Wind energy cost, utility integration

The cost of wind turbines generated electricity is very low. A steady stream of technological innovations has driven wind energy costs below those of most other generation sources. Wind turbines is close to cost-competitive with new natural gas generation even at today’s unsustainably low natural gas prices.

A recent report from the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (LBNL) found that the trend of declining wind energy costs is continuing. LBNL said wind turbine prices have dropped sharply in recent years, due largely to the scaling up of turbine size to reduce cost of energy (COE) and the growth of a domestic supply chain as the U.S. dollar has declined against other major currencies.

That phrase "growth of a domestic supply chain" is key. During the past four years, the wind farm industry has grown at an annual rate of 37 percent. Today, over 400 facilities across 43 states manufacture for the wind energy industry, and 60 percent of a wind turbine’s value is now produced here in America, compared to 25% prior to 2005. American manufacturing jobs are coming back, with tens of thousands of new jobs from wind power. Also, more than $60 billion of investment has been made since 2005.

With wind farm today, we are seeing a virtuous circle–developing more wind farms is leading to more demand for turbines and turbine parts, spurring the development of a new manufacturing industry, creating new jobs, and fostering increased competition, which results in lower costs. That virtuous circle began with a key federal incentive, the Production Tax Credit (PTC). The PTC is scheduled to expire at the end of this year and should be extended by Congress as soon as possible to avoid an unnecessary, job-killing tax increase on a growing industry that has been one of the few sources of new manufacturing jobs.

Variable electric generation from wind farms can be integrated readily into utility systems. Utility system operators already deal regularly with massive swings in electricity demand and in the output of conventional generators. Also, the amount of electricity generated by wind farms changes slowly and predictably; failures at conventional (nuclear and fossil-fueled) power plants occur instantaneously without warning. Utility system operators must have fast-acting reserve power sources on standby 24/7/365 for such failures, and those reserves typically cost dozens of times more than the slower-acting reserves needed to manage wind’s variability. It is more appropriate to talk about the need to back up large conventional power plants than about backing up wind power.

Tom Gray, www.awea.org/blog/