IT WAS HARDLY A SURPRISE that the giant wind machines at Meridian Way came from Denmark. Vestas Wind Systems has long been a wind energy technology leader, with a supply chain reaching back to America’s first big wave of wind power development in the 1980s. Denmark has also distinguished itself as a global pioneer in generating its own electricity from wind. A fifth of the country’s power today comes from wind, and plans are afoot to raise that contribution to as much as 80 percent of the country’s power supply—all part of a broader government plan to free Denmark from fossil fuels and reduce its greenhouse gas emissions by 80 to 95 percent by 2050.1
I traveled to Denmark to get a close look at wind turbine production. From Copenhagen I drove to the village of Lem, set on a flat stretch of farmland near the western rim of the Jutland peninsula. This is where Vestas got its start and where some of the company’s manufacturing still takes place.
Lone Mortensen, director of people and culture in the Vestas blades division, met me at the entrance to a neat campus of white factory buildings. Appearing wholesome and informal in her slacks and Argyll sweater, Lone (pronounced “LO-neh”) had recently returned from a two-year stint in Portland, Oregon, where she helped ramp up the company’s North American communications. Despite both countries’ refusal to sign on to any greenhouse gas reductions, the United States today ranks second only to China in both its annual installation of wind turbines and its cumulative wind power capacity (see tables 1 and 2). Responding to this market demand, Vestas has invested heavily in building new factories and assembly plants in those two countries. The massive scale of turbine equipment makes it important to keep transportation distances to a minimum. In addition to reducing costs, closer proximity cuts down on the greenhouse gas emissions associated with freight haulage—something this environmentally attuned company monitors closely.
Lone’s English is excellent, but she chooses her words slowly and carefully. She is wary of outsiders wanting to know details about the company’s closely guarded manufacturing processes.
As we set out on our tour, Lone tells me about the company’s founder, a blacksmith named H. S. Hansen who began making farm equipment in the village in 1898. Those early days are commemorated by a quaint outdoor cluster of iron figures depicting workers in the old Lem Forge, just a few blocks from the village center, with its handful of small shops sprinkled among modest red-brick homes.
By the end of World War II, H. S. Hansen’s son Peder had taken over the business, naming it VEstjyskSTålteknik A/S (fortuitously shortened to Vestas) and shifting the company’s focus to the manufacture of farm trailers, ship engine intercoolers, and hydraulic cranes. In 1978, just when I migrated from college to Capitol Hill to promote renewable energy, Vestas built its first experimental wind turbines. After trying a few designs, the company’s engineers decided on a three-blade turbine that went into production the following year. Eight years later, the company made wind energy systems its single focus, and it soon grew to be the world’s top-ranked turbine manufacturer.
In 2004, Vestas acquired its prime Danish competitor, NEG Micon, and the consolidated company supplied 34 percent of the 8 gigawatts (8 billion watts) of new wind power capacity installed globally that year.2 Over the next six years, worldwide demand for wind turbines skyrocketed, reaching 40 gigawatts by 2010. Vestas remained number one in the trade, but its market share dropped to about 12 percent of all new installations.3 Still, the company brought in $9.2 billion in revenues that year and added nearly 3,000 people to its workforce—healthy signs of strength coming out of the global recession.4
Lone informs me that Vestas operates factories for blades, towers, and other wind turbine components at more than two dozen locations across Europe, Asia, and North America. Her job is to handle staff communications for the company’s eight blade plants worldwide, fostering a sense of staff camaraderie across cultures and time zones from Colorado to China. Now and then, the company hosts planetary parties using satellite-beamed video-conference technology to connect workers celebrating at different plant locations around the world.
Rock music blares in the background as we step out onto the factory floor, our feet in company-issued red plastic clogs, our heads crowned by clean white hard hats, and our eyes shielded by safety glasses. This vast room, as brightly lit as the music is loud, is shaped like an enormous shoebox, nearly as long as a football field and about a third as wide. Lone first points to a machine that looks like an industrial-scale rotisserie. Workers clad in white protective clothing carefully feed long sheets of epoxy-saturated fiberglass around this squared-off steel mandrel, gradually expanding its girth. Layer upon layer of fiberglass is added, reinforced by wavy black veins of carbon fiber. Once heated, dried, and hardened, the resulting obelisk—more than a hundred feet long—will become the structural mainstay of a blade that is expected to withstand the forces of nature for two decades or more. In the trade, this structural spine is called the spar.
