2007: record year for US wind industry
Posted by Jerome a Paris on January 20, 2008 - 1:55pm in The Oil Drum: Europe
Topic: Alternative energy
Tags: regulation, wind [list all tags]
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This is impressive news:Shattering all its previous records, the U.S. wind energy industry installed 5,244 megawatts (MW) in 2007, expanding the nation's total wind power generating capacity by 45% in a single calendar year and injecting an investment of over $9 billion into the economy, the American Wind Energy Association (AWEA) announced [Thursday]. Disclosure: I am working for the wind industry - I finance wind projects in Europe. update: A first estimate of global numbers puts total new capacity built in 2007 at 20 GW |
This was widely expected to be an excellent year, after an already good year in 2006, when more than 2,500MW were installed in the US. hopes were that 3,000, or even 3,500MW would be installed in 2007. With more than 5,000 MW built and connected to the grid, the record for any country is shattered (the previous one was Germany with 3244 MW in 2002). And 2008 is looking good too.
As the AWEA notes, wind power has several advantages:
- Helps protect consumers from increases in electricity costs due to volatile fuel prices and supply disruptions: by reducing the use of natural gas and other fuels used for electricity generation, and lowering the pressure on their price, wind can save consumers money, even in regions with low or no wind resources.
Wind power prices are quite simple: there is no fuel cost, just a little bit of maintenance, so each additional kWh of power provided when wind blows is almost free once the turbines are installed. Which means that the only cost is the amortization (or financing) of the initial construction. And the good news is that this cost is set in stone from the start, and will not change for the next 20 years: you know how much interest and principal you need to pay, and that's it. Compared to gas-fired plants or even coal-fired plants, whose main cost is that of the fuel, it's becoming a huge advantage, and an incredibly safe bet.
Even better, as the AWEA notes, each time wind blows, power with zero marginal cost is sent into the network; with electricity market prices set at the highest marginal cost needed to satisfy demand at any given moment, the more ultra cheap power you have, the lower that market price will be, as there is less need to tap the more expensive producers (like diesel plants or gas peaking plants). That reduces the price of electricity for everybody. The Economist noted that studies in Denmark have shown that the savings to electricity consumers thanks to that effect are now larger in that country than the cost of subsidizing wind power production - which means that this is exactly the kind of things that governments should do, ie bear an expense that creates a larger gain for the overall population.
Today, wind power, while still more expensive than existing coal and nuclear plants, is cheaper than gas-fired power and, thus, most of the time, cheaper than market prices which are driven by gas prices. The trouble is that investors are not yet convinced that this will be true for the full next 15 years, and are still reluctant to some extent to support wind construction without some form of support. In the US, that support takes the form of the PTC, or production tax credit, which allows investors to deduct, for ten years, an amount equal to 2cents/kWh from their tax bills, which can thus be added to their income coming from the wind project.
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The PTC is pretty low compared to European support mechanisms, but given that the US has a generally better wind resource, it's been more than enough to support the industry. The problem is that it is a temporary mechanism which is only extended for a year of two by Congress each time it lapses, causing huge uncertainty. In fact, several times in the past few years, it was not renewed in time and killed the industry for that year, creating havoc for the industry worldwide (some manufacturers almost went bankrupt). |
Oddly enough, the problem with PTC is not that it's unpopular in Congress, but the opposite: that it's hugely popular. That means that any law that includes it is likely to be supported by a strong majority, and then gets larded with more disputable - and disputed - items, which are then opposed. The PTC gets taken hostage, effectively... Crazy, but true.
- Reduces global warming emissions: To generate the same amount of electricity using the average U.S. power plant fuel mix would cause over 28 million tons of carbon dioxide (CO2) to be emitted annually.
This is pretty obvious too. Each kWh of wind is carbon-free, and reduces the need for the same kWh to be generated by a hydrocarbon-burning plant. Some contest that effect by saying that wind power is intermittent, and thus unreliable, and requires fuel-burning plants as back-up for times when there is demand for power but no wind. What is true is that wind power cannot eliminate the need for coal-fired and gas-fired plants, but it does eliminate the need for these plants to actually burn fuel: having these plants around, but functioning at a lower capacity is a net plus for carbon emissions. A lot of gas-fired plants are designed not to be used for permanent use (gas peaking plants can be profitable even though they function less than 5% of the time), so this is technically feasible and imposes minor costs - and it DOES reduce emissions (for a discussion of a more detailed study, see this diary: No technical limitation to wind power penetration).
