The World's #1 Renewable Energy Network for News, Information, and Companies.

Can Wind Power Keep Energy Prices in Check?

Our system of checks and balances in government is important to our democracy. Each of the three branches of government limits the powers of the others to prevent one branch from becoming too powerful. In a similar manner, wind power may serve as a check to future natural gas price hikes.

The U.S. Department of Energy recently authorized a second Texas-based export facility of domestically produced liquefied natural gas (LNG) to ship to countries in Asia and Europe. Many U.S. energy companies will likely take advantage of higher prices for natural gas in Asia by exporting U.S. LNG — gas converted to liquid form to make it easier to transport — to Korea and Japan, especially after Fukushima. The Federal Energy Regulatory Commission (FERC) is already reviewing 20 applications for LNG export facilities. If approved, we could see a significant amount of our domestic LNG being shipped overseas. More LNG going overseas will likely increase prices in the U.S. due to a decreased supply at home.

The Balance of Wind 

Dennis McKinley, Director of North American Wind Power Business for ABB North America, which works with turbine OEMs and wind developers, said wind power is an important part of our energy mix. 

“[Wind] acts as a check and balance system to keep natural gas prices in check,” McKinley said. “Manufacturing is beginning to return to the U.S. because of low natural gas prices. But if we just go all in with gas that makes gas prices rise even more.”

Natural gas prices fluctuate over time with highs and lows, said McKinley. With wind, companies always know what the fuel cost will be, which is why wind power plants are able to sign 20-year power purchase agreements, he said. “As exports increase, the price for LNG will increase, but there will be a line there — at some point, it will be cheaper to install wind and solar than to build new natural gas plants for power generation.”

McKinley suggests that without wind energy to provide competition for natural gas as an energy source, natural gas prices will be allowed to rise unchecked. 

Development Requirements 

If wind power is to compete with natural gas, the U.S. grid system will need to be updated, said McKinley. About 80 percent of the power load demand is on either coast (West and East), but most of the wind generating capacity happens in the plains, he said. 

For a wind farm to go up, developers need to figure out how to deal with transmission issues. Utilities today were built up over time by local wind farms that will drop a substation into an area to accommodate a local population, he said. That model has created a U.S. grid system that resembles a series of spider webs that aren’t connected together.

“We don’t really have a national infrastructure -- a more modern grid like Europe and China where you can connect across multiple regions and areas,” he said. “The infrastructure we have here is lacking compared to other countries in the world. We need smarter grids and better infrastructure.”

ABB is working on a developing a high voltage DC circuit breaker that will allow utilities to flip their transmission lines to HVDC to transmit power down long-distance lines, then flip back to AC once power reaches the end user. The new circuit breaker will also allow utilities to transmit power “ocean-to-ocean” similar to our national highway system and also section off areas that need to be fixed and keep transmitting power in other areas.

Back to Our Old Ways? 

Some energy company leaders have predicted that the LNG void will be filled by coal. In a recent CNBC interview, Andrew Lipow, President of Lipow Oil, said he believes utilities will switch back to coal if the price of natural gas continues to rise. He sees natural gas rising here to $5 per million BTUs (British Thermal Units) in the next couple of years. The cost is about $12/ MBTUs in Europe and $14/MBTUs in Japan right now, Lipow said.

McKinley doesn’t believe coal will replace natural gas if prices rise, that is why wind development is so important, he said. “Approximately 60 coal-fired plants will be retired in the next five years,” he said. “I think it would take a major shift to stop that from happening. Once that happens, utilities will need to fill the void.”  Some coal-fired power plants are already beginning to shut down or are being retrofitted for natural gas.

Addressing Intermittency

Greg Worden, a small wind project developer, green business consultant, and adjunct professor of business at Marylhurst University in Oregon, believes natural gas complements renewable energy well because it provides backup electricity generation when the wind falls and has a rapid ramp up capability. With the enormous discoveries of gas in Pennsylvania, New York and North Dakota, many states are fast laying plans to bring gas to their region through fast tracking pipeline permits, especially in Maine, he said. 

“Multiple gas companies are already making the pitch to cities, towns, and even fleet vehicle owners,” he said. “Within a decade, so goes the promise, New England states could nearly rid themselves of coal-fired electricity generation plants as well as oil-burning furnaces in homes. This cleaner energy future dovetails perfectly with intermittent renewable sources of electricity such as wind, solar, wave and tidal generators.”

But Worden sees three major downsides to increased natural gas development. First, gas could compete directly with renewables; second, prices for LNG overseas may exceed domestic prices; and third, when overall fuel prices, especially gasoline, drop there is a tendency to forget about renewables, he said. For instance, 16 of the 29 states with renewable energy portfolio standards are already considering reducing the quotas in favor of natural gas. 

Forgetting about wind energy is a mistake, according to McKinley. McKinley sees wind energy development as important to a healthy energy economy because consumers and businesses will turn to wind energy if natural gas prices rise significantly due to an increase in LNG exports. This could happen more quickly than consumers think if the proposed additional 20 export facilities are approved. In this way, wind energy may provide consumers with more power than just electricity for their homes.

Lead image: Wind turbine via Shutterstock

RELATED ARTICLES

GE Digital Wind Farm

GE Introduces Digital Wind Farm that Could Boost Production 20 Percent, Re-ignites Alstom Buyout Talk

Meg Cichon, Associate Editor General Electric (GE) is pushing its wind farms to join the big data revolution with its new Digital Wind Farm, announced this week at Windpower 2015 in Orlando, Fla. amidst talk that its $15 billion offer to buy Alstom’s p...
Wind turbine

Bigger Wind Turbine Towers = Bigger US Development Opportunity

Meg Cichon, Associate Editor Wind energy already accounts for about 5 percent of U.S. electricity generation, which crowned the nation as the global leader in wind production late last year. There is now more than 65 gigawatts (GW) of capacit...
Wind turbines

Wind Energy Is Crucial in the Fight Against Climate Change, Says US Energy Secretary

Meg Cichon, Associate Editor

The opening general session at Windpower 2015 marked the first appearance by an U.S. energy secretary at the show, “which is surprising,” said current energy secretary Ernest Moniz, “but better late than never.”

Renewable Power Can Now Flow All Over Europe

Rachel Morison and Weixin Zha After almost two years of delays, Germany, France and their neighbors in central-western Europe connected their electricity markets on Wednesday under a system that lets prices dictate where power flows between countries. F...
Lauren Poole is a journalist and science writer based in Colorado. She worked for 11 years at the National Renewable Energy Laboratory, where she wrote extensively about solar and wind energy technologies and policy issues before starting her own ...

CURRENT MAGAZINE ISSUE

03/01/2015
Volume 18, Issue 3
file

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @megcichon @jennrunyon

FEATURED PARTNERS



EVENTS

Doing Business in Brazil – in partnership with GWEC, the Global Win...

Brazil is one of the most promising markets for wind energy.  Ranke...

Energy Storage USA 2015

Energy Storage USA is the leading conference in the United States focuse...

Wind Power Central America

Wind power projects are expected to reach 46GW of total installed capaci...

COMPANY BLOGS

SunEdison Expands Residential Market Offerings with New PPA, Sales ...

SunEdison has largely focussed on the commercial and utility-scale solar...

Deadline for Inclusion in Solar Power World's Top Solar Contractors...

UPDATE: The official deadline for the Solar Power World T...

Are You Ready for a Natural Disaster?

Guest post by Jenna Clarke  Living in the Shenandoah Valley of Virg...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS