Abstract

Wind power forms a very small part of the total electricity generation at the global level, when compared to power from fossil fuel and hydro power. However, countries are increasingly adopting wind power and other renewable energy sources to reduce their reliance on fossil fuels and minimize the impact on the environment. In terms of installed capacity for power generation, wind energy is growing faster than other renewable energy sources such as solar energy, geothermal energy, and tidal energy. Wind energy generation, which initially started in Europe and the United States, is gradually expanding to the rest of the world. In 2005, 11 countries - Germany, Spain, Denmark, Italy, the UK, the Netherlands, Portugal, India, China, Japan, and the US - each accounted for more than 1000 MW of wind power generation capacity, as compared to only five countries having an installed capacity of more than 1000 MW in 2003. In 2003, the share of the top five wind energy generating countries - Germany, Spain, USA, India, and Denmark - in global installed capacity was about 82%. This share decreased to about 79% in 2004, which further declined to about 77 % in 2005. Generation of wind power is critical for developing nations to meet the growing demand for power resulting from increasing population and industrialization, especially in view of the increasing price of oil. Asia, with an annual growth rate of about 48%, is expected to emerge as a major wind power-generating region in the near future. In 2005, Asia accounted for 20% of the additions to the global wind power generation capacity. In Asia, India dominates in terms of installed capacity for wind power generation, while in Europe, Germany has the largest installed capacity for wind power generation. Considering the generation cost of wind energy and the immense power generation potential from wind energy, governments at the international level are implementing a number of financial incentive systems and financing policies to encourage the installation of wind farms. And these governmental measures appear to be yielding results. Technological innovations are continuously bringing down the generation costs of wind power. Wind turbine manufacturers are upgrading production capacity to meet the growing demand for wind turbines at the global level. Investment in the wind energy sector at the global level is also increasing with venture capitalists finding it attractive to invest in wind power generation projects. In 2004, wind energy accounted for 72% of the total investment in the green energy market. In 2005, the United States recorded the largest investment in the wind energy sector. Future prospects for the wind energy market are bright and global installed capacity for generation of wind power is projected to reach 120,000 MW by 2010. As the wind energy market grows, the number of wind energy projects is estimated to initially increase. The larger wind farms may eventually acquire the smaller wind farms, resulting in market consolidation.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Wind power, Renewable energy sources, Fossil fuel combustion, Kyoto Protocol , Greenhouse gases, Wind turbine, Production Tax credit, Net metering, Renewable Portfolio Standards, RPS, Green power, Noise pollution, Wind farm, Iberdrola SA, FPL Energy, Acciona Energia, Vestas Wind Systems A/S, Gamesa Eolica, Enercon GmbH, GEWind, United Nations Framework Convention on Climate Change, UNFCCC