Wind energy illustrates a renewable energy technology that has achieved competitiveness in a short time. Five decades ago, wind systems were fairly common in many countries for water-pumping and mechanical power, and small-scale electric power generation. Then, except in certain limited locations, cheap fossil fuel limited them from the market.

This situation changes when wind energy research and development revived in the 1970s, and high costs for oil and natural gas in California creates a market opportunity in the utility sector. Federal legislation in the United States in 1978 allowed independent power producers to escape utilities regulations [20], and federal and state-government tax incentives provided investors with attractive tax breaks for investment in renewable energy systems. This combination of factors stimulates a rapid market expansion of wind power in California, where wind resource availability tracked closely with utility needs for peak power in summer time.

Spurred by an aggressive industry and private investors, total installed wind-energy capacity in California grew from virtually nothing to 16,000 wind turbines, totaling 1,400 MW of capacity. Utility did not pay for the capital cost of installing the new capacity, only for a capacity credit and the energy delivered to them under standard contracts the state government had help to create. Through 1990, these turbines had generated 5,693 GWh of electricity, saving California the equivalent of 10,041,000 barrels of oil.

In a state with 11% of the US population and an economy about sixth largest in the world, wind power was producing 1% of the electric power. This 1% contribution has occurred in less than a decade.

California is not alone. In Hawaii and Denmark and Europe in general, wind energy is also providing 1% of electric power, and several countries are now investing to create wind energy companies and buying wind energy plants.

The rapid commercialization of wind energy in the US and Denmark has confirmed the key attributes of renewable energies. First they exhibit substantial economy of scale. Learning curve gains among manufacturers and increases in system sizes [21] lowered production and installation costs from $3.5/kW to around $1/kW per rated peak capacity for wind-farm turbines.

A proper comparison of wind-energy technology with other electric power systems must also take into account the capacity factor of a wind turbine. It is a characteristic of renewable energy systems that they perform intermittently. A utility or user must know how much output they can expect in a year, measured by the capacity factor. For wind turbines, the machine must be available over 95% of the time the wind reaches adequate speed to produce power. Such reliability levels are now common, and in the many wind installations around the world, measured performance has shown that overall capacity factor for the entire collection of wind turbines has risen substantially. Newer systems are recording a capacity factor of around 20%, and the best plants are achieving a capacity factor of around 30%.

These figures mean that wind turbines can deliver competitively priced electricity, in the range of 7 cents per KWh, and wind plants are out-performing the most expensive electric utility power plants, invariably nuclear facilities. Industry analysts point out that at least one-fourth of the wind energy industry is competitive with new nuclear capacity [22].

The large number of wind turbines, and several years of monitored performance, has given electric power utilities in the US, Denmark, and several other countries a thorough understanding of wind energy capacity performance. They have concluded that wind energy plants in many sites match their system power management requirements well and offer the utility reliable, firm capacity or load carrying capability [23]. Some utilities have estimated that their system could accept wind energy for around 20% of their power, without significant adjustment due to the intermittent nature of the resource. Affordable energy storage systems can rise this figure further.

Technological advance promise continued cost reductions. At good wind sites, the cost of electricity using the new technology for which prototypes were tested in 1992 is less than the cost of electricity from new fossil-fuel plants.

Total wind generating capacity is now about 3,000MW. The investments made to achieve this level of development have led to a steady accumulation of field experience and organisational learning. Taken together, many engineering improvements, better operation and maintenance practices, improved wind prospecting, and a variety of other improvements have led to steady cost reductions.

The value of wind electricity depends on the characterization of the utility system into which it is integrated, as well as on regional wind conditions. Some areas, particularly warm coastal, have winds with seasonal and daily patterns that correlate with demand, whereas others have winds that do not. Analyses done in the UK, Denmark and Netherlands make it clear that wind systems have greater values if numerous generating sites are connected because it is likely that wind power fluctuations from a system of turbines installed at many widely separated sites will be less than at any individual site.

Country Potential Energy use
  (Twh) (Twh, 1996)
United Kingdom 760 1023
Denmark 38 284
Netherlands 16 1023
United States 10777 25560

Table 8: Wind Potential

The potential excludes land not available for wind development due to environmental urban, and another conflicting uses, as well as offshore resources.