Clean Power Plan

Two new studies confirm wind’s role in cost-effectively and reliably meeting the Clean Power Plan

Graph from AEE report shows wind energy prices (red line) are competitive with national electricity prices (grey area).
Two new studies confirm wind’s role in cost-effectively and reliably meeting the Clean Power Plan
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Recent reports from the Advanced Energy Economy (AEE) Institute and National Renewable Energy Laboratory (NREL) bolster the case made by other experts over the last month that wind energy is key to cost-effectively and reliably meeting the Environmental Protection Agency’s Clean Power Plan.

The AEE  documents how wind energy costs have declined by more than half over the last five years, thanks to technological improvements, economies of scale, and greater domestic manufacturing. However, it notes, wind cost estimates compiled by the Energy Information Administration (EIA) have failed to keep pace with the wind cost reductions observed in the market, so EIA, EPA, and other groups that rely on EIA’s numbers continue to underestimate future wind energy deployment. AWEA compiled the following table showing how EIA consistently overstates current wind energy costs. EIA’s cost data are even more inaccurate when used as estimates of future wind costs, which are widely expected to continue their downward trend. AEE’s report catalogues how EIA has consistently underestimated future renewable energy deployment as a result of these flawed assumptions.

LBNL data on actual installed wind project costs (constant 2013$/kW) EIA overnight capital cost, $/kW
2011 $2,167 $2,438
2012 $1,960 $2,437
2013 $1,630 $2,213
2014 Data not yet released $2,205
2015 Data not yet released $1,980

 

In fact, AEE notes that EIA actually “assumes that the cost of wind energy increases over time” based on the assumption that the “most attractive sites [are] being developed first.” However, AEE points out that “turbine design enhancements, such as larger rotors and taller towers, are raising capacity factors, improving the economics of wind power production at lower-quality wind sites and opening up markets that were formerly not accessible. Thus, while the best wind sites are likely to be developed first, there is no reason to assume that wind power prices will rise over time, especially in the face of market trends showing the exact opposite.”

Because it uses a wind cost estimate that is about 20 percent too high, last month’s EIA analysis, which still shows wind energy playing a critical role in the lowest-cost compliance mix, may have actually been a conservative estimate of the role wind energy will play in Clean Power Plan compliance. EPA also underestimates future wind deployment by using EIA wind cost data, both in the Regulatory Impact Analysis that accompanied the Clean Power Plan release and in the Technical and Economic renewable energy target setting method that may be used to set the binding state targets for emissions reductions. Unfortunately, many grid operators, utilities, and state regulators also continue to use EIA’s outdated wind cost data when conducting critical generation and transmission planning, leading them to underinvest in wind energy. Utility system planners modeling options for complying with the Clean Power Plan should make sure to use current data on actual wind project costs, such as the real-world data provided by Lawrence Berkeley National Laboratory. Thus, the AEE report shows that wind energy can help cost effectively meet the Clean Power Plan.

NREL’s report shows that the Clean Power Plan can also be meet while maintaining electric reliability. It reviews recent studies by grid operators and other experts which unanimously conclude that renewable resources can reliably provide between 24 and 50 percent of our electricity. As summarized in the table below, these studies examined the full range of reliability issues and found that large amounts of renewable energy can be reliably accommodated. Several studies have closely examined the provision of essential reliability services, finding that wind plants are capable of providing these reliability services just as well as or better than conventional power plants. NREL’s primary conclusion after reviewing the grid operator renewable integration studies was that, “a 30% CO2 reduction has already been extensively studied, and the body of work taken as a whole shows that reliable and cost-effective compliance is possible.”

table1

NREL’s report builds on reports released by the Brattle Group and other power system experts in recent weeks, explaining how large amounts of wind energy are being reliably integrated onto the power system today.

 

Here is a running list of reports and other analysis documenting how meeting the Clean Power Plan and diversifying our energy mix with renewable energy will not harm and will actually improve electric reliability:

 

Clean Power Plan and reliability:

Analysis Group

Susan Tierney, Eric Svenson, Brian Parsons, letter and report to Chairman Norman Bay, FERC Analysis Group on PJM

Analysis Group on MISO

The Brattle Group

AEE Institute

An updated analysis of NERC report, correcting flawed assumptions

 

Renewable energy and reliability:

NREL

AWEA report

AWEA statement at FERC

AEE

 

Clean Power Plan

As Senior Director of Research, Michael oversees AWEA's analytic work. Michael Goggin has worked at AWEA since February 2008. Prior to joining AWEA, he worked for two environmental advocacy groups and a consulting firm supporting the U.S. Department of Energy’s renewable energy programs. Michael holds an undergraduate degree with honors from Harvard University.ojlklkl

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