Loading...

Follow The AWEA Blog | Into the Wind on Feedspot

Continue with Google
Continue with Facebook
or

Valid

News circulated today of a draft plan the administration is considering to bail out certain uneconomic and outdated coal and nuclear plants. A broad coalition representing many different energy sources responded, and the most affected grid operator weighed in as well.

Here’s a roundup of what people are saying:

PJM Interconnection
“Our analysis of the recently announced planned deactivations of certain nuclear plants has determined that there is no immediate threat to system reliability. Markets have helped to establish a reliable grid with historically low prices. Any federal intervention in the market to order customers to buy electricity from specific power plants would be damaging to the markets and therefore costly to consumers. There is no need for any such drastic action.
PJM just released the results of its capacity auction, which secured reliable supplies through 2021/2022. The auction results saw an increase in the amount of coal resources that cleared the market, along with a diverse mix of natural gas generation, nuclear generation, renewable resources, demand response and energy efficiency. The PJM electrical grid is more reliable than ever, with 23 percent reserve margins and billions of dollars of new investment…”
Amy Farrell, American Wind Energy Association Senior Vice President for Government and Public Affairs

“Independent energy regulators, grid operators and other experts have gone on the record to declare that orderly power plant retirements do NOT constitute an emergency for our electric grid. Infrastructure and processes are already in place to ensure that remains the case. The reported proposal would be a misapplication of emergency powers, there’s certainly no credible justification to force American taxpayers to bailout uneconomic power plants.”

Todd Snitchler, American Petroleum Institute Market Development Group Director (API)

“The Administration’s draft plan to provide government assistance to those coal and nuclear power plants that are struggling to be profitable under the guise of national security would be unprecedented and misguided…

[U]nprecedented government intervention in the energy markets to support high cost generation will put achieving [energy dominance] in jeopardy and hurt customers by taking more money out of their pockets rather than letting people keep more of what they earn – a key priority of this administration.”

John E. Shelk, President and CEO, Electric Power Supply Association (EPSA)

“There was no emergency when coal and nuclear interests sought federal relief and there is none today that justifies such unprecedented Executive Branch intervention in the economic life of the country. The economic consequences are profound for power suppliers and consumers.”

Dena E. Wiggins, Natural Gas Supply Association President and CEO (NGSA)

“Propping up aging and uneconomic power plants through the Defense Production Act, the Federal Power Act or other unnecessary federal intervention is a short-sighted action that drives up customer costs and undermines well-functioning power markets. It is an inappropriate use of the federal government’s emergency powers that is even more egregious when even the regional power grid authorities at PJM say there is no emergency.”

Malcolm Woolf, Advanced Energy Economy Senior Vice President of Policy (AEE)

“The Administration’s plan to federalize the electric power system is an exercise in crony capitalism taken solely for the benefit of a bankrupt power plant owner and its coal supplier. It would be a command-and-control mechanism that fundamentally disrupts and undermines the competitive electricity markets that have improved our electricity system’s reliability, resilience, and affordability, while fostering innovation. As has been well established – by FERC, by grid operators, by industry experts – there is no emergency that would justify propping up uneconomic power plants that are superfluous in an over-supplied region. The Administration’s plan to alter competitive electricity market outcomes through the use of narrow emergency authorities crafted by Congress to protect the nation from true imminent threats to electric reliability is wholly unprecedented and legally indefensible.”

The post Broad coalition and grid operator: Markets are working, there is no emergency appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Hannah Hunt and Betsy Beck contributed to this post.

Expanding and upgrading transmission lines is key to unlocking low-cost wind energy resources across America. Transmission projects also deliver significant economic benefits for communities located along the project route and beyond: new lines typically result in hundreds of millions in local economic impact; cost-savings for consumers; hundreds of jobs; and tens of millions of dollars in new state and local tax revenue.

An expanded and upgraded transmission grid can also serve other purposes, however.

Importantly, additional and upgraded transmission lines make America’s electricity grid more reliable and resilient.

That’s why it was particularly notable that five of the largest U.S. companies – Cargill, General Mills, Procter & Gamble, Nestlé, and Unilever – delivered the first-ever letter from corporate buyers of renewable energy to the U.S. Federal Energy Regulatory Commission (FERC) on the topic of transmission.