Lone directs me to the opposite end of the production room, where another team of workers is painting a protective sealant onto the inside surfaces of a giant double-mold that looks like an opened, elongated clamshell. Once the sealant has dried, epoxy-soaked fiberglass will be layered on each side of the mold, forming the shape of the blade’s two halves. The bivalve will then be closed around the spar, an epoxy compound will be injected, and the parts will be fused into a completed blade.
The making of wind blades is a curious mix of high-tech engineering and traditional craftsmanship, demanding the sophistication and subtlety of aeronautic design along with the patient attention to detail found among builders of high-end yachts. When I ask how long it takes to produce a single blade, Lone is visibly uncomfortable. “That’s the type of information our competitors want to know,” she explains.5 It’s clear, though, that progress is measured in hours, even days. Producing 6,000 to 10,000 blades annually at plants around the world, the company’s simultaneous demand for prodigious output and painstaking precision is daunting.6
A high-pitched, scratchy whine greets us on entering the factory’s finishing department, where a team of masked workers uses handheld sanders to massage the creamy outer surfaces of each giant blade. Meticulously they shape the razorlike edges that will slice through the wind as efficiently and quietly as advanced aerodynamics allow. After all the surfaces are smoothed and painted, a tractor pulls each completed blade, mounted on a rubber-wheeled dolly, out into the factory yard. There a forklift gingerly stacks the blades, three and four high, in neatly ordered frames like bottled wine shelved in a vintner’s cellar, waiting their turn to be shipped to customers.
Though Danish innovators built a few dozen power-generating wind turbines in the early twentieth century, the seeds of Denmark’s modern wind industry were planted by the 1973 oil crisis. Denmark at the time was more than 90 percent dependent on oil for its energy needs, and virtually all that oil was imported. To punish Western Europe and the United States for their support of Israel during the Yom Kippur War, Arab oil producers radically reduced the flow of oil to those countries, causing long gas station lines and tripling the price of oil. Denmark’s political leaders recognized the need for decisive action, but initially the government focused more on fuel-switching than on energy efficiency or renewable energy development. The nation’s first comprehensive energy plan, released in 1976, emphasized coal, natural gas, and nuclear power as the primary pathways to reduced dependence on foreign oil. In the years that followed, North Sea explorations yielded substantial supplies of oil and natural gas—enough to make Denmark a substantial net exporter of both resources. No nuclear plants were built, however, and in 1985, responding to broad popular opposition, the Danish parliament officially banned their construction.
The same was not true for coal, which quickly gained a foothold as the primary fuel for the country’s power plants. Like pre-embargo oil, nearly all of Denmark’s coal was imported, but it came from a more reliable and diverse array of nations, including South Africa, Russia, Colombia, Australia, and the United States. Denmark’s heavy reliance on coal continues to this day, despite an official ban on its use in new power plants as of 1997 and a commitment to phase out all coal-generated electricity by 2030. The pervasive reuse of waste heat from power production has substantially improved the overall efficiency of coal use in Denmark, with 60 percent of homes now kept warm during the long Scandinavian winters by a vast network of steam pipes running from the country’s power plants.7 Nevertheless, the energy sector remains the main contributor to Denmark’s greenhouse gas emissions, and within that sector, coal is the overwhelming culprit.
