The premise seems simple: use wind energy to push a turbine and generate electricity with no greenhouse gases or associated pollution.

Problem solved, right? Wind energy should be the answer to all our energy problems.

Not quite. As with most things in life, it’s never as easy as it seems and the devil is in the details. In this case, the devil is in the costs: The electricity from one proposed wind farm set to be built off the Massachusetts shore is expected to cost about double the normal rate. Energy Secretary Steven Chu has stated that the cost of producing electricity from wind needs to come down so that it's competitive without subsidies.

Despite those issues, the wind energy industry continues to grow. In fact, there’s been remarkable growth over the last decade and several major projects are planned for offshore wind farms in the United States.

But the wind power industry will faces significant economic challenges in the coming years as it competes with other forms of renewable energy as well as lower-cost fossil fuel electricity providers. 

Certainly, the wind industry has a strong hand to play: it enjoys solid support from both Democrats and Republicans, it offers lots of potential jobs and, of course, it has enormous environmental benefits. Furthermore, a 2008 study by the U.S. Department of Energy concluded that with increased infrastructure wind energy could produce 20 percent of the electricity in the United States by 2030.

But, getting from here to there won’t be easy. Regulatory and legal hurdles are significant. And, those startup costs will remain an issue for the foreseeable future. Nevertheless, we can expect wind energy to be a major factor in the energy industry over the next several decades.

The only real question seems to be: how big will it grow? 

A (short) history of wind energy

Humans have been using wind energy for more than 5,000 years. Most of that time, the wind powered sea travel and agricultural endeavors.  

The modern wind energy industry began in earnest about 30 years ago when several companies began manufacturing turbines on a larger scale.

The capacity of wind turbines (another way of saying the maximum amount of electricity they can produce), has grown significantly over the years. One manufacturer, Vestas, built and sold its first turbine in 1979. That original piece of equipment had a capacity of 30 kilowatts. These days, Vestas produces a turbine with a capacity of 3 megawatts — more than 100 times larger than the original.

Continued growth

The increased capacity of the turbines is a reflection of the continuing demand for more wind energy.

A 2009 report by BTM Consult, a renewable energy consultancy, stated that new wind turbine installations grew at an average annual rate of 27.6 percent over the course of the previous five years. The report went on to predict that new installations would grow by 15.7 percent in the ensuing years up to 2013.

Indeed, despite the global economic slowdown in 2009, the industry continued adding capacity for wind energy and the following year, the industry received several high-profile investments in the United States.

First, in April 2010 Interior Secretary Kenneth Salazar approved the Cape Wind project, a proposed off-shore wind farm that could become the first wind energy project in U.S. coastal waters. The project, which would be located off Cape Cod in Massachusetts, is expected to cost $2.5 billion.

Also last year, Google made a couple of large investments in wind energy. In May, the search engine giant plunked down $38.8 million for an investment in a wind farm in North Dakota. The company later invested a similar amount in the Atlantic Wind Connection, a large off-shore wind project that would ultimately stretch along the Atlantic coast from New Jersey to Virginia.  

And in February 2011, Salazar and Energy Secretary Chu announced $50.5 million in spending aimed at boosting off-shore wind energy in the United States over the next five years.

Chinese startups

As much as the United States has been investing in wind power, the Chinese have been even more aggressive in moving into the industry.

According to a report in The New York Times, the Chinese have been heavily subsidizing its domestic wind energy industry and forcing foreign companies manufacturing in China to use almost all Chinese parts in their products.

The Chinese policies and subsidies led to the Obama Administration sending a complaint in October to the World Trade Organization.

Nevertheless, Chinese wind energy developers continue to grow and prosper. In March 2011, China Longyuan Power Corporation reported that its profits almost doubled in 2010.

The Beijing-based company, which is China’s largest wind developer, said its income rose to $308 million in 2010, an increase of 46 percent from the previous year. The company installed 2.05 gigawatts of wind energy in 2010 and noted that the procurement costs for wind turbines fell by 15 percent compared to the previous year.

The question of cost

Judging from the sharp reaction to the Cape Wind project, costs will be one of the biggest factors affecting the future of wind energy in the United States.

Even though the startup and capital costs are significant, the impact on many customers would be appear to be nominal: The Massachusetts Department of Public Utilities found that the impact from Cape Wind would be an increase of one to two percent on most electric bills.

Of course, some commentators have noted that the one or two percent increase could translate to several thousands of dollars for businesses that are heavy electricity users.

The 2008 Department of Energy study also examined cost and came to a similar conclusion of a relatively small increase for the average electric customer.

According to the government study, the cost for building enough wind energy capacity to meet 20 percent of the U.S. demand for electricity in 2030 would require an investment of “as little as” $43 billion. That figure is net of the expected energy construction costs in the United States if no new wind energy capacity was added. 

The study concludes that the additional investment in wind energy would mean an extra 50 cents per month per household.

Looking to the future

Judging from the investments in the United States and the success of the manufacturers in China, the wind industry will continue its double digit growth in terms of adding capacity in the next few years.

But, without a doubt, the Cape Wind project will be one to watch as the U.S. explores its options for offshore wind.

As of this writing, the project was still trying to find a buyer for half its expected electric power. It also faces several legal challenges that may delay construction several years.