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AWEA Study Responds to Wind Industry Criticism

The American Wind Energy Association (AWEA) issued a report seeking to refute some power industry criticism about the market effects of wind.

In particular, AWEA said it rejects arguments by Exelon (NYSE:EXC), which the trade group says “has been leading a campaign to undermine broad bipartisan support for wind energy with the argument that the renewable Production Tax Credit causes frequent occurrences of negative electricity prices at Exelon’s nuclear power plants.”

AWEA and Exelon underwent a very public split a couple of years ago when the wind association effectively kicked Exelon out of the group after Exelon publicly called for an end to the PTC.

“Exelon’s campaign confuses the consumer benefits of wind energy with an exceedingly rare and isolated issue called negative pricing,” said AWEA Senior Electric Industry Analyst Michael Goggin said.

“Grid operator data show Exelon has overstated the frequency of negative prices at its nuclear plants by a factor of 20, and that in fact the majority of these negative prices were actually caused by Exelon’s own nuclear plants and not wind,” Goggin said. “Regardless, negative price occurrences are being eliminated anyway by long-needed grid upgrades.”

The real threat to Exelon, and the economics of nuclear generation in general, come from cheap natural gas and weak electricity demand, AWEA said in a statement.

Exelon did not immediately provide comment on the report titled “The facts about wind energy’s impacts on electricity markets.”

Exelon and other critics have said that because wind receives productive-based tax credits it often provides power to the grid during times when market prices are so low that other generators would be losing money – hence the term “negative” pricing.

Exelon and some other industry players have said that wind power is now a mature technology that no longer needs a subsidy from the PTC.

AWEA says negative pricing happens rarely and can often be attributed to other factors. “The cause of many of the remaining negative price occurrences appears to be the inability of Exelon’s nuclear power plants to reduce their output during periods of low electricity demand,” AWEA said.

The current PTC expired at the end of 2013 but is still available for wind units that entered “construction” as defined by the IRS, by the end of 2013. As a result, lots of new wind generation is on the way. Wind supporters are trying to revive the PTC in some form.

This article was originally published on GenerationHub and was repubished with permission.

Lead image: Wind turbine via Shutterstock

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