Wind energy cheaper than coal

We often run "Fact check" articles on this blog when fossil-fuel-funded "experts" exaggerate the cost of electricity generated with wind power (for a particularly bald-faced recent example, see Fact check: American Enterprise Institute epic FAIL on study of wind power costs, Feb. 29), but perhaps this one should be titled "Reality check."

Reality: the Michigan Public Service Commission (PSC) recently issued a report that finds that electricity generated from renewable energy sources, at an average cost of $91 per megawatt-hour (9.1 cents/kilowatt-hour), is almost one-third cheaper than the cost of electricity from a new coal-fired power plant ($133 per MWh, or 13.3 cents/kWh).

Further, the report notes, "The actual cost of renewable energy contracts submitted to the Commission to date shows a downward pricing trend. This was the case as of the filing of this report in February of 2011 and continues to be the case, as the two most recent contracts approved by the Commission for new wind farm capacity have levelized costs of $61-$64 per MWh. This is significantly lower than the levelized costs of the first wind turbines contracts submitted in 2009." (emphasis added)

The report is one in a series required annually from the Commission to the state legislature, reporting on the impact of the state’s Renewable Energy Standard (RES), which requires utilities to obtain 10 percent of the electricity they provide from renewable energy sources by 2015.

Other highlights from the report:

– While utilities are allowed to charge customers extra for renewable energy, customers are also seeing savings due to wind power. Said the Commission, "While … surcharges have an impact on electric rates, there are also economic benefits attributable to an increase in renewable energy generation sources and improved energy efficiency. As noted in previous sections, the cost of energy generated by renewable sources continues to decline and is cheaper than new coal-fired generation. Throughout the MISO footprint [the area covered by the Midwest Independent System Operator, which manages the electric transmission system in the Upper Midwest], increased growth in wind turbines generation appears to have displaced relatively high cost generation, resulting in lower cost base-load plants more frequently setting the marginal electricity price. The continued growth in Michigan’s wind turbines generation is expected to make a much greater contribution to this displacement in the MISO footprint by the end of 2012 as over 800 MW of new wind generation will be operational in the state."

– Michigan utilities receive extra credit toward meeting the state’s renewable energy standard for projects built using Michigan equipment and labor, and that incentive appears to be effective: "As noted in last year’s annual report, the Michigan Green Jobs Report 2009 was optimistic about the job creation potential of the renewable energy industry and pointed to the renewable energy standard as a driver for growth in this field … The Commission is confident that Michigan has the potential to become a regional leader in development and manufacturing of renewable energy systems, building on the state’s engineering expertise, modernized machining, and investment in renewable energy in coming years. It appears that the Michigan incentive REC provision in the standard is meeting its intended purpose to encourage developers to maximize the amount of Michigan equipment and labor. (emphasis added)

“Michigan’s renewable energy sector is providing solid financial, social and ecological values for Michigan because of our renewable energy standard. Michigan utilities that are investing in advanced energy such as wind power and solar energy deserve full credit for embracing the future and creating new economic opportunities,” said Rich Vander Veen, president of Mackinaw Power in Lowell, Mich., in a news release issued by the Michigan Energy Innovation Business Council (EIBC), a trade group.. “The PSC report shows a renewable energy standard establishes energy security and makes good economic sense for Michigan businesses and ratepayers. New wind farms are providing solid income to local communities and landowners, and this helps protect family farms for future generations.”

Earlier this month, the EIBC released a study showing Michigan’s advanced energy manufacturing sector – solar power, wind turbines, advanced energy storage and batteries, and biomass – generates $5 billion a year in economic activity and supports 20,500 jobs a year. The study is one of the first of its kind in the nation because it used real-world manufacturing data.

Tom Gray,