TOM BEARDEN: There isn't much to see on the plains of West Texas -- Greasewood and mesquite, cattle and sheep, a lot of oil pumps. But on some of the distant mesas a new source of energy is emerging -- one that proponents think could be even more abundant than the oil that made a lot of Texans rich. Two hundred and forty two giant new wind turbines made in Denmark are being constructed south of Midland, Texas. Hundreds more are already operating nearby, feeding the statewide power grid -- an impressive demonstration of wind's new status in the energy business.
ROBERT I. MORRISON, Vice President, FPL Energy: With the recent run-up in fossil fuel prices, we've had a good number of utilities approach us directly and ask about adding some of this to their portfolio generation, simply as a diversification away from being totally dependent on, say, natural gas, which, as we've seen recently, is subject to lots of spikiness in its price.
TOM BEARDEN: But not all utilities are enthusiastic. Colorado's biggest utility, Xcel Energy, also has a wind farm, but it's reluctant to build more. The company's engineers, who follow the output of every plant in their system, are worried about reliability.
HENRY KLAIMAN, Xcel Energy: This is an example of the wind farm. You can see in about an hour's timeframe, we had quite a large fluctuation in the generation there as the wind speed varied quite a bit.
TOM BEARDEN: Even so, some serious money is being spent on wind power, once considered mostly an environmentalist's dream. Wind got a lot of press in the late '70s, during an earlier energy crisis. But the technology got a black eye from failed projects like this one at Altamont Pass in Northern California. The technology and the regulatory climate has come a long way since then. FPL Energy, an unregulated division of Florida Power and Light, is spending a billion dollars building wind farms around the country. When their plant in West Texas is done, it'll generate 160 megawatts, enough to power 48,000 homes. That's a big difference from the anemic performance of older turbines.
ROBERT I. MORRISON: The primary change that has gone in the last 20 years in this industry has been the machines have gotten very much larger. These are probably seven or eight times larger than the original machines that were installed in California. That makes them much more efficient, and the energy that comes out of them less expensive.
SPOKESMAN: Every turbine has its own computer that controls the operation of that turbine...
TOM BEARDEN: But there's more to the cost equation than just better technology; federal tax advantages are also involved. Altamont Pass got tax credits just for erecting turbines. It didn't matter if they didn't work very well, and many of them didn't. Today's tax laws give producers a break only if they actually produce electricity, encouraging them to build commercially viable machines. The West Texas plant produces electricity at rates competitive with today's higher fossil fuel prices.
ROBERT I. MORRISON: Government public policy initiatives have enabled this industry to grow and mature significantly. While it needs some protection from direct competition with fossil resources, the federal production tax credit, I think, is a shining example of a legislative and policy initiative that has worked extremely well in the United States.
TOM BEARDEN: The Texas legislature went a step beyond tax credits. It ordered utilities to construct 2,800 megawatts of renewable energy by 2009 as part of the state's plan to deregulate electric power. That so-called renewable energy portfolio was added after a series of town meetings and surveys demonstrated that substantial numbers of Texans wanted more nonpolluting energy.
CITIZEN: If there's no emissions from renewable sources, isn't that worth the extra rate increase?
TOM BEARDEN: Eleven other states also have laws requiring renewables. Representative Steve Wolens, one of the sponsors, says he had to fight the utilities to pass the legislation.
STEVEN D. WOLENS, Texas State Representative: They didn't want to be required to do any more than they would have to. And they resisted the renewable and the reusable, number one, because it was a lot. It was a lot more than they'd ever been required to do, because in Texas, they had been required to do nothing. And they didn't know what the expense was going to be. They did not want to have the expense forced on them.
TOM BEARDEN: But once the law passed, it created an incentive for firms like FPL to build some of the biggest wind plants in the country. Not all the new energy in Texas comes from wind. This groundbreaking ceremony, with officials sheltered in a tent from a driving rain, was for a $1/2 billion gas turbine plant near Dallas. Natural gas supplies 40 percent of Texas' electricity, but the state public utilities commissioner says Texans aren't as wedded to fossil fuels as some might think.
PAT WOOD, Chairman, Public Utility Commission of Texas: We find that these folks really are very interested in renewable power. And we're not just talking, you know, the conservation granola eaters out in the hills of Texas, but we're talking about, you know, the refinery workers in Port Arthur, and those folks are interested in products that clean the air. They're domestic resources-- I mean, what's more domestic than wind?
