capacity addition of 5,244 MW in 2007 exceeds the more conservative
growth trajectory developed for the 20% Wind Scenario of about 4,000 MW/year in
2007 and 2008. The wind industry is on track to grow to a size capable of installing
16,000 MW/year, consistent with the latter years in the 20% Wind Scenario, more
quickly than the trajectory used for this analysis.

SCOPE
This report examines some of the costs, challenges, and key impacts of generating
20% of the nation’s electricity from wind energy in 2030. Specifically, it
investigates requirements and outcomes in the areas of technology, manufacturing,
transmission and integration, markets, environment, and siting.

The modeling done for this report estimates that wind power installations with
capacities of more than 300 gigawatts (GW) would be needed for the 20% Wind
Scenario. Increasing U.S. wind power to this level from 11.6 GW in 2006 would
require significant changes in transmission, manufacturing, and markets. This report
presents an analysis of one specific scenario for reaching the 20% level and contrasts
it to a scenario of no wind growth beyond the level reached in 2006. Major
assumptions in the analysis have been highlighted throughout the document and
have been summarized in the appendices. These assumptions may be considered
optimistic. In this report, no sensitivity analyses have been done to estimate the
impact that changes in the assumptions would have on the information presented
here. As summarized at the end of this chapter, the analysis provides an overview of
some potential impacts of these two scenarios by 2030. This report does not
compare the Wind Scenario to other energy portfolio options, nor does it outline an
action plan.

To successfully address energy security and environmental issues, the nation needs
to pursue a portfolio of energy options. None of these options by itself can fully
address these issues; there is no “silver bullet.” This technical report examines one
potential scenario in which wind power serves as a significant element in the
portfolio. However, the 20% Wind Scenario is not a prediction of the future. Instead,
it paints a picture of what a particular 20% Wind Scenario could mean for the
nation.

2
AEO data from 2007 were used in this report. AEO released new data in March of 2008, which were
not incorporated into this report. While the new EIA data could change specific numbers in the report,
it would not change the overall message of the report.
3
According to AWEA’s 2007 Market Report of January 2008, the U.S. wind energy industry installed
5,244 MW in 2007, expanding the nation's total wind power generating capacity by 45% in a single
calendar year and more than doubling the 2006 installation of 2,454 MW. Government sources for
validation of 2007 installations were not available at the time this report was written.
Chapter 36: Wind Research—Department of Energy Releases New Estimates
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National Renewable Energy Laboratory
Wind Research
Department of Energy Releases New
Estimates of Nation's Wind Energy
Potential
February 26, 2010
The Department of Energy (DOE) recently released new estimates of the U.S. potential
for wind-generated electricity, tripling previous estimates of the size of the nation's wind
resources. The new study, which was carried out by the National Renewable Energy
Laboratory (NREL) and AWS Truewind, finds that the contiguous 48 states have the
potential to generate up to 37 million gigawatt hours annually. By contrast, total U.S.
electricity generation from all sources was roughly 4 million gigawatt hours in 2009. The
estimates show the total energy yield that could be generated using current wind turbine
technology on the nation's windy lands. (The estimates show what is possible, not what
will actually be developed.)
Along with the state-by-state estimates of wind energy potential, NREL and AWS
Truewind have developed wind resource maps for the United States and for the
contiguous 48 states that show the predicted average wind speeds at an 80-meter height.
The wind resource maps and estimates provide local, state, and national policymakers
with accurate information about the nature of the wind resource in their areas and across
the nation, helping them to make informed decisions about wind energy in their
communities.
The new estimates reflect substantial advances in wind turbine technology that have
occurred since DOE's last national wind resource assessments were conducted in 1993.
For example, previous wind resource maps showed predicted average wind speeds at a
height of 50 meters, which was the height of most wind turbine towers at the time. The
new maps show predicted average wind speeds at an 80-meter height, the height of
today's turbines. Because wind speed generally increases with height, turbines built on
taller towers can capture more energy and generate more electricity. The new estimates
also incorporate updated capacity factors, reflecting improvements in wind turbine design
and performance.
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Content Last Updated: May 20, 2010
Chapter 39: Wind and Water Power Program—FAQs on Small Wind Systems
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U.S. Department of Energy - Energy Efficiency and Renewable Energy
Wind and Water Power Program
Frequently Asked Questions on Small
Wind Systems
Below are frequently asked questions related to using a small wind energy system to
power your home. The frequently asked questions below will help you determine if a
small wind energy system is practical for powering your home.
x What are the benefits to homeowners from using wind turbines?
x Is wind power practical for me?
x Is my site right?
x What about legal, environmental, and economic issues?
x Where can I find more information?
x What equipment do I need to run my own home wind energy system?