Their letter states:

“Ensuring the U.S. electricity grid can withstand and recover from increasingly frequent, extreme weather events is critical to the nation’s economic vitality. While we see no emergency requiring immediate action, as large consumers of electricity, we encourage the Commission to use this opportunity to examine the full range of benefits provided by investments in regional and inter-regional transmission. Improving the efficiency of existing efforts to expand and upgrade the nation’s transmission system will build a foundation for a more resilient power grid that American companies need to operate, while also increasing access to affordable, reliable, and clean electricity for all consumers.” 

The companies go on to discuss how improved transmission planning may also lead to increased access to lower cost energy resources, noting:

“… transmission investments would increase connectivity to new, remote resources, while delivering consumer benefits like reduced costs. As such, we urge the Commission to: (1) accelerate and enhance regional and interregional transmission planning and coordination; and (2) better account for the rapid increase in corporate and other institutional demand for clean energy within these planning and permitting processes.” 

One of the signatories, Procter & Gamble, is among the 63% of Fortune 100 companies that have set one or more renewable energy targets. More broadly, a group of 100 large energy buyers have set a goal of procuring 60 gigawatts (GW) of renewable power by 2025 – equivalent to the output of over 100 average-sized coal plants.

Corporate purchasers have already procured over 11 GW of renewable power since 2013, leaving about 50 GW remaining to reach that goal. And with new wind and solar energy projects frequently the lowest-cost source of power, major American companies are increasingly buying both technologies to save money, control their energy costs, and decrease their environmental impacts.

However, transmission planners are not adequately accounting for this shifting and new demand. That could lead to a shortage of transmission to access the lowest-cost resources in the years ahead, according to a report produced by the Wind Energy Foundation earlier this year.

In fact, there are few plans for expanded transmission in the windy MISO, ERCOT, and SPP regions in the near-term, and none at the scale of transmission projects completed in those regions in the last decade. In short, the transmission projects that have enabled a pipeline of low-cost renewable projects that utilities, consumers, and corporate purchasers are enjoying today may fill up in the near future, unless transmission planners and regional grid operators commit to developing new transmission lines.

Studies show that transmission projects more than pay for themselves. A cost-effective solution that increases grid reliability and brings more clean, low-cost energy online is a win for everyone.

The post Name brands ask FERC to improve transmission planning to boost grid resilience appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Over the past year, there’s been no shortage of debate about grid reliability, particularly across the Mid-Atlantic and Northeast. A growing list of experts have declared the grid reliable.

  • “PJM has been ensuring the reliability of the grid for the last almost 90 years and it continues to do so, said PJM Independent Market Monitor Joe Bowring. “The grid is reliable and resilient, although resilience remains to be defined.”
  • “The PJM region is reliable, and its competitive markets have been instrumental in helping ensure reliability,” PJM has said.
  • The auction “indicates that these units are doing alright in PJM, and it certainly pours some cold water on arguments in favor of providing subsidies for coal units,” said Robbie Orvis of the clean energy consulting firm Energy Innovation.

New PJM auction results confirm these findings.

PJM, the grid operator charged with keeping the lights on across 13 Northeast and Mid-Atlantic states as well as the District of Columbia, just released auction results for the 2021-2022 time frame. Importantly, its reserve margin during those years will be 21.5%, substantially higher that the 15.8% reserve requirement PJM says it needs to ensure reliability.

In short, there’s no crisis.

Wind is adding low-cost, reliable electricity to PJM– it will grow by 37% according to this week’s results.

Both the data and the experts are in alignment: our grid is as reliable as ever, and it continues to get cleaner every year. That’s a win-win for all American families and businesses.

The post PJM Capacity Auction results offer latest evidence there is no grid reliability emergency appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

By now it should come as no surprise that American wind power spurs important economic growth in all 50 states, especially in the rural interior of the country. Each year, the industry invests an average of over $14 billion in new wind projects and pays landowners more than $267 million for hosting wind turbines on their property – not to mention employing over 100,000 Americans.

But there’s a lesser told story that’s just as important, and a new report sheds light on this neglected subset of wind benefits.

New analysis from Moody’s highlights the ‘windfalls to local governments across [the] U.S.’ that growth in wind energy supplies, mainly by substantially boosting local taxes bases and revenue in rural areas.

