Prepared by:

Curtis Matwychuk-Goodman, Jeff Wilson, Ryan Gillanders, Wade Tywoniuk, and Will Woo Young Kim.

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Introduction to the Issue

This paper is intended to provide readers with an understanding of the wind-energy industry.  In order to understand the industry a holistic approach is necessary.  First, this paper will explain the historical development of wind-energy.  It will then explain the concepts of location advantages which are crucial for industry development.  Readers will understand how location can both be an advantage and disadvantage depending on how firm-specific advantages are leveraged.  Furthermore this paper will detail the stages of wind-energy project developments as well as the technological advancements that have given rise to the current wind turbine designs.   In the end readers will understand the basics about wind-energy; with a better understand how wind can be harnessed to produce sustainable and renewable power.

In terms of the global regions of the wind-industry our research indicates the largest players are found in the triad economic regions; including the European Union, North America and Asia-Pacific.  The second part of this paper will give a brief overview of some countries from each region.  From the EU, the focus will primarily be on Germany and Spain, with brief discussions of secondary players from Bulgaria, Italy, UK, France, Turkey and Poland.  This section will prove Europe’s historical dominance in the wind energy industry.  From Asia-Pacific we will discuss the emergence of China as a global player; and from North America we will focus on Canada and the United States.  Overall, from this regional overview readers will gain insight into key areas of: the role of governments from incentives to regulation; how a global shift has occurred from Europe to the world; and the ways in which a cluster-effect has occurred similar to other global industries.  This section will enable readers to understand the high –growth potential of wind energy.

To further understand the regional markets of the wind-energy industry we will provide a detailed overview of three major companies operating within each triad region.  The Irish company Mainstream Renewable Power provides an interesting case of the cooperation between European and Canadian markets.  From Asia we will examine Goldwind Science and Technology Company, an interesting case of state-owned enterprise and the role in developing local area-clusters.  We will also look to TransAlta Wind, one of Canada’s largest wind-energy producers; which will provide readers with insight how energy market deregulation has fostered economic growth in the wind sector.  In the end readers will better understand the current issues and barriers facing firms within the wind-sector as well as our predictions of the future of the industry.  Our discussion will conclude with our key recommendations for the industry.

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Theories and Concepts

In terms of major theoretical concepts used in this paper our primary focus is: the correlation of location and competitive advantage and the CAGE Framework; Michael Porter’s Diamond of National Advantage, and cluster development.

This paper will demonstrate how location plays one of the most important roles in industry development.  Through the regional discussions we will briefly explain how the CAGE Framework of Distance applies to industry.  CAGE stands for the four distances or hurdles often faced by transnational corporations: culture, administrative, geographic and economic.  This paper will show how the greater the distance of any of the variables – the weaker the transference of firm specific-advantages across borders.

Michael Porter’s Diamond refers to four major areas that contribute to national advantage, these include: factor conditions; demand conditions; related and supporting industry players; firm strategies, structure and rivalry.   Discussion on this concept will be thoroughly addressed in the regional overviews of the wind industry.  Our discussion will cover each of the four areas of national advantage and will describe how some countries are indeed leveraging these to become industry leaders.

In terms of cluster development our paper will demonstrate how clusters are forming in each of the TRIAD regions.  From Europe we will see how the German turbine and component manufacturing sector has maintained a competitive advantage through government incentives and policies.  From Asia we will see how China has developed a regionally competitive wind-producer capable of capturing increasing market share in the years to come.  From North America we will see how since 2007 an internationally-competitive industry cluster has developed in the United States.

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History of the Industry

Wind power was not the first non-human power source in the history.  The technique of grinding grain between stones to produce flour is similarly ancient as is processes powered by both animals and water.  Windmills were originally developed in European countries which contributed significantly to both economic development and civilizations’ advancement.  Development of windmills in European countries especially in England and Holland helped these two countries develop highly skilled labour forces concentrated on technology development.  During the seventeenth and eighteenth centuries as major European powers colonized remote areas of the world they spread the technology as well.

As steam power developed, however, windmills were thought to be defective in comparison working only when the wind blew at the average rate of 16 kilometers per hour.  New industrial advancements made wind seem unreliable and not the best source of energy.  European countries struggled to make use of wind power in an effective manner.  In North America, water-pumping wind turbines began appearing in the late 1800s used primarily to irrigate crops (Transalta).

The United States was the first country that saw the possibility that the wind motor could still render its benefits to the modern civilization.  Charles F. Brush (1849-1929) is one of the founders of the American electrical industry.  He invented a very efficient DC dynamo used in the public electrical grid, the first commercial electrical arc light, and an efficient method for manufacturing lead-acid batteries.  During the winter of 1887-88 Brush built what is today believed to be the first automatically operating wind turbine for electricity generation; however, his first turbine was not efficient due to the slowly rotating wind turbines.

It was the Dane Poul la Cour , who later discovered in Denmark that fast rotating wind turbines with few rotor blades are more efficient for electricity production than slow moving wind turbines.  Following Dane Poul la Cour, Johannes Juul, who was one of the first students of Poul la Cour, became a pioneer in developing the world’s first alternating current (AC) wind turbines.

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Location Effects

Within the industry of wind energy production, location is the most important factor because how many aspects of wind energy depend on it.  When talking about location itself, it can present itself as both the most important location advantage for firms, yet at the same time it is also the most difficult factor within the industry to actually take advantage of.  Aspects of location can also uncover many barriers to entry into the industry itself.

Location Advantage

When discussing the types of competitive advantages which firms may use to gain an edge within an industry location advantage is the most important advantage that any firm within the wind energy industry can exploit.  Given that “since 1980, wind turbines have been becoming larger and more efficient at rates otherwise only seen in computer technology,” it does not make sense to depend exclusively on firm specific advantages such as innovation and technology to maintain a competitive advantage (World Wind Energy Association, 2006)[1].  This is the same dilemma that the computer and electronic industry has encountered: you simply cannot rely on technological advancement as your sole competitive advantage because of the extremely high rate of growth and innovation.  Therefore location advantage is the type of advantage that producers will need to exploit the most in order to maintain competitiveness within the industry.

Location advantage is easy to understand within this industry because not every geographic area within the world is suitable for wind energy production.  The difficulties of making location work for the firm as a competitive advantage will be described later, but what should be noted is that if an industry player has discovered and gained access to an area suitable for wind production then they already hold a tremendous advantage over other competitors.  Quite literally, any firm or nation interested in wind energy production can only enter the market if they have access to ideal locations.  This is the reason why location is the most important factor of competitive advantage in the industry and at the same time one of the most difficult issues for competitors within the industry which they could capitalize on and / or overcome.

Location as a Disadvantage

One of the most important factors that can determine the success or failure of wind energy generation is location.  Unfortunately for wind energy producers, location is often one of the most difficult obstacles to overcome.  For most wind industries development is dependent on windy areas and windy areas may still not provide optimal conditions for wind energy production.  Location of possible production areas may not have any geographical relation to areas that are requiring increased production of electricity.  This makes issues such as location, storage and transmission become serious concerns for new firms entering the industry.  Some locations may require excessive regulatory approvals which add to the time and cost of the project.

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Types of Wind Turbine Design

When people usually think of ‘wind turbine,’ they recall a high tower with three blades looking like a large fan.  Actually, there are so many different types of wind turbines as endless as the designers’ imagination.  However, we can differentiate the most common types in two ways: vertical axis and horizontal axis wind turbine.

Vertical Axis Wind Turbine (VAWT)

The principle advantage of Vertical Axis Wind Turbine (VAWT) is that they are omnidirectional – this means they accept the wind from any direction.  Vertical axis turbines also can be divided into two major groups: those using aerodynamic drag to extract power from the wind such as the cup anemometer, and those that use lift.