By investing in a small wind system, you can reduce pollution and reduce your exposure
to future fuel shortages and price increases. Deciding whether to purchase a wind system,
however, is complicated; there are many factors to consider. But if you have the right set
of circumstances, a well-designed wind energy system can provide you with many years
of cost-effective, clean, and reliable electricity.
What are the benefits to homeowners from using wind
turbines?
Wind energy systems provide a cushion against electricity price increases. Wind energy
systems reduce U.S. dependence on fossil fuels, and they don't emit greenhouse gases. If
you are building a home in a remote location, a small wind energy system can help you
avoid the high costs of extending utility power lines to your site.
Although wind energy systems involve a significant initial investment, they can be
competitive with conventional energy sources when you account for a lifetime of reduced
or altogether avoided utility costs. They length of the payback period — the time before
the savings resulting from your system equal the system cost — depends on the system
you choose, the wind resource in your site, electric utility rates in you're area, and how
you use your wind system.
Is wind power practical for me?
Small wind energy systems can be used in connection with an electricity transmission
and distribution system (called grid-connected systems), or in stand-alone applications
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that are not connected to the utility grid. A grid-connected wind turbine can reduce your
consumption of utility-supplied electricity for lighting, appliances, and electric heat. If
the turbine cannot deliver the amount of energy you need, the utility makes up the
difference. When the wind system produces more electricity than the household requires,
the excess can be sold to the utility. With the interconnections available today, switching
takes place automatically. Stand-alone wind energy systems can be appropriate for
homes, farms, or even entire communities (a co-housing project, for example) that are far
from the nearest utility lines. Either type of system can be practical if the following
conditions exist.
Conditions for stand-alone systems
x You live in an area with average annual wind speeds of at least 4.0 meters per
second (9 miles per hour)
x A grid connection is not available or can only be made through an expensive
extension. The cost of running a power line to a remote site to connect with the
utility grid can be prohibitive, ranging from $15,000 to more than $50,000 per
mile, depending on terrain.
x You have an interest in gaining energy independence from the utility
x You would like to reduce the environmental impact of electricity production
x You acknowledge the intermittent nature of wind power and have a strategy for
using intermittent resources to meet your power needs
Conditions for grid-connected systems
x You live in an area with average annual wind speeds of at least 4.5 meters per
second (10 miles per hour).
x Utility-supplied electricity is expensive in your area (about 10 to 15 cents per
kilowatt-hour).
x The utility's requirements for connecting your system to its grid are not
prohibitively expensive.
x Local building codes or covenants allow you to legally erect a wind turbine on
your property.
x You are comfortable with long-term investments.
Is my site right?
To get a general idea if your region has good wind resources, look at the Wind Powering
America Wind Resources page, which has state wind maps. The maps will show you if
wind speeds in your area are strong enough to further investigate the wind resource. Of
course, the maps are just a starting point — the actual wind resource on your site will
vary depending on topography and structure interference. And a localized site with good
winds, such as a ridgetop, may not show up on the maps.
Another source for wind data is the National Climatic Data Center, which collects data
for selected sites and makes area wind data summaries available for purchase.
Chapter 39: Wind and Water Power Program—FAQs on Small Wind Systems
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 723
You will need site-specific data to determine the wind resource at your exact location. If
you do not have on-site data and want to obtain a clearer, more predictable picture of
your wind resource, you may wish to measure wind speeds at your location for a year.
You can do this with a recording anemometer, which generally costs $500 to $1500. The
most accurate readings are taken at "hub height" (i.e., the elevation at the top of the wind
turbine tower). This requires placing the anemometer high enough to avoid turbulence
created by trees, buildings, and other obstructions. The standard wind sensor height used
to obtain data for the DOE maps is 10 meters (33 feet).
You can have varied wind resources within the same property. If you live in complex
terrain, take care in selecting the installation site. If you site your wind turbine on the top
or on the windy side of a hill, for example, you will have more access to prevailing wind
than in a gully or on the leeward (sheltered) side of a hill on the same property. Consider
existing obstacles and plan for future obstructions, including trees and building, which
could block the wind. Also realize the power in the wind is proportional to its speed
(velocity) cubed (v). This means that the amount of power you get from your generator
goes up exponentially as the wind speed increases. For example, if your site has an
annual average wind speed of about 5.6 meters per second (12.6 miles per hour), it has
twice the energy available as a site with a 4.5 meter per second (10 mile per hour)
average (12.6/10
3
).
