At the end of 2000 there was 2,554 MW of wind generation installed in the US. An American Wind Energy Association (AWEA) report published in May 2001 suggested that an additional 2000 MW was under development or expected to be completed by year end 2001. Much of that capacity has come online; 2001 was a tremendous year for growth in the utility-scale wind industry. A total of 1,694 MW of capacity was installed, representing a 66% increase in total US capacity. In Section 3 of this paper we will take a more detailed look at projects coming online in 2001. Table 1 below shows the current top 10 states in terms of wind generation capacity as of January 11, 2002. Total US capacity is now 4,248 MW.

Wind power classes range from 1 to 7. Figure 1 shows annual average wind resource estimates for the contiguous United States.

A class 3 wind resource, which is not uncommon throughout much of the United States, is the minimum level suitable for wind most wind turbine applications. A class 4 wind resource or above is generally preferred for today's large wind farms. Factors such as those listed below influence the actual amount of land area available for development.

1. land form (flat vs. mountainous terrain)
2. land use (forest, agriculture, urban)
3. environmental exclusions (federal and state lands such as parks, monuments, wilderness areas)
4. other exclusions such as transportation right-of-ways, local parks, privately administered areas, and proposed environmental lands

Figure 1 Annual Average Wind Resource Estimates

Utility-scale turbines typically range from 600 kW to 1500 kW. Larger turbines, in the 2 MW to 5 MW range, are being developed for offshore applications.

Table 2 provides a listing of all projects coming online in 2001. Most notable from the RUS perspective is the Chamberlain, SD project, Prairie Winds. RUS provided it's first wind energy loan to support this joint project between Basin Electric Power and East River Electric Power.

There is no typical sized wind generation project. For example, of the 22 projects currently operating in Minnesota, totaling 319 MW, the smallest is 0.225 MW and the largest is 107 MW. The two largest projects at 107 MW and 103 MW account for just over 2/3 of the states wind capacity. The remaining 20 projects total only 109 MW of capacity. This sort of dispersion does seem to be the norm for sates with a longer than average history in wind energy. However, newer entrants such as Washington, have jumped right in (see Table 2) with their first project exceeding 100 MW. Kansas also saw an increase in wind generation capacity from 1.5 MW to 113.5 MW with the addition of the Montezuma Project.

Many factors come into play when considering the economics of a wind generation project. The discussion in this section is meant to provide a few generally accepted averages typically used in discussion of wind generation projects. This material pertains to onshore wind farms and much of the information is owed to the very useful website of the Danish Wind Industry Association.

The cost of capital is always a significant factor in utility investments. At RUS wind projects are primarily being considered under the loan guarantee program. Current rates for this program can be found through the RUS website.

Installed turbine prices generally tend to be in the neighborhood of $1000 per kW. One reason this tends to hold true across the range of the utility-scale turbines is that prices of turbines are much flatter above 600 kW than below. The two most significant factors affecting differences in turbine cost are tower height and rotor diameter. Installation cost typically come in at around 30% of the total turbine cost. Economies of scale are certainly possible if more than one turbine is installed. Scale economies often become evident at the 20-25 MW level.

Installation cost will generally include foundations, road construction, transportation, communications equipment, transformer and other interconnection or transmission related cost. These costs can vary considerably depending upon such factors as soil type, distance from other roadways, and the possible need for grid reinforcement or other interconnection related expenses.

Annual operating and maintenance cost for newer turbines tend to average 1.5% - 2.0% of turbine cost. Some analysts prefer to use an expense of $0.01 per kWh because wear and tear tends to increase with increased production. The design life of most onshore utility-scale turbines is 20 years or 120,000 hours. The actual lifetime of a wind turbine will depend both on the quality of the turbine and the local climatic conditions.

Availability factors for wind turbines are quite high. Availability factors of 98% are common for the best manufacturers. Capacity factors for wind turbines typically range from 25% to 30%.

Many states and the federal government have established incentives or mechanisms to aid in wind and other renewable energy market development.

At the federal level, the Renewable Energy Production Incentive (REPI) was authorized under section 1212 of the Energy Policy Act of 1992. The program, which is administered through the Department of Energy, provides an annual payment of 1.5 cents per kWh for energy produced from an eligible facility during the first 10 years of operation. Eligible facilities are those owned by state or local governments, or not-for-profit cooperatives and they must have started operating between October 1, 1993 and September 30, 2003. Payments are subject to annual appropriations for each year of operation. Regulations for the administration of the REPI program can be found in 10 CFR 451.

