We have been harnessing the natural wind in our atmosphere to supply us with power since 2000 B.C. China and Persia were the first countries to develop it. Windmills have been used to mill grains and pump water from Holland to the farms in the United States. Wind power to generate electricity is the highly evolved version of the windmills.
Wind is America’s number one credible source of electricity production. The heyday dates as far back as the 1870s. The wind can produce five times more electricity than what the U.S. is currently using. Farmlands in the plains states are the best wind resource.
Wind power has exponentially increased as an inexhaustive source to generate energy with an average of 32 percent every year from 1998 to 2002. California used to be the only state where wind power was concentrated. However, as of May 2014, 80 percent of U.S. wind power capacity is also generated in Washington, Oregon, Texas, Wyoming, Colorado, Oklahoma, Kansas, Illinois, Minnesota, Iowa, North Dakota.
Wind turbines also have varieties for residential use. It can be used as a stand alone application for communication and water supply. However, many homeowners, ranchers, and farmers use it to cut their electricity bills. Electricity providers connect it to a utility power grid system to supply power to their customers.
Wind Power Farms
Wind power farms function like a power plant. They are a group of large 7.5 MW turbines. They are mounted on towers made of concrete or tubular steel and anchored in a platform ranging from 30 – 50 feet across and 30 – 40 feet deep. They should be higher in the ground where the wind is less turbulent and the turbine energy production is greater. The blades and are made of fiberglass reinforced with wood-epoxy.
The towers are between 80-140 feet or higher, but 80 or 100 foot tower is sufficient for most situations. The blades will turn when the turbine catches the energy in the wind and converts it to electricity. Ninety five percent of wind turbines are installed in private lands where there is a wide and open area in the prevailing wind direction. A single turbine can power up to 500 homes.
Small and Medium scale wind turbines
Small and medium-scale wind turbines is an environmental friendly option for off-grid applications. There are over 200 companies manufacturing small turbines in 26 countries. The largest manufacturers are in the U. S. The majority of these turbines is built on freestanding poles. The installation includes a permanent magnet generator.
Residential wind turbines have been installed in all 50 U.S. states. A wind turbine is a rather large device so it is not suitable for a small lot suburban home. You need about an acre or more land area and about 10 mph average wind speed. In its 30 year nominal life, a single turbine can offset about 1.2 tons of air pollutants and about 200 tons of greenhouse gases.
The upside potential
Wind energy is a clean and renewable type of energy which is also important for our future. It is cheaper and could help in the electrification of many rural areas in developing countries. In the U.S, it provides billions of dollars into the economy every year. Wind power accounts to 55 percent of all new electricity generating capacity in 2012 representing $25 billions dollars in investments in rural America. By 2010, electricity generated from wind power farms will be cheaper compared to conventional power plants.
A 250 MW project can create 400 positions in manufacturing, 500 in construction, and 125 jobs in operations, planning and development, and sales. Today, the wind industry is currently employing over 75,000 employees across 550 manufacturing facilities in the United States.
Downside risk level
The steady growth of wind power and the increase of energy price has turned wind into a viable option for large scale production. However, they are not without risks and dangers. Wildlife near the installation area. Values of real estate prices are reduced, making it almost impossible to sell.
Industrial wind factories can be destructive to local environments because the ecosystem is destroyed. Vibrations and sub-sonic noise of turbines can cause health problems for people like headaches, dizziness, and depression. While blade throw is rather a rare occurrence because of design improvements, it could pose danger. In cold climates, ice can form and be thrown from turbines endangering properties as well.
Companies investing in Wind Power
Google has been recognized for their commitment in using 100 percent renewable energy to reduce the overall environmental impact. They already made agreements to invest $1.5 Billion to 16 renewable energy development projects. Rick Needham has been in charge of Google’s headlong renewable energy as Director of Energy and Sustainability since 2008.
GE is the largest manufacturer of wind turbines in America. It has a long track record in renewable energy investment with focus on wind power. GE has invested $8 Billion in wind turbines with capacities ranging from 1.5 MW to 4.1 MW. GE is also considering buying wind power projects in Chile, Japan and Ireland. Its financial services plans to invest $1 Billion in wind energy projects.
