Last week, on October 5th, Ohio Governor Strickland announced with great fanfare that a new 49.9 MW solar project, dubbed Turning Point Solar, will likely (pending approval of regulators) be constructed in a remote part of southeastern Ohio. In governor Strickland’s press release, he is quoted as saying: “We recognized the future when we established our state’s aggressive renewable portfolio standard, invested in the energy industry and eliminated taxes for new energy facilities to create jobs and grow Ohio’s advanced energy industry,” said Strickland. “Today, the future has recognized Ohio. One of the largest solar farms in the nation is going to be built here in Ohio, with solar panels and solar trackers made in Ohio, built by Ohioans with the know-how taught in Ohio colleges.”

Zack Space, Ohio Congressman for the district in which the project will be located, jumped onto the political bandwagon and said that: “Today’s announcement of more than 300 jobs coming to Southeastern Ohio provides an enormous boost for our economy in the short-term, and paves the way for the kind of long-term development that will help Appalachian Ohio reverse the economic disparity that has been so devastating to our towns and communities.” Not missing an opportunity to appeal to his constituency, Ohio Senator Sherrod Brown was quoted as saying: “Today’s announcement shows how Ohio is poised to lead the nation in clean energy” and that “Solar energy has the potential to bring a host of benefits to southeastern Ohio, including hundreds of new manufacturing jobs and clean energy for hundreds of thousands of rural Ohioans.”

The Turning Point Solar project is indeed a terrific solar project. Built on about 500 acres, the project will turn a former strip mine into green power generation. Since the project is chartered to use about 239,000 c-Si solar modules from Isophoton, it could (if state and local incentives are approved) reasonably employ 200-300 “Ohioans” to build modules in a 60 MW facility from solar cells made in Spain. Approximately another 300 employees would be needed for a year or two to build and install the project itself, and Prius Energy, that makes trackers and racking systems for solar modules, could reasonably employ a few more people. As importantly, the utility company American Electric Power (AEP) should be applauded for agreeing in an MOU to a 20-year PPA that underwrites the project and helps AEP to reach its RPS goals.

Isn’t it interesting, though, that this announcement occurred a few weeks before mid-term elections take place? Would the fact that Governor Strickland and Congressman Space are in tight races to keep their respective jobs have anything to do with the timing of the announcement and their repeated mentioning jobs for their constituencies? Also, why would such a large installation be limited to precisely 49.9 MW? Why not 50 MW? Could this slight difference be driven by easier approval of regulators?

Additionally, note that the Isophoton will build modules, not cells, in the US which, when combined with module manufacturing in the U.S. by SunTech Power and Yingli Green Energy, confirms a likely trend in which solar companies plan to build bulky c-Si modules here but not the easy-to-ship, more labor intensive c-Si cells.

While the U.S. wind industry has become a major player in global markets with traditional terrestrial power generation applications, efforts to move offshore – where wind resources are far superior but logistics are more challenging – have been hampered by a lack of regulatory support at both federal and state levels.
The American Wind Energy Association (AWEA) sponsored a conference last week in Atlantic City, New Jersey, attracting roughly 1,500 attendees from around the globe, with heavy representation from European turbine manufacturers such as Vestas, Gamesa, REPower and Siemens, firms that dominate sales in today’s major offshore markets such as the United Kingdom and Denmark.

The conference started off with a bang and a bit of ceremony with U.S. Department of the Interior Secretary Ken Salazar signing a 28-year lease for the first offshore wind project in the U.S., to be located off the coast of Cape Cod, Massachusetts.

The Cape Wind project, which will rely upon 130 3.6 MW wind turbines provided by Siemens, will grow from a first phase of 182 MW up to 468 MW at full build out. The project took 8 years to gain final approvals, and drew staunch opposition from wealthy citizens residing on Cape Cod, including the infamous Kennedy family.

In a passionate speech, Salazar pointed out that taking eight years to permit an offshore wind project was unacceptable. He promised that by the end of 2010, the federal government hopes “to identify places where offshore wind makes sense.” He suggested that this approach — which has been utilized by European countries such as Denmark — could help reduce the length of future permitting battles as environmental reviews could be expedited up-front, “so developer proposals will have a better chance.”

