European wind-power firms see an opportunity in the United States' increasing interest in alternative energy. Indeed, the inroads that electricity-generating wind turbine technology has made in the U.S. are due in large part to the efforts of companies based in Europe.A few examples:
"Wind at present becomes viable as a result of its subsidies," says Matthew White, a business and public policy professor at Wharton. Barring a sudden technological leap, "wind would not be competitive with coal" absent incentives such as the Production Tax Credit. So, with the PTC's inconsistent history, why are so many European firms jumping into the U.S. wind energy arena? And for that matter, why are wind "farms" a much more common sight throughout Europe than in the United States? "In Europe, there's more of a willingness to move forward on environmental protection," White said. "Europe has been a whole lot more willing to pay the short term price. That price can include the higher upfront costs of enacting more aggressive regulation. And it can also encompass subjective costs -- such as aesthetic concerns about the siting of wind turbines." The question of how to get wind electricity to customers has posed a thorny issue as well, further slowing adoption in the United States. "Unfortunately, many 'windy' sites in the U.S. are located in remote areas far from urban centers where the electricity is needed," Tomczyk says. "Can we efficiently transmit electricity from a wind farm in South Dakota to Chicago? Another variation on this theme involves installing wind turbines on buildings. Chicago is the 'windy city': What would happen if every office building in the city had several wind turbines on the roof?"
Wharton operations and information management professor Karl T. Ulrich says it is not surprising that non-U.S. turbine manufacturers have gained traction here so quickly -- it's the nature of that business. "In the wind industry, most transactions are between a relatively small number of well-known entities," he says. Those entities include electric utilities, turbine manufacturers, site developers and operators, and sometimes municipal and state governments. Because the number of parties is so small and well understood, it is not very hard for a non-local firm to make contact with the key parties. That is, it's not like the restaurant business where location matters in order to attract a large number of retail customers. If you are
selling a $100 million airplane, wind turbines, ships, or the like, you don't really care if you have to fly across the ocean to make a sales call." In a September report written with the Political Economy Research Institute at the University of Massachusetts, the Center for American Progress took aim at what it described as erratic federal policy. "Lapses in federal production tax credits, occa¬sional one- to two-year extensions, and uncertainty about the future of these credits have led to a 'boom and bust' cycle in the development of wind power," according to the report. The center proposed that "production tax credits for all types of renewable energy should last long enough so that businesses can make sound investment decisions."
While European nations have leapt ahead of the curve in wind power development, a number of organizations see the makings of a brand new U.S. economy based on sustainable technology and practices. The Center for American Progress report also called for a two-year, $100 billion federal stimulus package to encourage six "green" infrastructure areas, including wind. The report's authors say the program could be paid for in full through a "cap-and-trade" carbon auction in which companies would pay for the right to pollute above a pre-set standard. The report also claimed that such a program would create two million jobs, as people would be needed to retrofit buildings for energy efficiency, expand mass transit, build and maintain "smart grid" electrical transmission systems, and develop wind and solar power, along with renewable biofuels, to ease demand for foreign oil. Oil tycoon and financier T. Boone Pickens has thrown his weight behind wind energy with what he's calling The Pickens Plan. He's been barnstorming across the Midwest to promote wind energy as part of a solution to the nation's dependence on foreign oil. If wind does catch on, Pickens stands to benefit: He is investing $10 billion to build in West Texas what he says will be the world's largest wind farm. Galeziewski, of manufacturing firm K&M, sees the doors of opportunity still wide open for enterprising firms or individuals seeking entrée into wind power. "Ultimately," he says, "it's fun.... Wind is like the wild West." For more information about Knowledge@Wharton, please visit knowledge.wharton.upenn.edu.