In South Dakota, you can depend on the wind. South Dakota wind power already generates significant amounts of energy; and at rates enviable to other regions. Moreover, much of that wind power is used right here in South Dakota.
What wind power we don’t use in South Dakota is exported to other states just as we export wheat, corn and beef. Isn’t this what we want from wind as a viable commodity?
At the same time, wind power projects are paying millions of dollars in local taxes, while providing well-paid jobs in rural areas, where such jobs are few and far between.
Looking to the future, the utility industry faces continuing pressure to reduce carbon emissions and wind energy is the most cost effective technology to meet that need. At the same time, increasing environmental regulation will continue to drive up the cost of fossil generation, with EPA regulations expected to drive the closing of over 50,000 MW of coal plants in the next few years. Wind generation will help offset some of that lost generation.
At the same time, the cost of new wind power is dropping. Long-term power purchase agreements in this region are available at prices between 3 cents and 4 cents per kWh; that is comparable to the non-capital operating cost of a gas turbine, even at the current low gas prices. As wind technology continues to advance, and gas prices rise, wind energy will become even more competitive in the market.
Keep in mind that wind’s value in displacing fossil fuels is only part of the cost equation to utilities — the long-term price stability offered by wind energy is a valuable price hedge against economic shocks in the energy market and the historical volatility of the gas market.
Over the last 40 years, various forms of energy have cycled in and out of favor, while world oil politics has whipsawed national economies and governmental policy. What makes this volatility dangerous is the fact that we live in an energy-intensive world. It takes a great deal of energy to support our economy and our lifestyle. Reliable energy supplies are fundamental to the foundation of our society and no single energy source will provide the reliability or security necessary to maintain our current lifestyle.
Wind helps to provide diversity in fuel resources and that is important to energy security. Yet today, virtually all new generation is going natural gas. That path is short-sighted and will come back to haunt us when we are hit with the next energy shock.
Underscoring the need to develop new resources is the inexorable growth in energy consumption over the last century, both nationally and worldwide. Amidst the ongoing uncertainty of energy sources, wind offers an important new and sustainable opportunity to diversify our existing energy resources. Utilities need to be able to hedge their risks against the volatility of the fossil fuel market and wind’s value as a long-term hedge against fuel price uncertainty has yet to be adequately recognized.
Wind offers a stable price and sustainable source of energy at a reasonable cost, and South Dakota has a vast wind resource that can be tapped. Now is the time to start down that path.
By Ron Rebenitsch Executive Director, South Dakota Wind Energy Association