Wind Energy Industry in the US and Canada: A Note on the Regulatory Environment

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Case Details:

Case Code : BENV007
Case Length : 08 Pages
Period : 2003-2006
Pub Date : 2006
Teaching Note :Not Available
Organization : Microsoft
Industry : Alternative Energy
Countries : USA, Canada

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Thanks to the Congress's extending the wind energy production credit before it expired for the first time in the credit's history, the wind industry is looking forward to several record-breaking years in a row."¹

– Randall Swisher, Executive Director, American Wind Energy Association, in February 2006.

"2005 will be remembered as the start of Canada's wind energy boom as more than 3,000 MW of wind energy projects are now contracted and slated for construction in Canada over the next few years. In fact, federal and provincial governments both put in place policies in 2005 that could facilitate the installation of a minimum of 8,000 MW of wind energy in Canada by 2015. This would make wind energy responsible for 16% of all electricity to be produced by new generating facilities to be constructed in Canada over the next decade."²

– Robert Hornung, President of the Canadian Wind Energy Association, in February 2006.

Introduction

The US and Canada are largely dependent on imports of fossil fuels such as oil and natural gas to meet their power requirements. The fossil fuel reserves are limited in nature and are being continuously depleted with the rise in consumption. The increasing demand for energy coupled with the near-stagnant supply of fossil fuels has resulted in rise in fuel prices. Consumption of fossil fuels for power generation also results in emission of greenhouse gases³ (GHG) that are detrimental to the ecosystem. These fuels are imported from certain regions such as the Middle East, where an unstable political climate in certain countries puts the consistency in supply of fossil fuels at stake.

Further, oil prices in the international market are highly volatile and cause a major capital drain for the US and Canada.

In the US and Canada, transportation sector accounts for the major chunk of oil consumption, in contrast with the rest of the world where majority of oil is used for electricity generation.

In the US, the transportation sector accounts for two-third of the oil consumption, while heating and electricity generation account for the remaining one-third. Electricity is mainly generated from coal and natural gas. Increasing industrialization and growing consumption have created more demand for energy and power, which is met by inadequate natural gas supply. Natural gas sources in North America are very limited in nature.

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1] "Record Year for Wind Energy: Global Wind Power Market Increased by 40.5% in 2005,"www.gwec.net, February 17, 2006.

2] "Canada's Wind Energy Industry Shatters Growth Records in 2005,"www.canwea.ca, February 10, 2006.

3] Greenhouse gases include gases like carbon dioxide, methane, chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs). These gases absorb and re-emit infrared radiation, which warms the earth's surface, thus contributing to climate change. (Source: www.unisdr.org).