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Wind sideswiped in utility rate story

Wind sideswiped in utility rate story

Minnesota Public Radio carried a report last week (“Wind power surplus blamed for spike in rural electricity costs”) to the effect that wind's variability, and the surpluses that are created for one utility when the wind is high and electricity demand low, are costing ratepayers money. When there is a surplus of wind, the report said, the utility must sell it on the spot power market, at a price lower than it is paying wind farm owners for their production.

While the article leads off with wind energy's variability, it also notes that the expected increase in rates is largely due to $400 million the company spent to upgrade a coal power plant, more than 20 times what the company estimates it has spent on wind due to the temporary conditions in the market. For the article and headline to blame wind energy for causing the increase in rates is misleading at best.

Moreover, the article fails to note that in the long term, wind energy decreases consumers' energy bills. Wind energy allows utilities to decrease their reliance on expensive fossil fuel power, thereby avoiding costs like the $400 million being spent on upgrading a coal plant, as well as saving tens of millions of dollars when the cost of coal and natural gas increases by several hundred percent, as it did most recently just two years ago. The most recent U.S. Department of Energy analyses have all concluded that renewable energy standards save consumers money in the long-term. The article itself also notes that the apparent wind cost is temporary and will disappear when the recession lifts and energy costs return to normal levels. Moreover, new transmission infrastructure currently under development will greatly expand the market opportunities for selling wind energy.

Finally, the article does not mention the thousands of jobs and billions in economic development benefits wind energy has brought to Minnesota and the Dakotas. Many rural communities in the area have been greatly revitalized by the resulting jobs and local investment, not to mention the large increases in property tax revenues for local schools and the major new income for rural landowners from leasing small sections of their land for wind energy development.

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Michael Goggin is Vice President at Grid Strategies LLC, a DC-area consulting firm working on grid and markets issues for clean energy clients including AWEA. He was previously head of Research at AWEA.

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