Atlantic City was selected as the venue for this premier conference because New Jersey Governor Chris Christie signed the Offshore Wind Economic Development Act into law on July 19, 2010. The Act will provide $100 million in tax credits for offshore wind developments in the Atlantic Ocean that connect to the New Jersey grid. Special “offshore renewable energy credits” (ORECs) help make projects more economic, with a “Clean Energy Manufacturing Fund” offering additional grants and loans based on local job creation. At present, three of the five “interim leases” offered for offshore wind projects in the U.S. have been secured off the New Jersey Coast, representing 1.4 GW of capacity.

Several other U.S. states have set up special incentives for offshore wind projects:

• Rhode Island has a special 15% by 2019 set-aside for offshore wind, with the so-called “Deep Water” offshore project currently under development.

• New York has released two RFPs: one for 120-500 MW of freshwater offshore wind on Lake Erie and Lake Ontario; and a second saltwater RFP for 350-700 MW off the coast of Long Island.

• Virginia offers a unique incentive approach, allowing each MW of offshore wind development to count as the equivalent of 3 MW when complying with the state’s Renewable Portfolio Standard.

• Even more generous is Delaware, which offers a 3.5 times multiplier on RECs from offshore wind (which increases to a 4.2 multiplier if 50% of turbine components are manufactured in-state).

• Maine has a special deepwater offshore program focused on 30 MW of pioneering projects that validate new foundation and installation technologies.

• Since Ohio does not have sufficient wind resources to meet its 12.5% by 2025 RPS, the state is looking to develop 20 MW of freshwater offshore wind on Lake Erie, a total that could grow to 1 GW by 2020.
Despite the hype and headlines, there was also some sobering news at the conference. The National Renewable Energy Laboratory projects that including the current PTC and other available federal incentives, the cost for offshore wind is still over 22 cents/kWh. An estimate from Europe was even higher – 26 cents/kWh.

Given the high costs of offshore wind, the rationale for policy support is increasingly focused on economic development. One study by Siemens showed that offshore wind provides 22 jobs per MW in Europe, which compares to approximately 7 jobs per MW for onshore wind there. Jobs in the U.S. are much lower, according to the study, with just 2 jobs per MW for onshore wind, the key difference being Europe’s market features 90% local content, while the U.S. is closer to 50%. Rather than manufacturing being the key to maximizing jobs on land-based wind projects, it is ongoing maintenance that provides 70% of employment benefits for offshore wind over the long term.

The U.S. Department of Energy estimates that 54 GW of offshore wind could be included in the 300 GW required to meet 20% of the U.S. electricity needs in 2030.

Despite the hype and hope, Europe is way out in front of the U.S. in this clean energy sector. At present, 17 offshore wind projects are under actual construction in Europe totaling more than 3.5 GW. The projected growth rate for 2010 is 75% when compared to 2009, with 1 GW expected to come on-line by the end of the year. Though the U.K. is now by far and away the market leader, Germany – in spite of its very limited coastline – may soon move into second place.

To get a sense of scale of this opportunity consider that one off-shore wind project proposed in the U.K. would total 9 GW alone, and would represent the fifth largest infrastructure project in the world. All told, 5 GW of offshore wind are currently under development in the U.K. with a goal of 33 GW of offshore wind development by 2020, an investment of $150 billion.

On September 30, California’s Governor Schwarzenegger signed Assembly Bill 2514 into law, which sets mandatory targets for energy storage systems in the utility sector. Groups such as the California Energy Storage Alliance have been working hard to promote this bill, the first of its kind.

Energy storage is being championed as one of the keys to unlocking renewable energy, especially wind energy. Energy losses due to wind curtailment, for example, in which the utility or grid operator deliberately removes wind-generating capacity from the grid to avoid overloading the grid with power, could be avoided with storage devices and help the state meet its aggressive RPS target of 33% by 2020. Storage can also be used as a substitute for expensive new construction of transmission lines and infrastructure and perform crucial ancillary services on the grid.

