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Wind energy poses economic challenges

A recent letter indicated states with more wind energy have lower electricity prices for customers. The facts do not support this statement.

Wind energy proponents usually omit several cost components when discussing the price customers pay for electricity. The electricity output from wind turbines is very volatile. The output is constantly changing and these changes can be large.

As result of the output volatility, primary plants must be ready to provide electricity in a very short time frame. Primary plants lose fuel efficiency as they cycle up and down to maintain the electric grid.

Finally, improvements to the transmission grid are required. The Department of Energy estimates onshore wind energy retail price will be 8 or 9 cents per kilowatt-hour. The hidden costs bring the true retail price to approximately 15 to 19 cents per kwh. The cost related to the renewable portfolio standards requirements are not included in this estimate. The price for electricity generated by coal is 8 to 9 cents and natural gas is 6 to 7 cents per kwh.

The U.S. Energy Information Administration, an agency of the Department of Energy, collects energy data for the United States. This data includes the amount of energy generated by different generation technologies, including wind at the state level.

The Energy Information Administration also collects price data at the state level. Several categories of price data are available and the data classified as “All Sectors” is used in this analysis. The states with wind energy are identified and compared to states with no wind energy in 2013. This is the most recent annual data. Then the average price per kilowatt hour is calculated for the two groups.

Wind turbines generated some electricity in 37 states. Thirteen states and the District of Columbia did not have any wind energy. The average price for the wind state was 10.79 compared to 10.08 cents per kwh for the states (and the District of Columbia) with no wind energy.

To more fully understand the price issue, it is interesting to compare the rate of change in electricity prices.

The price change from 2012 through 2013 is positive for 32 of the 37 (86.49 percent) wind states. The average increase is 2.78 percent. Of the remaining 13 states (and the District of Columbia), nine (69.23 percent) experienced increases and four saw decreases. The average price increase for these states is 2.64 percent. The price in DC did not change from 2012 to 2013.

This analysis supports the view that wind energy increases, not decreases, electricity costs to the consumer.

The factors that impact the level of a state’s electricity prices and the changes in price are many and can be complex. This simple analysis is a starting point for more in-depth studies. However, this simple analysis should provide a basis to question statements concerning the cost of wind energy on the Eastern Shore and the Mid-Atlantic region.

Electricity production and distribution is a complex endeavor. This region and United States have enjoyed reliable systems in the past. It is vitally important to remember the advantages of reliable, economical and safe electricity.

Electricity has driven the economic progress of the region and country in addition to saving millions of lives. Let’s be sure any changes we make to the system are in the public’s best interest.

Dan Ervin is a professor with the Perdue School of Business at Salisbury University.