Business Discovers Profit in Alternative Energy Investments
Editor's Note: Most industry representatives have till now largely
sat on the sidelines as observers in climate change meetings.
But world business leaders are beginning to include climate change
in their long-run corporate strategies. As it has become clear
that technology - green technology - is a key to mitigating climate
change, entrepreneurs have become aware of the potential damage
to their balance sheets from more frequent floods and droughts
and alert to the profitable opportunities from fuel cells and
wind turbines.
In this issue of Climate Alert, we report on ventures in several
forward-looking industries: photovoltaics, wind, transportation
and financial.
Natural Gas Firm Commits Capital to Wind Energy
In January '97, one of the largest natural gas suppliers in the
world, the Enron Corp. of Houston, demonstrated its confidence
in the future of alternative energy by buying the Zond Corp.,
a wind power manufacturer and developer headquartered in California.
Enron is supplying a crucial ingredient - capital - to the wind
industry.
"Renewable energy will capture a significant share of the
world energy market over the next 20 years, and Enron intends
to be a leader in this very important market," said Enron
chairman and CEO Ken Lay. (Enron is the largest US-owned producer
of solar photovoltaic cells and the second largest producer worldwide.
See accompanying article on the photovoltaic industry on page
1.)
Zond, founded in 1981 and now known as the Enron Wind Corp.,
was one of the first wind farm developers in California. It has
designed, engineered, constructed and operates over 2,500 wind
turbine generators in California. Each year the company's wind
power plants generate more than 550 gigawatt hours, enough electricity
to offset nearly two million pounds of air pollutants that would
otherwise have been generated by fossil-fuel plants.
Enron Wind is constructing projects in the 100 MW size for major
utilities in the US Midwest. It also has overseas projects in
Northern Ireland, China, Latin American and other parts of Europe
and Asia.
Global wind energy capacity soared 32 percent from 1994 to '95
and is expected to add 30,000 new megawatts of capacity by 2006,
according to the American Wind Energy Association. Wind power
has been called the world's fastest growing energy source, increasing
at an average rate of 20 percent annually, 150 percent since 1990.
Conventional power has only grown at three percent or less a year.
The US is still world leader in installed capacity but others
are closing the gap rapidly. European wind growth has been called
"explosive." Germany and India are the largest single
markets, and Germany surpassed the US in installed capacity in
1997. While China is likely to have 100 MW go on line in 1997,
it is not likely to meet its goal of 1,000 MW wind capacity by
the year 2000. Spain is among the top growth markets and Netherlands
and Denmark have significant installed capacity. Costa Rica, Mexico
and Egypt have also expressed interest in the area.
Large World Potential
The US share of the world wind energy market, which was 90 percent
in 1988, has shrunk to 30 percent, because of a lack of policies
to support wind power development, chaos in utility restructuring,
a push for lower conventional energy prices, and the resistance
of utility monopolies. (Only 10 new megawatts of wind power come
on line in 1996 in the US.) However, wind power on less than one
percent of the land in the 48 contiguous states could provide
20 percent of current US power needs.
Wind power cannot fully replace fossil fuels, but it has the
potential to meet or exceed 20 percent of world electricity supply
according to Chris Flavin of Worldwatch Institute. In fact, more
countries have wind power potential than have large sources of
hydropower or coal, Flavin has said.
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Declining Wind Electricity Costs
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per kWh
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Mid-1970s
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1996
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2010 forecast*
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*DOE, EIA, World Energy Projection System (1997) (if favorable
financing available)
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