Stories tagged with "wind"

How to keep on financing wind farms when banks have no money left.

My earlier wind diaries can all be found here: Wind power series

Banks are engaged in a massive deleveraging exercise right now. One part of that has been much described and commented upon: the elimination of bad assets, either by taking the losses or by dumping them on the tax payer. The other part of the process is much more devious, as it means choking off new activity, even when sound, to avoid any new build up of assets. Debts that mature and are paid help shrink the balance sheet; giving new loans goes against that process and is thus avoided as much as possible by banks right now.

New lending activity is therefore much more scrutinized from a risk perspective, sees its conditions made much less favorable than they used to be, and is especially frowned upon for long term commitments, as long term liquidity is scarce and expensive.

In my case, working in a bank that suffers from a huge gap between its predominantly long term assets, and its short term liabilities, was basically bankrupt earlier this autumn, had to be bailed out via nationalisation and has not yet announced its forthcoming strategy (ie I still don't know yet if my ativity will be a "core business" or not), funding has been especially restricted.

The wind sector requires long term funding in order to spread out the initial investment over a long enough period (so that the levelized cost per MWh is low enough) and it was a massive user of debt finance to get investments done. This means that it is an industry particularly vulnerable to the credit crunch. And indeed, expectations are that the fourth quarter will show a severe drop in new activity. Construction will still be at a record high, as projects which got their financing in the past year and a half get built, but new funding is drying up and next year is thus likely see a significant drop in actual building activity as those investors that relied on debt finance have more difficuly finding it and have to delay their plans.

In this context, I must admit that I'm especially pleased to be able to announce that we closed the financing of a new wind project, with a $60 million loan to build, over the next 12 months, a 30MW wind farm in the Caribean island of Aruba (part of the Kingdom of the Netherlands).

The Problem with Making Predictions - Oil or Climate

One of my most enduring memories of Washington D.C. occurred while attending a meeting on Geothermal Energy Development, back in the days before the Iron Curtain fell. In the evening after dinner, I took a colleague from Eastern Europe, on his first American visit, for a walk down the Mall. We walked, almost alone, on a still, bitterly cold, dark evening with fresh snow on the ground, and stars peppering the sky above us to see the sights, including the Lincoln Memorial. We stood staring, like backwoods tourists, through the windows of the Air and Space Museum.

We came back to the hotel for alcoholic refueling, thinking that the energy problems of the time would guarantee unending research funding into new forms of energy, and that our future was assured. That was about thirty years ago, and we were, of course, wrong, at least in terms of the funding and sustained interest in unconventional energy sources. Now we are walking back over some of the same ground. Again, fluctuations in oil prices have removed the immediate perception of the need for alternate supply, and have also weakened the credibility of those of us who try to suggest how to deal with the problem.

Prophecy, particularly when it deals with the near term future runs the risk of being corrected by the actual turnout of events. The ups and downs of energy demand, and available supply–-particularly when tied to the economic fortunes of nations, can make logical projection under one condition, but become apparently hopelessly in error when that condition doesn’t happen. Thus, at the moment, with the declining price, and apparent glut of oil, the public no longer feels that there is a crisis; the credibility of those forecasting a crisis is damaged, and can only be reconstructed over a longer period of time and changing circumstance.

Author's note: I have added a comment to the bottom of the post.

Impact of Credit Crisis on the Energy Industry - Where Are We Now?

I recently looked through news articles to see which energy sectors were being affected by the credit crisis. I was amazed at how widespread and how devastating the impact is.

There are really two closely related problems. One is reduced access to credit, making new borrowing difficult for nearly every business that requires debt. Prices for all commodities have been dropping as well. At least part of the reason for this price decline is the lack of availability of credit—many of the less credit-worth buyers drop out of the market. This leaves fewer buyers and almost the same number of sellers, so the price drops.


In this post, I examine how reduced access to credit and the concomitant decline in commodity prices is affecting energy companies.

Electrical Supply: Time, Scale, and the Need for Decision in Planning Future Power Plants

As the first gentle snowflakes of winter settled on the windscreen of my car I was reminded, yet again, of the turning of the seasons and our need for power to keep us warm through the coming months. Last week I commented on how jobs might be created as the pattern of power supply begins to change, particularly with the incentives that might be a part of a new initiative. Two factors often get understated, however, in the current anticipation of the changes that a new Administration may bring. The first of these is the time that it will take to get any decision implemented at a scale that can be meaningful, and the second is the scale itself of the problem that now faces us.

