Air Date: Week of July 20, 2007

: A Vesta V80-1.8MW Turbine windfarm in Evanston, WY (Courtesy of Vesta Wind Systems A/S)

The rapid growth of wind power has exceeded most projections. Now there aren’t enough wind turbines to meet demand. Host Bruce Gellerman speaks with Matthew Platsky of Winslow Management Company, a green investment firm.

Transcript

GELLERMAN: These days, you don’t have to be a weatherman to know which way the wind is blowing. You might want to be an investment banker. That’s because the wind turbine business is booming. Demand is so high for wind power there aren’t enough wind turbines to go around.

Joining me is Matthew Patsky. He’s partner and portfolio manager with Boston-based Winslow Management Company, which manages the Winslow Green Growth Fund focusing on companies that address environmental issues. Matthew, welcome.

PATSKY: Thank you, Bruce.

GELLERMAN: Boy, the demand is so big for these things. I was reading the United States went up fourfold since 2000.

PATSKY: Yeah. It’s been growing very rapidly. In 2006, we were up 26 percent and we’re growing a little bit faster this year, up 27 percent.

GELLERMAN: Why is that?

PATSKY: The economics of wind are very compelling. Particularly in an environment of rising fossil fuel prices, the economics have only become more compelling as technology improvements have lowered the cost in producing electricity using wind, and obviously the cost of producing it via fossil fuel has been rising.

GELLERMAN: But in Europe, it’s been big for decades, and it’s only recently here.

PATSKY: In Europe there was much more forward thinking federal government initiatives by a lot of the countries in Europe to promote renewable energy and so you saw, for example, Germany get far ahead of us in terms of use of wind. And basically broadly in Europe there’s been a lot more use of wind power for producing electricity, and we were slower to pick up on that trend.

GELLERMAN: Well, the demand is so high now, they don’t have enough wind turbines to go around.

PATSKY: You’re seeing a couple factors in both the U.S., which is really turning to wind now, in a very major way, with lots of demand and of course China and India, also coming on as part of their energy demands, picking up wind as one of the resources they’re trying to implement. You’ve got such tremendous demand, everybody was caught without enough supply of wind turbines, and all the wind through the manufacturing channel there’s bottlenecks and a need to increase capacity.

GELLERMAN: We’re not talking about the windmills from 20 years ago, which were really kind of small ones. The ones now are enormous.

PATSKY: Right. As they’ve been building them larger and larger, getting more efficient, they’ve also had all sorts of issues. The old blades were made of fiberglass. You actually with the new windmill blades-- because of the blade size in these wind turbines you can’t even make these blades out of fiberglass anymore, you need carbon fiber. There’s a shortage of carbon fiber. And that’s because there’s such a demand for the carbon fiber for use in applications of wind power.

GELLERMAN: And you would think that it’s such a simple looking device. You know it just goes around.

PATSKY: Right.

GELLERMAN: But it’s very complex, a lot of parts.

PATSKY: It is a complicated device and an expensive device, but becoming increasingly economic, and therefore, you know, there’s not only just regulatory reasons why there’s more and more demand for them; it’s because industry is realizing that there’s an economic reason to use them. For example, Florida Light and Power now producing almost 20 percent of their power from wind.

GELLERMAN: And there are states that require a certain amount of power—I think 20, or 21 states that require a certain amount of power be supplied by alternative energy.

PATSKY: Right. Increasingly states have put in place legislation requiring that there be a move toward a certain portion of their electricity needs coming from renewable, and those renewable standards are indeed helping drive some of this growth too.

GELLERMAN: So right now we have this bottleneck on the parts to make these turbines.

PATSKY: Yup.

GELLERMAN: When does that clear up?

PATSKY: I mean you have Vestas building new facilities, which is a wind turbine maker. You have Zoltek which we know well which is a carbon fiber manufacturer has been adding capacity in its facilities, particularly in Hungary. So, you’re really trying to catch up with demand by adding capacity. Now, is there truly ever a catch-up in the near term? I can’t tell. I know that there’s more capacity coming on in ’08 with both of those companies.

GELLERMAN: Wind is bigger than solar.

PATSKY: Wind is bigger than solar because it’s more economic. And of course geothermal which is another alternative energy source is even cheaper. You know you’re going to see some very rapid growth of a lot of different categories of renewable energy over the next decade and wind is certainly seeing the biggest growth because it has so many applications. They can be put in a lot of different places. And obviously the wind farms that you are seeing are producing a lot of electricity with those larger and larger wind turbines.

GELLERMAN: But even with all this growth in the wind industry, it still supplies only a small fraction of the energy that’s consumed in the United States, right?

PATSKY: In the U.S., 50 percent of our energy comes from coal. Less than three percent is coming from wind.

GELLERMAN: So, what would it take for wind power to cover a much greater proportion of our energy use?

PATSKY: Well, you’re seeing 25 percent plus growth now. You’re likely going to see acceleration as some of the capacity issues are eased. And with that you will see continued growth in the market share of energy that’s produced via wind in the U.S. But you’re coming off such a small base, this could go on for many years. You know you could see acceleration to 50 percent and still have that continue for three, four, five, six years and we’re just sort of beginning to make a dent in fossil fuel use.

GELLERMAN: Well, Matt Patsky, thanks for coming in.

PATSKY: Thanks Bruce, it’s my pleasure.

GELLERMAN: Matthew Patsky is partner and portfolio manager with Boston-based Winslow Management Company.

[MUSIC: Radiohead “Like Spinning Plates” from ‘Amnesiac’ (Capitol Records – 2001)]

GELLERMAN: Coming up: heading for the hills of New Zealand. Tuvaluans flee the advancing sea. Stay tuned to Living on Earth.

 

Links

Winslow Management Company

Vestas – The largest wind manufacturer in the world

General Electric’s Wind Turbine Division