During 1920’s French inventor D.G.M. Darrieus patented a wind machine using curved bladed to the rotor instead of straight blades.  Darrieus’s concept eventually faded into obscurity. Canada’s National Research Council reinvented the design in the mid-1960s, and subsequently Canadian wind research focused on Darrieus turbines, which experimental Darrieus design was under developed near Picher Creek, Alberta.  There are some advantages for VAWTs:

1. It may place the generator and gearbox on the ground, and you may not need a tower for the machine equates to cost efficiency.
2. It does not need a yaw mechanism to turn the rotor against the wind, as mentioned above it is omnidirectional and should turn under any wind direction.

But the reason most VAWTs disappeared is they have more disadvantages:

1. Wind speeds are very low close to ground level, so although it may not need a tower, its wind speeds will be very low on the lower part of your rotor
2. The overall efficiency of the vertical axis machines is not impressive.
3. The machine is not self-starting
4. The machine may need guy wires to hold it up, but guy wires are impractical in heavily farmed areas.
5. Replacing the main bearing for the rotor necessitates removing the rotor on both a horizontal and a vertical axis machine. In the case of the latter, it means tearing the whole machine down.

Horizontal Axis Wind Turbines (HAWT)

Unlike VAWTs, conventional horizontal wind turbines are not omnidirectional.  To supplement this problem, wind turbine makers invented the yaw mechanism[2].Horizontal Axis Wind Turbines (HAWTs) can be largely divided depending on number of blades and yaw mechanism.

There are various numbers of blades in HAWTs: one blade, two blades, three blades and multi-blade turbines.  One and two blade turbines are hardly seen in new turbine installations.  Two-bladed wind turbine designs have the advantage of saving the manufacturing cost of one rotor blade as well as the weight savings on the overall structure design.  On the other hand, they require higher rotational speed to yield the same energy output. This is a disadvantage both in regard to noise and visual intrusion.

One and two-bladed machines require a more complex design with a hinged (teetering hub) rotor, which enable rotor to tilt in order to avoid too heavy shocks to the turbine when a rotor blade passes the tower. In addition, one-blade rotor requires a counterweight to be placed on the other side of the hub from the rotor blade in order to balance the rotor, which is not gave them a weight efficiency anymore compared to two-blade rotor. As a result, today it is difficult to find these one and two-blade wind turbines and several traditional manufacturers of two-bladed machines have switched to three-bladed designs. Most modern wind turbines are three-bladed designs with the rotor position maintained upwind using electrical motors in their yaw mechanism.

Components of wind turbine

According to the Canadian Wind Energy Association a typical wind turbine is made up of about 8,000 separate parts – containing everything from electronics to heavy metal components (2008).  Think of it like this: once wind hits the rotor blades hold by a hub, it rotates to life, which is the same concept used for airplanes and helicopters.  Though the low speed shaft, rotation transfers to gearbox that change low speed revolution to high speed.  Hydraulics system works with gear box to make it able to have proper revolution speed from inconsistent wind.  From the gear box through the high speed, rotation convey to electronic generator.  Controller unit like an Electronic Controller Unit (ECU) in a car engine which controls overall operation is also included in turbine unit.  It also has a cooling unit to prevent over heating of turbine.  Most turbine designs also have brake-components to prevent the unit from over-spinning in intense wind speeds[3].  Once a wind-energy project is installed and contributing to the electricity market of an area they also require regular maintenance to ensure all machine parts are functioning properly.

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Development

The first major hurdle that wind energy producers must overcome is finding an adequate location to establish a wind farm. According to the World Wind Energy Association, there is a multi step process in determining the location of a new wind farm.

First there needs to be an estimation of wind conditions, this can be ascertained through a combination of general meteorological weather statistics such as average wind speed and an analysis of the geography of the location.  Geography of the location is important because every obstacle such as hills, valleys, manmade structures, and trees can dramatically affect how the wind travels through the region.  Determining the wind conditions will then give developers an idea of what type of wind turbine they will need, how tall the turbine will need to stand to capture the optimal wind conditions, as well as where the turbines can be located.  Compilation of data is extremely important and must not be overlooked because there are so many influencing factors that can determine whether or not a wind energy farm is a viable project within that geographic area.  The importance of determining and knowing accurate wind conditions cannot be taken lightly, for example “if the wind speeds are 10% smaller than expected, the energy yield will fall short by more than 30%” (World Wind Energy Association, 2006).  Such a dramatic change in energy output could not only affect the determined success of the wind farm, it could cause serious distribution problems within the electrical grid that it is supplying.

Once establishing an estimation of wind conditions have been established developers will need to draft initial estimates of installed capacity and energy yield. Essentially this involves determining how much space is available in the area, where they can obtain access to the power grid in order to transfer the electricity produced and to determine what type and how many generators will need to be installed in order to reach a nominal level of power output. For large wind farms that produce more than 20 MW of electricity it is often necessary to set up a separate transformer station for the farm which can tie itself into the power grid instead of tying the farm’s production into an already existing transformer along the grid (World Wind Energy Association, 2006).  Access to the power grid itself can be a very large issue given that the geographic location of many wind farms (due to the need for ideal geographic and meteorological conditions) does not have a close proximity to either a power transmission grid or areas requiring electrical power.  In order to deal with this issue, the consideration of construction new power transmission lines should be taken into consideration as a possible necessity and cost to successfully construct a wind farm.

The next step is to draft a layout of the farm.  This may sound like a simple task but it is actually a very complex process. Drafting the layout involves contrasting productivity optimization factors of “looking for the optimal arrangement of wind turbines on a given site is the highest possible energy yield of the entire wind farm over its service life” against other attributing factors such as “the conditions and costs of installation — such as construction of power lines from the turbines to the transformer and interconnection stations or roads for assembly, maintenance, and service vehicles” (World Wind Energy Association, 2006).  The largest difficulty that is encountered by developers is determining the optimal trade-off between the two sets of factors as well as successfully securing permits and lease agreements (if necessary) to use the decided-upon land, all the while observing specified restrictions and barriers to entry which can arise (such as maximum building heights, minimum distances from other structures, and environmental protection regulations).

If all the factor requirements can be satisfied during this development stage, the planning for the wind farm can finally become a reality. What this process shows is that there is an incredible amount of time, energy and resources that will need to be expended just to determine a location in which a producer can actually set up operations. This process considers many different factors, all of which are essential and must be met, and if the factors do not present evidence that the location is optimal for wind energy production, it is often hard to continue on with that specific location. This alone should shed some light on why location can be the most important competitive advantage and at the same time be one of the most difficult aspects of wind energy production to incorporate into successful production operations.

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Global Location of the Industry

In terms of the global regions of the wind-industry our focus is on the triad economic regions including the European Union, North America and Asia-Pacific.  Our discussion will give a brief overview of the countries in: the EU, primarily Germany and Spain, with brief discussions of secondary players from Bulgaria, Italy, UK, France, Turkey and Poland; from Asia-Pacific we will discuss the emergence of China as a global player; and from North America we will focus on Canada and the United States.

This section draws from a few key sources.  The most valuable source of wind-industry information is the Global Wind Energy Council (GWEC).  We felt that GWEC provided us with the most accurate and unbiased information on individual countries and their production of wind energy.  For information on Europe’s wind-industry the European Wind Energy Association (EWEA) proved useful for timely information.

When finding information on solely Chinese wind energy, the Chinese Wind Energy Association, the Energy Research Institute.  When researching Goldwind Science and Technology, there was a scarce amount of information that could be found in English.  Because of this, we had to rely on the Goldwind website, where we realize has the potential to be a biased source.  However, we still felt that for the most part the information we found pertaining to Goldwind was accurate.