Wind grew more gradually to its current 20 percent share of Denmark’s power supply. The same year that the government released its 1976 energy plan, Danish academicians produced their own, emphasizing the need for a major shift toward renewable energy. Two years later, a test lab and certification facility for wind turbines was established at Risø National Laboratory, and the year after that, the Danish parliament adopted a new law that gave a big boost to wind turbine ownership: wind power producers of any scale would be entitled to an up-front government grant amounting to 30 percent of the purchase price of the turbines, for all models approved by the Risø laboratory.8
Making it easier to buy turbines was important, but two other steps were needed for wind energy to take hold. First, turbine owners had to be assured that the power generated by their wind machines would find its way onto Denmark’s electric grid. With the government eager to encourage new wind projects, state-owned transmission companies agreed to cover 35 percent of the costs of connecting windmills to the grid. Second, turbine owners needed to be able to sell the power generated by their windmills at a reasonable profit. Here too, the major state-owned utilities settled on a formula that guaranteed wind power producers substantially more than utilities were paying for conventional coal-fired power.9
With these incentives in place, tens of thousands of Danish land owners decided to enter the wind business. Some planted single, grid-connected turbines on their properties. Others joined local cooperatives, or vindmøllelaugene, that pitched in together to build small arrays of turbines.10 Local ownership of wind power was seen as a virtue, by the landowners themselves as well as their political supporters in Copenhagen. When nonlocal speculators rushed in to take advantage of the public subsidies, the government restricted its grants to people living within 10 kilometers (6.2 miles) of their windmills or in the same municipality.11
Denmark’s utility leaders soon became nervous as they watched windmills sprout across the countryside. To protect their large, central-station power plants, they successfully lobbied for the removal of the investment grants to wind developers. In 1989, the grants were abolished,12 but wind investors continued to enjoy guaranteed rates for the electricity they generated. They also benefited from a refund of the tax on carbon emissions that the Danish government charged to conventional electricity providers. With post-tax rates of return ranging from 5 to 22 percent per year, wind energy remained an attractive investment,13 and the number of investors continued to grow. According to one account, 50,000 Danes held ownership stakes in windmills in 1991—nearly 10 percent of the country’s population.14 By 1999, 150,000 Danes were reported to be full or partial owners of wind turbines,15 and during that period, more than 80 percent of the country’s wind turbine capacity was locally owned.16
Appealing though it was for Danish landowners to invest in wind power, government planners quickly recognized the importance of building an export market for the country’s emerging wind turbine industry. In a country with a smaller population than Massachusetts and little more than twice its physical size, it was clear that wind turbine producers would need to reach buyers outside Denmark’s borders if they were to thrive. In 1982, the Ministry of Industry commissioned a report that looked at America as the next Danish wind energy frontier. The report triggered an immediate response among the country’s leading turbine companies. According to one historian, sales representatives from Vestas and three other Danish turbine manufacturers were on a plane to the United States within a few days of the report’s release, eager to test out their prospects.17
California was the prime target for Danish wind companies. A volatile combination of idealistic fervor and entrepreneurial bravado had spawned a new generation of California wind developers who were eager to cash in on some remarkably enticing state and federal investment incentives. As in Denmark, the 1973 oil embargo had sent shockwaves across America. Drivers long accustomed to cheap and plentiful gas suddenly found themselves lining up for hours outside filling stations. “Rationing,” a term that hadn’t crossed most Americans’ lips since World War II, reentered the nation’s vocabulary. And America’s political leadership awakened to the folly of depending on imported oil to meet the nation’s energy needs.
Richard Nixon, beleaguered by ongoing investigations into the Watergate scandal, grabbed hold of the energy crisis as a defining moment in his waning political career. On January 23, 1974, he delivered a Special Message to the Congress on the Energy Crisis, in which he outlined a lengthy slate of measures to bolster U.S. energy self-reliance. Along with creating a provisional framework for gas rationing, he called for expanded surface mining of U.S. coal, new mineral leases on federal lands, expanded offshore oil and gas production, and the accelerated licensing and construction of nuclear power plants. Research and development into “new” technologies was another feature of his program, though “solar electric power” was the only renewable technology mentioned, as a prospect “for the far term,” at the end of a long list of more immediate priorities focusing on fossil and nuclear fuels.18
The historic nature of Nixon’s energy agenda was made perfectly clear in his State of the Union address a week later: “In all of the 186 State of the Union messages delivered from this place,” he said to the packed House chamber, “this is the first in which the one priority, the first priority, is energy.” Under the rubric “Project Independence,” he set a high bar for immediate progress in weaning America off of foreign oil: “Let this be our national goal,” he said, barely glancing up from his text, with signature sweat beading on his chin and upper lip. “At the end of this decade, in the year 1980, the United States will not be dependent on any other country for the energy we need to provide our jobs, to heat our homes, and to keep our transportation moving.”19
