WIND Power is generating a torrent of investor interest in Eastern Europe. It may offer a viable economic solution to a notoriously energy deficient region desperately seeking to reduce fossil fuel use and Greenhouse gas emissions. Hungary and its neighbours are taking advantage of a soft energy technology, which is expanding rapidly around the world.
'This country alone may well have as many as 400 wind power plants operating by the year 2006', says Balazs Stelczer, managing director of the First Hungarian Wind Power Generator Association (EMSZET). The reason: the country must invest in a hurry to double its renewable energy generation from the present 3 per cent to 6 per cent of the total within a decade--a commitment accepted as a condition of entering the European Union (EU) next year. Wind power is particularly suitable to improve the national energy consumption mix.
Hungary's hurry is shared by the entire region. Last year's devastating floods in Central Europe--which experts largely blame on climate change due to global warming--cost more than $3.2bn in insured losses alone. (See Contemporary Review, December 2002.) That was the most expensive single loss of the year due to a 'natural' catastrophe. Specialists fear that far worse is to come unless this notoriously flood-prone region reforms its environmentally destructive collective energy economy.
EMSZET has just set up two experimental public power supply wind power generators, each with a capacity of 600kW, in the Kisalfold region of Hungary. Several announcements heralding a spectacular and dramatic expansion of the wind power industry in this region are currently being prepared.
Gyorgy Hatvany, deputy secretary of state at the Ministry of Commerce in Budapest, describes a 'feverishly intensive review' of the national energy economy currently being conducted by Hungary's centre-left coalition government. This former Soviet satellite country struggling to re-orientate its national economy towards the West is still heavily dependent on Russian natural gas imports. Lacking significant indigenous energy resources (apart from the plentiful, sulphur-rich lignite deposits that used to fuel the polluting, obsolete power stations of the bygone Soviet era), Hungary must harvest the potentially lucrative winds sweeping across its great planes.
Hatvany says that, by 2010, Hungary will be able to cut its Greenhouse gas emissions to the level set by the Kyoto Accords on Climate Control. Emissions generated by energy production here declined from 101,000 tonnes in 1987 to 82,000 tonnes in 1998. The cuts achieved so far have been larger than what was promised, but energy production could grow by 2010. The national environment programme devotes a separate action plan to Greenhouse gas emissions. A committee comprising experts from various ministries will be set up soon to oversee an accelerating rate of such environmental economies.
Help is also on the way. Spencer Abraham, the American Energy Secretary, has recently passed through Budapest to announce a $138,000 grant to Greenergy Kft. of Hungary towards a feasibility study for the construction of several projected wind parks. They may have a combined capacity of 80-100MW, and cost perhaps $100m. The study will assemble the first green energy map of the country including environment assessments, geological studies, economic analyses and wind flow modelling. The American Trade Development Agency has so far invested more than $13m here to promote renewable energy generation, making Hungary one of the biggest recipients of such funds.
Eastern Europe is making the most of a dramatic global development. Wind energy generating capacity reached nearly 32,000MW world-wide by the start of this year, an increase of 27 per cent on 2001. Spurred by falling costs, concern about climate change and new governmental policies, wind remains the fastest growing energy source in the world. Global wind capacity has tripled since 1998. In early 2002, wind power provided enough electricity to meet the residential electricity needs of 35m people. And many more people get at least some of their electricity from wind.
Net additions to the global wind energy generation capacity last year totalled approximately 6,720MW--a new record, according to an important industry survey just released in New York and London. Yet the rate of growth was slower than expected due to the slump in the United States market, which continues to swing widely in response to short-term extensions of federal wind energy tax credits. The US installed only 410MW of new capacity in 2002, compared with 1,714MW in 2001, bringing its total to 4,685MW. But up to 1,800MW more may well be erected in 2003 as developers rush to install projects before the pre-set tax credits expire at the end of the year.
Europe alone installed an estimated 5,870MW of wind power generating capacity last year, 31 per cent more than in 2001. This continent has nearly 73 per cent of the global wind capacity--thanks to strong, consistent policies driving demand for renewable energy technologies, particularly in Germany, Spain and Denmark. These three countries accounted for 90 per cent of the capacity installed in Europe during 2002, says the industry survey published by the authoritative Worldwatch Institute in Washington.
More than half of Europe's 38 per cent of the world's wind capacity is found in Germany. In 2002, Germany set another record, adding 3,250MW to end the year with just over 12,000MW of total capacity--enough to provide 4.7 per cent of the country's electricity. In October, the government announced plans to reduce Germany's Greenhouse gas emissions by 40 per cent by the year 2020. Wind power will play a large role in this plan. And these developments are set to encourage wind power development in Gemany's neighbours in Eastern Europe.
German energy enterprises are increasingly looking beyond their domestic market. One of the biggest investors in Hungary's energy sector is E.ON, the largest privately owned power supply company in Europe which operates about half of Germany's wind power plants. Energy specialists project keen competition in Hungary by several foreign enterprises. The Hungarians thus can afford to be choosy.
The environment authority of the windy Central Transdanubian Region has just denied planning permission for a $114m wind turbine park proposed by German-owned UTEC-Thomsen Magyarorszag. The scheme was scuttled after the conclusion of preliminary deals by the company committing the local authorities and landowners in the Tes district to the proposal for the construction of 40 wind turbines. UTEC-Thomsen still plans to invest nearly $1bn elsewhere in this country.
The environmental benefits and profit opportunities promised to this region by wind power have been positively evaluated in the first stage of a strategic assessment just completed for the London-based European Bank for Reconstruction and Development (EBRD). The report identifies Hungary as well as nearby Poland, the Czech Republic, Russia, Ukraine and Latvia, closely followed by Estonia and Romania, as the most interesting countries for investment in green energy. Indeed, Poland has recently added 30MW and Latvia 21MW power generating capacity to their nascent wind turbine industries.
The EBRD has been set up specifically to speed the economic transition process across formerly Soviet-dominated Europe. Both the EBRD and the European Investment Bank (EIB), the long-term financing arm of the EU, are expected soon to embark on substantial investment programmes for the promotion of wind energy. The EIB has just raised its first ever, $135m loan for wind energy generation in Denmark, and promised further funds for the industry throughout this region.
Most of the 100,000 people employed by the global wind power industry are Europeans, observes the new Worldwatch market analysis published in its landmark survey Vital Signs 2003 (W. W. Norton and Co., New York and London). European companies manufacture 80 per cent of all wind turbines sold worldwide. The global large-turbine market is expected to surpass $16bn annually by 2007. And the investment firm Merrill Lynch believes that wind power will grow 15-fold over the next 20 years.
Wind energy development in Eastern Europe began in a big way in 1999 in studies centred at the Agro-Energy Department of St. Istvan University, Godollo, not far from Budapest. An important recent conference held there by the Hungarian Wind Energy Scientific Association concluded that the technology involved is particularly suitable for this country and its neighbours. The biggest attraction of wind power generation here is that it offers an indigenous, Greenhouse gas-free alternative to the traditional energy economy which once made this region the dirty man of Europe.