The problem today is certainly not that of too much wind in the system, it is that, despite recent growth, wind investment is still dwarfed by investment in the traditional power sector, as this table from the US Energy Information Agency shows:
Just under double the capacity in gas-fired plants was built than in wind. And, with wind power's lower capacity factor (30% for wind, which means that a wind power will produce, on average over the year, only 30% of its maximum potential capacity, as opposed to 70-90% for gas) that means that capacity additions in 2007 still translate in 5 times more kWh coming from gas than from wind just for the new capacity.
The problem is that gas is no longer plentiful: production in North America (ie US and Canada) is declining, which means increasing LNG imports - a sector where there is heavy competition from other markets:
Even if there is enough gas, the massive requirement to invest in the LNG infrastructure, and likely bidding wars with European buyers, are going to keep gas prices high - and thus power prices.
- Conserves precious water resources: Wind farms don't need water for steam or for cooling, a benefit that is increasingly valuable in arid areas and in times of drought.
This is a less obvious argument, but a vital one in many areas, as steam-based power plants (which also includes nuclear ones, in that instance) require access to plenty of water to function.
So, some may ask, why subsidize wind power if it's so great and so damn economic already? As I noted above, its competitivity in the short term has not yet convinced investors that this will be the case over the next 15 years, the usual duration to finance the investments. The good part of having fixed production costs is that they cannot go up; but the downside, of course, is that they cannot go down which means that, should there be any period of lower gas prices, wind power plants would not be able to repay their debt during that period - and banks absolutely hate payment defaults, even temporary. The risk is low, but enough to give cold feet to lenders without some additional revenue source, and the lack of financing makes projects much less attractive for investors.
Also, wind is almost competitive despite the massive subsidies received by its competitors (all the tax breaks received by the oil&gas industry, no accounting for pollution and carbon emissions, etc...), and the PTC only levels the playing field to some extent.
But there are other reasons why more support for the industry would be worthwhile, even given prevailing price conditions:
- wind power creates a lot more jobs per kWh produced than all other technologies. Good manufacturing jobs, good construction jobs, and long term maintenance jobs. Even better, apart from the manufacturing ones, these jobs are not offshoreable, and are usually located in the communities near thewind farms, often providing a much needed boost to areas with otherwise few prospects;
- wind power does not require the control of the Persian Gulf by US Navy aircraft carriers nor grunts in Iraq;
- wind power is local, is plentiful, and will not be depleted;
Some will say that wind farms are ugly. I don't have an argument against that, but would suggest that there is enough space for wind power projects without needing to put them in the most spectacular spots.
And as a final note about my partiality here: as a financier for the industry, I have to make sure that we do not take inappropriate risks. In particular, that means making sure that performance claims are not inflated, that costs are as announced and, a very important thing, that each project is well accepted by the local community and that there is no hostility (as this can lead to judicial procedures, delays, and bad publicity, all things which cost money and can compromise debt repayment). So bankers - when they do their job - have to remain clear-eyed about the industries they work with...
- can be local but not necessarily optimal - economically, environmentally
- plentiful in places not necessarily local
- may not be depleted in any chosen site but still can render the turbine useless if the wind pattern changes significantly which is likely as the climate change accelerates.
vessel based wind harvester with ammonia production capability might be the way forward with least risk of wasting the remaining limited resources.
While an impressive amount of total new wind power capacity had been installed in the US last year, proposed offshore wind projects have not fared so well in the US. As a result, the US currenly has no full-scale offshore wind installations (that I'm aware of).
In New England we have the NIMBY effect hard at work.
In the mid-Atlantic, a 150-turbine wind farm proposed by Bluewater Wind, and which would have been located 11 miles off the southern part of the Delaware shore, is currently the victim of some rather unseemly political intrigue and probably has a less than 50/50 chance of ever being built. The local power provider, Delmarva Power, wants no part of any long-term contract that would force it to buy power from Bluewater Wind and has been using its influence in the Delaware Legislature to scuttle the project. To add insult to injury, it wants to pass along to its power customers all the money it has spent on consultants and lawyers in its attempts to discredit the project.
