Wind critics use the wind industry as their go-to whipping boy for anything it seems they dislike. For instance, traffic getting worse? Blame the wind industry. Got indigestion? Blame the wind industry. Power costs headed up? Blame the wind industry.
Editor Paul Dvorak
That’s bone-headed thinking on all counts, although the latter is the only one we’ll address. Power costs maybe on the rise, but low-cost wind generated power is not the reason. In a nutshell, power costs are headed up because utilities are making long overdue upgrades to their equipment. A lot of the nation’s grid is 1950s technology, and utilities realize it needs improvements.
Consider this from a Fierce Energy newsletter:
“Worldwide, gas turbines have seen an upswing (in orders) due to the rising replacement of aging coal plants with modern gas-fired power stations and the growing availability and usage of natural gas in power generation. This is also due to … the need for more flexible generating assets, owing to greater renewable energy generation, according to research from Frost & Sullivan.”
F&S in the newsletter goes on: “Gas turbines will also benefit from increasingly stringent emissions legislation and roll out of emissions trading schemes (emphasis added) in emerging markets, as they curtail the growth of (coal fired) steam turbines.”
The coal plants that the new more-efficient facilities will replace were paid for and depreciated long ago, and you and me, the power consumers, are expected to pay for their replacements and other upgrades, such as new, more efficient transformers at substations and higher-voltage transmission lines. By one estimate, the U.S. looses 7 to 8% of its generated power in low-voltage transmission alone, so the transmission upgrades are long overdue and not because of the wind industry.
Although some utilities own wind farms, most are owned and operated by independent companies that contract to sell their power to grid operators. One lawyer that negotiates power purchase agreements tells of selling prices in the $0.05 to $0.06/kWh range, lower than the price we pay in the Midwest. Transmission costs make up the rest of your bill.
What’s more, to accommodate the variable nature of wind, some utilities are installing the previously mentioned gas turbine and gas-engine powered generators that burn more cleanly than coal and because they more easily follow the ups and downs of wind power. Although gas is relatively cheap at this writing, as demand increases or another cold winter descends on us, its price will rise, letting wind deliver the lower cost power, thereby moderating price rises.
For those utilities still running coal fired plants, the EPA has required fitting them with pollution controls. FierceEnergy tells of one such plant in Indiana that has spent $280 million in emissions controls since 2000. Who paid for that? You did, dear Indiana reader. Similar investments have been made around the U.S.
The cynic in me says that when costs inexplicably rise, dig a little and you find government regulations (“emission trading schemes”) causing several unintended consequences. But for those of us still breathing, perhaps slightly cleaner air is not such a bad idea.
Just for kicks, try negotiating a 20 year, low cost, price-control agreement with your utility. Twenty year purchase agreements in the wind industry provide stability to electric prices. Don’t blame the wind industry for higher electric bills.
–Paul Dvorak
Filed Under: News
Very well thought out article with salient points to support the wind energy position. I especially liked it when Paul quoted the following: “The coal plants that the new more-efficient facilities will replace were paid for and depreciated long ago, and you and me, the power consumers, are expected to pay for their replacements and other upgrades, such as new, more efficient transformers at substations and higher-voltage transmission lines.” Good stuff right there. Thank you for sharing your insight.