EERE: A Record-Breaking Wind Plant and an Invisible Energy Boom

A weekly newsletter from the U.S. Department of Energy's (DOE) Office of Energy Efficiency and Renewable Energy (EERE). The EERE Network News is also available on the Web at: www.eere.energy.gov/news/enn.cfm May 21, 2008 News and Events Former Texas Oilman Pursues the World's Largest Wind Power Plant Interior Department Allows Offshore Wind and Ocean Energy Testing Report Calls Energy Efficiency an "Invisible" Energy Boom Alliance to Save Energy Launches a New Fuel Economy Campaign Global Sales of the Toyota Prius Hybrid Top 1 Million U.S. Experts Say Biofuels Have a Minimal Impact on Food Prices Energy Connections DOE Stops Filling the Strategic Petroleum Reserve

News and Events Former Texas Oilman Pursues the World's Largest Wind Power Plant Texas is already host to a number of large wind plants, including the 736-megawatt Horse Hollow Wind Farm and the 278-megawatt King Mountain Wind Ranch, shown here. Credit: Todd Spink General Electric Company (GE) announced last week that it has received an order for 667 of its 1.5-megawatt (MW) wind turbines from Mesa Power LLP, a company founded by billionaire T. Boone Pickens. Pickens, a former Texas oilman and founder of BP Capital, an energy investment firm, launched Mesa Power to build the world's largest wind power plant, called the Pampa Wind Project. The 4,000 MW facility will be located near Pampa, Texas, which is northeast of Amarillo on the Texas Panhandle, and will stretch to the east, spanning five counties. Mesa Power's current order for wind turbines—the world's largest wind turbine order for a single location—will provide 1,000 MW of wind power capacity for the $2 billion first phase of the project, which will be online by early 2011. Currently, the largest U.S. wind plant has a capacity of 736 MW. In August 2007, Mesa Power filed documents for the Pampa Wind Project with the Electric Reliability Council of Texas (ERCOT) and awarded a contract to Burns & McDonnell to provide initial development and conceptual engineering support for the facility. The company plans to complete all four phases of the $10 billion project by 2014. According to GE, an economic impact study has found that the project will generate 1,500 jobs during its construction phase and support about 720 jobs during its operation. While operating, the project is expected to pay local landowners a total of $65.3 million per year to lease their land for wind power production. See the press release from GE and Burns & McDonnell, and for background on T. Boone Pickens, see his Web site. The Pampa Wind Project will depend heavily on the state's creation of "Competitive Renewable Energy Zones" (CREZs), which will be linked to the grid by new transmission lines. Last year, the Public Utility Commission (PUC) of Texas issued an interim final order that designated five CREZs, including the future site of the Pampa Wind Project (designated as the Panhandle "B" wind zone). In response, ERCOT released a study last month that places the cost of the transmission lines at $2.95-$6.38 billion, with the most expensive option providing 3,270 MW of transmission capacity for the Panhandle "B" zone, and the other options falling short of that. The Wind Coalition claims that the proposed improvements would save consumers more than $3 billion in annual energy costs. The PUC is expected to finalize its order soon, thereby authorizing the development of the new transmission lines. See an overview of CREZs from the Texas State Energy Conservation Office, the press releases from The Wind Coalition on the CREZs and the ERCOT report, and the ERCOT press release. Interior Department Allows Offshore Wind and Ocean Energy Testing The U.S. Department of Interior's Minerals Management Service (MMS) has designated five areas on the Outer Continental Shelf for testing new energy technologies related to wind power, wave energy, and ocean currents. The five areas are located off the coasts of California, Delaware, Florida, Georgia, and New Jersey. The agency is proposing limited, temporary leases in these areas for data collection and technology testing, but commercial energy production will not be allowed. In November 2007, the MMS proposed allowing such short-term leases and requested detailed information from parties wishing to obtain such leases. In response, the agency received more than 40 nominations for research projects, of which 16 could be located in the five newly designated areas. Ten of the proposed projects relate to wind power and would be located off the coasts of Delaware, Georgia, and New Jersey. In addition, 4 ocean current projects would be located near the Florida coast and 2 wave energy projects would be located off the Northern California shore. Public comments on the proposed lease areas are due by June 17. See the MMS press release. Report Calls Energy Efficiency an "Invisible" Energy Boom Energy efficiency has met three-quarters of the U.S. demand for new energy services since 1970, but it goes relatively unnoticed amid a focus on energy production, according to a new report from the American Council for an Energy Efficient Economy (ACEEE). The report notes that the U.S. economy uses half as much energy per unit of economic output than it did back in 1970, making energy efficiency the "fastest-growing success story of the last 50 years." The report focuses specifically on 2004, when roughly $300 billion was invested in energy efficiency in the United States, supporting 1.6 million jobs. That investment was triple the amount invested in the energy supply infrastructure, and it generated 1.7 quadrillion