So, not all is not rosey on the wind front.
Offshore wind is probably less of an urgency in the US than in Europe, which is smaller, a lot more densely populated, and, in several countries, already widely equipped with onshore wind turbines.
As offshore is still significantly more expensive than onshore wind, it makes sense to focus, for now, on onshore installations.
that's true if one merely moves the turbines designed/optimized for onshore operation offshore. for any application that does not use the electricity directly, the ocean vessel based wind harvester (carrier group) designed/optimized for such operation may not be more expensive given the (2X+) wind speed and much higher consistency.
The current European experience is that kWh are still at least 50% more expensive offshore, despite the advantages you mention. Net production is probably 50% higher than onshore, but as costs as almost double, the economics, for now, are worse. It may change as we move up in scale and start looking at 1,000 MW wind farms, but it's still unproven.
guess no one with a "sane" mind has seriously looked into harnessing the gale force wind on the high seas.
Jerome,
A portion of the cost for onshore wind is the rent paid for land where the turbine is located. Offshore should avoid this cost. Can you see a time when the rent catches up with the extra expense of working offshore? Would the reuse of portions of the equipment over a century or so bring the long term costs in line or does in just not converge?
Thanks,
Chris
Rent costs are minuscule, all considered.
What makes offshore more expensive is the following:
- foundations: the deeper you are, the bigger they need to be, which costs more to manufacture, and then to transport;
- grid connection: the further away, the more expensive (this is a really big issue)
- installation requires special vessels and cranes, and is dependent on weather, so takes more time
- operations and maintenance similarly requires specific transportation (vessels and cranes), which tales more time and is a lot more expensive, and a lot harder to make on time when the weather is bad (for health and safety reasons); as turbines are under bigger strains than onshore (stronger winds, salt corrosion), the needs are actually greater.
Against that, you get the ability to put bigger turbines, and much better and stronger wind, so higher capacity numbers on bigger turbines. As I said, for the time being, the overall cost per kWh is still higher, by about 50%. It might go down faster than onshore costs will (both are currently increasing right now, due to supply chain tightness and higher commodity prices, althoguh probably slower than for other sectors of the energy generation world)
an insanely out-of-box idea: a flotilla of floating VATs with minimal height positioned around and with electrical connection to a carrier with an on-board ammonia plant and storage.
all eliminated.
and you can move these carrier groups to wherever the wind is most favorable.
want strong winds? in Arctic ocean right now - 60+ kn. place them close to the ice cap, the excess capacity can be used to pump water through the thin ice to make the thicker ones. now the return on the investment is not only the clean fuel produced but also the side-effect-free ice cap fixing. what price-tag should one put on a vanishing ice cap and the risk of THC shutdown?
Unconventional offshore wind has a lot of promise, but it's still not even at prototype-level.
Most of the issues with offshore wind could be mitigated using a combination of any of the floating oil-rig type technologies, featherweight carbon fiber towers and blades, and some type of energy storage taking place in a fleet of ships.
The shipboard energy storage could be any number of things.
Lithium borohydride
Flow batteries
Compressed air (the Coselle CNG concept is nice here)
Liquid nitrogen from air (LNG containers, likewise, are already well-proven)
Ammoniasynthesis
Ethanol distillation
Hydrogen electrolysis
Any of a dozen reversible fuel cell technologies
None of these would work. A simple calculation:
- let's have a 3MW wind turbine installed on a floating barge, operating at 40% capacity factor
- let it need to go and "offload" its energy once a week (I don't think less than that would be practical).
During that time the wind turbine will produce:
3MW * 0.4 * 7 * 24 = 201.6 MWh
Using batteries with a typical power to weight ratio of 200Wth/kg will require:
201.6 10^6 / 200 = 1 mln.kg = 1000 tonnes of batteries only... forgetting about cost for a moment this will be some 10 times the weight of the turbine!
Compressed air stores typically 75 to 300kJ/kg, which translates to 20 to 83Wh/kg, so you will need around 3 times more air as weight than batteries - imagine a 3000 tonne compressed air bottle, waiting to blow up!
IMO the only close to feasible energy storage from those would be hydrogen, as it stores around 40kwH/kg, so it will require "only" 5,000 kgs of hydrogen. With roundtrip efficiency of 50% though (electrolysis + fuel cells) or 40% (electrolysis + NG powered plant) we would end up as though we have only 1.5 or 1.2MW wind turbine for all those investments... it will be hugely inefficient and expensive enterprise.
