Riding the wind
U.S. breakbulk ports demonstrate prowess for handling turbine components.
By Chris Gillis
Many U.S. ports are experiencing painful slowdowns in ocean freight volumes crossing their docks due to the crippling global economic meltdown, but for some port operators there's optimism in the air.
Wind turbine component imports have provided a much needed lift in activity to nearly a dozen ports around the country that specialize in breakbulk cargoes, and the business is looking increasingly up with the Obama administration's commitment to renewable energy development in the United States.
'Wind energy projects remain a bright spot,' said Larry Paulson, executive director of the Port of Vancouver in Washington, in his annual 'state of the port' address on Feb. 5. 'They are of national significance and with the new federal administration reinforcing the need for this renewable energy resource, wind energy projects will continue to be built.'
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| Paulson |
The $787.2 billion economic stimulus bill signed by President Obama in mid-February provides nearly $50 billion in tax incentives for renewable energy and energy efficiency over the next 10 years, including grants and an extension of the production tax credit for renewable energy.
Wind energy developers are expected to be major beneficiaries of these programs, and this spells more business for U.S. ports.
'The Port of Vancouver is very well positioned for the importation of the components for these projects,' Paulson said. 'In 2009, we anticipate handling over 3,000 pieces of wind energy projects.'
Other breakbulk ports scattered along the West and Gulf coasts, and even in the Great Lakes, are optimistic that wind turbine shipments will continue to cross their docks in increasing volumes, although some wind energy projects are stalled by the tightened credit market.
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'We look at 2009 as a little bump in the road,' said Ron Johnson, trade development director for the Duluth Seaway Port Authority in Minnesota. 'We'll see what impact that has on cargo handling for the year, but the trends look good, especially with passage of the stimulus package, the extension of the production tax credit and the strong support of the new administration for renewable energy.'
'Clean Cargo.' The U.S. wind energy industry has long struggled with periods of boom and bust, often predicated on Capitol Hill's timely commitment to extending the production tax credit (PTC) program before it expires on Dec. 31.
The PTC was put in place by Congress in 1992 and serves as the primary government incentive for wind power development. It's essentially a federal rebate on the taxes paid by companies that own wind projects.
Congress has allowed the PTC to periodically lapse, including a disastrous eight-month period in 2004. The American Wind Energy Association (AWEA) estimated that the 2004 delay resulted in the idling of more than 2,000 megawatts of wind projects valued at $2 billion. In recent years, the wind energy industry has managed to get by on fairly consistent annual PTC extensions.
Another factor contributing to positive growth in U.S. wind energy is the increased implementation of state-based renewable portfolio standards programs that have set timelines for electric utilities to provide a certain percentage of their power from renewable energy sources such as wind, solar and biomass. Wind, by far, is considered the biggest contributor to meeting these states' renewable energy goals.
Last year, the Energy Department published a report supporting the feasibility of meeting 20 percent of the country's electricity supply through wind power by 2030.
The AWEA reported that the U.S. wind energy industry broke all previous records in 2008 by installing 8,358 megawatts of new generating capacity. In all, wind energy generating capacity in the United States now stands at 25,170 megawatts, producing enough electricity to power close to 7 million households. The top five states in terms of installed capacity at the end of 2008 were:
' Texas, 7,116 megawatts.
' Iowa, 2,790 megawatts.
' California, 2,517 megawatts.
' Minnesota, 1,752 megawatts.
' Washington, 1,375 megawatts.
'The country that figures out how to make cheaper energy that's also clean, that country is going to win the economic competition of the future,' declared Obama at a Feb. 9 town hall meeting in Elkhart, Ind.
Paulson pointed out that the wind energy business has also created good paying jobs in transportation, construction and maintenance in the Northwest and into the Midwest. 'So when you see wind energy parts traveling down your streets, be patient and think of how many people go to work as a result,' he said.
This wind energy boom created about 85,000 jobs in the United States last year, up from 50,000 in 2007. These jobs include:
' Turbine component manufacturing, construction and installation.