Btu, or quads, of energy savings. For comparison, the United States currently consumes about 100 quads of energy. The 2004 savings were roughly equal to the combined energy output of 40 mid-sized coal-fired power plants. Nearly 60% of total energy efficiency investments were made in buildings, including homes, commercial buildings, and energy efficient devices, while about a quarter of the investments went toward industrial energy efficiency improvements. Only 11% of the investments went towards improving the fuel economy of cars, trucks, aircraft, and other forms of transportation, despite the fact that the transportation sector consumes 28% of the U.S. energy supply. The ACEEE report also finds plenty of room for improvement, noting that the United States can reduce energy consumption by an additional 25%-30% over the next quarter century through cost-effective energy efficiency measures. In an environment of accelerated market transformation and rapid growth in energy efficiency, the total annual investments in energy efficiency could approach $400 billion by 2030, according to the report. See the ACEEE press release. Alliance to Save Energy Launches a New Fuel Economy Campaign The Alliance to Save Energy (ASE), the Wal-Mart Foundation, and 16 public and private partners have launched the "Drive $marter Challenge," a fuel efficiency campaign to help U.S. consumers lower their gasoline costs. The new campaign, launched yesterday, offers effective money- and gasoline-saving tips in both English and Spanish, as well as extensive additional resources. The campaign's interactive Web site allows you to find out exactly how much money you can save by following six easy tips for vehicle maintenance and sensible driving, and it also allow you to challenge up to six friends or family members to join you in the fuel savings. See the ASE press release and take the challenge on the Drive $marter Challenge Web site. The members of the American Trucking Associations (ATA) are also looking to improve their fuel efficiency, partly because they know that reducing the demand for diesel fuel could help keep its cost down, but also out of a need to address global climate change. Under the banner of "Trucks Deliver a Cleaner Tomorrow," truckers aims to reduce their fuel consumption by 86 billion gallons while cutting carbon dioxide emissions by 900 million tons over the next decade. To meet that goal, the ATA recommends that shippers and carriers join the SmartWay Transport Partnership Program, an effort spearheaded by the U.S. Environmental Protection Agency (EPA) with the goal of improving the fuel efficiency of trucking. However, most of the other recommendations call for federal action, including reducing the national speed limit to 65 miles per hour (mph), requiring truck manufacturers to set speed limiters at 68 mph or less, providing incentives for idle-reduction technologies, reducing congestion on highways, allowing trucks to carry larger volumes of freight, and setting fuel economy standards for medium- and heavy-duty trucks. See the ATA press release (PDF 62 KB), the program Web site, and the EPA SmartWay Transport Partnership. Download Adobe Reader. Global Sales of the Toyota Prius Hybrid Top 1 Million The Prius is one of Toyota's top sellers in the United States, a fact that has helped Toyota sell 1 million of the vehicles worldwide. Credit: Toyota Toyota Motor Corporation announced last week that its worldwide cumulative sales of the Toyota Prius have passed the 1 million mark. The Prius hybrid is now sold in more than 40 countries and regions, but the market leaders remain Japan and North America. In fact, North America has provided nearly 60% of all Prius sales, and reached 183,800 vehicles in 2007. That sales pace has accelerated in early 2008, with 66,100 vehicles sold in North America in the first four months, a rate that would result in nearly 200,000 sales if continued through the entire year. In fact, Toyota sold 21,757 Prius hybrids in the United States in April, setting a record for April sales and making the Prius the third most popular vehicle in the Toyota line, trailing the Corolla and the Camry. See the Toyota press releases on the Prius global sales and April U.S. sales. While Toyota is enjoying the lion's share of benefits from the hybrid vehicle market, Nissan Motor Company, Ltd. aims to profit from the next generation of plug-in hybrid and fuel cell vehicles. In April, the company launched a joint venture with NEC Corporation and its subsidiary, NEC TOKIN Corporation, to develop and mass produce advanced lithium-ion batteries. On Monday, the new company, called Automotive Energy Supply Corporation (AESC), began full operations. The new company will invest $114.6 million over a three-year period in a manufacturing facility that will start producing 13,000 batteries per year in 2009. At full capacity, the plant will manufacture 65,000 batteries per year. The batteries employ a compact laminated configuration with lithium-manganese electrodes, which NEC TOKIN will manufacture at a separate facility through an additional investment of $105.1 million over the next three years. AESC intends to install the batteries in electric forklifts next year, and Nissan plans to use the batteries in both a hybrid and an all-electric vehicle starting in 2010. Nissan claims that the batteries deliver twice as much power as the nickel-metal hydride batteries used in today's hybrid vehicles. In field tests exceeding 60,000 miles, the batteries have demonstrated high performance without any safety problems, according to the company. See the Nissan press release. U.S. Experts Say Biofuels Have