Renewable Energy Investor Says Wind Industry Ripe for Innovation

2/18/10Follow @bvbigelow

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so-called “renewable portfolio standards” set in California, Massachusetts, and other states are requiring utilities to develop renewable energy projects. The regulations require that a significant percentage of their power from renewable energy by specific deadlines. In California, for example, utilities are required to generate 20 percent of their power from renewable sources by this year, and 33 percent by 2020. Before that, if I understood McDermott correctly, USRG was not involved in the U.S. market because, as he put it, “it was a tax-motivated market.”

That has changed. By the end of 2009, Gramlich says the total installed wind energy capacity of the United States was about 35,000 megawatts—less than half the 76,000 megawatts of Europe’s installed wind energy. The depleted base of the U.S. wind industry helps to explain why so much federal stimulus funding—more than 75 percent of $2 billion awarded to create green jobs in the U.S.—went to foreign-owned wind energy companies, according to recent press reports.

Gramlich and the American Wind Energy Association took exception to the reports, arguing that the stimulus funds awarded to foreign wind companies was still spent on developing wind projects in the United States.

U.S. wind manufacturing is up 12-fold in four years, and Gramlich says the domestic content of U.S. wind turbines is over 50 percent—which approaches the domestic content of Chrysler cars. By domestic content, Gramlich says he means the percentage of the machinery in wind turbines that comes from U.S. manufacturers. “It is calculated by weighting each of the 8,000 components by [a] percentage of overall turbine cost,” Gramlich says.

With U.S. wind energy capabilities expanding, McDermott says sees a couple of attractive areas for wind energy investors:

—Over the next three to five years, McDermott says, “you’re going to see some opportunities where people are going to develop wind power in the middle of the country, and then there are going to be some interesting opportunities to wheel that energy to the east or west.”

—The other opportunity addresses more of the long-term issues facing wind energy and other renewable energy sources. McDermott says it means funding companies with technology innovations that help address such problems as the intermittency of renewable power generation. It means investing in sensors and software for the grid, as well as industrial-scale battery storage, flywheels, fuel cells, and even technologies for compressed air storage.

Bruce V. Bigelow is the editor of Xconomy San Diego. You can e-mail him at bbigelow@xconomy.com or call (619) 669-8788 Follow @bvbigelow

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