' Operations and maintenance.
' Legal and marketing services.
As many as 70 turbine component manufacturing facilities have been either added or expanded in the United States during the past two years.
The public has taken a more favorable attitude towards wind turbines and other renewable energy technologies in recent years, as the country tries to reduce its reliance on imported oil and reduce pollution from carbon-based fuels.
Ron Popham, assistant vice president of industry and trade relations for the Port of San Diego in Southern California, said the local community has shown support for the port's wind turbine business.
'Our community loves this business,' Popham said. 'We bring in clean cargo and contribute to clean air.'
Port Attraction. Breakbulk ports are attractive to turbine manufacturers and wind farm developers for a host of reasons. Unlike busy hub ports, such as Houston, Los Angeles-Long Beach, and Seattle-Tacoma, breakbulk terminals are generally less congested and provide the proper equipment and workforce necessary to handle project cargoes.
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| Harris |
'Five years of proven experience handling this over-dimensional and fragile equipment tends to draw attention in the cargo handling arena,' said Valerie Harris, director of marketing for the Port of Longview in Washington. 'Our responsive workforce has the ability to perform many value-added services which are tailored to our wind energy customers' needs.'
Longview handled 39 vessels of wind energy components in 2008, or an average of four vessels a month. The cargo came from Denmark, Spain, South Korea, China and India.
'We've been able to do this so far without any investment in infrastructure,' Popham said. San Diego has four stevedores and the International Longshore and Warehouse Union, which are experienced at handling these large cargoes, including the necessary dock equipment and a 250-ton floating crane.
'Because of the volume increase, we're looking at off-dock locations and distribute from there,' he said. 'We can only handle so much.'
'We have plenty of space,' said Michael Luken, port manager for the Port of West Sacramento in California. 'As a former woodchip port, we have lots of paved lay-down area for project cargoes, and the potential to add another 400 acres.'
Many of the breakbulk ports have attracted turbine components due to their proximity to wind farm projects.
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| Luken |
'We have close access to major wind farm projects in Texas supported by an uncongested and efficient highway system,' said John Valls, marketing director at the Port of Corpus Christi. 'Most of the wind turbine equipment moved through our port is destined for project sites in Texas, some as close as 20 miles while others are bound for the Texas Panhandle and the Midwest.'
In 2007, Corpus Christi received 34 vessels with turbine component loads, followed by 94 vessel calls in 2008.
West Sacramento in early February announced the delivery completion of wind turbine components from Asia and Europe to the enXco's Shiloh II wind farm near Rio Vista in Solano County, Calif.
During June-October 2008, eight vessels from Star Shipping and three from Oldendorff Carriers unloaded turbine components to build as many as 75 turbines. The components included towers made in Korea, and blades and nacelles (the power generation component) from Denmark and Germany. Each turbine unit includes three 185-foot-long blades and three tower sections. When constructed, each unit rises more than 400 feet from the tower base to the tallest blade tip.
In recent years, some turbine manufacturers have strengthened their relationships with certain ports by establishing formal agreements. For example, Suzlon Wind Energy Corp. of India ships a majority of its Gulf-bound tower sections, blades and nacelles through Port Freeport in Texas. The port handled about 300 complete Suzlon wind turbines in 2008 and expects that number to increase to 600 turbines in 2009, said Mike Wilson, the port's director of trade development.
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| Valls |
Vancouver in February announced two agreements with turbine makers Vestas of Denmark and Siemens of Germany to be their exclusive cargo handler on the Columbia River, a location not far from some of the country's largest wind farm developments.
Vancouver started handling Vestas' shipments in 2000 and has had an exclusive agreement with the manufacturer since 2006. The new agreement provides a three-year extension of this activity between Vestas and the port. Similarly, Siemens, in its agreement, named Vancouver its exclusive Columbia River port for the next two years.