AB 2514 requires the California Public Utilities Commission (CPUC) to establish roadmaps for major electricity providers to procure energy storage systems. These systems must be both “viable” and “cost-effective,” which is a tricky part of the puzzle, as many of the storage technologies in use today—batteries, in particular—might not satisfy the cost-effectiveness requirement of the bill. Other technologies, such as pumped hydro or CAES, may stand a better chance of coming in on budget.

Widespread deployments of storage won’t happen overnight, though. The bill requires private electric companies to establish their procurement targets by October 2013, and the first stage is to be implemented by December 2015—over five years from now. The dates are set even further back for publicly owned utilities, to 2014 and 2016, respectively. That may give battery vendors enough time to drive down the costs of their systems and have a chance at this market.

The act leaves little room for utilities to avoid using energy storage in future build-outs of renewable energy and fossil fuel-based assets that provide ancillary services. The first version of the bill, which was eventually struck down, would have required the state’s three largest utilities—PG&E, SCE, and SDG&E—to have energy storage systems with a capacity measuring 2.25 percent of average peak electrical demand by 2020. The final version defers the target-setting to a later time.

Of the 16 DOE-funded “Energy Storage Demonstrations” announced in November 2009, seven will be installed at sites in California for household names including SCE and PG&E. These, along with other announcements such as Community Energy Storage (CES) projects, represent almost three-fifths of all energy storage capacity announced for the U.S. in the last year. The results of these demonstrations will provide hard data on the performance and costs associated with grid-connected storage as CPUC establishes its 2015 and 2020 targets.

The market for turbo chargers in small engines is about to heat up. If Honeywell is to be believed the global market will grow from 17 million new turbo vehicles in 2009 to 35 million in 2015, while the U.S. market will see growth from 5% to 20% of the internal combustion engine market. With the tightening CAFE requirements and the growth in demand for smaller vehicles, these numbers are not too hard to believe. In fact, I might argue that the numbers for 2015 may be a bit on the conservative side assuming it includes diesels and Chinese manufacturers.

In many ways, turbo chargers are currently the best “off the shelf” technology available today to improve fuel economy. By reducing the size of the engine then adding a turbo to maintain vehicle performance, automakers are finding they improve vehicle fuel economy by 10% to 20% in gasoline and up to a whopping 40% in diesels. There are essentially four main competitors in the turbo market right now, Honeywell, Borgwarner, Mitsubishi, and IHI Corporation. Honeywell and Borgwarner are the dominate players in this market at the moment.

But the market for turbos appears to be headed for a shakeup. The large German auto supplier, Continental AG, is developing a turbo that they plan on offering in 2011 and have stated that they are going to aggressively pursue the turbo market with OEMs. Since purchasing Siemens VDO from Siemens AG in 2007, Continental AG has grown into a major supplier to the auto industry. Their goal is to reach 4 million turbo unit sales by 2015 (a little over 10% of the market predicted by Honeywell). They claim to already have a deal with a European OEM (they are not saying who), and since they have connection with most major automotive OEMs their goals can’t be considered too over the top.

However, since Honeywell is already supplying turbos for the Chevy Cruze Eco and Ford Ecoboost engines in the U.S. and Borgwarner is supplying turbos to BMW, VW, Ford, Nissan, and Hyundai’s diesels in Europe, Continental won’t have an easy path to market. It would not be surprising if during their bid to become a major player in the turbo market, the cost of turbo chargers in general fall (if only for a little while). In the end, assuming their product meets expectations, I expect Continental will be successful in becoming a major player in the turbo market.

With government pressure on to increase fuel economy and consumers still feeling the pinch of the recession in both here and Europe, auto makers are on the hunt for new solutions to improve fuel economy without substantial added cost to the vehicle. New technology such as dual spark and lighter weight materials will help, but it’s likely that technology like turbo chargers will provide a lot of bang for the buck without having a substantial impact on either consumer wallets or behavior.