Although America recently became the world leader in wind electricity generation, can you really call our wind power growth a “boom” when it’s been spurred by government mandates and subsidies? That is the question The Atlantic asks as it compares the surge in wind energy investments to the bubble that occurred in the similarly regulated and subsidized biofuel industry — which was the darling of cleantech VCs, presidents and agronomists not too long ago.
The food-vs.-fuel debate was an unforeseen obstacle for biofuels but the hurdles for wind energy seem to be relatively well understood. Transmission shortcomings and inconsistent breezes are the two major challenges wind energy developers face as more and more wind capacity is added to the grid. So how much hot air is there around wind energy investments? Burned once, investors and regulators are already working to ensure the wind energy boom doesn’t go bust.
On the transmission side, investment is starting to pick up. The inimitable T. Boone Pickens plans on investing $2 billion in electrical transmission lines to pipe power from his remote $10 billion wind farm to market. Regulators are also working to smooth the process of connecting new wind capacity to the grid. The Federal Energy Regulatory Commission just approved the Midwest Independent Transmission System Operator’s proposal to reform the generator interconnection queue process, making the administrivia of connecting to the grid more a bit less tedious.
The generally predictable fluctuations in wind energy generation can prove to be an opportunity for other cleantech sectors. Solar energy could help produce complementary power, balancing the load. Utility-scale energy storage has been getting more and more innovation and investment, too. Meanwhile, grid management solutions like demand response could also help in the event of suddenly still winds. EnerNOC inked a deal with the Texas Electric Reliability Council earlier this year in the state that leads the country in wind energy.
Though wind energy growth is certainly being helped by mandates and subsidies similar to those that over-inflated the biofuel bubble, the potential bubble poppers are entirely different. Wind is a pure energy play, with no messy food price stability issues likely to come out of the woodwork. While those mandates and subsidies are subject to the whims of constantly re-elected legislatures, investors should know what the variables are when getting into the wind energy business and no single hurdle is likely to lance the investments.