Jerome,
Thanks. Sounds like there is always something to rent. If not the land then the boat. I hope it pulls together well.
Chris
Methanol synthesis is not particularly difficult. Since you take the CO2 out of the air or water it's carbon neutral.
take the CO2 out of the air or water
any idea how much would that cost?
I made an estimate of the power required using zeolite as an absorber and it is not a lot. Others are working on this pretty hard. You can read my estimate here. I think the Navy considers dissolved carbon dioxide easier to work with.
Chris
i know nothing about zeolite. for the type that can trap CO2, what would be the cost, size and weight that can produce a tonne of CO2/day?
Well, as far as the situation in Delaware is concerned, if a wind farm isn't built offshore, it's not likely to be built at all. The value of coastal and near-coastal property in Delaware's seaside resort areas is so high that I very much doubt one could find the several square miles of contiguous property required for a wind farm at anything even close to a reasonable price. And once you get further inland, potential wind power drops off quite rapidly.
And perhaps this is the way it should be. High coastal property values send a clear market signal: the general public wants these areas for recreational use: not energy production.
Overall, I'd have to say that the prognosis for offshore wind power in the US is not particularly encouraging.
quikSCAT map shows where the real wind (30+ knots) is
http://manati.orbit.nesdis.noaa.gov/cgi-bin/hires_day_qf.pl
click on any area to see the detailed distributions
30+ knots (about 35mph)?????
Who needs wind that strong? Most wind turbines work in 8 to 10 knot wind (10 to 12mph).
I have lived in various places across the middle and western US. In many places such as North Dakota and central Texas the wind blows most days although the speed varies a lot. I have been in ND in January and witnessed 20 mph plus wind contant for two days straight during temps of 0 to -20 deg. F. The power in that wind could easily have provided everyone's heat in the area of Minnesota, North Dakota and South Dakota if the power Co. had wind turbines.
the simple, cheap and robust underdog VAT.
VAT is, to me at least, Value Added Tax - a version of sales tax. Can you please let us know what you meant by VAT?
in the context of wind turbines, it's vertical axis turbine.
Most large wind turbines cut in at around 9mph and reach stated capacity at around 25 mph. Energy output at 9 mph (4m/s) for a 1.5 MW turbine is around 100 KW, 12mph (6 m/s) = 300 KW, 17 mph (8 m/s) = 600 KW, 19 mph (10 m/s) = 900 KW, 21 mph (12 m/s) = 1.2 MW, and 25 mph = 1.5 MW.
For a look a total world wind resources, take a look at this NASA survey. Ocean resources are huge. But you still find some pretty strong average winds in the great plains, the Sahara and Gobi deserts.
some pretty strong average winds in ... the Sahara and Gobi deserts.
if one is to turn wind into liquid fuels, abundant water is also needed.
As many have noted, the strongest average winds speeds are over the oceans -- so for liquid fuel that's not a constraint at all. I think most wind plans will, eventually, include land and water based resources with liquid storage in ocean wind farms being a possibility. One other point, you don't need anywhere near the kind of water resources for wind/electricity storage that you do with fossil fuels. If there were abundant resources in a given area, I don't think it would be too difficult to store water/liquids underground in the volumes needed.
if the wind pattern changes significantly which is likely as the climate change accelerates.
The volume of the resource might change slightly, but a good windy site will stay windy.
The Great Plains have nothing but barbed wire between the Arctic Ocean and the Gulf of Mexico, this will not change. The Arctic will still be colder than the GoM. This is also true of more localized windy places as well.
Best Hopes for Wind to continue transferring heat & cold,
Alan
The Great Plains have nothing but barbed wire between the Arctic Ocean and the Gulf of Mexico, this will not change. The Arctic will still be colder than the GoM. This is also true of more localized windy places as well.
there is also the not so obvious subtropical high which can shift as the tropical region expands and the polar region shrinks.
