The Power of Wind.

“The answer my friend, is blowin’ in the wind, the answer is blowin’ in the wind”

The words from Bob Dylan’s classic probably ring truer today than when he first sang them. With environmental groups pressing the greenhouse gas and global warming issues and oil at near all time highs, we are desperately looking for clean, renewable and cheap energy. Wind fits the bill on all three counts.

Although wind currently accounts for just over 1% of world-wide electric use, some countries are ahead of the curve and have made a significant impact on their natural resources. Denmark gets a fifth of its electricity from wind. Spain is next on the list with 9% and Germany follows up with 7%.

So why have we, a country that was referred to as “the Saudi Arabia of wind”, by the National Renewable Energy Laboratory (NREL), fallen behind in the wind production race? As a country that was founded by entrepreneurs and full of opportunists, it’s hard to imagine how we have overlooked the amazing potential available here. In fact, the Midwest region, including Nebraska, could potentially generate 5.4 trillion kilowatt-hours of electricity from wind turbines. That's nearly twice the electricity used in the United States every year. All states in the region, with the exception of Missouri, have more than enough wind energy available to meet all their electrical needs. The top state in the region, Nebraska, could even become a net exporter of electricity since it has the potential of producing nearly three and a half times the power needed by the entire seven state territory, according to the NREL.

The last major push for wind power was attempted in the 1980’s when tax incentives were being handed out by the millions and, not coincidentally, oil was at record highs. But unfortunately, the original turbines have become largely obsolete, and once oil came down, we abandoned the cause.

George Santayana once said, "Those who do not remember the past are condemned to repeat it."

We are at a critical point in our countries history and again subsidies and incentives are being doled out to encourage the development and production of clean fuel sources. But this isn’t the 80’s anymore, there are many differences that I believe will allow us to not only stay the course with wind power, but also gain a certain level of energy independence.

Allow me to make my point:

1) Oil’s price has largely been based on supply and demand. Even if you don’t believe that the world’s peak production level has been reached, there is no arguing when it comes to the demand increase. With China putting an estimated 20,000 new cars on the road everyday, demand is only going to intensify.

2) Wind was considered a “variable” resource due to its unpredictability. Like other electricity sources, wind energy must be "scheduled". Wind power forecasting methods are used, but predictability of wind plant output remains low. But with the introduction (and efficiency) of grid energy storage facilities, wind can now be shaped and stored. The total cost for additional storage can add up to a 25% increase, but that still makes wind affordable and more importantly, reliable.

3) Environmentalists have always been concerned about the impact on the local wildlife. From birds of prey to the silver-haired bat, many were threatened by the massive wind turbines. But now, studies are done before a new wind plant is erected. Flight patterns, migration habits and other relevant data is complied and studied prior to building to help reduce the negative impact. Due to such studies, the numbers of deaths have been significantly reduced. Recent studies in the UK have revealed that, on average, one bird is killed per turbine per year, compared to 10 million per year that are killed by cars alone.

4) EROI (Energy Return on Investment). After all, I’m an investor and everything comes down to the bottom line. Wind energy is equal to the cumulative electricity generated divided by the cumulative primary energy required to build and maintain a turbine. The EROI for wind ranges (depending on such factors as location, actual wind, time in storage, etc...) from 5 to 35, with an average of around 18. This places wind energy in a beneficial position relative to conventional power generation technologies in terms of EROI. Since energy produced is several times energy consumed in construction, there is a net energy gain. As technologies continue to improve, so will the net gain. I’m optimistic that the average will drastically increase as we start to utilize areas such as the Midwest.

5) Potential. The wind power available in the atmosphere is much greater than current world energy consumption. The most comprehensive study to date (Journal of Geophysical Research, 2005) found the potential of wind power on land and near-shore to be 72 TW (terawatt), equivalent to 54,000 MToE (million tons of oil equivalent) per year, or over five times the world's current energy use in all forms!!! This alone should be enough to convince any skeptics.

6) Clean, renewable and now affordable. Wind power consumes no fuel for continuing operation and has no emissions directly related to electricity production. Operation does not produce carbon dioxide, sulfur dioxide, mercury, particulates, or any other type of air pollution, as do fossil fuel power sources. Even with out incentives and subsidies, advances in technology have mad the clean energy resource more affordable than ever.

Have I convinced you yet?

One person that needed no convincing was John Eber, a managing director for JPMorgan Investments in energy, stating "There are far greater opportunities to make good investments in wind at the moment compared with other renewable energies. The market is much better developed."

If we’re going to actually address our energy independence and global warming, now is the time to do it. Never before in our world’s history have the stars aligned so perfectly for alternative energy sources, and I believe wind can lead the way.

As Dylan said, “the answer is blowin’ in the wind”. Now let’s have the fortitude of Winston Churchill, “Lest we forget”.

This column is for entertainment purposes only and should not be construed as investment advice. Please view our complete disclaimer here.