“What we’re seeing is wind farms generate new operating revenues, lower the tax burden for local residents,” Moody’s analyst Frank Mamo told Reuters. “In many cases, local governments are using this new money to address what was a growing backlog of deferred capital expenditures.”

Wind power: An economic engine for rural America - YouTube

Consider this: 10 years ago just a handful of states and a few hundred counties had wind farms. In the time since, wind has grown quickly, adding 64 gigawatts (GW) of new wind power capacity, and today, there are wind farms in 41 states and over 400 counties. The U.S. now has enough installed wind capacity to power 27 million American homes. This expansion has propelled tax base growth and created new tax revenue for state and local governments hosting the wind projects.

To better understand the benefits wind farms provide to local governments, let’s consider three case studies that Moody’s highlights:

Adair County, Iowa

Wind power is ubiquitous in Iowa – nearly half of Iowa’s counties contain at least one wind farm and the state ranks third in installed wind power capacity. Across Iowa, these wind projects add to a county’s tax base and pay property taxes. As a result, Adair County has seen its tax base grew over 30% between 2009 and 2018, and is expected to continuing growing as projects are fully assessed and new wind farms are built.

Jackson County, Minnesota

Counties in Iowa’s neighbor to the north also benefit from wind farms. A state-wide tax on wind provided $12.7 million last fiscal year, up more than three-fold from 10 years ago. At the county level, wind farms supply an average of 6% of general fund revenues – a tremendous share for a single industry. Jackson County – one of the most active counties for wind farm development in Minnesota – received $19 million in tax revenue from wind farms in 2017, 16% of total revenues. And that number is expected to grow to $2.2 million in 2018.

Texas Schools

Down south, wind projects in the Lone Star State help service debts for school districts. While a property tax incentive designed to promote wind project investment and job creation in the state minimizes the amount of property tax that wind farms pay, it does not mean that these projects do not provide significant tax benefits. To the contrary, a debt service levy on wind farms helps school districts service their debt burdens.

Just look to Webb Consolidated Independent School District, where wind farms pay over 40% of the district’s annual debt bills. This greatly reduces the tax burden on local taxpayers and helps the school district to continue to invest in and improve its schools.

These are just three examples in three states that highlight the local economic benefits wind farms provide to rural America. The wind development pipeline remains high, so wind will continue investing in rural America and adding revenues to local governments for years to come.

The post New Moody’s report: Wind power boosts local tax revenue across rural America appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Fortune 500 companies and others are setting ambitious targets for renewable energy procurement, and they choose wind power more than any other source. How much wind power are they buying? More than 9,100 megawatts (MW) were purchased through the end of 2017 by corporate and other non-utility customers. That’s more than Oklahoma’s entire installed capacity, the second largest wind state in the country.

And now AWEA has a guide to help new corporate buyers power their operations with wind.

Source: AWEA U.S. Wind Industry Annual Market Report Year Ending 2017

Corporate buyers represent 94% of total non-utility wind deals, which demonstrates significant leadership among other customers like cities and universities. The trend has continued in so far in 2018, with recent customers including Adobe Systems, AT&T, Brown Forman, Kohler, and Nestlé.

Wind energy clearly provides a cost-competitive solution for companies seeking to power their businesses with clean, renewable energy at a long-term stable price.

But they aren’t done yet. There is a big world of corporate customers that have set renewable energy targets but still need to sign on the dotted line to make the promise a reality.

For those companies, AWEA’s newest primer, the Corporate Buyers Guide to Wind Energy, introduces new corporate customers to the world of wind energy procurement. The educational primer begins by explaining the many ways that a buyer can purchase wind energy from specific wind projects.

For example, customers can procure wind power through a wholesale energy transaction by signing a physical or virtual power purchase agreement (PPA). These are long-term contracts to purchase energy, and potentially capacity or other environmental attributes.

Wind PPAs remain one of the most popular tools available for corporate customers, with more than 8,000 MW in PPAs signed since the beginning of 2008.

Companies can also buy wind power through a retail energy transaction with their local utility or another type of retail electricity provider. Retail transactions include green tariffs, like the one General Motors and Switch signed up for this year, and other methods.

Direct investment can happen through wind project ownership, as well as through tax equity and debt investment. Corporate customers can also buy renewable energy credits (RECs) from a specific wind project, preferably through a long-term contract. These deals are most helpful when the customer buys RECs above market price, or when the wind project is located in a high-demand REC market.