That goal was far from met. In 1973, 28 percent of our oil came from abroad: 6.3 million barrels a day out of a total U.S. daily consumption of 17.3 million barrels. Today we use substantially more oil than we did at the time of the embargo (19.1 million barrels a day in 2010), and we import about 60 percent of it.20
While the 1973 embargo and its aftershocks failed to lessen America’s oil appetite over the long run, it did open the door to a new level of public and private commitment to renewable energy. In the early days of Jimmy Carter’s one-term presidency, energy independence emerged as the dominant theme. Just two weeks after taking office in the winter of 1977, President Carter appeared before the U.S. public in a televised address that came to be known as the “sweater speech.” Bundled in a beige cardigan and sitting by a glowing White House fireplace, the president called for a major commitment to energy conservation. In terms more befitting a pastor than a U.S. president, he decried Americans’ wasteful ways and exhorted the public to “make modest sacrifices” and “live thriftily.” He also signaled the need for new energy technologies like solar power, but that message was largely lost on American TV viewers, who came away feeling stunned by the president’s call for a new age of austerity in which thermostats would be kept at a cool 65 degrees during the day and an even chillier 55 degrees at night.21
In his second televised energy address in April 1977, Carter struck a more conventional pose behind his desk in the Oval Office, but again he adopted a sermonizing tone. “Tonight,” he opened, “I want to have an unpleasant talk with you about a problem unprecedented in our history.” He went on to discuss the need to “balance our demand for energy with our rapidly shrinking resources,” and he cautioned that his proposed policies would “test the character of the American people” and be “the ‘moral equivalent of war,’ except that we will be uniting our efforts to build and not destroy.”
Jimmy Carter may not have won the hearts of the American public with his grim admonitions, but his administration’s policies created a wholly new federal climate for advancing renewable energy. For Carter, as for Denmark’s political leadership of the 1970s, coal was a big part of the solution to foreign oil dependence; he saw U.S. coal as “our most abundant energy resource” and advocated for its expanded use, along with the carefully supervised use of nuclear power.22 At the same time, he saw a real role for alternative energy resources including the sun, in which he invested major symbolic value. In 1977, he called for solar energy to be used in more than 2.5 million American homes, and two years later he led by example, installing solar water-heating panels on the White House roof.
A further step that Carter took to advance solar energy was the creation of the Solar Energy Research Institute, a new national laboratory with Denis Hayes at its helm. Charismatic and articulate, Hayes had been the driving force behind the first Earth Day in 1970, and had more recently orchestrated the presidentially proclaimed Sun Day in May 1978. Hayes brought a broad definition of solar energy to the new national laboratory, including “anything that uses sunlight within a few decades of the time it arrived at the surface of the planet.” In his view, this included wind because of the sun’s crucial role in creating the thermal gradients that draw air at different speeds and in different directions across the planet.23 As a practical matter, though, the research supported by his institute focused primarily on a narrower realm of solar thermal and solar electric technology.
While solar energy received greater fanfare, Carter’s policies brought enormous benefits to the wind industry as well. Most consequential was the Public Utility Regulatory Policies Act of 1978 (PURPA), which gave small-scale power producers a way to compete in a market that had, for decades, been monopolized by large public utilities. Wind farms and other renewable energy-based power plants were PURPA’s primary targets, along with small “cogeneration” facilities that made use of the waste heat created from power production. Public utilities were obligated to buy the electricity generated by independent generators at a price that was “just and reasonable” to consumers and, at the same time, did not discriminate against this new breed of power providers.24
PURPA predictably triggered a backlash by a number of public utilities that were reluctant to open up their markets to competition. Some states also resented the federal government’s encroachment onto turf traditionally dominated by their own public utility commissions. Two court challenges to PURPA’s reach into state-held territory went all the way to the U.S. Supreme Court, but the Court ruled in PURPA’s favor in both cases. This cleared the way for a new generation of daring and often idealistic energy entrepreneurs.25
Just as PURPA guaranteed wind developers a market for their electricity, a powerful blend of tax incentives drew investors into the field. Under the Energy Tax Act of 1978, wind energy projects enjoyed a double benefit: they could claim a business investment tax credit of ten percent, and they were on a short list of special energy projects that qualified for a second ten-percent tax credit for capital outlays.26 Then, in 1980, the Crude Oil Windfall Profits Tax Act increased the energy portion of the tax credit to 15 percent for solar, wind, and geothermal investments, bringing the total federal credit available to wind farmers to 25 percent.27 What’s more, commercial wind farms—like many other energy companies—benefited from federal tax provisions that let them depreciate their equipment on an accelerated basis.
