Few new industries have attracted as much attention in recent years as wind energy, a business that could bring big shipping business through Gulf Coast ports. But the market has blown hot and cold, largely because of financing difficulties and uncertainty about government incentives for wind energy projects.
A big indication of the market’s weakness came in June 2009 when billionaire T. Boone Pickens, who made his vast fortune in the oil business, canceled plans to build the world’s biggest wind farm in Texas. He said the project was stopped partly because existing transmission line capacity wasn’t available. His company had planned to build new lines, but couldn’t get financing.
“The problem with wind energy is that if you look at the costs of building wind farms, and wind power is intermittent, the cost of a megawatt is higher per unit than for standard gas or coal plants,” said Walter Kemmsies, chief economist for the consulting firm Moffatt & Nichol.
“Everyone was optimistic about wind, and it looked like the sky was the limit for the next three to five years — but then the economic downturn arrived,” said Mike Wilson, director of trade development at the Port of Freeport, Texas. The port is one of several Gulf ports that have made a specialty of handling and storing the massive blades, nacelles and tower sections that can take up port space for months or even years while project developers get their financing, permitting and other wind farm-related ducks in a row.
“Manufacturers had sold (wind components), but they hadn’t been installed, and then the financing crunch caused (owners) to store them. Orders weren’t canceled, but developers had no ability to construct farms, and that slowed production and delivery,” Wilson said.
Still, wind energy has been a growing business at several Gulf ports, including Houston. That’s primarily because of imports from India, Spain and Brazil. But Alec Dreyer, CEO of the Port of Houston Authority, expects the port will see fewer imports of wind turbines because most non-U.S. suppliers, including Denmark’s Vestas, Gamesa of Spain, and Siemens of Germany are producing the turbines in the U.S.
Domestic manufacturers, led by General Electric, account for an ever-increasing percentage of the wind equipment used in the U.S.
Growth in domestic capacity has now outpaced growth in imports, although the U.S. remains a large importer of wind equipment, according to the Lawrence Berkeley National Lab’s “Wind Technologies Market Report,” published in August.
The import share of equipment-related turbine costs is estimated to have fallen from 50 percent in 2008 to 40 percent in 2009. Wind turbine imports were worth about $4.2 billion in 2009, down 22 percent from $5.4 billion in 2008, according to the report.
The report noted, however, this will probably be a slower year, because of a combination of the financial crisis, lower wholesale electricity prices, and lower demand for renewable energy.
Exports, by contrast, have been paltry, totaling just $120 million last year, although that was a sixfold increase over the $20 million in sales in 2008, according to the report. However, exports should continue to rise because of growth in domestic manufacturing.
John LaRue, executive director of Port Corpus Christi, sees good opportunities at the port in the production of offshore windmills. Construction costs “are significantly higher because the units are so much larger, but the efficiencies are there,” he said.” They will have to be built adjacent to ports because the blades are so large that they are very difficult to transport by rail or truck. We’re talking with some companies about that.”
LaRue said there probably will not be any deals in 2011, “but not too long after that.” Corpus Christi is dealing with companies such as GE, Vestas, Gamesa, Mitsubishi and Siemens, he said, adding, “The Chinese are starting to get into it. We expect them to come in soon.”
Acreage is crucial to handling and storing massive wind components: Tower sections are generally 80 feet long and 12 to 13 feet in diameter; wind blades can be as long as 180 feet, and nacelles can weigh as much as 83 tons.
Blade Dynamics, a British company, will import components and manufacturing in New Orleans, said Robert Landry, the port’s marketing director.
John Roby, director of customer service at the Port of Beaumont, is enthusiastic about the port’s prospects for growth in wind energy components. Traffic at the Texas port surged in July and August, when it handled five entire trainloads and almost 50 truckloads carrying a total of almost 500 individual components for the construction of new windmills. Since then, however, business has slowed.
The Port of Brownsville, Texas, expects to start handling wind products in three to four months, said Tony Rodriguez, director of cargo services. The port has a deal with a company in Mexico, he said, though he could not identify it because there has not been an official announcement. “We have ample available land. We’ve been working with our board, and our port director is opening up properties so we can accommodate turbines,” he said.
The shortage of land is a problem at Gulfport, Miss. “We’ve looked at it, but we haven’t seen the right opportunity because it requires vast areas of real estate,” said Don Allee, executive director.
Janet Nodar contributed to this report.
Contact William Armbruster at email@example.com.