Properly located they are fine , we have a wind farm zone near our city of 75,000 (Palmerston North, NZ )with several hundred turbines from the smaller ones to giant 3MW. The 31 3MW have been up for almost a year and at any one time about a quarter are out of action due to mechanical problems, bearings usually, blades delaminating and in one case a blade simply falling off.At 45m I bet that sure made a dent in the ground. 8 were out of action yesterday. The wind appears to be too strong with violent swings in direction. The wear and tear is a significant ongoing cost. This may well be that the Manawatu has the wrong turbines and that the ridge tops of the Tararuas, only a few hundred metres from an active fault line, is simply the wrong place for them. Whatever, I hope this tempers some of the optomism held by those who think they are a magic bullet.
This was in our local paper recently.
Wednesday, 02 January 2008
Energy strategy risks power shortages
There is a significant risk of power shortages from the Government's aim for 90 per cent renewable power and prices will rise, according to former Electricity Commission chairman Roy Hemmingway.
The Government's Energy Strategy, announced in December, will also impose a 10-year ban on building new fossil fuel power stations in an effort to cut carbon dioxide emissions.
Hemmingway left the job as Electricity Commission chairman at the end of 2006, at the end of an often turbulent three years. At that time, he openly criticised Energy Minister David Parker as an "interventionist" who appeared to think he was nearly always right.
Now living in the United States again, Hemmingway told BusinessDay the original Energy Strategy drafted by government officials was "fairly well balanced". But Hemmingway said he understood that the more "extreme reliance" on renewable energy was substituted by Parker himself.
"More renewables are necessary if New Zealand is to meet climate change targets. However, in my opinion, the government's policy puts so much emphasis on renewables to the exclusion of other generation sources that the power supply is at risk," Hemmingway said.
He warned against an over-reliance on wind power.
"The most likely and abundant source of renewable electricity is wind, and wind is unpredictable," Hemmingway said.
It was possible to predict the amount of wind energy available over the course of a whole year, but it was "very difficult" to predict how much wind power might be possible at the exact time it was needed to meet demand, he said.
"Given that New Zealand has begun to experience issues around meeting peak demand, there is a very serious problem with relying on wind," he said.
There were not enough other forms of renewable power such as hydro and geothermal stations that would provide a more reliable power supply.
"Power prices will rise, simply because new sources of supply, of all kinds, are more expensive than the old sources," Hemmingway said.
Banning non-renewable power from coal or gas fired stations potentially meant generators would have to turn to more expensive sources driving up prices.
Hemmingway did not estimate the potential impact on prices from the policy. However, independent electricity consultant Bryan Leyland has recently estimated the price of power could rise 30 to 40 per cent within a few years as a result.
Previous Electricity Commission figures suggest wind would cost 11 cents a unit, about twice the present cost of coal or gas. The Wind Energy Association says wind would cost between 7c and 10c a unit.
Bank economists have estimated government policies will see the price of petrol rise 4 per cent and electricity rise 7 per cent, at least, adding to the risks of inflation for the Reserve Bank.
New Zealand is already a world leader in renewable power, producing about two-thirds of its electricity mainly from hydro power, with smaller amounts of geothermal and wind power. Most Australian electricity, by comparison comes from coal-fired power stations.
About half of all New Zealand's greenhouse gases are methane from farm animals.
New Zealand produces about 200g of CO2 for each kilowatt of power produced, about one-fifth of the average CO2 of Australian power. France, which relies heavily on nuclear power, is one of the few countries with lower CO2 emissions from power generation.
If more wind farms were built, they would have to be "where the wind blows", and not necessarily near where people use most power, such as Auckland. That meant more transmission lines would be needed than for a power plant in Auckland.
Hemmingway pointed out it would be easier to build another gas-fired power station at Contact Energy's Otahuhu plant in Auckland, which already has consents as an operating power station, than seek consents for new generation.
The power system would also need more back-up power stations to meet peak demand when the wind was not blowing, Hemmingway said.
State owned Genesis Energy was told by Parker in October not to proceed with any plans for thermal power generators.
However, a recent Court of Appeal judgment said the application for the proposed gas-fired Genesis station at Rodney, north of Auckland was still alive. Sources have indicated the station could yet be built to handle peaks in demand, rather than a base-load station operating almost full time. Genesis has said it was "still reviewing" the Rodney plant, but if it went ahead it would meet the requirements of the government's Energy Strategy.
Hemmingway said security of supply was always an issue for New Zealand's power system because of the unpredictable nature of water running into hydro lakes. That would be made worse by an even greater reliance on hydro and wind, as against the more predictable power from gas or coal.