For the section on North America, information is derived from a variety of sources.  The American Wind Energy Association and the Canadian Wind Energy Association provided valuable sources for localized knowledge of the industry.  These sources are considered to be among the most reliable as they represent the major industry players.  In addition to this the North American section is supplemented by information from Price Waterhouse Coopers, the Canadian and United States government.

This regional overview of the industry readers will gain insight into key areas of: the role of governments from incentives to regulation; how a global shift has occurred from Europe to the world; and how a cluster-effect has occurred similar to other industries discussed throughout the course of the semester.

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The European Perspective

According to the European Commission, the European Union (EU) hosts only 3.5% of the world’s proven coal reserves, less than 2% of the world’s gas, less than 2% of the world’s uranium and less than 1% of the world’s oil (EWEA, 2009).  With such a lack of natural resources, it becomes obvious that the EU Member States must turn to alternative energy sources to meet the energy demands of their populations.  However the EU has taken this requirement of alternative energy sources one step further by focusing their efforts on sustainable and renewable energy sources.

At the opening session of the European Wind Energy Conference and Exhibition, EU Energy Commissioner Andris Piebalgs said “it makes good sense to invest in indigenous sources of power which hedge against unpredictable fossil fuel prices and in which Europe has a real competitive advantage” (EWEA, 2009).  Also at the session, Arthouros Zervos, European Wind Energy Association (EWEA) president, emphasized that

…the fight over the world’s rapidly depleting fuel resources is already intensifying… [and] it will only become more brutal with time and Europe will lose the battle. European companies have two-thirds of the €35 billion global market for wind power technology. Wind energy is Europe’s contribution to peace, progress and prosperity and we should urgently develop, promote and export it to the best of our ability. (EWEA, 2009)

The implementation of this strategy could vastly decrease, even eventually eliminate, the need for imported energy fuels, and in the process develop a great opportunity for increased export markets.

The EU remains the world leader in total installed wind energy capacity, and one of the strongest regions for new development, with over 8.4 GW of new installed capacity in 2008.  Cumulative wind capacity has increased by 15% reaching 64,949 MW by the end of 2008[4].  Wind energy is now the fastest growing power technology in Europe accounting for 35% of the approximately 24 GW of total new power generation capacity built in the EU in 2008[5].  A total of 160,000 workers were employed directly and indirectly in the wind energy sector, which saw investments of about €11 billion in the EU alone.  The wind power capacity installed by the end of 2008 will produce 142 TWh of electricity, equal to about 4.2% of the EU’s electricity demand. (GWEC: EU, 2009)

A major factor behind the growth of the European wind market has been strong policy support both at the EU and the national level.  In 2001 the EU put in place the Renewable Energy Directive which is aimed at increasing the share of electricity produced from renewable energy sources in the EU, as a whole, to 21% by 2010 (up from 15.2% in 2001).  EU Member States are given the freedom of choice regarding support mechanisms, but mainly feed-in tariffs, fixed premiums, green certificate systems and tendering procedures are utilized, complemented by tax incentives, environmental taxes, contribution programs or voluntary agreements (GWEC: EU, 2009).  However, major barriers to “growth and integration” of renewable electricity are present, including “delays in authorization, unfair grid access conditions and slow reinforcement of the electric power grid” (GWEC: EU, 2009).

In December 2008, the EU agreed to a new Renewable Energy Directive in which the EU’s overall 20% renewable energy target will be divided into legally binding targets for the 27 Member States, averaging out at 20% each by 2020.  In terms of electricity consumption, renewable energy sources should provide about 35% of the EU’s power by 2020, with wind energy set to contribute more than a third of all the power coming from renewable energy sources (GWEC: EU, 2009).  The directive legally obliges each EU Member State to outline the steps it will take to meet its target in a National Renewable Energy Action Plan and every two years Member States must submit a progress report to the European Commission, containing information on their share of renewable energy, support schemes and progress on tackling administrative and grid barriers.  Flexible measures have been built into the directive to help countries achieve their targets in a “cost-effective way, without undermining market stability” (GWEC: EU, 2009).  Acceptable measures include the transfer of a specified amount of renewable energy between Member States, joint projects involving private operators, or joint or partly coordinated national support schemes (GWEC: EU, 2009).  The directive also requires EU countries to take “the appropriate steps to develop transmission and distribution grid infrastructure, [develop] intelligent networks, [develop] storage facilities, [develop the] electricity system… [and] speed up authorization procedures for grid infrastructure” to help develop renewable electricity (GWEC: EU, 2009).  EU countries must “ensure that transmission system operators and distribution system operators guarantee the transmission and distribution of renewable electricity and provide for either priority or guaranteed access to the grid system or access” (GWEC: EU, 2009).

The new Renewable Energy Directive targets will translate into 230 GW of installed wind energy capacity, including 40 GW offshore, producing approximately 600 TWh per year in the EU by 2020; power equivalent to meet the demand of approximately 135 million average EU households (60% of EU households) and meeting between 14 and 18% of EU electricity demand (depending on total demand in 2020). (EWEA, 2009)

Major European Players

Germany and Spain remain the driving forces of the European wind energy industry, remaining Europe’s leaders for new installations in 2008 and cumulative installed capacity.

Germany is Europe’s largest wind energy market, both in terms of total installed capacity and in terms of new installations; ranking Germany second in the world in cumulative capacity installed, only trailing the United States as of the end of 2008, and placing them fourth in 2008 installations, behind the United States, China and India[6].  During 2008, 866 new wind turbines with a capacity of 1,665 MW were installed in Germany, bringing the cumulative total up to 23,903 MW[7].  Repowering old machines accounted for 24 MW in 2008, and 5 MW were installed offshore. The largest turbines currently operating in Germany have a rated capacity of 6 MW.  Wind energy generated 40.4 TWh of electricity in Germany in 2008, representing 7.5% of Germany’s net electricity consumption, with a number of states now providing more than one third of their electricity generation from wind energy: Saxony-Anhalt (42.6%), Mecklenburg-Vorpommern (39.4%), Schleswig-Holstein (38.3%) and Brandenburg (34.1%).  A reliable domestic market has allowed German manufacturers and suppliers to lead the way in developing wind energy worldwide. (GWEC: Germany, 2009)

A cluster in the wind turbine and component production industry appears to exist within Germany’s borders.  In 2007, turbine and component production worldwide by German companies amounted to €6.1 billion, a healthy 21% increase from 2006.  This translated into German manufacturers and suppliers contributing to about a quarter of the total worldwide turnover of €25 billion in 2007.  The percentage of exported equipment increased from 74% in 2006 to over 83% in 2007. (GWEC: Germany, 2009)

Strong governmental support and beneficial legislation implementation has been a key driver in Germany’s development into a world leader in the wind energy industry.  Under the Renewable Energy Sources Act (Erneuerbare-Energien-Gesetz-EEG):

• electricity produced from renewable energy sources is given priority for grid connection, grid access in both distribution and transmission grids, and power dispatch.
• fixed feed-in tariffs are stipulated for each kWh of power produced and fed into the grid from renewable sources.
• there are higher tariffs for on and offshore wind energy installations, incentives and regulations for improved grid integration technology of turbines and stricter obligations for grid operators in integrating wind power.
• an ‘initial tariff’ for wind energy is fixed for at least five and up to 20 years and is then reduced to a ‘basic tariff’ depending on how local wind conditions compare to a ‘reference yield’.
• grid operators are obliged to feed-in electricity produced from renewable energy and buy it at a fixed price within their supply area.
• grid operators must not only extend the grid, but also optimize and enhance the existing grid. Failure to comply with this can lead to claims for damages by anyone willing but unable to feed-in. (GWEC: Germany, 2009)