For those interested in learning more about PPAs, the primer provides a deep dive on both virtual and physical PPAs. It defines common terms found in a PPA like “point of delivery,” “availability guarantee,” and “termination rights.” The primer also shows the typical negotiation points that can be expected with a PPA, and the ways in which buyers and sellers can allocate risks inherent to the negotiation points.

AWEA will continue releasing primers in the future with deep dives on other procurement methods. We’ll also continue to provide authoritative U.S. wind industry data and analysis through products like WindIQ and our annual and quarterly market reports.

With the cost of wind falling by 67% over the past eight years, the time is now for corporate buyers to lock in historically low wind prices. Read and share the “Corporate Buyers Guide to Wind Energy” today!

The post A guide to buying wind power for Fortune 500 companies appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

A slew of surveys across 2016 and 2017 found Americans across the board supported the growth of wind energy. Now we have our first evidence from 2018 that this support continues to increase, and that we have a true rarity in today’s political environment coming into focus– there is no meaningful partisan divide in the country’s preference for wind.

Among American adults, 85% support increased reliance on wind power according to new data from the Pew Research Center. That includes 91% of Democrats and those who lean Democratic, and 79% of Republicans and those who lean Republican. Such cross-cutting support for renewables stands in contrast to other forms of energy.

What’s really fascinating, however, is the breakdown in support for wind by age. When examining millennial preference for wind, the small partisan gap that exists for the overall population virtually disappears: 87% of Republican millennials support growing wind, compared to 91% of Democrats at any age.

Another recent poll, by the American Conservation Coalition (a college republican clean energy group) and the Conservative Energy Network, found 79% of millennials “felt that a pro-clean energy candidate cares more about their family’s future.” Likewise, millennials favored wind by a 39 point margin in their survey.

So not only do we see widespread support for wind regardless of political leanings, that support is likely to increase in the years. Furthermore, the small partisan gap that exists in overall support for wind may soon disappear entirely.

And none of that should be surprising considering the kinds of benefits that wind brings to communities across the country:

New Mexico: America's fastest growing wind state - YouTube

The post Myth busted: No partisan divide on wind support, young Americans overwhelming in preferences appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

WINDPOWER isn’t just home to the industry’s established researchers, innovators, and leaders– it also hosts America’s premier collegiate wind energy competition, fostering the next generation of wind industry innovators, engineers and entrepreneurs. And this year the California State University Maritime Academy took home the crown, coming out on top in the field of a dozen colleges and universities. Penn State came in second, followed by Kansas State University.

Every year, colleges from across the country send their students to the WINDPOWER expo to compete head-to-head. The competition forces students to face the real-world challenges of any wind farm. It is not just building an efficient wind turbine design, but taking into the account the siting, marketing and financing that goes into any wind project.

“The students participating in the Collegiate Wind Competition represent the best and brightest that our nation has to offer,” said Tim Unruh, Deputy Assistant Secretary for Renewable Power at DOE. “As the U.S. wind industry continues to grow, the Collegiate Wind Competition provides unique, hands-on training and an opportunity to help launch the careers of the next generation of wind energy professionals.”

Students competing from Puerto Rico worked on a hurricane-proof wind turbine. Photo: Daniel Turner

This event helps engineering and business students connect and work together, a surprisingly uncommon occurrence at most universities. Normally, students from different technical backgrounds enter the workforce having spent the majority of their college years only with people within their major.

The Collegiate Wind Competition breaks these barriers, and facilitates conversations these future professionals will have to face every day: How can we market this new wind turbine design? What market barriers exist around the planned wind farm site? How will potential customers finance these projects?

Photo: Daniel Turner

Questions like can’t be approached by business or engineering-minded experts alone. Instead, they need collaboration and discussion. Bethany Straw, one of the organizers of the event and an analyst at NREL, noted these interactions are critical to future business success. “The intradisciplinary nature of the competition is vital because it broadens and deepens the learning experience – there is more to it than designing the ideal component… but involves siting, marketing and financing.”

Winning the Collegiate Wind Energy Competition hinges on one thing: teamwork. Success in business is no different, and learning this lesson early ultimately prepares these college students for their future professional careers in the wind industry. Congratulations to all of the teams that made this year’s competition an exciting success!

