Midwest Study: Adding More Wind Power Will Save Money

Carl Levesque, AWEA
May 31, 2012 | 4 Comments

Adding more wind power to the electric grid could reduce wholesale market prices by more than 25 percent in the Midwest by 2020, according to a new analysis.

The report, conducted by Synapse Energy Economics and commissioned by Americans for a Clean Energy Grid, found that wind power could drive down the wholesale price of power by $3 - $10 per megawatt hour (MWh) in the near term and up to nearly $50 per MWh by 2030. Those savings would be passed along to consumers through lowering retail electricity prices by $65-$200 each year.

The analysis also found that new transmission is needed in the region to tap wind power; however, investments in transmission are small compared to the savings they would reap, providing more than a 2 to 1 return on investment throughout various scenarios. The connection between new transmission and cost savings to the consumer is something that the wind power industry has been highlighting for several years.

“This analysis illustrates a basic fact about our power system — building transmission to unleash cheaper, domestic resources makes strong economic sense,” said John Jimison, managing director of the Energy Future Coalition and Americans for a Clean Energy Grid. “Transmission makes up the smallest sliver of the electricity bill, but can make power markets more competitive and drive down costs for everyone. Midwestern states where some of the most valuable and abundant wind power can be found have a real opportunity to capitalize on these findings and continue investing in the infrastructure they need to facilitate additional generation of clean power.”

The study, titled “The Potential Rate Effects of Wind Energy and Transmission in the Midwest ISO (MISO) Region,” evaluated the electric power market in the upper Midwest including all or most of North Dakota, South Dakota, Nebraska, Minnesota, Iowa, Wisconsin, Illinois, Indiana, Michigan and parts of Montana, Missouri, Kentucky, and Ohio.

The report points out that wind as an electricity supply resource has been getting steadily cheaper, and its performance characteristics continue to improve as larger turbine sizes and higher hub heights capture both economies of scale and more of the passing wind. Simultaneously, the projected cost of coal-fired power has begun to climb; the increasingly global coal market has given rise to higher coal prices with new EPA environmental controls contributing to the move away from coal.

Carl Levesque is the communications editor at AWEA. This article first appeared in the AWEA Windletter and was reprinted with permission from the American Wind Energy Association.

Image: Terrance Emerson via Shutterstock

4 Comments

ANONYMOUS
June 10, 2012

One would have to be pretty stupid to buy this line of reasoning. Looking at the power grid as a system, we add wind turbines and transmission lines. We cannot subtract anything because the present system is going to be needed as is for when demand peaks and there is no wind. Even the potential for fuel savings begins to disappear when the reduction in efficiency is factored into the need to firm the power output of variable and intermittent wind. To participate in the wholesale market for electricity wind power needs to be firm enough for scheduling. This can only be done with either direct fossil fuel backup generators or utility scale energy storage. Once that is added, the wholesale cost of wind energy cannot compete.

Bob Plugh
June 1, 2012

The MORAL of this story is... ANYTIME someone tells you that ADDING WIND POWER is going to REDUCE the cost... you better look VERY CLOSELY at the terms of the agreement - and NOT JUST THE 1st YEAR'S TERMS... Look at the OVERALL COST because I can guarantee you, these guys are playing HOUDINI with YOUR AND MY MONEY and they don't really care.

Bob Plugh
June 1, 2012

All this test SOUNDS real good, however, let's put numbers to the equation here. FACT: Boston utility NStar has agreed to pay a STARTING PRICE (!!!) for power from Cape Wind project that is more than double the cost of conventional energy.

Then, they go on to say that it will only add $1 per month to customers' bills IN THE FIRST YEAR. But, they STOP THERE? Why? Because they got a sweetheart deal the first year and after that all hell is going to break loose. But the GOVERNOR - DUVAL PATRICK - desperate to get this thing sold has rammed it down NStar's throats. He essentially FORCED them to buy it so HE would agree to a MERGER between NStar and Connecticut based Northeast Utilities IF AND ONLY IF NStar made concessions, INCLUDING BUYING POWER FROM CAPE WIND.

In other words, the BIG CORPORATE TYPES AT NSTAR are going to rake in MILLIONS of dollars - they're going to merge - get out of the business, take their money, run, and SCREW the ratepayers!

Why do I think that? Well, just look at what they said PRIOR to the state agreeing to this merger!!!

The utilities pay about 8 cents per kilowatt hour for electricity and NStar originally balked at becoming a Cape Wind customer, arguing the wind farm's cost was just too high

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Now - I don't know about YOU, but 8c and 18.7c is NOT double, it's more like 2.3375 or MORE THAN 2 1/3 ... but who cares about that 1/3, right? IT'S ONLY THE CONSUMERS THAT WILL GET CHARGED MORE !!! Oh, wait - THAT IS ONLY THE FIRST YEAR... Why no mention about years 2 - 15 ???

Wind power is EXPENSIVE to BUILD and EXPENSIVE TO MAINTAIN too!

They signed a 15 year deal with Cape Wind - why no more details about what is going to happen in the years to come???

HEY CONSUMERS - COME HERE - BEND OVER... That's essentially what GOVERNOR DUVAL PATRICK SAID !!!

V. Bruce Stenswick
May 31, 2012

The problem with many of these articles is they ignore climate change. Coal has to become worthless, which means its cost will come down and the electricity it produces will come down. We need to keep our eye on the ball, and that is the devastation climate change will wreak, and thus must be prevented.

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Carl Levesque

Carl is Editor & Publications Manager at the American Wind Energy Association, where has worked since 2006. At AWEA he oversees AWEA's online and print publications including the Wind Energy Weekly, Windpower Update, and other products....