Lower-than-average winds in the western United States in the first half of the year have cut into production and revenues at wind farms there, according to company data. Now, the industry is trying to figure out how it will deal with variable weather in the future.
Wind energy is booming in the United States, with prices at an all-time low. The sector grew 8 percent in 2014, boosting domestic capacity to almost 66,000 megawatts and providing around 4.4 percent of the country’s electricity, according to the Department of Energy (ClimateWire, Aug. 11).
That means changes in wind patterns that might have once gone unnoticed are now having a visible economic impact. And increasingly more people in the wind industry have a stake in predicting, and adapting, to unusual weather.
“For industries across the world impacted by weather, it’s now all about adaptation,” said Pascal Storck, the global manager of energy services at environmental measurement company Vaisala. “Renewable energy is the poster child for an industry impacted by weather.”
Concerns rose in January, when slower winds first appeared. In the first quarter, nearly all regions west of the Mississippi River saw winds at least 20 percent below the average for the last 30 years or so, according to an analysis by Vaisala.
California, Washington, Oregon and Texas, hotbeds for wind farms, had a particularly slow winter. Some regions saw winds around 50 percent lower than normal.
Since then, conditions have started improving into early summer but have remained largely below average for most regions in the West, according to Vaisala.
Lower winds mean turbines have been churning out less electricity. A U.S. Energy Information Administration analysis confirmed that wind farms in California, Oregon and Washington had been working at a reduced rate this spring compared with the five-year mean.
Most major wind operators, from NRG Energy Inc. to NextEra Energy Inc., also reported seeing slower winds in both the first and second quarters of the year—and reduced revenues.
Duke Energy Corp. saw an $18 million drop from electricity from January to June, “primarily resulting from changes in wind patterns,” according to filings with the U.S. Securities and Exchange Commission. AES Corp. reported similar losses of $19 million.
The consequences of a changing climate?
This year’s wind trends could be consistent with wider weather patterns in the Pacific Ocean, said Gil Compo, a climate scientist affiliated with the National Oceanic and Atmospheric Administration in Colorado.
Above-average sea surface temperatures and a high-pressure ridge in the Pacific have been linked to a hot and dry winter in California and the Northwest. The same pattern could have also disturbed winds throughout the western United States, he said.
A growing El Niño could add extra variability. Vaisala forecast winds in the Northwest and Midwest to remain low into the fourth quarter as a result. California could see above-average winds.
But scientists warned there weren’t enough historical or current records on winds at turbine heights around 80 to 100 meters, or 200 to 300 feet, to reach any significant conclusions about the phenomenon.
“The sparseness of the data makes it more difficult to assess how extreme events like what we’ve observed in the first half of 2015 are,” said James Wilczak, a research meteorologist with NOAA in Colorado.
“Even with relatively good measurements of precipitation and temperature, trying to attribute a single season’s regional drought or temperature extremes to some kind of climatic shift is extremely difficult to do,” he added. “Attempting to do the same thing for turbine-height wind speeds is many, many times more difficult.”
Some researchers have tried predicting long-term wind patterns but found that the models disagreed or that there was little convincing change.
As the wind industry continues to expand, however, the need for good short- and long-term wind forecasts is becoming increasingly urgent, Wilczak said.
Building a climate-resilient industry
Companies know that winds fluctuate often. They build flexibility into contracts with utilities and warn investors of some seasonal and year-to-year variability. But this year’s weather conditions have exceeded those calculations, causing some companies to alter their annual expectations.
For example, Pattern Energy Group Inc., which owns wind farms in Texas, California and elsewhere, reduced its expected 2015 output by 5 percent in a statement in April. Low winds have reduced its production by 15 percent in the first six months of 2015, according to SEC filings.
“We are building a business for the long term. Short-term volatility and wind levels, or the capital markets, while frustrating, will occur from time to time,” CEO Michael Garland said in an Aug. 10 earnings call with investors. “We will continue to seek the best ways to manage these challenges.”
His company’s adjustments included maintaining the availability of its equipment, especially during periods of high wind, and improving its forecasts for windy months in the future. The company also plans to keep some of its cash from above-average wind years as backup for below-average wind years, according to filings with the SEC.
In the long term, weather conditions might be even less clear. The phrase “climate change” only very rarely comes up when energy companies discuss long-term prospects with investors—and even then, it’s most likely to raise concerns about government regulations on emissions.
But “there’s nothing like an absence of the fuel to make people talk about the weather and climate,” said Storck, the global manager of energy services at Vaisala.
Reaching out for better weather information is a first step toward preparing for a changing climate, he said.
“The phone in our office is ringing off the hook, with people asking what happened, what does it mean, how usual is it, what is the prediction for the future,” he said. “And then the light bulb goes off: Where do I build my next set of projects to mitigate this?”
The unusual weather patterns did not reduce winds everywhere. Canada, for example, saw above-average wind speeds throughout the year, according to the Vaisala analysis. So, Storck has been advising companies and investors on how to spread the risk across different wind farm locations to build a “climate resilient portfolio.”
“If all of your eggs are in one basket, if all of your wind farms are in Texas and it’s negatively impacted by climate change, that’s a risk that needs to be accounted for,” he said.
By Camille von Kaenel and ClimateWire