Other breakbulk ports hope to get a piece of the wind energy cargo action. The March 2008 Windletter, an AWEA publication, reported that Louisiana's Port of Lake Charles plans to spend about $125 million on improvements, including on-dock rail enhancements and additional paved storage space, that could help attract turbine component shippers to its docks.
Road Ways. While breakbulk ports are attractive to wind turbine shippers, these facilities could easily be rendered undesirable if there's extreme difficulty moving these giant components beyond the terminal gates to the wind farms. (For more detail about road transport of wind turbine components, read the April 2008 American Shipper, pages 64-71.)
The Port of Milwaukee handled a half-dozen vessels transporting wind turbine shipments in 2007, but none in 2008 due to over-the-road permit problems these shippers and their truckers experienced with the Wisconsin Department of Transportation and the Milwaukee Department of Public Works.
Milwaukee port officials said they have since been working closely with both departments to accommodate long and heavy pieces on the interstate system. Loads that are 190,000 pounds and no taller than 14 feet-3 inches will be allowed on Interstate 794, which has the interstate bridge and connects into the port. Heavier and higher loads will also be allowed on the interstate in the Milwaukee area with the intention to get them on the freeway as quickly as possible as the height clearances allow.
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| Nowak |
'This is a significant change because the old rules did not allow for oversize or overweight loads on the freeway system within Milwaukee County,' said Betty Nowak, marketing manager for the Port of Milwaukee, in an interview. 'Additionally, the Milwaukee DPW and WisDOT are surveying the on-ramps at the port freeway system to increase the radius to its maximum to allow long loads, like the wind blades, easier access to the freeway.'
The Port of Duluth, also on the Great Lakes, has had a different experience with Minnesota when it comes to moving wind components to the interior.
'We have an extremely cooperative permitting office at the Minnesota Department of Transportation and strong relationships with the Minnesota State Patrol and a number of specialized trucking companies,' Johnson said. 'By conferring regularly with these strategic partners, we make it virtually seamless to move cargo in and out of the Port of Duluth.'
Despite regulatory and logistics challenges, many wind turbine components continue to be trucked from the ports to wind farm sites throughout the U.S. heartland and even across the border into Canada.
In 2008, Duluth estimates that it trucked more than 2,000 individual wind components, such as blades, towers and nacelles, for 10 manufacturers, some of which had multiple destinations for their parts. These included the Upper Midwest, and as far away as Montana, Missouri and Oklahoma.
Rail Connections. In recent years the railroads, particularly the Union Pacific and Burlington Northern Santa Fe, have become increasingly active in the transport of wind turbine parts, and many breakbulk ports are already endowed with rail access.
'Everything we've handled in and out of the port by land to date has been by truck,' Johnson said. 'But we've had a number of requests recently so it's only a matter of time before we start handling wind components by rail, especially since we are so well connected to rail service here in Duluth.'
Duluth has the benefit of:
' Direct access to four Class I railroads (UP, BNSF, Canadian National and Canadian Pacific).
' Four tracks along the dock that allow for direct transfer from ship to truck/rail.
' A loop track that offers other transloading options at its terminals.
Until recently, all wind turbine movements from Corpus Christi were handled by trucks, but starting in March the port began using the UP to rail components to project sites in Colorado. 'Rail movements expand our capabilities and offer more efficient service to our customers while still supporting transport by truck,' Valls said.
The Port of Beaumont reached an agreement with BNSF, UP, Kansas City Southern and the Texas Department of Transportation to begin work on a $16 million rail expansion project. The expansion will remove a rail yard north of the port and add it onto an existing rail storage yard inside the port. The addition will total 15 acres of extra tracks, which will enhance the port's railcar storage capacity. 'The added capability presents the port with opportunities for growth with respect to wind energy cargo handling,' said Mike Smith, a spokesman for the port.
At Freeport, Wilson said the port, which is served by the UP, is replacing an old swing bridge to more efficiently handle unit trains of wind turbine components. The project, scheduled to be completed in April, will allow Freeport to begin offering the first railed shipments for Suzlon throughout the United States, he said.