Spain is Europe’s second largest wind energy market, both in terms of total installed capacity and in terms of new installations; ranking Spain third in the world in cumulative capacity installed, fifth in 2008 installations, directly behind Germany in both categories[8].  With 16,754 MW of total installed capacity, new installations in 2008 totaled 1,609 MW[9], maintaining pace with previous years. The developments in 2007, with over 3.5 GW of new capacity installed, provided an exception as pending regulatory change brought about a higher than usual installation rate.  In 2008, wind energy generated more than 31TWh, delivering more than 11% of the country’s electricity demand. (GWEC: Spain, 2009)

Spain is home to the world’s largest wind farm owner, Iberdrola, as well as some of the most important turbine manufacturers and developers, who are now involved in wind energy operations around the globe.  The wind energy sector contributes more to the country’s GDP than any other industry, according to a study entitled The Macroeconomic Impact of the Wind Energy Sector in Spain, published by the consultancy Deloitte in 2008.  The Spanish wind industry exports equipment worth 2.5 billion Euros every year, invests around €200 million in research and development activities and has created more than 40,000 jobs, including indirect employment and employment create by a large Spanish export industry producing components for the global wind market. (GWEC: Spain, 2009)

Spain’s current tariff system offers different levels of tariffs depending on the technology and on the size of the installation. According to Spanish law:

• the power producer can choose between a fixed price and a premium added to the market price. The choice is revisited yearly allowing a switch if desired.
• the electricity distributor has an obligation to buy electricity produced by renewable sources at the defined price and the National Commission of Energy (CNE) performs the settlement of costs incurred by distributors.
• the costs of the renewable energy electricity generation are taken into account for the annual calculation of the electricity price, thereby ensuring that the additional cost to consumers is proportional to their electricity consumption. (GWEC: Spain, 2009)

New legislation entered into force in 2008 provide a structure similar to the old system, with a choice between fixed tariff and fixed premium, but with less favorable tariffs and a cap and floor mechanism for the fixed premium option.  This new system aims to protect operators of renewable energy installations from excessively low market prices, and, on the other hand, eliminate the premium when market prices are deemed high enough to cover generation costs. (GWEC: Spain, 2009)

The 2008 market was much more balanced than in previous years [with a] group of ‘second wave’ countries emerg[ing to] provide real momentum to the surge in wind energy. Italy added 1,010 MW to reach a total of 3,736 MW of installed capacity; France added 950 MW to reach 3,404 MW and the UK added 836 MW to reach 3,241 MW… Ten EU Member States – over one third of all EU countries – now each have more than 1,000 MW of installed wind energy capacity…

[In addition, a] distinct ‘third wave’ became visible for the first time in 2008 as the new EU Member States had their strongest year ever. Hungary doubled its capacity to 127 MW and Bulgaria tripled its capacity from 57 MW to 158 MW. Poland, one of the fastest growing younger markets, now has 472 MW up from 276 MW at the end of 2007. Outside the EU Member States, Turkey tripled its wind energy capacity from 147 MW to 433 MW. In terms of offshore wind energy, 357 MW of capacity was added in 2008, to reach a total of 1,471 MW. Nearly 2.3% of total installed EU capacity is now offshore. (GWEC: EU, 2009)[10]

Mainstream Renewable Power

Mainstream Renewable Power is a renewable energy company based out of Ireland that was founded in February 2008 by Dr. Eddie O’Connor, former CEO of Airtricity, and Fintan Whelan, former Corporate Finance Manager of Airtricity (Airtricity is an Irish based renewable energy company that sold its North American business unit in October 2007 and the remainder of the company in January 2008). (Mainstream: About Us, 2009)

[Mainstream’s] vision is of thriving economies and communities liberated from the restrictions of fossil fuels, using renewable energy as their mainstream source of power… [and their mission is t]hrough the passion and imagination of our people, we work together with partners and communities to deliver a successful business that accelerates global progress towards a sustainable future. (Mainstream: Vision and Mission, 2009)

Major accomplishments since 2008 include:

• Set up offices in Berlin, Chicago, Cape Town, Dublin, London, Santiago and Toronto.
• Identified and recruited some of the most talented and experienced teams in the industry.
• Established its board to include chairman, Fintan Drury, Sir Roy Gardner, former head of Centrica, Brendan Halligan of Sustainable Energy Ireland and Mark Brown of Barclays Capital.
• Raised €72 million in equity including €20 million from Barclays Capital in return for a 14.6% stake in the company.
• Raised €26 million in corporate mezzanine debt by private placement with Dolmen Stockbrokers.
• Identified potential partners in key markets. (Mainstream: About Us, 2009)

Notable business transactions since February 2008:

• Signing a $1 billion deal to build wind farms in Chile – November 6, 2008.
• Awarded 360MW offshore wind site in Scottish Waters – February 16, 2009.
• Signing CAD$840 million deal to build wind farms in Canada – March 12, 2009.
• To build 500MW in South Africa by 2014 with Genesis Eco-Energy – March 19, 2009. (Mainstream: News Releases, 2009)

Mainstreams third transaction announcement, regarding the future construction of wind farms in Canada was the major driver in selecting them as the company of focus for the European region.  For this business agreement is extremely close to home for staff and students of the University of Lethbridge.

On March 12, 2009 Mainstream Renewable Power announced the signing of a CAD$840 million joint venture deal with Canadian wind farm developer, Alberta Wind Energy Corporation (AWEC) to build an initial portfolio of over 400MW of wind energy plants in Alberta by 2013. The joint venture company plans to have the 46MW Old Man River project, located in the Pincher Creek area of Alberta, ready for construction in late 2009 with the goal of being operational in 2010, while the 62MW Windy Point Wind Farm is due to be fully operational by 2012. (Mainstream: News Releases: Mainstream signs…, 2009)

Mainstream’s Chief Executive, Dr Eddie O’Connor said, “Our strategy is to ‘think globally, deliver locally’ and I believe this is key to our success. We identify local partners with great projects and they leverage from our global strength in areas such as Project Finance, Construction and Procurement so that together we can deliver projects faster and more cost-effectively” (Mainstream: News Releases: Mainstream signs…, 2009).

Stewart Duncan, President and CEO of AWEC commented, “This is great news for Alberta. Demand for electricity in the area is growing, while fossil fuel generating stations are nearing the end of their life and will require decommissioning or refurbishment.  A recent forecast by Alberta’s Electric System Operator indicated that Alberta will need an additional 5,000MW of generation by 2017.  Furthermore, Southern Alberta has some of the best wind sites for power generation anywhere in onshore North America” (Mainstream: News Releases: Mainstream signs…, 2009).

Sherra Zulerons, Mainstream’s Country Manager for Canada commented, “Getting connected to the transmission system can be a major obstacle for new wind generation in Alberta.   All of our projects have already obtained, or are in the process of obtaining grid connection agreements. This is a major plus” (Mainstream: News Releases: Mainstream signs…, 2009).

This is a huge step in the progression of renewable energy in the fossil fuel dominated Province of Alberta, and thus the entire nation of Canada. In addition to the Southern Alberta corridor providing great potential for wind energy projects, Mainstream is also currently pursuing possible projects in Northern Alberta and Northern British Columbia.

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The Asian Perspective

The growth in Asian markets has been breathtaking, and nearly a third of the 27GW of new wind energy capacity added globally in 2008 were installed in Asia (Global Wind Energy Council)[11]. When it comes to wind power in Asia, there are two main countries that that are leaders in wind power – China and India.

China and India have a combined population of 2.5 billion people and are two of the world’s worst culprits when it comes to global pollution.  “The rapidly expanding economies of China and India are showing a swift increase in CO2 emissions.  China, which is already the second largest polluter, has increased its emissions by 33 percent… while India’s emissions have grown 57 percent” (World Bank). However, both China and India are making conscious efforts to reduce their impact on the global environment.  One of the ways to do this is by investing in wind-energy generation sites as a source of new electricity demand.