The post Teaching teamwork, one wind turbine at a time appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

At an energy panel in Houston last week, industry and policy leaders highlighted the road map and milestones marking lift-off for the country’s burgeoning offshore wind (OSW) industry. There are now 8 gigawatts (GW) of firm commitments in six Northeast states and a project pipeline of almost 25 GW— enough to power millions of American homes.

Bottom line: Tapping into this enormous home-grown energy resource promises to deliver tens of thousands of U.S. jobs, market-competitive clean electricity for U.S. coastal consumers, and high value for U.S. companies in the supply chain.

Experts said U.S. OSW has achieved the scale needed to light up boardwalks and boardrooms up and down the East coast with clean wind power from the sea. To generate this electricity, a new U.S. heavy industry is taking shape to install, connect and service offshore wind turbines and infrastructure – putting OSW “steel in the water.” America’s OSW industry will be supported by a supply chain that partners OSW developer initiative with expertise from U.S. oil & gas firms, onshore wind manufacturers and European OSW leaders, maximizing U.S. jobs, synergies and value.

Over the past two years, the U.S. industry has made dramatic advances in policy commitments and investor confidence. We no longer wonder if OSW will make it to America’s shores– it has already arrived and growth is accelerating, with market momentum and utility-sized commitments to scale. Panelists said U.S. offshore energy and OSW industry leaders are working to ensure U.S. companies bring their full expertise to bear.

Roy Francis, Vice President of Business Development for Gulf Island Fabrication, a Texas-based offshore energy construction firm, noted his company’s new strategic relationship with OSW developer Bay State Wind and German steel pipe maker EEW, which will help advance a renewable energy supply chain that will create more jobs in Massachusetts.

“The European offshore wind market is 27 years old,” he said. “We are taking the best from the mature European industry and pairing it with American know-how.”

“The industry is moving at a phenomenal pace,” said Walter Cruikshank, Acting Director at the Bureau of Ocean Energy Management (BOEM). “There is great industry-wide confidence in the market,” he told the panel, held in Houston during the Offshore Technology Conference. “There are strong policy commitments from the states, particularly in the Northeast and mid-Atlantic, and a strong commitment from this Administration,” he said. “We are actively working with leaseholders to move their projects forward.”

“Offshore wind is an important diversification opportunity,” said Joseph Orgeron, Special Projects Manager at Falcon Global LLC, a subsidiary of Louisiana-based SEACOR Marine and the liftboat operator that helped build the Block Island Wind Farm, the country’s first OSW project. “We’re using our assets and putting employees to work alongside local workers on the East coast. It’s all positive commerce.”

“There’s lots of room for partnership,” said Randall Luthi, President of the National Ocean Industries Association (NOIA), speaking about the synergies between OSW and the U.S. oil & gas sector. “Offshore energy service companies can build anything out in the ocean. It doesn’t matter if it’s an oil rig or a wind farm. We can, should and will continue to work together.”

“The U.S. supply chain is fantastic,” said Chris van Beek, President of Deepwater Wind. “OSW is a tremendous opportunity. We estimate that 70 percent of the capital expenditures of an offshore wind farm can be delivered by the U.S. supply chain.”

The panel cited other U.S. OSW milestones and data points:

  • Department of Energy (DOE) reports the project pipeline for U.S. OSW totals almost 25 GW of potential installed capacity, including 28 projects off the East and West coasts, Great Lakes and Hawaii. Along with wind turbines and towers, estimates indicate developing this scale will require 7,000 km of offshore export and array cables, 3 million tons of steel on foundations, 100 crew transfer vessels and 2 new generation jack-up vessels.
  • By 2050, DOE projects 86 GW of U.S. OSW installed capacity will support 160,000 full-time U.S. jobs.

This vast new market for U.S. offshore wind power is coming into clear focus, first in the Atlantic states and then other U.S. coastal markets.  With America’s tremendous offshore wind power potential, there’s good reason to be excited!

The post Booming offshore wind market to power jobs, new U.S. heavy industry appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

How can you tell an industry is thriving? How about a 40% year-over-year increase in projects nearing completion?