For most of this year, hydro lake storage levels have been running under the long-run 80-year average.
Wholesale power prices started to rise from extremely low levels of just 2c a unit in early November as storage levels dropped, to more than 8c a unit in mid-December.
Prices have since fallen back somewhat, with rising lake storage levels, now about 90 per cent of average, up from 78 per cent full a month earlier.
It had been expected to be a dry summer and lake levels had reached a level where operators should be cautious, according to electricity consultant Leyland.
Low lake levels showed the importance of having gas and coal-fired power stations that could be brought on when needed, Leyland said.
He pointed out Contact Energy has now permanently closed its old 300 megawatt New Plymouth power station, at a cost of $25 million, reducing available generation.
In September, asbestos was found in areas of the 31-year-old plant where it had not been previously recorded and the plant was immediately shut down. The loss of New Plymouth meant the system had less back-up generation than before the introduction of the emergency supply Whirinaki station in Hawkes Bay.
And that increased the risks if there was a station failure.
"We are always at risk of the major failure at one of the big gas turbines and it is not a risk we should underestimate," Leyland said.
There is also reduced transmission capacity on the Cook Strait power cable, down by about a third, adding to concerns about power supply.
On the other hand, Contact will get a fast-track consent process for its planned $500 million Te Mihi geothermal station near Taupo.
Leyland said if the summer was dry the system could be "easily be in serious trouble next winter".
http://science.reddit.com/info/661qr/comments/
cheers!
http://science.reddit.com/info/661qr/comments/
Seems busted.
Our past--and future?--transportation solution:
San Angelo, Texas, circa 1908 (population about 20,000 at the time)
Yet plenty of horses can be seen in the picture.
People are going to go to electric cars, scooters, and other small vehicles that take them where they want to go. Mass transit is not sufficiently personal.
Mass transit has never been the dominate form of transport. As you note horses and walking were the dominate forms of transport the the hay day of trains and street cars.
Here is a quote from West Point's Systems Engineering Department.
The lessons of Just-in-time manufacturing and Six Sigma can be applied to the transporting process.
I rode Minneapolis' Light Rail to show it to a friend a couple of weeks ago. Despite help from other passengers, a family with luggage got separated trying to get off and the train operator did not answer the call box until we had left the station.
Coming back at bar close one guy was passed out and peed his pants.
There is a very good paper on applying Just-in-time to the transporting process.
Based on riders per day, the most successful form of public transport is the elevator; an on-demand, nearly just-in-time device.
It is the reason Morgantown's PRT is a success. On this video you will hear it explained as a horizontal-elevator.
The analogy between mass production and mass transit is not complete.
How do you double the fuel efficiency of a car? You just add another person. Nearly all the fuel consumed by a car is for transporting the vehicle, not the people in it.
This is true of most traditional vehicles. Rolling friction is almost linearly dependent on the weight of the vehicle and air friction is proportional to the square of the speed of the vehicle at reasonable speeds; the aerodynamics and cross section of the vehicle is also of great importance. Until it becomes acceptable for vehicles to be shaped like a bobsleigh with wheels and until we can make vehicles out of lightweight composites, mass transit has better fuel economy than you can reasonably hope to accomplish with a personal vehicle.
You can compare this with nuclear, coal, natural gas or other generation methods. The cost is up front and the fuel costs and repairs are downstream. On a 30 year basis, this is probably cost effective. In our economy, it has to make sense for investors to do this if they want to make money. Pumped hydro, molten sodium and other methods can store the energy for use later. A better transmission grid can make getting it there more efficient and reliable. This is a good trend. I can remember 30 years ago, lots of people scorned the Altamont Pass wind farms between San Francisco and Sacramento as a boondoggle, now they are going up everywhere.
Since the original cost of the wind turbines is amortized over a 15-20 year period, there is no doubt that as the years pass the cost of the energy generated will decrease in relation to other energy sources. With that understanding in mind, it only makes sense for the government to provide low interest, long term loans for companies looking to install more wind turbines.
We can't lose with wind turbines - it doesn't foul the air with carcinagen particulates or greenhouse gases, and the more we have the less oil we will be dependent on from OPEC. Keep installing those suckers at break neck speed!!!