Another Asian country that is actively harnessing wind power is Japan.  Japan’s growth in wind energy has nearly equaled that of China’s; however, “severe weather conditions are constraining growth of the Japanese wind market” (Global Wind Energy Council).  It is for this reason that we will be looking at China as the major Asian market for wind power.

China – Wind Energy Potential

The greatest potential for wind power in China occurs in two major areas of the country.  Wind power projects are mainly distributed in the northern part of China bordering Mongolia and along the coastline.  “The distribution of wind energy resource and electric load are not well matched, the best areas with rich wind energy potential and plenty available land are in the north and west China, but also no electric load centers close to wind sites, wind farms [are] usually located at the end of weak power grid. Along the coastal areas and offshore, load centers are close to the wind site, but due to the high density of population, available land for wind project is limited” (Pengfei).

The China Academy of Meteorological Sciences estimates that China has a potential of 253 GW at 10m height.  Also, offshore wind energy resource along the coast of eastern China, may be three times higher than that of mainland. The total estimated potential is 750 GW.[12]

China’s government is actively trying to reduce their conventional means of producing electricity. The Chinese government has set a National Mid and Long-Term Development Plan, which the goal is to increase non-hydro renewable electricity production to 3% by 2020.  In order to obtain this goal, China has created the 10 GW-Size Wind Base Program. The 10 GW-Size Wind Base Program is as follows: “The bureau [National Energy Administration] selected six locations from the provinces with the best wind resources: Xinjiang, Inner Mongolia, Gansu, Hebei and Jiangsu. Each site will have more than 10 GW of installed capacity by 2020” (Global Wind Energy Council).  Because one of China’s goals is to significantly increase wind power, incentives to join the wind power revolution are directed to local manufacturers. Policies to stimulate domestic manufacturing have been set in place:

In August 2008, the Ministry of Finance issued another incentive policy on funding support for the commercialization of wind power generation equipment. According to this regulation, for all the domestic brands (with over 51% Chinese investment) the first 50 wind turbines over 1 MW will be rewarded with RMB 600/kW (60 Euro) from the government. The rule specifies that the wind turbines must be tested and certified by China General Certification (CGC), and must have entered the market, been put into operation and connected to the grid. The regulation further requires that the rewarded turbines must use domestic manufactured components and share the awards proportionate with component manufacturers.

This new policy has two ground-breaking implications. It is the first time that the government gives subsidies to renewable energy manufacturers and the first time that there is a link between a stimulus policy and a testing and certification system. This policy will have a significant impact on the future promotion of China’s domestic industry’s technology innovation, improving competitiveness and building domestic branding in the long run. (Global Wind Energy Council)

With this incentive to stimulate domestic manufacturing, it in itself is also a barrier to foreign firms trying to enter the market.  With the various incentives for entry into the market, competition is inevitable leading to a decrease in the supply deficit.  The largest constraint that is faced by the Chinese government is the ability for wind generated electricity to be tapped into the existing grid system:

Among wind farms currently in operation, a great number have only limited access to the grid. According to the Renewable Energy Law, renewables should be given priority access to the grid, yet the rule is not being followed due to the physical constraints of grid capacity. In the past, new wind projects were spread throughout the country and close to grid connections. In recent years however, with the boom in wind development, most of the new wind farms are located in north-west China, where the existing grid structure is weak. (Global Wind Energy Council).

Goldwind Science and Technology Company

Goldwind Science and Technology is the largest domestic turbine manufacturer in China and one of the ten largest in the world.  Goldwind is located in the Xinjiang autonomous region produces various sizes of wind turbines in batch production.  Goldwind uses 95% Chinese made key components including: blades, gearbox, generator, yaw mechanism and control system. “We [Goldwind] are engaged in manufacturing and marketing large-sized wind generator sets; introducing and applying wind generating technology; making and selling parts of wind generating sets; providing consulting service in building and operating wind generating plants; building and operating middle-sized wind generating plants” (Goldwind).  Goldwind’s mission is to “preserve white clouds and blue skies for human beings and preserving more resources for the future”.

Since Goldwind is fully Chinese-owned with about 55% ownership being from the state, they possess a key firm specific advantage compared to foreign firms trying to enter the market. This allows the company to receive the government incentives and subsidies mentioned above. Goldwind also has bright plans for their future. Their vision is to make the transition from “Goldwind of China, to Goldwind of the world”. They plan to have worldwide international cooperation as well as to have an international research and development organizations arrangement. They also believe they can manage an international wind turbine supply and distribution chain.

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The North American Perspective

North America is among the world’s largest consumers of electricity – since the turn of the millennium over 4,000 billion kilowatt hours are required annually to power one of the world’s largest-trio of economies (Energy Information Administration 2008).  In fact, between 1970 and 2000 “total electricity demand grew by 3.3 per cent annually, very close to the actual GDP growth of the OECD nations” (Hunt 2007).  Due to such incredible demand for electricity there has been incredible growth in the region’s energy industry.  This section is dedicated to exploration of the wind industry within North America with specific focus on the countries of Canada and the United States of America (USA).  Mexico does not currently have a meaningful wind energy sector and therefore will not be discussed at any great length.

It has only been within the last ten years that North American has embraced the capabilities of wind energy that are abundantly available.  According to the Global Wind Energy Council (GWEC) in 2008 North America experienced the largest growth in new grid capacity from wind generated sources[13].  Onshore development has been the largest growth sector in North America.

In terms of recent industry growth 2007 has been the most productive to date for bringing renewable energy sources online.   This is confirmed by Price Waterhouse Coopers, one of the big-four accounting firms, who reported that in 2008 wind power had been the principal focus of deal activity^[14] in the North American energy sector “accounting for the majority of the value (57%) of all renewable energy deal making” (PWC 2008).  The report indicates the total overall value of such deals has dropped to total number of deals has increased; a 40% drop in the overall value but an increase of 74% in total deals^[15].

Canada

In terms of potential for wind energy it has long-been known that Canada is one of the top countries with such an ability to capture “free energy” – however Canada has not leveraged such location advantages to become a world leader in the industry.  In fact, according to CanWEA only about 1% of all electricity produced in Canada comes from wind (2008).

According to the Global Wind Energy Council Canada is now among the top twelve nations to diversify their energy sources to include wind.  In 2008 the total installed capacity finally exceeded 2000MW almost the equivalent of one-percent of total national electricity demand. (GWEC 2009)

Traditional sources of energy in Canada have been coal, natural gas, nuclear and hydro-electric – each of which still has considerable influence on energy markets’ procurement strategies.  There is proof of this in the fact that until recently Alberta had a cap on total wind-energy production at less than 1000MW.  However, the environmental implications of coal, natural gas and nuclear are making alternatives like wind-power much more appealing for new generation facilities.

Recently the federal government has offered production incentive payments under the ecoENERGY for Renewable Power program.  The program provides a production incentive of 1 cent/kWh for the first 10 years of production on new energy technologies such as wind.  The program was brought into effect at the beginning of 2007 and was budgeted to run until 2011 – however, due to such strong demand for the program all of the funds will be fully allocated by mid-2009. (GWEC 2009)  This suggests the need for greater regulatory stability in such programs to ensure consistency for companies who seek to invest in Canada.

