Energy Industry Entrepreneurs

Primer on Wind Energy

Written by Gautam Patil for Gaebler Ventures

There has been a sudden increase in the use of Wind Energy to generate clean power and the installed capacities in many countries have consistently registered double digit growth figures. More than 30% of EU's new installed power generation capacity constituted wind power. Many factors like economics, fossil fuel prices and climate change have fuelled the revival of this technology.

The earliest use of windmills dates back to the 1st Century AD when it was used to build a musical organ by the Hero of Alexandria.

Even today, the Dutch proudly show off their old windmills which were used to grind grains and pump water alongside their latest wind turbines.

In this modern era, almost all windmills are used for electricity generation, and, as a result, many smart entrepreneurs see entrepreneurial opportunity blowing toward them as a result of this trend in the energy industry.

How Wind Power Works

Wind originates primarily due to differential heating on earth's surface which in turn sets up a global convection system - land masses cool faster than sea in the night resulting in a wind flow from sea to the land.

Wind turbines generate power by converting the kinetic energy of wind into mechanical motion (evident from circular rotation of the blades) which in turn runs electrical generators, producing clean, pollution free electricity.

The wind turbine mainly consists of the blade or rotor which is driven by the wind, an electrical generator (this is the component from which a wind turbine gets its 'installed capacity'), a tower and a foundation to support the rotor and generator and ground support equipment like electric cables, controls etc. The rotor and the generator contribute 50% to 70% of the cost of the turbine.

Power generated from wind turbines is sensitive to local atmospheric conditions which dictate wind speed and wind patterns throughout the year.

The capacity utilization factor (CUF), the fraction of the actual annual electricity generated to the installed capacity, depends on such characteristics of the wind for a given turbine. Wind turbines typically have a CUF of 20% to 40% though this can change drastically for wind turbines of lower rated power. Also, the high variability of wind power production - on an hourly, daily or seasonal basis - necessitates the use of good storage solutions (if used for captive power production) or good load balancing techniques if connected to the grid.

Ensuring complementarity of power generation helps track demand more closely and also mitigates the need for storage solutions. Thus, highly localized and stand alone wind power projects may not always be very reliable sources of electricity.

Site Selection for Windmill Power Generation

Due to the sensitivity of wind power to local conditions, site selection becomes extremely important.

Several professional agencies survey the land area and access meteorological reports to comment on the viability of wind turbines in it.

Wind turbines could be onshore, offshore or even aerial. Aerial wind turbines benefit from the significantly higher wind speeds at higher altitudes but they also face huge design challenges related to keeping the turbines airborne etc. A number of wind turbines are combined into a wind farm which then generates power at a utility scale.

Such wind farms also improve the economics of wind power because wind farm sites are typically located at remote locations, which increase costs of grid connection, but clustering spreads this cost over more wind turbines.

The Future of Wind Power

The worldwide installed capacity at the end of 2007 was about 93 GW and is expected to go up to 160 GW by the end of 2010. Germany, US and Spain currently lead in terms of installed capacities while India and China are quickly catching up with open commitments of increasing wind power's share in their energy mix.

With appropriate site selection, wind power's economics are on par or even better than those of conventional power sources. Thus, with increasing regulation to improve the share of clean energy in their portfolio, wind power will remain the favorite candidate of most utility companies in the near future.

Gautam Patil is a recent MBA graduate from the Indian Institute of Management, Bangalore. In addition to serving as a contributing writer for, he will join the consulting firm Oliver Wyman at their London office.

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