If Jimmy Carter was the stern preacher waging a righteous war for American energy independence, California governor Jerry Brown was the smart and savvy iconoclast, surrounding himself with creative people who were willing to challenge conventional thinking on everything from religion and social relationships to the environment. Thirty-six years old when he became governor for the first time in 1975, Brown later recalled his early days in office: “This was the mid-1970s. It was the time of the Whole Earth Catalogue. I was dealing with people like Stewart Brand, Wendell Berry, Amory Lovins, Herman Kahn, and Dick Baker from the Zen Center. I mean, it was a hotbed of ideas. And there was a sense that we were on the threshold of a new politics. We were building something new. It was very exciting.”28
An eclectic and contradictory mix of community empowerment and space-age zeal inspired Jerry Brown’s politics, leading a famously caustic newspaper columnist, Mike Royko, to brand him “Governor Moonbeam.” On one hand, Brown proposed that California launch its own communications satellite; on the other, he was an ardent proponent of backyard composters and rooftop solar panels. In the latter realm, he took particular inspiration from Amory Lovins, author of a widely read manifesto mapping out the social, economic, and political reasons to abandon our reliance on fossil fuels and centralized power generation.
In fact, Lovins’s proposed paradigm for autonomous, community-based energy systems was much more radical than anything that Brown was able to advance as governor. Lovins was unequivocal in his condemnation of the status quo: “Siting big energy systems pits central authority against local autonomy in an increasingly divisive and wasteful form of centrifugal politics,” he wrote in his 1977 book Soft Energy Paths. “In an electrical world, your lifeline comes not from an understandable neighborhood technology run by people you know who are at your own social level, but rather from an alien, remote, and perhaps humiliatingly uncontrollable technology run by a faraway, bureaucratized, technical elite who have probably never heard of you.” 29
Steps were certainly taken under Brown’s leadership to help Californians recapture at least some of the power that they had drawn from distant, centralized generating plants for decades. A year after taking office, the governor turned to another energy mentor, Wilson Clark, and asked him to oversee the creation of California’s Office of Appropriate Technology.30 Under Clark’s guidance, this new agency sponsored demonstration projects and disseminated information on small-scale energy systems, along with other residential and community-based projects. The Brown administration also introduced hugely enticing tax incentives for residential renewable energy investments. Californians could claim 50 percent of the price of qualifying equipment as a personal income tax credit, up to a total of $3,000 per household.31
While thousands of homeowners used the residential tax credits to purchase rooftop solar water-heating panels, the state adopted a model for wind energy that strayed far from Lovins’s idealized vision of grid-liberated local self-reliance. With new wind farms selling their power to big utilities like Southern California Edison and Pacific Gas & Electric, the state’s renewable energy marketplace would soon be drawn back into the “centrifugal politics” of big energy systems that Lovins railed so passionately against.
Various state agencies under Jerry Brown were instrumental in helping this process along. Surveys conducted by the California Energy Commission identified sites for 13,000 megawatts of wind capacity in the state; half of these were viewed as ripe for near-term commercial development. Particularly promising were a number of the mountain passes where cool air blowing in from the Pacific accelerated as it flowed into warmer inland regions. The Altamont Pass, east of the Bay Area, was one such area. Two others were the Tehachapi Pass, southeast of Bakersfield, and San Gorgonio Pass, near Palm Springs, both drawing swift and sustained air currents from the west into the Mojave Desert.
