House of Representatives

Commonwealth of Pennsylvania

Majority Policy Committee Hearing

Alternative Fuels and New Energy Technologies

March 1, 2007

Testimony of Ellen Lutz

Development Director

Gamesa Energy USA Atlantic Office

Good afternoon, and thank you to Chairman Eachus and the Majority Policy Committee for including Gamesa Energy in today’s Alternative Fuels and New Energy Technologies hearing.

My name is Ellen Lutz, and I am the Development Director of Gamesa Energy USA’s Atlantic office. Gamesa Energy USA is a division of Gamesa Technology Corporation (based in Philadelphia), which is the US subsidiary of Gamesa Corporacion Tecnologica, a publicly traded company based in Spain. Gamesa is the world’s second largest manufacturer of wind energy turbines and the world’s fourth largest wind energy developer. Gamesa has a long-term commitment to the state of Pennsylvania, having built four industrial factories that manufacture all of the components needed to build wind turbines that will supply wind farms throughout the state of Pennsylvania and the US. Gamesa has invested $108 M in Pennsylvania to date, and has created jobs for over 800 people, principally in this state.

These factories are located in Ebensburg and Fairless Hills, PA. The location of the Gamesa factories in Pennsylvania is critical to the development of wind energy projects in the state as well as the US, because the worldwide demand for wind turbines currently outstrips the existing supply. It has been extremely difficult in previous years for planned wind farms in the Eastern US to receive the turbines necessary to build projects. This situation has been steadily improving as Gamesa’s production has entered the market.

In addition to our manufacturing activity in the state, Gamesa has a strong development division, and we are currently in the process of constructing two wind farms in Pennsylvania totaling 150 MW. The first wind farm, Allegheny Ridge, is an 80MW wind farm in Blair and Cambria Counties that will be operational in the next month, and will be the largest wind farm in the state to date.

Prior to joining Gamesa I was a Regional Director for the US Department of Energy, where my primary focus was on market transformation of emerging alternative fuels and renewable electricity technologies. In that capacity I worked with states across the US in developing policies to encourage the market penetration of domestically-produced renewable energy resources. From this experience I learned that it is Government’s role to stimulate the early development of innovative technologies that serve a public good that would otherwise not be able to compete with existing alternatives. I don’t believe that anyone could argue that renewable energy technologies, which are domestically produced, pollution free and growing at an annual rate of 30% per year, are not serving an enormous public good. The prices for renewable energy technologies such as wind and solar power are steadily dropping, but they are not currently competitive with the price of fossil fueled electricity in this part of the US without government subsidies. Even though the growth rates of over 30% per year are impressive, renewable energy still makes up less than ½ of 1% of the installed base of electricity in Pennsylvania.

The US Department of Energy has determined that a 20% penetration of wind energy into the US electricity grid is not only technically feasible, but is necessary to produce a domestic, clean energy supply that will allow America to meet our environmental and climate goals while fostering continued growth of the US economy. The Pennsylvania Energy Development Plan calls for an 11% market penetration of wind energy. An 11% market penetration of wind energy in Pennsylvania today would amount to over 5,000 MW of installed capacity; a 20% penetration would be over 9,000 MW. Today there is only 185 MW of installed wind capacity in Pennsylvania. Meeting Pennsylvania’s state goal will require installations 25 times what exist today, and meeting the Federal goal will require an effort 50 times today’s installations.

Governor Rendell, Secretary McGinty, Secretary Yablonsky and others have provided tremendous leadership in bringing Pennsylvania to the cusp of a clean energy future. Pennsylvania’s innovative policies are recognized throughout the country, if not the world. A major reason that Gamesa located in Pennsylvania was because of its strong leadership and commitment to renewable energy. Yet state level efforts can not make this happen alone. Every level of government must share this commitment.

The development cycle for wind farms in Pennsylvania is about 2 to 3 years today and becoming longer. This is greater than many other states in the US. Wind developers are encountering restrictive ordinances from many townships in the most wind -rich areas of the state, although a model wind energy ordinance exists that has been endorsed by the Pennsylvania State Township Supervisors Association. Many wind- rich townships have taken their ordinances to levels that will cause undue hardship to wind development in the state.

Over the past six years approximately 16 states across the US have instituted over $3 Billion in state-funded programs to promote the development of alternative fuels and new energy technologies. Pennsylvania’s System Benefit Funds represent approximately $90M of this total. Pennsylvania has invested its funds in energy efficiency and new energy projects throughout the state, which brought us from 0% to ½ of 1%. This is still a long way from declaring victory and developing market sustainability. Government incentives, such as Governor Rendell’s Energy Independence Strategy, are still required to complete the market transformation.

Pennsylvania must continue to drive to make state and federal goals a reality. Pennsylvania has been a US energy leader for over 200 years. Coal was first mined in Pennsylvania in 1761, and the first US oil well was discovered in Titusville, PA in 1859. As we have learned, the environmental, health and security impacts of our reliance upon fossil fuels are consequential. It is time for Pennsylvania to once again be an energy leader and drive the state forward to a clean, safe, and sustainable renewable energy future. Achieving this will require continued funding and political will at every level of Pennsylvania’s government.

To this end, Gamesa applauds and supports Governor Rendell’s Energy Independence Strategy, and feels that this will further position Pennsylvania among America’s state energy leaders. The proposal to levy a fee of five hundredths of one cent ($0.0005) per kilowatt hour on electricity will create a much greater benefit to Pennsylvania consumers than the $0.45/month it will cost the average household.

Pennsylvania is a wind-rich state, and has the capability to supply not only our own renewable energy needs, but markets throughout the Mid Atlantic and New England states, where 11 states have passed Renewable Portfolio Standards. Because up-front capital costs are the main costs associated with renewable energy development, the Governor’s Energy Independence Strategy will provide necessary capital to reduce project financing costs, ultimately saving consumers in electricity costs. It will also assist companies with seed funding or economic expansion that will continue to bring needed jobs to Pennsylvania.

Again, I would like to thank Chairman Eachus and the Majority Policy Committee for inviting Gamesa to speak today on this timely and critical issue for Pennsylvania’s energy future. Gamesa stands ready to assist the state in meeting it’s current and future renewable energy goals, and in helping to create both a sound environment and economy for our current and future generations.