The U.S. wind industry continues to power forward so far in 2018, adding over 5.5 gigawatts (GW) to the wind development pipeline and signing a record amount of power purchase agreements (PPAs) in the first quarter, according to AWEA’s latest quarterly market report. That’s enough new wind to power millions of additional American homes.

Here’s a look at a few more top findings from the U.S. Wind Industry First Quarter 2018 Market Report:

The wind development pipeline continues to grow

The U.S. wind industry reported 5,523 megawatts (MW) of new project activity in the first quarter, with 1,366 MW starting construction and 4,158 MW entering the advanced development phase. There are now over 33,000 MW of wind power either under construction or in advanced development, a 40% increase over this time last year and the highest level since AWEA began tracking both categories in 2016. This pipeline will keep wind workers busy and add tens of billions of private investment dollars to the American economy.

Utilities and corporate customers sign record amount of power purchase agreements

Project developers signed 3,560 MW of PPAs during the first quarter, the strongest quarter for PPA announcements since AWEA began tracking this activity in 2013. Utilities including Great Plains Energy and Public Service Company of New Mexico accounted for 69% of this activity, while corporate customers signed over 1,000 MW of PPAs, totaling 31% of capacity contracted in the quarter. Utilities also announced plans to develop and own 1,379 MW wind capacity during the year’s first three months, led by PacifiCorp with 1,111 MW of planned wind projects in Wyoming.

New corporate purchasers are joining the party

Six companies signed wind PPAs for the first time during the first quarter, adding to the list of Fortune 500 companies and other non-utility purchasers powering their operations with wind energy. First-time wind buyers included Adobe Systems, AT&T, Brown Forman, Kohler, and Nestlé. AT&T led the pack, signing two PPAs for a total of 520 MW, one of the largest corporate renewable energy purchases in the U.S.

“As one of the world’s largest companies, we know how we source our energy is important,” said Scott Mair, President, AT&T Operations. “We’ve been working for a long time to ensure our wind projects deliver for both our business and the environment.”

These new players joined repeat wind buyers Bloomberg, Facebook, Nike, and T-Mobile who also signed wind PPAs during the first quarter. Corporate and other non-utility customers have solidified their role as a stable demand driver for wind, signing more than 9,000 MW of PPAs to date.

States call for more offshore wind power

Four states also made significant announcements to add offshore wind to their portfolios. New Jersey announced a goal to develop 3,500 MW of offshore wind by 2030, while New York outlined solicitations for 800 MW of offshore wind through two requests for proposals (RFPs) in 2018 and 2019 to meet its larger goal of 2,400 MW of offshore wind by 2030. The Connecticut Department of Energy and Environmental Protection issued an RFP for renewable energy, including up to 220 MW of offshore wind. Lastly, Rhode Island announced plans for a 400 MW renewable RFP open to offshore wind that will be issued this summer.

Check out more top facts from the first quarter report and the 2017 Annual Market Report here.

The post New report: Wind power development pipeline up 40% appeared first on Into the Wind.

Read Full Article
Visit website
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

A Forbes article by Michael Shellenberger came out this week, focusing on retail electricity prices and how they’ve changed over time. It also asks an important question – what causes retail electricity prices to change?

While the article is correct about wind and solar energy’s recent cost reductions, it unfortunately misses the mark when it comes to explaining why electricity rates change over time. It also makes an incorrect claim that price increases are tied specifically to wind and solar energy growth.

Let’s take a closer look at the facts.

Fact #1: Wind costs are declining

The article’s first claim is certainly true that wind and solar energy costs have dramatically decreased in recent years.

Since 2009 the cost of wind energy has fallen by 67%, and it is now the cheapest source of new generation in the Midwest and other regions of the country. Electric utilities like Xcel Energy have stated they are investing in wind “because of the tremendous economic value it brings to our customers” at no cost to grid reliability.

Technology advancements and supply chain efficiencies have helped to propel wind costs to historic lows, most recently reflected in an all-energy-source request for proposal (RFP) released in Colorado. Xcel Energy received over 400 bids in response, and wind power posted the cheapest responses by a significant margin, clocking the lowest median bid of $18.10/megawatt hour (MWh).

Importantly, these cost declines translate to consumer savings. In Oklahoma, the planned 2,000 MW Wind Catcher project is expected to save customers more than $7 billion, net of cost, over 25 years.