Along with charting the winds, California offered a 25 percent tax credit to commercial wind investors, and it gave tax-free bonding authority of up to $10 million to “alternative energy” projects.32 California Democratic congressman Pete Stark minced no words in decrying these subsidies. “These aren’t wind farms,” he grumbled. “They’re tax farms.”33 Added to the federal tax incentives, the state enticements were enough to create what many have likened to the Gold Rush that had swept the state more than a century earlier. Paul Gipe, an early publicist for the wind industry, estimated that California’s wind developers raised $2 billion from as many as 50,000 individual investors during the boom years of the early 1980s.34
As wind investment capital flooded the California market, a scrappy collection of small, undercapitalized companies hustled to get their largely untested wares into the field. In 1981, wind developers at Tehachapi Pass installed 150 windmills; the following year they installed another 1,200 turbines; and in 1984, they topped out at 4,732 new units. By 1985, a grand total of 12,553 windmills were in place at California’s three biggest wind energy complexes, and by 1987, more than 17,000 windmills had been installed statewide. The turbines came from more than a dozen manufacturers and ranged in size from a few tens of kilowatts up to 330 kilowatts of installed capacity per machine.35
While federal and state subsidies supercharged the wind farm investment climate, the government did little to make sure that turbines entering the market could actually perform as intended. There was no official rating system for turbines, and federal research-and-development (R&D) funding for wind technology singled out megawatt-plus prototypes—equivalent in scale to today’s commercial turbines but several times larger than the machines that were entering the market in the late 1970s and early 1980s. Much of the federal research funding went through NASA, which regarded wind energy as a promising new focus for a flagging aerospace industry and awarded plum contracts to corporate giants such as Boeing, McDonnell Douglas, Grumman Aerospace, Westinghouse, and General Electric (GE).36 According to one estimate, $350 million—almost three-quarters of total U.S. R&D spending on wind between 1974 and 1992—went to research on 1-, 2-, and 3-megawatt turbines, none of which made it to market.37
Fledgling U.S. wind manufacturers learned their hard lessons in the field, experimenting wildly with a dizzying array of designs. Some had airplane-style propellers mounted on a horizontal shaft; others rotated around a vertical axis, their slender, convex metal blades resembling giant eggbeaters. One brand of turbine failed after only a few days of operation; it had been advertised as lasting a minimum of ten years.38 On other machines, gearboxes and generators failed, rotors spun out of control, blades cracked and collapsed, and towers buckled.39 In their rush to build windmills that could produce power on a commercial scale, some manufacturers simply relied on scaled-up versions of small residential wind generators; these often-flimsy machines were simply no match for the turbulent winds of California’s mountain passes. As Dutch technology analyst Rinie van Est commented about this first generation of U.S. wind turbine manufacturers, “they wanted to start dancing before they had learned to walk.”40
If U.S. turbines were inspired by the aerospace industry and its lofty ambitions, Danish manufacturers were tied to a tradition of rugged and enduring craftsmanship, firmly grounded in traditional agriculture and industry. American wind developers were ready to recognize the difference, with one of them pointedly observing that rockets and missiles, which played out their useful lives in no more than an hour, were a poor precedent for wind generators that needed to run reliably for years, if not decades.41 Just as Vestas could draw on decades of experience manufacturing farm trailers and cranes, another leading Danish company, Bonus, built irrigation systems, and a third, Nordtank, produced oil and water tanks.
The pragmatic spirit of these companies was reinforced by the Risø National Laboratory. Rather than focusing on speculative research into multi-megawatt prototypes, the lab devoted itself to testing and certifying much smaller market-ready designs. Its efforts converged with leading Danish manufacturers in favoring a single design that had demonstrated its reliability: a three-bladed rotor mounted on the upwind side of a supporting tower, with twin generators and a “yawing” system that mechanically adjusted the rotor to keep its blades facing into the wind. Experience gained operating turbines in Denmark strengthened the reputation of companies like Vestas as they pursued U.S. buyers. According to the Danish Wind Industry Association, some Vestas models had logged as many as 15,000 hours of operating time before being sold across the ocean. This compared very favorably to U.S. models, many of which found their way to California’s wind farms after no more than 1,500 hours of operation.42
With American turbines failing at an alarming rate in the early 1980s, the promise of greater reliability generated an American boom for Danish wind technology. In 1983, Danish turbines accounted for 11 percent of new installations in California; the following year they occupied 33 percent of the market, and by 1987, they had reached a staggering 90 percent of all new units.43 But even the relatively sturdy Danish machines had problems standing up to California’s swift, blustery winds and dusty desert conditions, which placed much greater strain on turbines that had operated relatively well in Denmark’s milder, steadier winds. Danish manufacturers were unfortunately slow to respond to these issues, in part due to a lack of timely information. Most California wind developers serviced their own equipment rather than relying on the original manufacturers, so company engineers back in Denmark had a hard time getting reliable feedback on issues as they arose.