What about legal, environmental, and economic issues?
In addition to reviewing your site and particular situation and goals, you should also
x research potential legal and environmental obstacles
x obtain cost and performance information from manufacturers
x perform a complete economic analysis that accounts for a multitude of factors
x understand the basics of a small wind system, and
x review possibilities for combining your system with other energy sources,
backups, and energy efficiency improvements.
Establish an energy budget to help define the size of turbine that will be needed. Since
energy efficiency is usually less expensive than energy production, making your house
more energy efficient first will likely result in being able to spend less money since you
may need a smaller wind turbine to meet your needs.
Potential Legal and Environmental Obstacles
Before you invest any time and money, research potential legal and environmental
obstacles to installing a wind system. Some jurisdictions, for example, restrict the height
of the structures permitted in residentially zoned areas, although variances are often
obtainable. Your neighbors might object to a wind machine that blocks their view, or they
might be concerned about noise. Consider obstacles that might block the wind in the
future (large planned developments or saplings, for example). If you plan to connect the
Goverment Series: Energy: Wind
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wind generator to your local utility company's grid, find out its requirements for
interconnections and buying electricity from small independent power producers.
Pricing a System
When you are confident that you can install a wind machine legally and without
alienating your neighbors, you can begin pricing systems and components.
Approach buying a wind system as you would any major purchase. Obtain and review the
product literature from several manufacturers. Lists of manufacturers are available from
the American Wind Energy Association; however, not all small turbine manufacturers are
members of AWEA. Manufacturer information can also be found at times in the
periodicals listed below. Once you have narrowed the field, research a few companies to
be sure they are recognized wind energy businesses and that parts and service will be
available when you need them. Also, find out how long the warranty lasts and what it
includes.
Ask for references of customers with installations similar to the one you are considering.
Ask system owners about performance, reliability, and maintenance and repair
requirements, and whether the system is meeting their expectations.
The Economics of Wind Power for Home Use
A residential wind energy system can be a good long-term investment. However, because
circumstances such as electricity rates and interest rates vary, you need to decide whether
purchasing a wind system is a smart financial move for you. Be sure you or your
financial adviser conduct a thorough analysis before you buy a wind energy system.
Grid-connected-system owners may be eligible to receive a small tax credit for the
electricity they sell back to the utility. The National Energy Policy Act of 1992 and the
1978 Public Utilities Regulatory Policy Act (PURPA) are two programs that apply to
small independent power producers. PURPA also requires that the utility sell you power
when you need it. Be sure you check with your local utility or state energy office before
you assume any buy-back rate. Some Midwestern rates are very low (less than
$.02/kWh), but some states have state-supported buy-back rates that encourage renewable
energy generation. In addition, some states have "net billing," where utilities purchase
excess electricity for the same rate at which they sell it.
Also, some states offer tax credits and some utilities offer rebates or other incentives that
can offset the cost of purchasing and installing wind systems. Visit the DSIRE web site,
which contains a database of financial incentives for wind energy. Check with your
state's department of revenue, your local utility, public utility commission, or your local
energy office for information.
Where can I find more information?
Chapter 39: Wind and Water Power Program—FAQs on Small Wind Systems
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 725
x AWEA's Small Wind Turbine Manufacturers List
x AWEA's Residential Wind Turbine Q&A
x AWEA's Wind Energy FAQ
x Your State Energy Office
x Wind Powering America: Small Wind Electric Systems
What equipment do I need to run my own home wind
energy system?
All wind systems consist of a wind turbine, a tower, wiring, and the "balance of system"
components: controllers, inverters, and/or batteries. Hybrid systems use additional
equipment, like photovoltaic panels and diesel generators to ensure electricity is available
at all times.
Wind Turbines
Home wind turbines consist of a rotor, a generator mounted on a frame, and (usually) a
tail. Through the spinning blades, the rotor captures the kinetic energy of the wind and
converts it into rotary motion to drive the generator. Rotors can have two or three blades,
with three being more common. The best indication of how much energy a turbine will
produce is the diameter of the rotor, which determines its "swept area," or the quantity of
wind intercepted by the turbine. The frame is the strong central axis bar onto which the
rotor, generator, and tail are attached. The tail keeps the turbine facing into the wind.
