a. Discuss the importance of wind energy in gaining energy self-sufficiency.

Explain
the role of government regulations in achieving this purpose.

U.S. and Canada are second (after Europe) in both power generations fossil fuel based
and wind-energy. In U.S. wind power till 2013 only accounted for about 4% of the power
sector. The potential for wind energy is immense, and experts suggest wind power can
easily supply more than 20% of U.S. and world electricity.

Importance of wind energy in gaining energy self-sufficiency

U.S. and Canada are largely dependent on Middle East for imports of fossil fuels (oil,
natural gas) that are limited, costly and their generation emits GHG - greenhouse gases
(CO2, methane, CHC-chlorofluorocarbons, and HCFC hydro-chlorofluorocarbon) that
absorb and re-emit IFR-infrared radiation causing global warming. Highly volatile costs
cause capital drain-out for US and Canada. Two third of oil consumption is in
transportation and one third in electricity generation.
Other sources were limited natural gas in North America that already has ever
increasing shortage. US needs balanced mix of energy sources in portfolio to
accommodate its growing demand. To gain self-sufficiency in power generation, US has
only one alternative of wind energy considering below importance
Stable Cost Although its costly as compared to fossil oil based power because its
yet a growing industry. But experts believe that in coming years it will be cheaper
than ever before and much less costlier than other options.
Decreased GHG emission
Popular among consumers Clean as reduces environmental pollution
Quick to install Wind turbines and cables to connect to existing or new power
grids

Role of government regulations

In 2006 AEI Advance energy initiative aimed to replace 75% of oil imports with clean,
cheaper and reliable - renewable energy sources (wind, solar, biomass, geothermal
resources) by 2025. This constituted favorable regulations promoting wind-energy
generation and as its already popular, public initiatives in collaboration with government
are also expected. Two major categories of government contribution are R&D research
and development, and installation.
R&D
AEI increased funding by 22% for R&D at DOE Department of energy for -
Cost reduction through new design, installation techniques, operations and
maintenance strategies, transmission options.
Impact on sea life, sea bed, marine traffic, air traffic, coastal communities, radar or
radio disturbances of military or commercial use
Enhancing efficiency in low-speed wind environment
Making federal lands available for wind-farms

Installation
Regulatory environment plays a vital role in nurturing the wind energy sector. Below are
some U.S. and Canada policies encouraging installation of wind-farms
RPS Renewables portfolio standards (US)
A fixed percentage of total power production had to be producing green power (generated
from renewable sources). It was monitored through REC-Renewable energy credit a
tradable certificate of proof of kWh-killowatt hour green energy produced.
PTC Production tax credit (US)
US offered 1.9 cents for every kWh wind-power generated in first ten years. This policy
kept renewing to encourage power suppliers.
WPPI Wind power production incentive (Canada)
Canada provided financial incentives of Canadian cents 0.8 in 2007 for each kWh wind-
power generated.
Feed-in Tariffs (Canada)
Ministry of energy in Ontario issued contract of wind-energy generation (connected to
provincial electricity system) to individuals on a fixed tariff of Can$ 0.11 for 20 years. To
encourage distributed local generation, upper limit set for individuals was 10MW.
Net metering system (Canada)
Power consumers could invest in green power generation facilities and earn additional
revenues besides using green power for their consumption. To meet the consumption, excess
power was sold to power supplying companies through supply grids.


a. In most countries, governments provide subsidies to companies developing
alternative energy sources. But several analysts are of the opinion that subsidies may
cause production inefficiencies. How can governments tackle the situation and
promote non- conventional sources of energy?




Subsidies to develop alternative energy sources

Nowadays, all energy systems are subsidized including wind. Without subsiding it
will be particularly problematic for rural households. Even in densely populated regions,
low electricity demand from rural households makes the installation of secondary and
tertiary transmission lines and distribution systems uneconomical. Such households are
unlikely to enjoy energy access unless part of the capital costs is subsidized.

Subsidies to increase energy access are not necessarily net costs for governments.
The use of traditional biomass fuels for cooking and heating has severe health
implications, especially for women. Access to modern energy sources means improved
health outcomes, benefits that are often not included in economic cost-benefit analyses.
Such omissions result in a market failure, whereby energy utilities have no incentive to
extend transmission lines when the social benefits of better health outcomes are not
internalized in their balance sheets. In these cases, subsidizing off-grid energy systems
might make even more sense.

Production inefficiencies

Technology imperative
Recent years have witnessed significant growth in manufacturing capacity and
deployment of clean energy generation capacity (Germany and Spain in solar; China and
the United States in wind and solar, for instance). But many technologies still remain at
the R&D stage or have not been deployed at a scale that would make them commercially
viable just yet. Technological innovation and leadership in these emerging sectors are
partly a function of a countrys indigenous scientific prowess.
Many bilateral ventures are also underway to jointly develop new technologies. In
India, the most recent example is the US$100 million India-US Joint Clean Energy R&D
Centre. At the multilateral level too, negotiations concerning a Technology Mechanism
under the UN Framework Convention on Climate Change have assumed a critical role.

Economic imperative
It underlies many of the decisions regarding investing in clean energy sectors.
Sustainable energy investments rose steadily from the third quarter of 2004 (at US$4
billion) to the fourth quarter of 2007 (peaking at US$40 billion). The dip in investments
began from early 2008, preceding the onset of the global economic crisis by a few
months.
Investors in clean energy might exit relatively less mature sectors sooner, or choose
to defer their investment decisions until well after signs of general economic recovery
become visible.

The role of subsidies to smooth the fluctuations in clean energy sectors and increase
investor confidence has become an international concern for sustaining investments in
the face of the climate challenge.