The Canadian Wind Energy Association (CanWEA) released a strategic plan, Wind Vision 2025 – Powering Canada’s Future, which suggests wind energy could supply 20% of the country’s electricity demand by 2025.  The plan outlines approximately 55,000 MW of wind generation capacity which would in turn generate close to $79 billion in investment through 2025.  Due to the recent economic fallout CanWEA has lowered their expectations for wind energy sector growth in 2009, but still expects 650 MW of new capacity to be added.  The five year outlook for the industry expects an additional five-thousand mega-watts to be added to the grid which should help achieve the GWEC’s expected minimum of 12,000 MW of installed wind energy capacity in Canada by 2015. (CanWEA 2008)

There are numerous hurdles to achieving such ambitious targets.  These range from the varying-degree of regulation across provincial jurisdictions to the weak transmission infrastructure.  The ten provinces of Canada comprise different regulatory jurisdictions; many provinces do not have a clearly defined long-term procurement strategy for electricity (GWEC 2009).  Where crown corporations are in charge of electricity procurement they often leave the process to competitive tendering.  In the case of wind-energy such a tendering process can range from hundreds of thousands of dollars well into the millions (CanWEA 2008).  This makes it especially difficult for smaller wind-energy producers to successfully penetrate the market.  Since each province is a separate jurisdiction this also means a long and often redundant permit process.  This duplication and excess regulation makes Canada’s wind power generation sector difficult to enter and does not add to outsiders of the transparency of the system.

In addition to this, many provinces lack adequate transmission infrastructure to transport wind from favourable geographic regions to those with high-demand for electricity.  According to the Canadian Electricity Association there are more cross-border connections with the United States than there are across provincial boundaries.  This makes it especially difficult to develop large national-projects.  Since economies of scale are required to stabilize investment and offer adequate long-term returns such hurdles make Canada a less appealing destination for transnational corporations to invest.

In terms of cluster development – there is evidence to suggest generating regions are in order of largest developments: Quebec, Ontario and Alberta.  In terms of component manufacturing there is little evidence suggesting a strong domestic industry or cluster development of related industries in any one area.  Most corporate headquarters are based out of Ontario because of the Toronto Stock Exchange (TSX) and the related access to capital.

The United States

The current electrical system in the United States is comprised of “approximately 200 investor-owned utilities, 70 large municipal and federal or state systems, and 50 rural generation and transmission cooperatives supply power for more than 3,000 local distribution companies across the country.” (DOE 2008)  Such a large energy industry is required to power the world’s largest economy.  It has only been recently that the United States has rapidly increased the size of their wind energy industry.  In fact, 2008 was the biggest year in wind energy with an increase of almost 50% in one year – which represents over 8000MW of new capacity potential (GWEC 2009).

Since the beginning of 2009 the United States has taken an impressive stance towards renewable energy sources under the Obama administration.  To encourage demand for clean electricity twenty-six state governments have implemented Renewable Portfolio Standards (RPS) which set minimum levels for ‘renewables’ in the electricity system.  The federal government has also just set a National Renewable Energy Standard in which 25% of demand will come from wind energy sources by 2025 (USA 2009).  In fact, under the American Recovery and Reinvestment Act (ARRA) there are numerous measures aim at developing and expanding the wind energy industry.  Under the ARRA numerous incentives have been created making it especially favourable for some wind companies to invest in new projects.

According to the American Wind Energy Association the ARRA extends the existing Production Tax Credit (PTC) for wind energy for three years, through until 2012 and offers the temporary option to claim 30% investment tax credit in lieu of the PTC.  This is an important development, as it will allow developers of wind energy to lease or sell such facilities without losing the potential for tax credit (AWEA 2009).  The new regulatory environment also mandates the creation of close to two-billion dollars in Clean Renewable Energy Bonds to encourage the creation of electricity from renewable sources including wind.

According to PWC there were 15-utility scale wind turbine manufactures in the USA in 2008 – this represents significant jump from only five in 2005.  PWC also reports the average wind turbine installed in 2007, was on average 1.6 MW of capacity almost twice as powerful as the average wind turbine installed in 2000 which was 0.76 MW.  According to the Global Wind Energy Council the USA wind industry employs more than 85,000 workers[16].  They also report that since 2007 over “70 manufacturing facilities have opened, been expanded or announced, including 55 in 2008 alone.”  This allows for almost fifty percent of all turbine components used in the country are made in the USA.  This is evidence that a wind-energy cluster has developed in recent years.

TransAlta Wind

To further understand the North American context, this paper seeks to provide readers with an overview of one major company that is considered an industry leader.  This section will describe Transalta as a firm operating within the North American wind industry.  This will include a detailed overview of Transalta as a firm; from company history to their current vision and strategy.  Consideration will be given to the firm’s operating environment –including industry alliances, the regulatory environment and barriers to commerce.

The company Transalta provides an excellent case example of a firm that operates throughout North America offering both traditional energy sources, like coal and natural gas, and renewable energy sources like wind and hydroelectric.  With a founding history as an integrated and regulated Alberta energy supplier Transalta has principally had a core focus on coal-generation.  Since 1996 Transalta has successfully transformed their generation portfolio to include wind – and has grown to become Canada’s largest investor-owned wholesale power generator and marketing company.  In 2008 the firm had approximately CAD$3 billion in annual revenue, $7 billion in assets, with power plants in Canada, the U.S. and Australia.  In 2008 alone the company generated close to 50,000 GWh of energy enough to power over seven-million homes. (Transalta 2009)

The Transalta Wind division is a result of mergers and acquisitions in the Alberta sustainable energy market.  The principal assets of Transalta Wind were originally formed after the acquisition of Vision Quest.  The company had 67 wind turbines in southern Alberta and held licenses in provinces across the country. The wind division grew further after a successful joint venture between The Chinook Project Inc. and Canadian Enhanced Energy Development Ltd. which was acquired by Transalta in 1996[17].

Vision and Strategy

Transalta would be considered a vertically integrated firm involved in host market production.  The entire company operates through two principal entities: TransAlta Generation Partnership, a general partnership, and TransAlta Energy Marketing Corp.  This means they are involved in almost every step of the energy generation process and caters directly to the needs of the market in which it is located.  In the case of traditional energy generation this means the firm is involved in the mining of coal reserves, the conversion of coal to alternating current (AC) energy, and the marketing of energy.  This is not to suggest Transalta is responsible for every step of the process to the end consumer.  In fact there is energy retailers involved in electricity transmission and end-customer delivery such companies includes Fortis and Enmax.  In the case of wind energy Transalta commissions local projects which then set up power-purchase agreements that sell to such electricity retailers.

Currently Transalta has a diversified portfolio of assets in both North America and Australia.  In terms of wind resources the firm has more than 200,000 acres of land that are currently under lease, option, or negotiation which hold potential for more than 1,000 megawatts of wind energy development.  In Canada alone properties currently in production include the provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Prince Edward Island.   As Transalta continues to grow they are adding more turbines to their portfolio that are larger with greater energy potentials.

It is evident that Transalta Wind has principally held Canadian assets in the province of Alberta, but as they continue to grow they have acquired assets further abroad in the United States, Mexico and Australia[18].  It is important to note, Transalta has not acquired any wind-related assets outside of Canada and recently Transalta sold all assets in Mexico.  It is no wonder that Transalta has chosen Alberta as the principal location to develop their wind energy portfolio.  It is generally accepted that Alberta has one of Canada’s best wind resources with a potential greater than 60,000MW.  However, Alberta currently only generates about 2% of its annual electricity supply from the wind (Energy Information Administration, p.3).

Industry Alliances

Transalta has recognized the importance of aligning the interests of energy producers in order to have an adequate voice in regulatory matters.  In terms of sectoral involvement Transalta is active in many ways:

• Canadian Wind Energy Association (CanWEA) which represents the wind energy community across Canada.   TransAlta Wind involvement with the association stems back to the association’s founding and continues on today. All three founding members of TransAlta Wind served as CanWEA Presidents.  CanWEA provides leadership and support to all wind energy producers; in addition CanWEA helps guide the industry by further developing its leading edge members.
• The Clean Air Strategic Alliance (CASA) is a non-profit organization of stakeholders committed to developing and applying a comprehensive air quality management system in Alberta.
• Independent Power Producers Society of Alberta (IPPSA) and British Columbia (IPPBC) are provincial organizations that were established prior to deregulation (in Alberta) and work to maintain an open energy market supporting by multiple buyers and sellers; and to develop a cost-effective independent energy service in BC.  Transalta Wind has been involved with the IPPSA since its inception.