A 1.5-kilowatt (kW) wind turbine will meet the needs of a home requiring 300 kilowatt-
hours (kWh) per month, for a location with a 6.26-meters-per-second (14-mile-per-hour)
annual average wind speed. The manufacturer will provide you with the expected annual
energy output of the turbine as a function of annual average wind speed. The
manufacturer will also provide information on the maximum wind speed in which the
turbine is designed to operate safely. Most turbines have automatic speed-governing
systems to keep the rotor from spinning out of control in very high winds. This
information, along with your local wind speed distribution and your energy budget, is
sufficient to allow you to specify turbine size.
Towers
To paraphrase a noted author on wind energy, "the good winds are up high." Because
wind speeds increase with height in flat terrain, the turbine is mounted on a tower.
Generally speaking, the higher the tower, the more power the wind system can produce.
The tower also raises the turbine above the air turbulence that can exist close to the
ground. A general rule of thumb is to install a wind turbine on a tower with the bottom of
the rotor blades at least 9 meters (30 feet) above any obstacle that is within 90 meters
(300 feet) of the tower.
Goverment Series: Energy: Wind
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Experiments have shown that relatively small investments in increased tower height can
yield very high rates of return in power production. For instance, to raise a 10-kW
generator from a 18-meter (60-foot) tower height to a 30-meter (100-foot) tower involves
a 10% increase in overall system cost, but it can produce 25% more power.
There are two basic types of towers: self-supporting (free standing) and guyed. Most
home wind power systems use a guyed tower. Guyed-lattice towers are the least
expensive option. They consist of a simple, inexpensive framework of metal strips
supported by guy cables and earth anchors.
However, because the guy radius must be one-half to three-quarters of the tower height,
guyed-lattice towers require enough space to accommodate them. Guyed towers can be
hinged at the base so that they can be lowered to the ground for maintenance, repairs, or
during hazardous weather such as hurricanes. Aluminum towers are prone to cracking
and should be avoided.
Balance of System
Stand-alone systems require batteries to store excess power generated for use when the
wind is calm. They also need a charge controller to keep the batteries from overcharging.
Deep-cycle batteries, such as those used to power golf carts, can discharge and recharge
80% of their capacity hundreds of times, which makes them a good option for remote
renewable energy systems. Automotive batteries are shallow-cycle batteries and should
not be used in renewable energy systems because of their short life in deep cycling
operations.
In very small systems, direct current (DC) appliances operate directly off the batteries. If
you want to use standard appliances that require conventional household alternating
current (AC), however, you must install an inverter to convert DC electricity to AC.
Although the inverter slightly lowers the overall efficiency of the system, it allows the
home to be wired for AC, a definite plus with lenders, electrical code officials, and future
homebuyers.
For safety, batteries should be isolated from living areas and electronics because they
contain corrosive and explosive substances. Lead-acid batteries also require protection
from temperature extremes.
In grid-connected systems, the only additional equipment is a power-conditioning unit
(inverter) that makes the turbine output electrically compatible with the utility grid. No
batteries are needed. Work with the manufacturer and your local utility on this.
Hybrid Systems
According to many renewable energy experts, a stand-alone "hybrid" system that
combines wind with photovoltaic (PV) technologies and/or a diesel generator offers
several advantages.
Chapter 39: Wind and Water Power Program—FAQs on Small Wind Systems
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 727
In much of the United States, wind speeds are low in the summer when the sun shines
brightest and longest. The wind is strong in the winter when there is less sunlight
available. Because the peak operating times for wind and PV occur at different times of
the day and year, hybrid systems are more likely to produce power when you need it.
For the times when neither the wind generator nor the PV modules are producing
electricity (for example, at night when the wind is not blowing), most stand-alone
systems provide power through batteries and/or an engine-generator powered by fossil
fuels like diesel.
If the batteries run low, the engine-generator can be run at full power until the batteries
are charged. Adding a fossil-fuel-powered generator makes the system more complex,
but modern electronic controllers can operate these complex systems automatically.
Adding an engine-generator can also reduce the number of PV modules and batteries in
the system. Keep in mind that the storage capability must be large enough to supply
electrical needs during noncharging periods. Battery banks are typically sized for one to
three days of windless operation.
