Gabriel Alonso, Chief Executive Officer of Horizon Wind Energy and Chief Operating Officer of EDP Renewables North America, is confident that wind power is the wave of the future, despite today’s challenges. Of all forms of renewable energy, he sees wind power’s economics as the best investment.
The fundamentals of wind power generation are extremely strong, according to Gabriel Alonso, thanks to the key drivers for wind power: the ever increasing demand for electricity, coupled with increasing pressure to generate electricity from renewable sources. We all consume increasing amounts of electricity as we surround ourselves with more electric devices. Wind power can help meet that increasing demand in a world with enormous environmental and economic challenges due to the existence of limited resources.
“Developing wind energy presents many challenges, some of them being siting, transmission, capital availability, and operational excellence. DNV helps Horizon Wind Energy and the rest of the industry understand how wind performs in our facilities, and why some of them are not working as projected.”
DNV provides a variety of key services to Horizon Wind Energy, including support of the original acquisition of assets, studies of wind farms, gathering and processing of data from meteorological towers, wind turbine selection, audits and end-of-warranty inspections. The services are critical to Horizon’s success, says Mr Alonso who has 14 years of wind energy experience in North America, Europe and North Africa and serves on the American Wind Energy Association Executive Committee and Board of Directors.
“Wind farms are fully front-loaded investments, so we need to be sure the wind blows, the wind turbines perform, the electricity prices hold and the operational expenses stay as we originally projected. There are activities that we do not perform ourselves and we don’t see the need to develop in-house capabilities, so we are comfortable to work with DNV,” he says. “Even more importantly, DNV helps us maintain our reputation. We must be able to forecast properly and make sure that every new investment is certain.”
Horizon, the third largest US wind-energy provider, is an early-mover that operates over 3,300 megawatts of wind power generation from 22 wind farms in nine states, including Oklahoma, where it built that state’s first wind farm. The company, which has been developing wind energy projects since 1999 and working with DNV since 2000, is wholly owned by publicly held EDP Renewables, based in Spain and is the 3rd largest wind energy company in the world. The majority of EDP Renewables is owned by the EDP Group, Portugal’s largest industrial group and one of Europe’s major energy companies.
Today’s challenges
Currently, demand for energy from the industrial and commercial sectors is lower than it was in 2008 and has not yet recovered over the past two years. The current economic recession has meant less economic activity due to less consumption of goods and services and therefore less manufacturing and commercial activity, explains Mr Alonso. “In the near term, it is difficult for a utility to justify entering into long-term contracts to acquire electricity from any source when demand for electricity is low. But everyone knows that long-term demand for energy will increase.”
The key question, he says, is which source of energy is going to supply the incremental demand for energy. “I think this is where wind energy is well-positioned for several reasons: first, balanced usage of existing resources to produce electricity and second, pricing certainty over the long run, and finally, wind energy is easy and quick to deploy. As the population increases, resources will be more and more scarce, and any human activity should be balanced within the ‘cycle of nature’. Wind energy is a positive addition within this cycle, it does not burn or consume any other limited or scarce resource like water, gas, or wood to produce electricity. Wind energy harnesses the wind to produce electricity as it passes through a wind turbine.”
Wind is the best long-term solution when compared to other sources of renewable and conventional energy, he says. Solar-thermal facilities are more expensive to build than wind farms, which are modular and easily deployed. He considers photovoltaic energy to be a good solution for distributed generation but difficult to scale up for utility applications. Geothermal facilities require incremental drilling to keep operating and natural gas has inherent price and marginal-cost volatility, plus water usage, which is becoming an increasingly important commodity.
The current low price for gas represents another challenge impacting demand for wind power. However, Mr Alonso expects that gas prices will increase as the shale gas industry matures. In contrast, Mr Alonso believes wind farms avoid the need for continual resource extraction, marginal-cost risk and fuel-price volatility because wind is free.
“Wind energy covers 40–50% of the growth margin in energy demand,” says Mr Alonso. “It will be difficult for other sources to gain that same percentage of the growth generation that is being displaced by retiring coal and oil plants. Also, it is very important that, on a regulatory basis, there is a clear mandate for utilities to procure a large part of that incremental demand from renewable energy sources.”
Expanding horizons
EDP Renewables plans to expand into the Canadian market. “We have an office and a team deployed in Canada,” says Mr Alonso. “We are looking at building our portfolio there. Our strategy is to grow organically. EDP Renewables is an experienced greenfield developer, and our model which has worked so well in the US will work well in Canada, where some of the provinces are providing the right schemes to support wind energy.”
Although Mr Alonso sees an opportunity to expand into Mexico due to the country’s declining oil and gas production and robust wind resource, Mexico is “a long-term bet”. Meanwhile, EDP Renewables continues to be active in Spain, Portugal, France, Poland, Romania, Belgium, Italy and elsewhere. Keeping its eye on the horizon, EDP Renewables is also developing wind farms offshore in the UK.
Text: Jeannie Stell
Date: 08 March 2011