The federal production tax credit (PTC) for wind and other renewables was also a product of the Energy Policy Act of 1992. The PTC, enacted as Section 45 of the Internal Revenue Code provides a tax credit of 1.5 cents for every kWh produced for the first 10 years of a projects life, assuming the project came on line after December 31, 1993. The most recent (2^nd) extension of the PTC expired December 31, 2001. Several attempts have been made to get an extension of the PTC passed; however this has not yet been successful. It is generally expected that the PTC will be extended; however the delay may certainly have an effect on the current industry momentum.

Renewable Portfolio Standards (RPS) is a public policy tool which typically requires an increasing share of renewable energy production within the portfolio of supply resources available to serve a state or country. To accomplish this in an efficient manner, the state or federal government would require of generators (or retailers) that they possess a number of Renewable Energy Credits at year end. The number of credits required is typically determined as a percentage of kWhs sold. For more information on credit trading, check out the National Wind Coordinating Committee website at http://www.nationalwind.org, for look at their new report on credit trading. Several states have already enacted such laws and most comprehensive federal energy proposals also include an RPS.

For a state by state look at incentives for renewable energy investment, visit AWEA's website at http://www.awea.org/pubs/inventory.html. Note that at the state level, not all incentives are targeted to utility scale investment.

The rural economic benefits of wind farms can be significant. Wind energy development is highly compatible with other land uses such as farming and ranching. Landowners can normally expect to receive lease fees of up to 2% of gross revenue or about $2000 per turbine annually.

Local property taxes bring in about $1 million per year for each MW of installed capacity. During construction, an estimated two jobs per MW are added to the local economy when local contractors are used for foundations, roads, towers, and electrical systems. When construction is complete, as many as five permanent jobs are created for each 50-100 MW of installed capacity.

The obvious environmental plus with wind generation is the fact that no CO₂ or other greenhouse gases are emitted into the atmosphere. There is also minimal or no risk of soil or water contamination.

There are however environmental and other externalities associated with wind energy development. These include potential impacts to birds and other animal habitat, soil erosion, noise, electromagnetic interference, and aesthetics.

The interaction between birds and wind turbines is an issue of current debate. It's often said that with careful sighting, this concern can be largely mitigated. The wind industry is currently working with other interested parties to address this important issue. The crux of the problem is the attractive nature (to birds) of the pasture and prairie lands where the best wind resources are located. The best advice is to carefully assess the potential for avian interaction in the early stages of project siting.

Wind turbines, like all mechanical systems do make noise. Turbines can create low frequency impulsive (thumping) and broadband (swishing) sounds. Design changes in recent years have done a great deal to lessen these noises. Much of the noise created by wind turbines is masked by the sound of the wind itself. At 250 meters the sound from a wind turbine is in the 45-50 decibel range. This is often compared to the sound of a typical household refrigerator.

Predictable levels of television interference have been associated with wind turbines, particularly in older machines with metal blades. Blades today are typically made with a composite material, which doesn't reflect television signals as much as past designs. However modern blades also tend to have lightning protection, on the surface of the blade, which tends to increase electromagnetic interference.

Integrating wind energy into utility systems presents the potential for some familiar power quality related problems and some not so familiar issues for most utility engineers. These issues have been characterized as either interface (engineering) issues, or operational/planning issues.

Interface issues include harmonics, reactive power supply, voltage regulation, and frequency control. Power quality is obviously a major utility concern. Problems with power quality have been documented at various California wind farms built in the early 1980's. Modern turbines are equipped with more sophisticated power electronics than their predecessors. These newer systems have largely eliminated past problems associated with harmonics, reactive power supply, and frequency control. The extent to which voltage regulation is an issue of concern today appears to be largely a function of grid strength at the point of integration.

Operational/planning issues essentially deal with the intermittent power output inherent in wind generation. These issues include operating reserve requirements, unit commitment, economic dispatch, modeling, and valuation. When integrating wind power into a utility system, reserve margins must also account for the maximum probable decrease in wind plant output over a given period. At the time of the Putnam report (see footnote 9) the variability of wind plant output in California had not required any change in operating reserve requirements. It's suggested that wind penetration must exceed 5% of system capacity to have an adverse affect on reserve requirements.

In terms of unit commitment and dispatch, the most conservative approach to integration of an intermittent resource is to discount the contribution of the resource. Much attention within the research community currently is being paid to forecasting wind plant output. Not unlike the issue of unit commitment and dispatch, planning issues also center on the modeling and valuation of intermittent wind resources. Models, which can reflect the real-time variation in load and wind plant output, are necessary to address concerns over the operational impacts of changing wind plant output. Further, modeling capability of this nature will allow better quantification of wind outputs capacity, environmental, and other distributed benefits to the utility system.