Sector Watch: Wind energy

Propelling forward the idea of alternative energy sources are wind turbines—machines that produce electricity from converted kinetic energy in wind.  

Wind energy is the world’s fastest-growing energy sector and is already well-established in Europe, where it accounts for over 40,000 megawatts of generating capacity. Although most of the large wind turbine providers are European companies, a few American companies also participate. Two in particular, American Superconductor Corporation (Nasdaq: AMSC) and Composite Technology Corporation (OTC: CPTC), have been benefiting from rapid growth in this alternative energy sector.

In 2005, wind energy installed globally reached nearly 60,000 megawatts, up nearly 12,000 megawatts from the prior year. By 2020, it has been estimated that as much as 1,250 gigawatts of wind power could be installed worldwide, a more than 20-fold increase compared to 2005. Wind turbines typically cost between $900,000 and $1,300,000 per megawatt; the turbine market in 2005 was valued at approximately $12 billion.

In the United States today, the renewable energy in wind provides enough electricity for approximately 2.4 million American households. A major growth driver for U.S. wind turbine installations results from the Federal Production Tax Credit, which guarantees a tax credit of 1.9 cents per kilowatt hour for U.S. wind projects over the first ten years of their life. At the state level, an additional incentive is provided by state tax credits similar to the Federal Production Tax Credit. Wind energy tax credits are available in 18 states, including the three most populated—California, Texas and New York.

Composite Technology manufactures and markets 1.25 megawatt and 2 megawatt wind energy turbines worldwide through its Dewind segment, which it acquired in July 2006. 

In August 2007, the company announced firm orders for $53 million in turbine and turbine parts; most of these turbines are scheduled for delivery in 2008. The company shipped its first large 2 megawatt turbine in September 2007.

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