Chapter 42: Wind and Water Power Program—Wind Powering America
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 733
U.S. Department of Energy - Energy Efficiency and Renewable Energy
Wind and Water Power Program - Wind Powering
America
Small Wind for Homeowners, Ranchers,
and Small Businesses
The National Renewable Energy Laboratory produced Small Wind Electric Systems
Consumer's Guides to help homeowners, ranchers, and small businesses decide if wind
energy will work for them. The U.S. map shows which states have small wind consumer's
guides. Click on a state to download the guidebook. The U.S. Small Wind Guide is
available in both English (PDF 1.3 MB) and Spanish (PDF 1.5 MB). And, there is an
American Corn Growers Association Small Wind Guide (PDF 1.7 MB). Some of the
following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.
Small Wind Turbine Independent Testing
NREL's Small Wind Turbine Research staff are independently testing small wind
turbines to help the wind industry provide consumers with more certified small wind
turbine systems.
Small Wind Events and Newsletter
The Interstate Renewable Energy Council (IREC) maintains a calendar specifically for
small wind events and publishes a quarterly Small Wind Newsletter.
Chapter 47: Energy Tax Policy: Issues in the 111th Congress
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Energy Tax Policy: Issues in the 111
th
Congress

Congressional Research Service 2
industry. The Appendix of this report provides a brief summary of energy tax policies enacted in
the 108
th
and 109
th
Congresses.
Economic Rationale for Intervention in Energy
Markets
The primary goal of taxes in the U.S. economy is to raise revenues. There are times, however,
when tax policy can be used to achieve other goals. These include the use of tax policy as an
economic stimulus or the use of tax policy to achieve social objectives. Tax policy can also be
used to correct for market failures, which without intervention result in market inefficiencies.
There are a number of market failures surrounding the production and consumption of energy.
Tax policy, as it relates to energy, can be used to address these market failures.
Rationale for Intervention in Energy Markets
There are a variety of circumstances in which government intervention in energy markets may
improve market outcomes. Generally, government intervention has the potential to improve
market outcomes when there are likely to be market failures. Externalities represent one of the
most important market failures in energy’s production and consumption. Market failures in
energy markets also arise from principal-agent problems and information failures. Concerns
regarding national security are used to rationalize intervention in energy markets as well.
Externalities
An externality is a spillover from an economic transaction to a third party, one not directly
involved in the transaction itself. Externalities are often present in energy markets as both the
production and consumption of energy often involve external costs (or benefits) not taken into
account by those involved in the energy-related transaction. Instead, these externalities are
imposed on an unaffiliated third party. In the presence of externalities, the market outcome will
likely lead to an economically inefficient level of production or consumption.
When externalities are present, markets fail to establish energy prices equal to the social marginal
cost of supply. The result is a system where cost and/or price signals are inaccurate, such that the
socially optimal level of output, or allocative efficiency, is not achieved. Economic theory
suggests that a tax be imposed on activities associated with external costs, while activities
associated with external benefits be subsidized—in order to equate the social and private
marginal costs. These taxes and/or subsidies will result in a more efficient allocation of resources.
Many energy production and consumption activities result in negative externalities, perhaps the
most recognized being environmental damage. Air pollution results from mining activities as well
as from the transportation, refining, and industrial and consumer use of oil, gas, and coal.
Industrial activity can also produce effluents that contaminate water supplies as well as result in
other damages to the land. In addition to causing environmental damage, the production and
consumption of energy can also lead to lung damage and a variety of other health problems. The
use of fossil fuels, both in the production of energy (i.e., coal-fired power plants) and at the
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Energy Tax Policy: Issues in the 111
th
Congress

Congressional Research Service 3
consumer level (i.e., using gasoline to power automobiles), and the associated greenhouse gas
emissions have contributed to global climate change.
1
There may also be market failures associated with external benefits stemming from the process of
learning-by-doing. Learning-by-doing refers to the tendency for production costs to decline with
experience. As firms become more experienced in the manufacturing and use of energy-efficient
technologies their knowledge may spill over to other firms without compensation. In energy
markets, early adopters of energy-efficient technologies and practices may not be fully
compensated for the value of the knowledge they generate.
2
Principal-Agent and Informational Inefficiencies
Market failures in energy use may also arise due to the principal-agent problem.