Fact #2: Retail electricity prices have remained relatively flat

When looking at the United States as a whole, it becomes clear that retail electricity prices have generally remained flat or declined in recent years. The Energy Information Administration (EIA) shows that, when adjusting for inflation, real national average retail electricity prices increased by only 0.3% over the past five years and actually fell by 2.3% over the past 10 years.

Unfortunately, Shellenberger chooses to focus on how California nominal retail electricity prices increased by 23.7% from 2011 to 2017 while ignoring inflation adjustments. Two flaws emerge from this focus.

First, adjusting for inflation would show that real retail electricity prices increased by 13.5% from 2011 to 2017, not by 23.7%. Second, California should not be considered representative of the entire country, and should not be considered the only state with significant renewable energy growth in recent years.

It is true that real price changes do vary depending on the state. For example, Texas is the undisputed leader for wind power and hosts one-quarter of the country’s installed wind capacity. However, real retail electricity prices have not increased in Texas – to the contrary, average prices actually decreased by 28.5% over the past 10 years.

Shellenberger also points to recent price increases in Denmark and Germany, arguing there is a connection between renewable energy growth and price increases. U.S. electricity prices should never be compared to European countries with entirely different market conditions and price formation structures.

Fact #3: Retail electricity price changes are due to many factors

Looking back to the article’s main question – what causes retail electricity prices to change? Shellenberger incorrectly claims that changes in a customer’s retail bill are linked specifically to renewable energy growth. The truth is that retail electricity prices are calculated according to a number of factors, many of which are unrelated to wind and solar energy, including:

  • New transmission and distribution investments
  • New power generation investment
  • Existing infrastructure upgrades
  • Environmental regulations
  • Fuel costs
  • Extreme weather conditions
  • Customer type
  • Many others

In regards to fuel costs, wind and solar energy have zero fuel costs and actually provide a hedge against future fuel price volatility. And when extreme weather conditions arise, wind energy has provided valuable electricity when grid operators and consumers need it most. Wind power saved consumers $1 billion over just two days during the 2014 Polar Vortex and performed above average during this year’s Bomb Cyclone event.

Because wind and solar energy costs have dropped to historic lows, it makes sense that retail electricity prices are calculated due to more factors than renewable energy growth alone, and that wind and solar energy actually provide valuable services that help consumers save money in the long run.

Fact #4: Grid operators are integrating wind energy in a reliable and cost-effective manner

Shellenberger makes a final misstep by arguing that wind and solar energy’s variability forces utilities and grid operators to implement cost-prohibitive measures to integrate these resources onto the larger electricity grid.

Grid operators are the experts here, and they’ve confirmed multiple times that large amounts of renewable energy can be integrated into a diverse energy mix in a cost-effective manner. A 2014 PJM study showed that, with adequate transmission and ancillary services, the grid operator “will not have any significant issue” integrating 30% of its electricity from renewables.

Bruce Rew, SPP Vice President of Operations, recently stated, “Ten years ago we thought hitting even a 25 percent wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability. Now we have the ability to reliably manage greater than 50 percent. It’s not even our ceiling.”

Today, four states—Iowa, Kansas, South Dakota, and Oklahoma—generate more than 30% of their electricity from wind energy. MidAmerican Energy expects to be 90% wind-powered in the near future, and the entire Southwest Power Pool, a grid operator serving 14 states, was 23% wind powered in 2017.

The truth is that all forms of energy impose integration costs on the power system, but it is far more expensive for grid operators to plan for and accommodate large conventional power plant failures. The data show that increasing the use of existing flexible generators to accommodate wind and solar energy costs only pennies on a typical electric bill.

Conclusion

It’s not easy or simple to determine what causes retail electricity price changes. To the contrary, these changes are determined by a number of factors, and are not solely based on renewable energy growth. The good news is that prices have generally remained flat or declined in recent years, and that wind power remains a reliable, cost-effective solution that helps keep the lights on for families and businesses across the country.

The post Fact Check: What really causes electricity prices to change? appeared first on Into the Wind.

Read Full Article
Visit website

Read for later

Articles marked as Favorite are saved for later viewing.
close
  • Show original
  • .
  • Share
  • .
  • Favorite
  • .
  • Email
  • .
  • Add Tags 

Separate tags by commas
To access this feature, please upgrade your account.
Start your free month
Free Preview