a Minimal Impact on Food Prices With global food prices rising rapidly, the chairman of the President's Council of Economic Advisers and the Secretary of Agriculture have both emphasized recently that the production of ethanol from corn has had little impact on food prices. In testimony before the Senate Foreign Relations Committee last week, Edward Lazear, the chairman of the President's Council on Economic Advisers, concluded that corn ethanol is only responsible for about 3% of the increase in food prices over the past year. Lazear noted that global food prices climbed 43% between March 2007 and March 2008, with wheat prices up 123%, corn prices up 37%, and rice prices up 36%, but he attributed most of that price increase to increasing demand and reduced global crop production due to adverse weather conditions. The U.S. production of ethanol from corn is responsible for only about a fifth of the price increase for corn, and on a global scale, ethanol production is responsible for about a third of the price increase for corn. Because corn represents only a fraction of the global food supply, ethanol production is estimated to be responsible for only 1.2 percentage points in the 43% rise in global food prices. See Chairman Lazear's testimony on the White House Web site. Secretary of Agriculture Ed Schafer and his staff seconded that conclusion in a briefing on Monday, and also noted the benefits of ethanol production. U.S. crop and livestock producers have seen a 43% increase in fuel costs this year and a 67% increase in fertilizer costs, both of which are driven by high fuel prices. U.S. farmers are welcoming the increased crop prices, while the impact on the U.S. consumer is tempered, because only about one-fifth of our food cost is driven by the commodity cost. As a result, the U.S. consumer price index for food has risen only 4%, while U.S. prices are expected to rise at most 6% in 2008. At the same time, biofuels have cut the global consumption of crude oil by 1 million barrels per day, helping to relieve the stress on oil supplies. U.S. ethanol production has cut the average retail cost of gasoline by 29-40 cents per gallon, according to a new report from Iowa State University. See the USDA briefing materials and the Iowa State report (PDF 350 KB). Download Adobe Reader. Looking ahead, the U.S. Department of Agriculture (USDA) expects the total use of U.S. corn to decrease by 2% in the 2008 and 2009 season, despite a 33% increase in the amount of corn going toward ethanol production. Although ethanol biorefineries will require 4 billion bushels of corn, feed and residual use will decline 14%, and exports will drop 16% in the face of growing global competition, according to the May 9 edition of "World Agriculture Supply and Demand Estimates." The total corn crop is estimated at 12.1 billion bushels, down 7% due to less planted acres and a projected decrease in yield. This will cause corn use to exceed production, decreasing corn stocks and pushing prices higher, to a record $5-$6 per bushel. Meanwhile, adverse weather conditions have continued to delay corn plantings, threatening to further lower U.S. corn production. The May 19 edition of "Crop Progress" reports that only 73% of the corn has been planted in the major corn-producing states, placing this year's crop 15 percentage points behind the five-year average. Only 26% of the corn plants have emerged, compared to the five-year average of 56% for this time of the year. See the USDA's world agriculture report (PDF 92 KB) and Crop Progress report (PDF 216 KB).

Energy Connections DOE Stops Filling the Strategic Petroleum Reserve DOE announced last week that it will not sign contracts this year for the addition of up to 13 million barrels of crude oil to the nation's strategic petroleum reserve (SPR). The move anticipated the "Strategic Petroleum Reserve Fill Suspension and Consumer Protection Act of 2008," which President Bush signed on Monday. That bill suspends additions to the SPR through the end of the year, unless the price of oil drops below $75 per barrel. DOE planned to start adding 76,000 barrels per day to the SPR from August through December, increasing the SPR from its current capacity of 727 million barrels toward its eventual goal of 1 billion barrels, as set by the Energy Policy Act of 2005. Congress decided to halt SPR additions in response to current high oil prices. See the press releases from DOE and the White House and the full text of the bill, House Resolution 6022. Stopping the addition of oil to the SPR was meant to reduce demand pressures on oil, but if it has had any impact on oil prices, it was not apparent as of yesterday. The price of light, sweet crude oil for July delivery settled near $129 per barrel on Tuesday, while the daily price of a "basket" of crude oils compiled by the Organization of the Petroleum Exporting Countries, or OPEC, held nearly steady on Monday, at $119.24 (this includes heavier crude oils that are not well suited to the U.S. market). Meanwhile, both diesel fuel and gasoline set new retail price records on Tuesday, with diesel fuel reaching $4.539 per gallon and gasoline hitting $3.80 per gallon. See the latest oil prices on the New York Mercantile Exchange and OPEC Web sites, and for the latest retail fuel prices, see the American Automobile Association's Fuel Gauge Report.

This newsletter is funded by DOE's Office of Energy Efficiency and Renewable Energy (EERE) and is also available on the EERE Web site. You can subscribe to the EERE Network News using our simple online form. If you have questions or comments about this newsletter, please contact the editor, Kevin Eber.