Facebook, Microsoft, and Starbucks are also investing in wind farms because of the fluctuation of fossil fuel price.
How much learning is involved
If you want to invest in wind development, educate yourself about the industry so you will know what options are available your you. Get involved in the wind energy projects by networking and talking to people about their experience to get you a better idea about the right way to participate. Learn more about the best practices related to business opportunities and processes. Contact your state legislators and let them know your interest in developing a wind power plant in your area.
Where to further educate yourself
The wind industry has developed resources to help you make informed decisions about your land and the wind power farm developers. You can attend wind energy summit, attended by the industry’s thought leaders from different countries who shares their expertise and information. There are sets of guidelines containing information, recommendations, and things to watch out for. The Internet is also a rich resource of wind power learning center you can explore.
If you are not familiar with the wind power generation industry, you can invest in ETFs or mutual funds. Or, you can invest in your local wind turbine projects and take advantage of the long term returns in one of the fastest growing industries in the world. They have either purchased electricity generated by wind farms or have their own wind farms.
The profitability of generating electricity using the wind power is increasing because it produces half the cost of electric utilities. In 1993, the power cost was 7.5 cents per kW but with newer and better technologies it can cost half of that. It also pays attractive dividends so if you reinvest your dividends it will be easier for you to accumulate stocks down the road. It provides a professional stock selection as well as diversification of assets.
However, since the wind power investment is fairly new, and investing in a few companies could be risky. Owning a wind power farm can actually turn out to be a more conservative investment .
Minimum investment level
A commercial size wind turbine can cost around $3.5million to install. Alternatively, a 50 MW wind power farm would require approximately 150 acres per turbine and can cost about $65 million, according to the American Wind Energy Association.
A 10KW wind turbine will cost about $50,000 to 65,000 to install and another $40,000 for the equipment. If you are installing a wind turbine large enough to power a home, it can cost $30,000 – $55,000 on average depending on the system of the installation. Off-grid turbines would generally cost between $4,000 – $9,000. However, there are generally zoning and height restrictions in the residential areas.
You can buy at any authorized dealer for a complete turnkey installation. This requires less work on your part and you have a high level of after-sales support. Alternatively, you have the option to purchase it directly from the factory and install it yourself. Self-installation can provide meaningful savings. You can choose whatever route fits your requirements.
Long or short term investment
As the fastest growing energy source, the growth trend is expected to double over the next five years. Wind power farming is a huge business because of the competitive costs and proven technology compared to fossil-fuelled power generation. The growing number of wind power farm investors is attracted to:
- The social responsibility of clean, renewable energy investment.
- Low operational risk.
- The long-term demand driven by the declining fossil fuel sources.
It offers wind investors very attractive returns over 25 years average life of a wind farm. Farmers and ranchers can greatly benefit from the wind industry by leasing their land to wind developers or become wind power producers. This can give them a stable supplement to their income. Annual royalties are typically $5,000 to $8,000 per turbine for each 1.5 – 3 MG turbine.
ROI during the holding period
It is important to calculate the ROI, payback period, and cost of generated electricity to determine whether the installation is a worthwhile investment. Installation cost should also be included.
Wind turbines can decrease your electricity bills up to ninety percent. It will take about 6 – 30 years to fully recover the cost of a small turbine depending on the installation sites, financing, incentives, and electricity rates. But, after that whatever energy it will produce is virtually free. Many people buy wind systems because they are worried about the increasing utility bills.
Wind developers normally offer a combination of single up-front payment, fixed annual payment, or shared revenue. Arrangements can be done between the landowner and the developer.
Best exit strategy
The wind power business is as volatile as the wind because it is always changing direction. However, is is one of the most exciting sectors in terms of opportunities.
It is not enough to launch a business. You also have to make sure that you have the best exit strategy so you can get the positive return on your investment. Exit strategies in the wind industry have been enhanced by the growing energy technology and the growing venture funds. And, there have been successful exits for business in the wind industry.
Written by: Janet Grace Ortigas