3
Generally, the
principal-agent problem exists when one party, the agent, undertakes activities on the behalf of
another party, the principal. When the incentives of the agent differ from those of the principal,
the agent’s activities are not undertaken in a way that is consistent with the principal’s best
interest. The result is an inefficient outcome. In energy markets, the principal-agent problem
commonly arises when one party is responsible for making equipment purchasing choices while
another party is responsible for paying the energy costs, which are related to the efficiency level
of the purchased equipment.
For residential rental properties, the incentives for the landlords and tenants surrounding the
adoption of energy-savings practices are often not aligned. Landlords will under-invest in energy-
saving technologies for rental housing when the benefits from such investments accrue to tenants
(i.e., tenants are responsible for paying their own utilities) and the landlord does not believe the
costs of installing energy-saving devices can be recouped via higher rents. Tenants do not have an
incentive to invest in energy-savings technologies in rental units when their expected tenure in a
specific property is relatively short, and they will not have enough time to reap the full benefits of
the energy conserving investments. There is also evidence that when utilities are included in the
rent, tenants do not engage in energy conserving behaviors. On the other hand, when tenants pay
utilities on their own, energy-saving practices are more frequently adopted.
4
The implication is
that inefficient energy use by tenants in apartments where utilities are included as part of the rent
would offset energy-saving investments made by landlords; consequently, landlords under-invest
in energy efficiency. In general, the under-investment in energy conservation measures in rental
housing provides economic rationale for intervention.
In another example, the incentives of homebuilders and homebuyers may not be aligned.
Consequently, the principal-agent problem may result in an inefficient utilization of energy-
efficient products in newly constructed homes. Homebuilders may have an incentive to install
1
See CRS Report RL34513, Climate Change: Current Issues and Policy Tools, by Jane A. Leggett for an overview of
climate change issues and potential policy remedies.
2
Kenneth Gillingham, Richard G. Newell, and Karen Palmer, Energy Efficiency Economics and Policy, Resources for
the Future, RFF DP 09-13, Washington, DC, April 2009.
3
The extent of principal-agent problems in residential energy use is quantified in Scott Murtishaw and Jayant Sathaye,
Quantifying the Effect of the Principal-Agent Probelm on U.S. Residential Energy Use, Lawrence Berkeley National
Labratory, August 12, 2006, http://www.escholarship.org/uc/item/6f14t11t.
4
Arik Levinson and Scott Niemann, “Energy Use by Apartment Tenants when Landlords Pay for Utilities,” Resource
and Energy Economics, vol. 26 (2004), pp. 51-75.
Chapter 47: Energy Tax Policy: Issues in the 111th Congress
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Energy Tax Policy: Issues in the 111
th
Congress

Congressional Research Service 4
relatively low efficiency products to keep the cost of construction down if they do not believe that
the cost of installing energy-efficient products will be recovered upon sale of the property. The
value of installing energy-efficient devices may not be recoverable if builders are not able to
effectively communicate the value of energy-efficient devices once installed. Further, since
homebuilders are not able to observe the energy use level of prospective buyers they may not be
able to choose the products that best match the use patterns of the ultimate energy consumer. The
result may be less energy efficiency in new homes.
There are also informational problems that may lead to underinvestment in energy-efficient
technologies. For example, homeowners may not know the precise payback or rate of return of a
specific energy-efficient device. This may explain the so-called “energy paradox”—the empirical
observation that consumers require an abnormally high rate of return to undertake energy-
efficiency investments.
5
National Security
Preserving national security is another often cited rationale for intervention in energy markets.
Presently, much of the petroleum consumed in the United States is derived from foreign sources.
There are potentially a number of external costs associated with petroleum importation, especially
when imported from unstable countries and regions. First, a high level of reliance on imported oil
may contribute to a weakened system of national defense or contribute to military vulnerability in
the event of an oil embargo or other supply disruption. Second, there are costs to allocating more
resources to national defense than necessary when relying on high levels of imported oil.
Specifically, there is an opportunity cost associated with resources allocated to national defense,
as such resources are not available for other domestic policy initiatives and programs. To the
extent that petroleum importers fail to take these external costs into account, there is market
failure.
In addition, the economic well-being and economic security of the nation depends on having
stable energy sources. There are economic costs associated with unstable energy supplies.
Specifically, increasing unemployment and inflation may follow oil price spikes.
6
Potential Interventions in Energy Markets
When there are negative externalities associated with an activity, correcting the economic
distortion with a tax, if done correctly, can improve economic efficiency.
7
Conversely, when there
are positive externalities associated with an activity, a subsidy can improve economic efficiency.