While the 1980s were turbulent times for Danish as well as U.S. wind turbine models, policy changes at the state and federal level played an even bigger role in breaking the frenetic pace of California’s wind farm construction in the latter part of the decade. Since 1978, wind developers had benefited from a federal law that made it all but impossible to build new power plants primarily fueled by natural gas or petroleum. The Powerplant and Industrial Fuel Use Act of 1978 barred the use of these fuels for most new electric generation, with the goal of stimulating an increased reliance on coal, nuclear, and, to a lesser extent, renewables—energy sources that were seen as less vulnerable to the fuel shortages that plagued U.S. industry and American consumers in the 1970s.44 By 1986, expanded domestic gas exploration, together with reduced demand, caused a market surplus and a drop in gas prices that led Congress to lift restrictions on the fuel’s use for power production.45 Opening up the power market to natural gas made it much harder for wind and other renewable energy technologies to compete.
The other big problem facing wind developers and turbine manufacturers alike was the demise of both the federal and California tax credits that had been crucial to attracting wind farm investors. In the fall of 1985, Congress, with the full backing of the White House, refused to extend the federal investment tax credits for wind and certain other renewable technologies beyond December 31 of that year.46 The following spring, President Ronald Reagan ordered the removal from the White House roof of the solar panels that Jimmy Carter had in stalled seven years earlier. One of these panels is now on exhibit at the Smithsonian, a bittersweet symbol of two presidents’ very different visions of America’s energy needs.
Ronald Reagan, even before taking office in January 1981, declared open war on Jimmy Carter’s energy policies, which he linked to our “disintegrating economy” and decried as “based on the sharing of scarcity.”47 Digging out more coal, drilling for more oil and gas, and building new nuclear plants became the cornerstones of Reagan’s energy vision; advancing renewable energy did not really fit with this plan. Once elected, he canceled the federal tax credits for renewable energy projects and slashed federal funding for renewable energy R&D. From a high of $718.5 million during Carter’s last year in office, research dollars for renewable energy dropped to $110.8 million by the end of Reagan’s two-term presidency. Wind’s share of the R&D budget dropped from $77.5 million to $8.7 million during the same period.48 The political momentum behind wind in Washington was gone.
In Sacramento, Republican governor George Deukmejian took office in 1983 with as much esteem for Jerry Brown’s energy policies as Reagan had for Carter’s. Stories about wind investment deals providing “welfare for the wealthy” and news footage showing broken-down wind turbines littering the California hills couldn’t have helped. But even without the damning media reports, a statewide budget crisis gave Deukmejian the political cover he needed. In 1986, he rolled back the investment tax credit for commercial wind projects from 25 to 15 percent. The following year, he eliminated it entirely.
Even after the plug was pulled on the state and federal tax credits, wind farm developers continued to install new turbines, thanks largely to contracts that had already been signed for the long-term supply of wind power to California’s two big utilities, Pacific Gas & Electric and Southern California Edison. As these contractual obligations were met, however, new installations began a steep and steady decline. In 1985, nearly 400 megawatts of new wind power came on-line. In 1986, that number dropped to 275 megawatts; from there it plunged to 154 megawatts in 1987. New installations hit an all-time low in 1992, with new turbines adding up to just 19 megawatts of new capacity.49
As new contracts for wind farms dried up, American and Danish turbine manufacturers alike fell into a deep slump. Their overreliance on a single market was taking its toll.50 Vestas had increased its workforce from 200 to 870 employees in 1982, largely to fulfill orders from a single large California wind developer. When the tax credits evaporated and petroleum prices plummeted in 1986, it was left with a huge inventory of turbines that it couldn’t sell. That year Vestas and a Danish blade manufacturer declared bankruptcy. The next year Nordtank followed suit, and in 1988, four other Danish wind energy companies declared their insolvency.51 In the aftermath, a few firms, like Vestas, trimmed their staffs, reorganized, and survived; others disappeared.
