Washington Insider-- Wednesday
Bigger Wind Turbines
Here's a quick monitor of Washington farm and trade policy issues from DTN's well-placed observer.
USDA To Purchase An Additional $1.5 Billion In Food Box Effort
USDA will purchase an additional $1.5 billion in food nationwide for distribution via the Farmers to Families Food Box Program. The fifth round of food box purchases comes via funding provided via the COVID aid plan approved December 21.
The effort will utilize organizations that previously participated and solicitations are expected to be issued by the end of this week. Seafood products will now be eligible along with other hard, semi-firm or semi-soft cheeses will be included. As of January 4,
USDA said that 132.5 million Food Boxes had been invoiced. Contracts are expected to be awarded by January 19 with deliveries to begin shortly thereafter and continue through the end of April.
This puts to rest speculation on whether USDA would operate another round of the popular program which many have viewed as a success.
CFAP 2 Payments Top $13 Billion
USDA has now paid out $13.01 billion under the Coronavirus Food Assistance Program 2 (CFAP 2) as of January 3, including $6.17 billion in acreage-based payments, $3.4 billion for livestock, $2.22 billion for sales commodities, $1.17 billion for dairy and $54.0 million for eggs/broilers.
Payments for seven commodities have reached $500 million or more, including corn ($3.35 billion), cattle ($2.78 billion), sales commodities ($2.14 billion), soybeans ($1.29 billion), milk ($1.17 billion), wheat $703 million), and hogs/pigs ($532 million).
But attention is already shifting to the expected CFAP 3 effort that USDA will unveil soon as the agency sorts through the provisions in the COVID aid package approved by Congress back in December.
Amid all the political tensions across the country this week, the New York Times is reporting that the “technology of wind turbines is about to change dramatically.” It describes a prototype turbine at the mouth of Rotterdam with rotors longer than two American football fields. Later models will be taller than any building on the mainland of Western Europe, the Times says.
The machine in the Netherlands is a test model for a new series planned by General Electric designed to have the potential to power cities, supplanting coal or natural gas-fired plants that form the backbones of many electric systems today.
However, GE has yet to install any of its machines offshore, the Times says and the company faces questions about how quickly and efficiently it can scale up production. But it thinks that “already the giant turbines have turned heads in the industry.” An analyst said the machine's size and advance sales had “shaken the industry.”
The new generation of machines are about a third more powerful than the largest already in commercial service. They will have a generating capacity that would have been almost unimaginable a decade ago, with each one will be able to turn out 13 megawatts of power – enough to light up a town of roughly 12,000 homes – and with each turbine capable of producing as much thrust as the four engines of a Boeing 747 jet, according to G.E. The plan is to deploy them at sea where developers have learned that they can install larger and more numerous turbines and where winds are stronger and more reliable.
The race for larger scale turbines has moved faster than many industry figures foresaw. G.E.'s Haliade-X generates almost 30 times more electricity than the first offshore machines installed off Denmark in 1991. Customers are expected to demand even bigger machines in the future.
Offshore technology took hold in Northern Europe in the last three decades and is now spreading to the East Coast of the United States as well as Asia, including Taiwan, China and South Korea. The big-ticket projects costing billions of dollars that are possible at sea are attracting large investors, including oil companies like BP and Royal Dutch Shell, who want to enhance their green energy offerings quickly.
Capital investment in offshore wind has more than tripled over the last decade to $26 billion, according the International Energy Agency, the Paris-based forecasting group.
G.E. began making inroads in wind power in 2002 when it bought Enron's land-based turbine business – a successful unit in a company brought down in a spectacular accounting scandal – at a bankruptcy auction. It was a marginal force in the offshore industry when its executives decided to try to crack it about four years ago.
The company saw a growing market with only a couple of serious Western competitors and proceeded to more than double the size of their existing offshore machine, which came to G.E. through its acquisition of the power business of France's Alstom in 2015. The idea was to gain a lead on key competitors like Siemens Gamesa and Vestas Wind Systems, the Danish-based turbine maker.
The efficiency of large-scale machines provides a powerful incentive for developers to go for the largest available in order to win auctions for offshore power supply deals that many countries have adopted, said Vincent Schellings, who has headed design and production of the G.E. turbine. “That is where turbine size plays a very important role.”
Among the early customers is Orsted, a Danish company that is the world's largest developer of offshore wind farms. It has a preliminary agreement to buy about 90 of the Haliade-X machines for a project called Ocean Wind off Atlantic City, N.J. “I think they surprised everybody when they came out with that machine,” said David Hardy, chief executive of Orsted's offshore business in North America.
On Dec. 1, G.E. reached another preliminary agreement to provide turbines for Vineyard Wind, a large wind farm off Massachusetts and it has deals to supply 276 turbines to what is likely to be the world's largest wind farm at Dogger Bank off Britain. These deals could add up to $13 billion, estimates Shashi Barla, principal wind analyst at Wood Mackenzie, a market research firm.
The waves made by the G.E. machine have pushed Siemens Gamesa to announce a series of competing turbines. Vestas, which until recently had the industry's biggest machine in its stable, is also expected to unveil a new entry soon.
To pull off its gambit, G.E. had to start “pretty much from scratch,” Schellings said. The business unit called G.E. Renewable Energy is spending about $400 million on design, hiring engineers and retooling factories at St. Nazaire and Cherbourg in France.
Offshore turbines account for only about 5% of the generating capacity of the overall wind industry, but that number is expected to grow. G.E. still must work out how to manufacture large numbers of the machines efficiently, initially at the plants in France and, possibly later, in Britain and the United States. With a skimpy offshore track record, G.E. also needs to show that it can reliably install and maintain the big machines at sea, using specialized ships and dealing with rough weather.
So, we will see. The new U.S. administration appears to be interested in supporting investment in non-fossil fuel energy – including wind power. At the same time, competing global investors appear to be interested in making their own substantial investments in new, more efficient technologies – trends that producers should continue to watch closely as they emerge, Washington Insider believes.
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