On the West Coast, the Port of Stockton in California has the benefit of access to the Sierra-Sacramento rail passage, which allows it to offer delivery of turbine tower sections to wind farms sites as far away as the Midwest and East Coast, said Bill Lewicki, marketing manager. Within the port area, the UP and BNSF jointly operate the California Traction Co., which prepositions railcars for the railroads to accommodate project cargoes.
Stockton also recently inherited the Navy's former facility on Rough and Ready Island, which includes access to 6,600 linear feet of continuous dock of double-reinforced concrete. The facility also includes two and half miles of on-dock rail, which can support up to 120 railcars, or two unit trains, at a time.
'A ship with its own gear can come in and discharge stands (towers) directly to the rail. There's no lay down required, saving shippers lots of money,' Lewicki said.
The United States is now the biggest market for wind turbines and components. Nearly $17 billion was invested in wind farms built during 2008. Wind turbine components arriving at U.S. ports come from around the world. Some of the biggest source countries for these shipments are Denmark, Germany, Belgium, Spain, China, India, South Korea, Vietnam and Brazil.
However, to take advantage of a shorter supply line to the wind farm projects, seven of the top 10 largest wind turbine producers have set up their own manufacturing operations in the United States. The AWEA noted that in 2008 the average wind turbine installed in the United States contained nearly half of American-made components, up from less than 30 percent in 2005. More than 55 wind turbine component manufacturing facilities were opened, expanded or announced in the United States last year.
'Each turbine manufacturing facility has more than 400 suppliers for the more than 8,000 component parts needed to complete a turbine,' said AWEA spokeswoman Julie Clendenin. 'Many of these components can be made by American companies, but some are not yet available here ' one reason for the increased port activity.'
Heightened domestic production has also opened opportunities for some ports to handle wind turbine component exports.
Duluth-Superior in the Great Lakes has handled dozens of shipments to and from European and South American ports in recent years due to its proximity to numerous Midwest wind farms, as well as turbine component manufacturers. In August, the port managed a shipment of 54 blades built in the United States by IMPSA Wind for a wind project in Brazil.
At the same time last year, Longview announced that it received a shipment of 48 blades from Acciona's plant in North Dakota via truck for a wind project in Australia.
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| Lewicki |
Lewicki believes that in the coming years Stockton could emerge from being just a receiving point for turbine component imports to one that also distributes these parts globally. With 4,200 acres, including 7 million square feet under cover, Lewicki said Stockton could provide turbine manufacturers a production site that feeds both international and North American markets.
'Our main competition is the (production) points in the Midwest, which market their proximity to the wind farms,' he said. 'We'll promote the best of both worlds ' access to domestic and international markets through our transportation services.'
However, in early 2009, the U.S. wind energy industry slowed due to insufficient financing for new projects, resulting in reduced orders for turbine components. Some manufacturers even announced layoffs at the start of the year. The AWEA and other renewable energy associations lobbied Congress and the White House for the inclusion of additional tax benefits in the recently enacted stimulus legislation.
'Because wind projects can be built quickly, positive legislation from Congress will have immediate and visible effects,' said Denise Bode, AWEA's chief executive officer, in a Jan. 27 statement. 'Looking forward, it will also be important for the new administration and Congress to put in place long-term, supportive renewable energy policies to make the new clean energy economy a reality.'
The ports have witnessed reduced volumes in wind turbine components in early 2009 and hope the stimulus benefits for renewable energy will kick in soon.
'Most wind energy manufacturers are telling us that many of their projects are on hold,' Smith of Beaumont said. 'However, they are optimistic that cargo should move again after the second quarter of 2009.'
The port handled about 40,000 tons of wind turbine equipment during 2008. 'The Port of Beaumont remains optimistic that the wind energy business will continue, albeit at a slower pace than predicted,' Smith said.
West Sacramento's Luken agrees the credit crisis has delayed some projects, but the U.S. wind energy business should soon regain momentum. 'We hope it will be a big year,' he said.