Transalta is involved in the North American wind-energy industry principally in the province of Alberta – but has power-generation assets throughout Canada and the United States.  This diverse portfolio of energy-sources gives Transalta the ability to expand their wind capabilities relatively easily across North America.  This is because the CAGE distances have already been bridged by the firm in many ways.  Since they are already operating in both jurisdictions they have covered the administrative barriers to commerce.  The United States division is capable of handling new wind-energy generation assets especially under the new favourable investment conditions that have been unveiled under the APPA.

As discussed earlier, wind is based on location and therefore the closer generation projects are built to their intended source of consumption to more efficient they are – this means Transalta must be willing to expand beyond just Alberta.  Geographically Transalta is able to leverage their strategic position in the North American market in many ways.  For one, there is greater north-south connection between Canada and the USA when compared to interprovincial connections; which indicates willingness for electricity export from Canada to the USA.  However because of the lack of infrastructure this would require great initial investment to bridge such a gap.

Regulatory hurdles remain among the largest concern for Transalta’s expansion into new areas.  Areas like British Columbia and Saskatchewan are regulated energy markets and are prone to fluctuations in wind-energy market growth because power-purchase agreements (PPA’s) with the regulated providers are negotiated on a staggered basis.  This means the firm must be ready to tender for projects in a fashion that does not allow for controlled and strategic growth.

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Conclusions and Industry Outlook

This paper has demonstrated the power of the wind-energy industry.  We have covered many things – beginning with the historical development of wind as a viable electricity source.  We have seen the origins of harnessing wind power for milling flour and irrigating crops.  We have discussed the different types of wind turbines currently in use in commercial applications.  In addition we have demonstrated how location advantages play a crucial part of industry development.

The main focus of this paper has been on the TRIAD economic regions – including the European Union, Asia-Pacific and North America.  This discussion has offered valuable information from countries within each region and has demonstrated a fundamental global shift in the industry over time.  Historically the wind energy industry was based in Europe, but in the last ten years this has shifted to include both North America and Asia.  Now there seems to be consistent growth in all three economic zones representing an overall stability in the industry.  We found that governments play one of the most important roles in the wind energy sector.  Each regional perspective demonstrated the importance of government involvement in the industry – from creating a regulatory framework for which firms operate within to providing incentives to encourage wind-energy production and investment.

Europe has enjoyed the benefits of being the first-mover into an industry with endless potential.  The EU countries alone continue to place Europe as the world leader in cumulative installed capacity, however this position is at risk.  2008 showed a strong emergence of domestic wind energy suppliers in nations worldwide that Europe had once enjoyed the dominant or only position in the market.  In some of these countries intellectual property rights are less rigorously upheld, which means European exporters must continually increase innovation in order to stay ahead of the market and remain the global gold standard for the wind energy industry.

China has the fastest growing wind energy market in Asia.  Incentives given for domestic firms (51% Chinese owned), however the wind turbines must be tested and certified by China General Certification and requires that the rewarded turbines must use domestic manufactured components.  The largest barrier is being able to tap into the existing grid system – new wind farms are located in north-west China where the grid structure is weak.  Goldwind is the largest domestic turbine manufacturer in China and one of the ten largest in the world. Goldwind is 100% Chinese owned, with 55% state ownership therefore they able to receive government incentives and subsidies.  The government involvement in Goldwind has allowed the firm to capture significant domestic market share.

North America has been one of the largest growth areas since the mid 2000s.  Both the United States and Canada have added close to 9000MW in 2008 alone – this represents close to a doubling in capacity in the USA.  Because of the new wind-generation capacity USA finally surpassed Germany in terms of annual growth for the first time ever.  This represents a major global shift in the wind-energy industry.  The domestic environment has also been conducive to new industry growth.  In the USA under the America Reinvestment and Recovery Act (ARRA) incentives have been extended to offer either production or investment credits for up to 30% the total project value.  In Canada the ecoENERGY for Renewable Power program is a federal initiatives designed to provide a production incentive of 1 cent/kWh for the first ten years of production on new wind technologies.  Such incentives provide valuable ways to spur investment in the industry.  However these programs must provide stable long-term funding for firms to avoid boom and bust cycle of the industry as such programs expire.  In terms of industry growth in North America the potential is virtually endless as the region is home to some of the best wind-power areas on the globe.

Transalta Wind provided a unique example of a former Albertan regulated energy-provider that has grown to become the largest wind-energy provider in all of Canada.  Transalta is an example of how traditional energy players can transform to become competitive wind-energy providers.   As a vertically-integrated firm Transalta provides an example of how regulatory jurisdictions can impact firm strategy.  In this particular case Transalta has been limited to providing Alberta with wind-energy and has been reluctant to expand to different geographical areas because of the varying regulatory hurdles and requirements of transmission infrastructure by province.

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Recommendations

1. Wind energy is an intermittent power source.  This means that because wind is an erratic and unpredictable energy source, it is not possible to generate a steady level of production.  This can sometimes be perceived as a major downfall to wind energy production as a competitive technology but the fact is “while single wind turbine can be quite intermittent, a large wind farm spread over a geographically diverse area will as a whole rarely stop producing power altogether” (Diesendorf 2007).  The best solution of this problem is to determine some form of average output and to develop the project accordingly so that in normal, expected varying weather conditions, the wind farm will be able to meet at least the minimum power production levels needed to serve demand.  Alternatively, this issue could be solved by developing innovative ways in which to store the produced energy thus eliminating the problem of wind energy being intermittent and unreliable.
2. One area where we hope wind energy can grow is to have the ability to correlate their operations with all other sources of electricity production.  Since wind can be sporadic and unpredictable we feel that Supervisory Control and Data Acquisition (SCADA) would be extremely beneficial to the wind industry.  “SCADA refers to a system that collects data from various sensors at a factory, plant or in other remote locations and then sends this data to a central computer which then manages and controls the data”  (TechFAQ 2009).  We hope that in the future, when wind speeds in one area become strong, through SCADA, a message will be sent out to all energy producers (including coal, hydro and natural gas), to coordinate their production accordingly.  This will ensure maximum efficiency while minimizing the impact on the environment.  This will allow for the best combination of energy generation sources. As well, SCADA will allow for real-time production, in the most efficient way possible.
3. Another area of importance is the sharing of intellectual property with developing countries.  It is important for developed countries to promote the benefits of wind energy globally to ensure new generation capacity has a minimum input from wind-sources.  Research and development for wind energy is quite costly, and by sharing such information it will allow for all countries to take a proactive approach – even though wind may not be the most affordable means of producing electricity it does provide a renewable and essentially free source once implemented.  We feel that the most effective way to encourage growth in these countries is by using joint initiatives.  This way the developing countries have a stake in the project and their economies will experience some positive economic fallout as a result.
4. Another recommendation that we have is to implement funding for education programs. We believe local conferences, seminars and dedicated education programs would be most beneficial.  We would focus these programs on educating the population on why wind energy is a good alternative, how it works, what can you do to become a user of wind energy, and how this alternative can eventually lower your energy costs.  Another important way to advance to industry would be to educate people on the requirements of specialized knowledge in the wind industry. The wind industry employs micro-climatologists, engineers, construction, maintenance people, retailers, and the list goes on.  Government funding for education programs as well as research and development initiatives will no doubt aid in the overall industry growth.
   

