Bull market in wind energy.

• Author: Flavin, Christopher
• Position: Pamplona, Navarra's increased generation of wind power capacity

Many countries may soon find that the cheapest way to produce electricity is to pull it out of the air.

The Spanish city of Pamplona has long been known for its annual running of the bulls. But this mid-sized industrial center, the capital of the state of Navarra in the rugged Pyrenees region, is quickly gaining another distinction: it has the world's fastest growing wind energy industry. Starting from scratch just three years earlier, Navarra was obtaining 23 percent of its electricity from the wind by the end of 1998.

With a population of 180,000, Pamplona has an economy based heavily on manufacturing, including a sizeable car industry. But along with much of the rest of Spain, the city has had a relatively stagnant economy and a high rate of unemployment in recent years. In an effort to deal with that problem - and replace the coal and nuclear energy it imports from other parts of Spain with local power - Navarra recently introduced a set of tax incentives and other inducements for harnessing wind energy using locally manufactured turbines.

These policies paid off well beyond the dreams of the government officials who crafted them. Several wind-energy companies were quickly established in Navarra, most of them joint ventures owned in part by the Danish firms that supplied the technology. And much of the investment is coming from Energia Hidroelectrica de Navarra, the regional electric utility. These firms have provided a strong political base for the region's burgeoning wind power industry. Navarra's wind companies are already looking to expand their horizons to even larger potential markets in areas where Spain has strong historic ties, such as North Africa and South America.

The sudden transformation of Navarra's energy mix may turn out to be foreshadowing something much bigger. During the 1990s, wind power has already become the world's fastest growing energy source. Propelled by supportive new government policies - most of them motivated by environmental concerns - some 2,100 megawatts of new wind generating capacity were added in 1998, according to our preliminary estimate. That's not only a new record, but 35 percent more than the previous record set the year before.

Global wind generating capacity now stands at 9,600 megawatts - a 26 percent increase from a year earlier. (See [ILLUSTRATION OMITTED] on page 27.) Wind turbines will generate a projected 21 billion kilowatt-hours of electricity in 1999 - enough power for 3.5 million suburban homes. And though it now provides less than 1 percent of the world's electricity, these double-digit growth rates could make the wind a major power supplier soon.

Wind power is also one of the world's most rapidly expanding industries. Valued at...