The tax (subsidy) should be set equal to the monetary value of the damages (benefits) to third
parties imposed by the activity.
8
The tax serves to increase the price of the activity, and reduce the
5
Gilbert E. Metcalf , “Using Tax Expenditures to Achieve Energy Policy Goals,” American Economic Review, vol. 98,
no. 2 (2008), pp. 90-94.
6
See James D. Hamilton, Causes and Consequences of the Oil Shock of 2007-08, National Bureau of Economic
Research, Working Paper 15002, Cambridge, MA, May 2009. Hamilton evaluates the role of the oil shock of 2007-08
in the succeeding economic recession.
7
There are non-tax options for addressing for addressing energy market failures such as regulation and private sector
solutions.
8
Taxes imposed to correct for negative externalities are also known as Pigovian taxes, named after the economist who
developed the concept, Arthur Cecil Pigou.
Chapter 47: Energy Tax Policy: Issues in the 111th Congress
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 757
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4
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Goverment Series: Energy: Wind
758 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
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Chapter 49: Resources from TheCapitol.Net
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 787
Resources from TheCapitol.Net
Live Training
<www.CapitolHillTraining.com>
• Capitol Hill Workshop
<www.CapitolHillWorkshop.com>
• Understanding Congressional Budgeting and Appropriations
<www.CongressionalBudgeting.com>
• Advanced Federal Budget Process
<www.BudgetProcess.com>
• The President’s Budget
<www.PresidentsBudget.com>
• Understanding the Regulatory Process: Working with Federal Regulatory Agencies
<www.RegulatoryProcess.com>
• Drafting Effective Federal Legislation and Amendments
<www.DraftingLegislation.com>
Capitol Learning Audio Courses™
<www.CapitolLearning.com>
• Congress and Its Role in Policymaking
ISBN: 158733061X
• Understanding the Regulatory Process Series
ISBN: 1587331398
• Authorizations and Appropriations in a Nutshell
ISBN: 1587330296
Goverment Series: Energy: Wind
788 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
Other Resources
These sources are available on the book’s web site at <TCNWind.com>
Internet Resources
• DOE’s Wind and Water Program
<http://www1.eere.energy.gov/windandhydro/>
• Wind for Schools Project Power System Brief (2 page PDF)
<http://www.nrel.gov/docs/fy07osti/41993.pdf>
• Wind and Hydropower Technologies Program (2 page PDF)
<http://www1.eere.energy.gov/office_eere/pdfs/windhydro_fs.pdf>
• 20% Wind Energy by 2030 (DOE), July 2008 (248 page PDF)
<http://www1.eere.energy.gov/windandhydro/pdfs/41869.pdf>
• Wind Energy Multiyear Program Plan, 2007-2012 (115 page PDF)
<http://www1.eere.energy.gov/windandhydro/pdfs/40593.pdf>
• National Renewable Energy Laboratory (NREL)—Wind Research
<http://www.nrel.gov/wind/>
• NREL’s Wind R&D Success Stories (2 page PDF)
<http://www.nrel.gov/wind/pdfs/46635.pdf>
• Small Wind Electric Systems, a U.S. Consumer’s Guide (NREL) (27 page PDF)
<http://www.nrel.gov/docs/fy07osti/42005.pdf>
• Sandia National Laboratories–Wind Power Technologies—Online Abstracts and Reports
<http://windpower.sandia.gov/TopicSelection.htm>
• Sandia National Laboratories–Wind Power Technologies—Wind Energy Related Links
<http://windpower.sandia.gov/links.htm#LINKS>
• Wind Maps and Wind Resource Potential Estimates
<http://www.windpoweringamerica.gov/wind_maps.asp?&print>
• Wind Energy for Water Applications
<http://www1.eere.energy.gov/windandhydro/
printable_versions/water_applications.html>
• State Energy Profiles (EIA)
<http://tonto.eia.doe.gov/state/>
• American Wind Energy Association—
U.S. Wind Energy Projects (As of 12/31/09)
<http://www.awea.org/projects/>
Chapter 50: Other Resources
Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com 789
• WINDPOWER Outlook 2010 by the American Wind Energy Association (6 page PDF)
<http://www.awea.org/pubs/documents/Outlook_2010.pdf>
• The Energy Independence and Security Act of 2007 (P.L. 110-140, H.R. 6)
<http://thomas.loc.gov/cgi-bin/bdquery/z?d110:HR00006:>
• Wind & Water Program, Wind Powering America, Anemometer Loan Programs
<http://www.windpoweringamerica.gov/anemometer_loans.asp>
• Wind & Water Program, Wind Powering America, Wind Working Groups
<http://www.windpoweringamerica.gov/wind_working_groups.asp>
• Wind & Water Program, Wind Powering America,
Wind Maps and Wind Resource Potential Estimates
<http://www.windpoweringamerica.gov/wind_maps.asp>
• Wind & Water Program, Wind Powering America, Wind Energy Audio,
Agricultural Podcasts, Webinar Podcasts, News, Publications, and Web Resources
<http://www.windpoweringamerica.gov/audio.asp>
• Wind & Water Program, Wind Powering America, Publications
This page lists all of the publications referenced on the Wind Powering America Web site.