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Appendix 1: COMPONENTS of a Wind Turbine

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Appendix 2: Increasing Size and Capacity of Wind Turbine Size

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Appendix 3: Global Regional Wind-Capacity Breakdown  – 2008

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Appendix 4: Chart on European Union’s Energy Mix in 2008

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Appendix 5: Total Installed Capacity (MW) of TRIAD Regions 2000 – 2008

Source of information: (Global Wind Energy Council, 2009)

		2000	2001	2002	2003	2004	2005	2006	2007	2008
Asia	China	346	402	469	567	764	1,260	2,599	5,910	12,210
	India	333	351	390	772	990	1,750	4,210	7,810	9,610
	Japan	136	302	338	580	809	1,049	1,309	1,538	1,880
North America	Canada	137	298	236	322	444	684	1,460	1,846	2,371
	United States	2,578	4.275	4,685	6,372	6,725	9,149	11,575	16,824	25,170
Europe	Germany	6,104	8,754	11,994	14,609	16,629	18,415	20,622	22,247	23,903
	Spain	2,235	3,337	4,825	6,203	8,263	10,027	11,623	15,145	16,754

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Appendix 6: Average Wind Speeds in TRAID Regions

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Appendix 7: Wind Energy Jobs in the USA

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Appendix 8: TransAlta Wind Milestones

• 1997: First new power generation on the Alberta electric grid, two – 600 kW turbines
• 1998: Added two additional 600 kW turbines
• 2000: Installed 16 additional 660 kW turbines
• 2001: Installed 12 additional 660 kW turbines to power Calgary’s “C-Train” under the Ride the Wind program and installed 46 additional 660 kW turbines
• 2002: Transalta purchases 100% interest in Vision Quest and installed two 660 kW exploratory turbines
• 2003: Constructed Canada’s single largest wind farm of the time, 75 MW at McBride Lake, Transalta officially becomes one of Canada’s largest wind power producer
• 2004: Installed 38 new 1.8 MW wind turbines at the Summerview wind farm in southern Alberta
• 2007: Installed 32 – 3.0 MW wind turbines at Kent Hills in New Brunswick adding 96 MW to the grid
• 2008: Announces 66 MW Blue Trail wind farm project in southern Alberta and announces a 66 MW expansion to its Summerview wind farm
• 2008: The Kent Hills, New Brunswick wind farm begins commercial operation supplying up to 96 MW of power.  This is the first wind-generated power delivered commercially in New Brunswick.

Table 1: Transalta Wind Generation

Current wind generation capabilities:	Projects currently under production:
252 Turbines 248 MW capacity Producing 731,000 MW/Hrs per year	44 Turbines 132 MW capacity Producing 400,000 MW/Hrs per year

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Appendix 9: Complete Map of Transalta Operations

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Works Cited

History of the Industry and Technology

Gipe, Paul. “Wind Power; Renewable energy for home, farm, and business” Copyright 2004. Editor: Chealsea Green Publishing Company, Vermont

Europe

(EWEA) European Wind Energy Association. “Wind Energy Gives Europe a Competitive Advantage, Says EU Energy Commissioner.” 18 Mar. 2009. 9 Apr. 2009 <http://www.ewea.org/index.php?id=60&no_cache=1&tx_ttnews[tt_news]=1465&tx_ttnews[backPid]=1&cHash=29a0316e5b>.

(GWEC) Global Wind Energy Council. “Regions: (EU) European Union.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=127>.

(GWEC) Global Wind Energy Council. “Regions: Germany.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=129>.

(GWEC) Global Wind Energy Council. “Regions: Spain.” 2009. 9 Apr. 2009 <http://www.gwec.net/index.php?id=131>.

Mainstream (Renewable Power). “About Us.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/About-Us.html>.

Mainstream (Renewable Power). “New Releases: Mainstream signs CAD$840 million deal to build wind farms in Canada.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/Mainstream-signs-CAD%24840-million-deal-to-build-wind-farms-in-Canada.html>.

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Mainstream (Renewable Power). “Vision and Mission.” 12 Mar. 2009. 9 Apr. 2009 <http://www.mainstreamrp.com/pages/Vision-And-Mission.html>.

Asia

Brower, Micheal, Bruce Bailey, and John Zach. “New High-Resolution Wind Resource Maps of China.”

Global Wind Energy Council. 10 Apr. 2009 <http://www.gwec.net/index.php?id=28>.

Goldwind. 11 Apr. 2009 <http://cn.goldwind.cn/en/index.asp>.

Haiyan, Qin. “Large Potential Market of Wind Power in China.” Chinese Wind Energy Association. 11 Apr. 2009 <http://www.adb.org/Documents/Events/2005/Prega-Subregional-Workshop/day1-presentation-haiyan.pdf>.

Pengfei, Shi. “Booming Wind Power Market and Industry in China.” Chinese Wind Energy Association. 11 Apr. 2009 <http://www.ontario-sea.org/Storage/26/1825_Booming_Wind_Power_Market_and_Industr_in_China.pdf>.

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Yanqin, Song. “Renewable Energy in China.” 5 June 2008. Energy Research Institute. 11 Apr. 2009 <http://www.juccce.com/documents/Facts/Energy/YANQIN_Session19_ACEF2008.pdf>.

North America

AWEA. “Summary of the American Recovery and Reinvestment Act (ARRA) of 2009:Provisions of Interest to the Wind Energy Industry.” American Wind Energy Association . March 2009. http://www.awea.org/legislative/pdf/ARRA_Provisions_of_Interest_to_Wind_Energy_Industry.pdf (accessed April 10, 2009).

CanWEA. “Windvision 2025 Powering Canada’s Future.” Canada Wind Energy Association. 2008. http://canwea.ca/images/uploads/File/Windvision_summary_e.pdf (accessed April 05, 2009).

DOE. “Report.” 20 Percent Wind. Edited by Department of Energy. Oct 2008. http://www.20percentwind.org/report/Chapter6_Wind_Power_Markets.pdf (accessed April 05, 2009).

Energy Information Administration. “International Energy Annual 2006.” World Net Energy Consumption 1980-2006. December 2008. www.eia.doe.gov/pub/international/iealf/table62.xls (accessed April 10, 2009).

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[1] See appendix 2 for a diagram on the increasing size and capacity of wind turbines

[2] Almost all horizontal axis wind turbines use forced yawing, i.e. they use a mechanism which uses electric motors and gearboxes to keep the turbine yawed against the wind.

[3] See appendix 1 for a complete picture and diagram of a wind turbine assembly

[4] See appendix 3 for a table on world regional wind-capacity breakdown

[5] See appendix 4 for a chart on European Union’s energy mix in 2008

[6] See appendix 3 for a table on world regional wind-capacity breakdown

[7] See appendix 3 for a table on world regional wind-capacity breakdown

[8] See appendix 3 for a table on world regional wind-capacity breakdown

[9] See appendix 3 for a table on world regional wind-capacity breakdown

[10] See appendix 3 for a table on world regional wind-capacity breakdown

[11] See appendix 5 for a table of capacity growth between 2000 and 2008

[12] See appendix 6 for a map of average wind speeds in the TRIAD regions including mainland China

[13] See appendix 5 for a table of capacity growth between 2000 and 2008

[14] According to the PWC report this includes deals relating to manufacturers and developers of wind technologies (for example, wind turbine manufacturers and wind technology firms).

[15] According to PWC in 2008 the average deal value was approximately $85 million; average number of deals was 74.

[16] See appendix 7 for wind energy jobs in the USA

[17] See appendix 8 for a detailed timeline of the major corporate milestones of Transalta Wind.

[18] See appendix 9 for a complete map of Transalta operations

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