Original photo by Kim Hansen, License: Creative Commons Attribution ShareAlike 3.0
In states across the Northeast, including New York and throughout New England, residents are facing increased electricity prices this winter. For example, the price of electricity in Massachusetts could jump to 16.2 cents per kilowatt-hour, up from 10 cents last winter. This is the result of spikes in the price of natural gas, which is the primary fuel used to produce electricity in the region. During cold weather events, the current pipeline infrastructure can’t meet the demand for natural gas in the region, which drives up prices and results in higher electricity rates.
However, the good news is that the increased deployment of stably-priced wind energy, including offshore wind, can help to mitigate these anticipated price spikes. That’s because wind energy has no fuel cost: once a wind turbine is installed, it has very low operating costs. Due to this, diversifying the energy mix with wind helps to stabilize energy prices and protect consumers against spikes in electricity prices, much like fixed-rate mortgages protect homeowners from interest rate fluctuations.
The Northeast’s wind plants performed extremely well during last winter’s polar vortex, providing more than 1,000 megawatts (MW) of output when the New York grid operator needed it most, and more than 450 MW for the New England grid operator. When wind provides energy during periods where there is peak power demand, it helps grid operators avoid turning to more expensive sources of energy, which saves consumers money. During the polar vortex, wind energy saved the region’s consumers millions of dollars on their energy bills.
Offshore wind energy output has a particularly strong coincidence with periods of peak power demand. During cold winter days and nights, as well as hot summer afternoons, consumers are using lots of electricity to keep their homes at comfortable temperatures. At these same times, there are typically strong winds offshore.
The results of a recent analysis by AWS Truepower confirm this. AWS examined offshore wind production estimates based on historic climatic data for several proposed offshore wind projects in the Northeast during the winter of 2013”2014.
Here is what the analysis revealed:
- During extreme cold weather, the need for energy is high; however, limitations are seen in natural gas production and availability, which constitutes the largest energy source.
- Offshore wind maintains a high production factor through the hours most affected by natural gas price spikes and/or need for peaking and reserve units.
- Even when there is slightly lower coincidence between offshore wind and natural gas price spikes, offshore wind can offset the need for high price reserves and peaking units, minimizing the spikes in price.
- For the 2 hours reviewed, offshore wind offsets would have shown a total savings of around $10 million.
These calculated savings are likely conservative, as the study did not look at how wind also benefits consumers by keeping spikes in the price of natural gas itself in check by reducing demand for the fuel. These savings accrue to all users of natural gas.
As policymakers across the Northeast region look for ways to help mitigate the rise in electricity prices this winter, they should strongly consider wind energy, including offshore wind. The evidence is clear that offshore wind can help protect Americans from electricity price spikes, particularly during periods of extreme cold weather.