Jobs in the Energy Business

To steal a phrase “It is the best of times, it is the worst of times,” although the rest of the opening to A Tale of Two Cities (“It was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair,”) may also be appropriate. It is also interesting, and will become more so as the new Administration seeks to find a way forward out of the compounding problems that now face it. The WSJ has noted the statements by President-elect Obama earlier:

On the campaign trail, Mr. Obama argued that spending $150 billion over the next decade to boost energy efficiency would help create five million jobs. The jobs would include insulation installers, to make houses more energy-efficient, wind-turbine builders, to displace coal-fired electricity, and construction workers, to build greener buildings and upgrade the electrical grid.

It goes on to note that if renewable energy is only brought on-line to displace conventional coal power, then the net job losses from existing industries may well offset the gains in wind power. That topic brought a discussion in comments a couple of days ago. It is, however, perhaps worth pursuing in a little more detail.

Making the case for wind, again

This is a simplified version of the presentation I will be making this Tuesday morning at the ASPO 7 Conference (the full presentation should be posted on that website in a couple of days). I must admit that I have been a bit nonplussed to see that the peak oil community seems to share the oil industry's dismissal of wind power as irrelevant and useless in the face of the currently energy challenge (maybe I am unfairly judging from a few individuals' comments, but it's definitely an existing undercurrent in the community).

So, in reaction, let me put up here a few arguments that suggest that wind could play a major role in solving our current energy woes - not a silver bullet, but rather more than a side show.

First, the "wind is too small to make a difference" argument: well, so was nuclear, until it got big enough. Wind is following the exact same growth trajectory:


Pure Power
EWEA, March 2008 (pdf)

Wind and Heat Pumps: A Winning Combination

The following is a guest post by Tom Konrad, PhD. Tom is an investment blogger who brings readers ideas for investments that may benefit from Peak Oil and Climate Change at AltEnergyStocks.com, where this article is cross published.

Last month, I posted some nice maps showing when and where good wind resources are found in the US. Now I've found something better: a visual comparison of electrical load with wind farm production[pdf file], published by the Western Area Power Administration in 2006. The study compared electricity production from five wind farms in Northern Colorado, Southwestern Nebraska, and Central Wyoming in 2004, 2005, and the start of 2006, compared with electricity consumption in the same area over the same time period.

API Energy IQ Game and Blogger Call

In this post, I will talk about American Petroleum Institute's new Energy IQ Game and a related bloggers call, which Nate Hagens, Robert Rapier, and I participated in.

Last year, the American Petroleum institute (API) developed an Energy IQ Survey. This year, they revised it slightly and made it into a game. You can play, by clicking on this link:

Energy IQ Game

The audio tape and the transcript for the API bloggers call can be accessed here.

The Path from Petroleum Shortages to Electricity Shortages

It seems to me that there is likely to be a very short path from petroleum shortages to electricity shortages. There are a lot of issues involved, from the fact that the fuels used in electricity production are themselves dependent on petroleum for their extraction and transportation, to the current state of the US electricity infrastructure, to the impact of peak oil on debt financing. I have written about most of these issues before, but since the petroleum/electricity link is such an important one, I thought I would devote an article to putting the pieces together.

Fuels used for electricity generation

In the United States, the primary fuel used for electricity generation is coal, at 49% of electricity production. Natural gas follows at 22%; nuclear at 19%; hydroelectric at 6%, and petroleum at 1.6%. The newer renewables are all quite small: wood at 0.93%; wind at .77%; waste at .41%; and solar (for electricity generation) at 0.01%.

Percentage distribution of fuels used in US electricity generation

Figure 1. Distribution of fuel supplies used in US electricity generation, based on EIA data.

Lester addresses U.S. governors on energy future, calls for Marshall Plan for energy innovation

This is a transcript of a speech by Richard K. Lester, MIT professor of nuclear science and engineering and director of the Industrial Performance Center, who spoke on 14 JUL 2008 at the annual meeting of the National Governors Association. The prepared version of Lester's speech is below the fold.

Lester is a co-author of recent MIT reports on the future of nuclear energy and coal energy, and he has published widely on the management and control of nuclear technology. He is currently leading the Energy Innovation Pathways Project, an interdisciplinary MIT assessment of the capabilities of the U.S. energy innovation system.

I found the speech interesting, so I thought I would bring it to you. A quote that particularly caught my eye is the following: "And so, to conclude, it is long past time for serious federal leadership on energy innovation. But it is also time to move beyond the Manhattan/Apollo Project metaphor. A better metaphor might be a domestic Marshall Plan for energy innovation. The original Manhattan project involved a relatively small number of people working in secret. The original Marshall Plan took everyone, working together, to rebuild the broken European economy."