TOM BEARDEN: In a number of cities, Texans can sign up to pay extra to help finance wind generation. The same is true in Colorado. This is Xcel Energy's wind farm in Northeastern Colorado. It was built as part of a Green Power Campaign organized by a group called the Land and Water Fund. Consumers have the option of signing up to show their support for wind power by paying 2.5 cents more per kilowatt hour. It doesn't mean they only get electricity actually generated by wind turbines. The farm's output is mixed with other sources in the power grid. But the extra money does help pay for the high initial cost of construction. The program has been very popular with homeowners, whose utility bills go up an average of five dollars a month. Rudd Mayer, of the Land and Water Fund, says a surprising number of businesses have also gotten onboard.
RUDD MAYER, Land and Water Fund of the Rockies: We have IBM, Coors Brewery; we have a steel company where you wouldn't traditionally think the steel industry would be on the leading edge, but it turned out that the CEO had a personal ethic about air quality in Colorado.
TOM BEARDEN: At the Aspen Ski Company, environmental manager Auden Schendler persuaded a sympathetic CEO to join the Green Power program. They bought enough to operate the equivalent of one ski lift and a portion of a mountaintop restaurant.
AUDEN SCHENDLER, Environmental Director Aspen Skiing Co.: Here at Aspen, we use about $1.8 million worth of electricity every year, and there's pollution associated with that. So when you use clean power, you're mitigating those impacts. Just the circ-lift, for example, is the... the green power we use is equivalent to not driving your car 95,000 miles, or planting 17 acres of trees.
TOM BEARDEN: But despite the popularity of its Green Power Program, Xcel Energy is very leery of becoming too dependent on this intermittent source of power. The company thinks adding a significant amount of wind to its generating mix makes a difficult job even more so. Engineers have to look at demand and adjust supply to meet it because the grid can't store unused electricity. And demand is always changing, affected by time of day, the outdoor temperature, workday versus weekend. Engineer Henry Klaiman uses Thanksgiving as an example.
HENRY KLAIMAN: This pronounced bump here in the middle of the day is all the turkey cooking that's going on, and then you can see people are basically doing nothing later on in the afternoon and early evening on Thanksgiving.
TOM BEARDEN: Energy traders like the people in this room have to decide when Xcel should run its own generators, and when to buy it from outside when it's cheaper.
ENERGY TRADER: You guys have anything to let go of, this afternoon?
TOM BEARDEN: Coal-fired plants and gas turbines can be turned on and off as needed. When they're running, they produce a steady output. Not so with wind farms. Xcel says it has to provide backup capacity to compensate for the unpredictability of wind, at significant expense. David Eves is in charge of purchasing power for Xcel.
DAVID EVES, Power, Xcel Energy: What we'll do is plan for the possibility that the wind may die down, may reduce its output from the facility. So we'll have maybe a couple of additional generation facilities committed and online but not fully loaded, so that they're in a position to make up the difference, should the intermittent resource fall off that hour.
TOM BEARDEN: But the Land and Water Fund's John Nielsen rejects those arguments.
JOHN NIELSEN, Land and Water Fund of the Rockies: They have a plant in Northern Colorado, they would have one in southeastern Colorado, and they're talking about developing another plant kind of in the middle part of the state. The different levels of output from those geographically distributed wind resources can also help smooth out the kinds of intermittent changes that I think Xcel is concerned about.
TOM BEARDEN: Nielsen testified to that effect earlier this year during hearings before the Colorado Public Utilities Commission. Eventually the PUB ordered the utility to add a big new wind farm to its future portfolio. Wind farms may be using even more efficient turbines in the future if research under way at the Energy department's National Renewable Energy Laboratory near Golden, Colorado, pans out. The lab is testing this giant blade made by Enron Wind. It's so long that the tip had to be removed so it would fit into the test building. Sandy Butterfield is dong some of the testing for the lab.
SANDY BUTTERFIELD, National Renewable Energy Laboratory: Every time we make an incremental improvement in how accurately we can predict performance, we tremendously improve our ability to predict loads, and hence, reliability of wind turbines. And that's what will make wind turbines a viable, reliable energy source.
TOM BEARDEN: American companies hope this kind of research will help their designs surpass those of Danish companies that manufacture those $750,000 turbines springing up in West Texas and elsewhere. They don't expect to match Denmark's commitment to wind power. Turbines there generate 10 percent of that country's electricity. But a lot of hard-nosed businessmen think wind will eventually have a substantial role in meeting America's voracious appetite for power.