<http://www.windpoweringamerica.gov/publications.asp>
Books
• Aerodynamics of Wind Turbines, by Martin Hansen,
ISBN-13: 978-1844074389, ASIN: 1844074382
• Wind Power for Dummies, by Ian Woofenden,
(John Wiley & Sons, Inc. 2009), ISBN: 978-0-470-49637-4 ASIN: 0470496371
• Wind Power Renewable Energy for Home, Farm and Business, by Paul Gipe,
(Charles Green Publishing Co. 2004), ISBN: 978-1-931498-14-2 ASIN: 1931498148
• Wind Energy Basics, Second Edition: A Guide to Home- and Community-Scale
Wind Energy Systems, by Paul Gipe, (Charles Green Publishing Co. 2009),
ISBN: 978-1-60358-030-4 ASIN: 1603580301
• Homebrew Wind Power, by Dan Bartmann and Dan Fink,
(Buckville Publishing, LLC 2009), ISBN: 978-0-9819201-0-8 ASIN: 0981920101
• Developing Wind Power Projects: Theory and Practice, by Tore Wizelius,
(Earthscan Publishing, Ltd. 2007), ISBN: 978-1844072620 ASIN: 1844072622
• Wind Energy Explained: Theory, Design & Application,
by James F. Manwell, Jon G. McGowan, and Anthony L. Rogers,
(John Wiley & Sons, Ltd. 2009), ISBN: 978-0-470-01500-1 ASIN: 0470015004
Goverment Series: Energy: Wind
790 Copyright ©2010 by TheCapitol.Net. All Rights Reserved. No claim made to original U.S. government documents. 703-739-3790 TCNWind.com
• Generating Wind Power (Energy Revolution), by Niki Walker,
(Crabtree Publishing Company 2007), ISBN: 978-0-7787-2927-3
Generating Wind Power (Energy Revolution)
• Wind Energy Handbook, by Tony Burton, David Sharpe, Nick Jenkins, and
Ervin Bossanyi, (John Wiley & Sons, Ltd. 2001), ISBN 0-471-48997-2 ASIN: 0471489972
• Wind Energy Generation: Modelling and Control,
by Olimpo Anaya-Lara, Nick Jenkins, Janaka Ekanayake, Phill Cartwright,
and Michael Hughes, ISBN-13: 978-0470714331, ASIN: 0470714336
• The Wind Farm Scam, by John Etherington,
ISBN-13: 978-1905299836, ASIN: 1905299834
• Sustainable Energy—Without the Hot Air,
by David MacKay, ISBN-13: 978-0954452933, ASIN: 0954452933
• The Boy Who Harnessed the Wind: Creating Currents of Electricity and Hope,
by William Kamkwamba and Bryan Mealer, ISBN-13: 978-0061730337, ASIN: 0061730335
• The Name of the Wind (Kingkiller Chronicles, Day 1),
by Patrick Rothfuss, ISB-13: 978-0756405892, ASIN: 0756405890
Videos and Movies
• Gone with the Wind (70th Anniversary Ultimate Collector’s Edition),
Clark Gable and Vivien Leigh, Blu-Ray, ASIN: B0013N7FZ6
• Gone with the Wind (Two-Disc 70th Anniversary Edition),
Clark Gable and Vivien Leigh, ASIN: B002M2Z3BA
• Inherit the Wind, Spencer Tracy (Actor),
Fredric March, DVD, ASIN: B00005PJ6V
• Essential Earth Wind & Fire, ASIN: B000069RJI
• Wind, Matthew Modine and Jennifer Grey,
ASIN: B000085EFG
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