No renewable energy project can be a success without the purchase of the electricity at a fair market price that covers the cost of deployment, ongoing operations, and a ROI desired by investors.The regulatory climate exists today that makes new wind generation facility especially attractive to Energy Companies.A key driver for the industry was the creation of a Renewable Portfolio Standard (RPS) that, simply put, requires energy companies to provide an ever increasing percentage of their electricity from renewable energy production facilities. The Renewable Portfolio Standard (RPS) implemented in over 20 states, requires each company that generates electricity in in a given state to obtain part of the electricity it supplies from renewable energy sources such as wind. To meet this requirement, the company could either generate electricity from renewables or buy credits for electricity from a renewable generator such as a wind farm. This "credit trading" system has been used effectively by the federal Clean Air Act to require utilities to reduce pollutant emissions. Aside from the "minimum renewable content" requirement, the RPS imposes very few other requirements on companies--they are free to buy, trade, or generate electricity from renewables in whatever fashion is most efficient and economical for them. The RPS is therefore often described by its supporters as being "market-friendly," because it allows market forces to decide which renewable energy sources will be developed, and also allows price competition. Several federal restructuring bills have included an RPS, and at least 20 states have also adopted RPS laws. One federal proposal, for example, would require 20% of U.S. electricity to come from non-hydro renewable energy sources (wind, solar, biomass, geothermal) by the year 2020. Typically, the RPS gradually increases over time, by 1% per year or some such number, in order to provide a foundation for the sustained, orderly development of renewable energy industries. In addition to pressure from Federal and State governments to provide green energy, utility customers around the globe are requesting that their energy company provide electricity from renewable energy production facilities.Power from wind plants in a utility's energy mix provides the opportunity for premium pricing to utility customers preferring a "green power" option. Wind energy also provides a hedge against fuel price uncertainty by offering stable long-term contracts. In addition to demand by homeowners, large companies are increasingly seeking to diversify their energy sources.This is especially attractive when they can lock-in attractive long-term windpower pricing while also helping the environment.In addition to the economic benefits, utilizing green energy reinforces a corporate image of environmental and social responsibility. Wind energy could supply about 20% of the nation's electricity, according to Battelle Pacific Northwest Laboratory, a federal research lab. Wind energy resources useful for generating electricity can be found in nearly every state. North Dakota alone is theoretically capable (if there were enough transmission capacity) of producing enough wind-generated power to meet more than a fourth of U.S. electricity demand. The theoretical potentials of the windiest states are shown in the following table.
Wind power currently provides nearly 25% of electricity demand in the north German state of Schleswig Holstein. In western Denmark, wind supplies 100% of the electricity that is used during some hours on windy winter nights.
According to the U.S. Department of Energy, the world's winds could theoretically supply the equivalent of 5,800 quadrillion BTUs (quads) of energy each year--more than 15 times current world energy demand. (A quad is equal to about 172 million barrels of oil or 45 million tons of coal.) Utilities use fairly complicated computer models to determine the value in added capacity that each new generating plant adds to the system. Since wind is a variable energy source, doesn't its growing use present problems for utility system managers?This issue is still some distance from being a problem on most utility systems. The rough rule of thumb is: to the point where wind generates about 10% of the electricity that the system delivers in a given hour of the day, variability of wind is not an issue. There is enough flexibility built into the most systems for reserve backup, varying loads, etc. Variations introduced by wind are much smaller than routine variations in load (customer demand).
At the point where wind is generating 10% to 20% of the electricity that the system is delivering in a given hour, it is an issue that needs to be addressed, but that can be resolved with wind forecasting (which is fairly accurate in the time frame of interest to utility system operators), system software adjustments, and other changes.
Since wind is a variable energy source, does it cost utilities extra to accommodate on a system that mostly uses fueled power plants with predictable outputs?The answer is yes, but the added cost is modest. Three major studies of utility systems with less than 10% of their electricity supplied by wind have found the extra or "ancillary" costs of integrating it to be less than 0.2 cents per kilowatt-hour. Two other major studies of systems with wind at 20% or more have found the added cost to be 0.3 to 0.6 cents per kilowatt-hour.
If a utility uses more wind energy, will that make electric rates go up?Yes, probably, but not much. Let's say that wind energy costs 2 cents more per kilowatt-hour (2 cents/kWh) than the rest of the electricity your utility is generating or buying—a conservative estimate. If your utility were to decide to use wind energy to generate 10% of its electricity (more than nearly all utilities in the U.S.), then the added cost to you would be 0.2 cents/kWh. An average U.S. home uses about 800 kWh per month, so you would pay an extra $1.60 per month, or about a nickel a day.With the price of natural gas, oil, and other fuels soaring to new records on an almost daily basis, wind energy is becoming more of a bargain than ever. A recent landmark study of wind integration into the New York State electric power system, looking at a 10% addition of wind generation (3,300 MW of wind in a 34,000-MW system), projected a reduction in payments by electricity customers of $305 million in one year. Infinite Energy Resources welcomes discussions with major energy companies, cooperatives, and other electrical providers that desire to supplement their portfolio of green energy providers.Whether we enter into a power purchase agreements (PPA's) through a competitive bidding process or through a negotiation process, IER will work hard to earn and maintain the trust of the energy companies we work with. _______________________________________________________
There are a wide variety of articles written on the benefits of wind power for energy companies.We invite you to read further using any of the following excellent resources:
From the National Renewable Energy Lab (NREL) Synopsis: Utilities must maintain enough power plant capacity to meet expected customer electricity demand at all times, plus an additional reserve margin. All other things being equal, utilities generally prefer plants that can generate as needed (that is, conventional plants) to plants that cannot (such as wind plants).However, despite the fact that the wind is variable and sometimes does not blow at all, wind plants do increase the overall statistical probability that a utility system will be able to meet demand requirements. A rough rule of thumb is that the capacity value of adding a wind plant to a utility system is about the same as the wind plant's capacity factor multiplied by its capacity. Thus, a 100-megawatt wind plant with a capacity factor of 35% would be similar in capacity value to a 35-MW conventional generator. For example, in 2001 the Colorado Public Utility Commission found the capacity value of a proposed 162-MW wind plant in eastern Colorado (with a 30% capacity factor) to be approximately 48 MW. For more information on the Commission's finding, see http://www.nrel.gov/docs/fy01osti/30551.pdf What Happens When the Wind Stops Blowing?British Wind Energy Association "Grid Impacts of Wind Power: A Summary of Recent Studies in the United States," Milligan et al, National Renewable Energy Laboratory, http://www.nrel.gov/docs/fy03osti/34318.pdf