The collapse of the California market could have driven Vestas out of the wind business. Instead, the company brought in new leadership and devoted itself to building new customer bases across Europe, Asia, the Pacific Rim, and other parts of the United States. In 1988, it won a bid to build six wind farms in India, financed by the Danish International Development Agency. A year later, it opened a subsidiary in Germany, and in the early 1990s, it expanded into new markets in Sweden, the United Kingdom, Australia, and New Zealand. In 1994, a joint venture with a local turbine producer, Gamesa, brought Vestas to Spain.52
Germany and Spain proved to be great strategic bets for Vestas and other wind energy entrepreneurs in the 1990s. In Germany, a law enacted in 1991 obligated utilities to pay solar and wind generators a fixed “feed-in” tariff amounting to 90 percent of the average consumer price for power. Along with enjoying a guaranteed price for their electricity, wind developers benefited from low-interest loans as well as planning guidelines that made it easier to site new projects. These incentives led to a dramatic surge in German wind power, from only 31 megawatts in 1990 to more than 6,000 megawatts of installed capacity a decade later—nearly a 19,000 percent increase! This made Germany number one in wind power generation worldwide.
Spain experienced similarly dramatic growth during the 1990s. From only 4 megawatts installed as of 1990, the country boosted its wind power capacity to 2,836 megawatts by the year 2000, placing it second only to Germany. As in Germany, this dramatic growth was triggered by a tariff that guaranteed Spanish wind producers a highly favorable rate for their electricity. Producers were paid the market price for power plus a premium that, in 2000, amounted to three euro cents per kilowatt hour. 53
During the 1990s, Denmark continued to ramp up its own use of wind, stimulated by a succession of pro-wind government plans as well as a feed-in tariff that guaranteed wind producers an above-market rate for their electricity. This was also the decade when Denmark opened up a vast new horizon for renewable energy development: offshore wind farms. In 1991 and 1995, two pilot projects tested out the technology, with results so encouraging that the government, in its 1996 energy plan, set a target of building 4,000 megawatts of offshore wind power by 2030. By the year 2000, Danish wind power—still mainly on land—totaled 2,291 megawatts, ranking it fourth in the world, just behind the United States, which reached 2,539 megawatts of installed capacity that year.54
The last leg of my Vestas tour in Denmark took me to the company’s global headquarters, an attractive modern building a short distance from the city of Aarhus. There I met Peter Wenzel Kruse, the company’s communications chief. Short in stature with a wiry build, he spoke in staccato phrases about his company’s global positioning. He sees Denmark as a showcase for wind power, and in that spirit he worked hard to land Vestas a high-profile spot at the Copenhagen climate summit in December 2009. Visiting VIPs and reporters who attended the event could hardly miss the prominently labeled Vestas turbine that towered above the meeting’s venue, a low-slung conference center on the outskirts of the capital city. Kruse said the exhibited turbine was “a good gimmick,” but he quickly added: “We have no business in Denmark.”55
Denmark may be ahead of all other nations in the percentage of its power generated by wind. But in the amount of electricity from wind, it barely earns a top-ten global ranking, lagging behind six other European nations plus India, the United States, and China (see tables 2 and 3). Even with the Danish government’s plan to provide most of the country’s power from wind, Kruse stresses that the local market for turbines will be minuscule relative to overall global demand. Denmark, after all, is a country with 5.5 million people in a world whose numbers already exceed 7 billion.56
As one sure sign of the company’s shift to global production and marketing, Vestas shut down four of its ten factories in Denmark in 2010, and laid off 2,000 Danish workers, bringing the company’s total domestic labor force down to 5,600. The Lem blades plant survived, but layoffs hit that factory, too. In October of that year, Vestas CEO Ditlev Engel announced that the company would expand its U.S. workforce from 2,300 to 4,000 during 2011, filling slots in freshly built blade, tower, and nacelle factories in Colorado. By mid-2011, the company’s American workforce had reached 3,100 and was expected to continue growing.57
In all, wind turbine production has created about 20,000 new American factory jobs, and this number is expected to grow as turbine companies and their suppliers gear up to meet America’s appetite for wind power.58 Wind power in America may have hit the doldrums following the California feeding frenzy of the 1980s, but its recent reemergence as a world wind energy leader has attracted vigorous competition among eager technology suppliers. Vestas is far from alone among foreign corporations that are seeking out U.S. buyers for their wind machines. Some of these businesses—like Spain’s Gamesa and India’s Suzlon—are hardly known outside the wind trade. Others are familiar global conglomerates like Siemens and Mitsubishi (see table 4). Whatever their corporate roots, most turbines sold in America are assembled on U.S. soil, with more than half of their components and subcomponents domestically made. Exploring this growing U.S. manufacturing base would be the next stop in my travels.