Electric Utilities and Wind Pow.pdf

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WIND WIND POWER utility WIND Energy AWEA AWEA utility Working utility Working Group WIND projects cost electric
 
 
 
 
 
 
 
 
 
 
 
 
UTILITIES ADDING WIND TO THEIR POWER SUPPLY MIX 
 
A total of 8,558 megawatts of new wind projects were brought on-
line in 2008.  The top utilities in terms of wind power include: 
• Xcel Energy with 2906 megawatts on its system overall (both 
wind energy PPAs and utility-owned projects) 
• MidAmerican Energy has 2363 megawatts overall, including 
the largest amount of utility-owned wind projects (1940 MW) 
• CPS Energy of San Antonio, TX has the largest amount of wind 
power serving its customers for a municipal utility (502 MW) 
• Great River Energy has the largest amount of wind power for 
their customers for a rural electric co-operative utility (319 
MW) 
Ownership of wind projects by utilities themselves continued to 
represent about 15% of all wind projects installed in the U.S. in 
2008, for the third year in a row. 
 
The Multiple Benefits of Wind Power for Utilities 
As the nation’s attention focuses more on global warming, the 
importance of wind energy as a readily-available solution becomes 
clearer.  Wind energy can help the U.S. reduce and stabilize carbon 
dioxide emissions due to electricity production.  Some of the many 
ways wind power can directly benefit electric utilities include: 
 
 Environmental 
Wind power produces no carbon dioxide or air pollutant 
emissions, does not require water, mining, drilling, or 
transportation of fuel, and does not generate radioactive or 
other hazardous or polluting waste.  
 Price Hedge 
Wind power lowers the portfolio volatility of electric utility 
power supplies, yielding benefits for future price risk and 
mitigating the impacts of fossil fuel price volatility. 
 Price Trends 
Although wind turbine prices have increased in the short-term, 
long-term downward price trends are expected to continue 
which will make wind power very cost competitive with other 
generating options as domestic manufacturing catches up with 
demand. 
 Utility Financial Considerations 
Wind projects have very short construction periods and can be 
deployed quickly with positive impacts on generation planning 
and cash flows.  In the case of wind ownership, additional rate 
base and tax-related benefits accrue to the utility as well. 
 
Electric Utilities and Wind Power – A Good Mix 
 
AWEA Utility Working Group 
The AWEA Utility Working 
Group is restricted to utility 
members in AWEA and focuses 
on information-sharing and 
identification of best practices, 
strategies, and business 
models related to wind power 
for utilities. 
 
AWEA Utility Website 
The latest information, 
resources, and links to the best 
information on wind power and 
utility information can be found 
at: www.awea.org/utility  
 
AWEA Utility Webinars 
AWEA hosts webinars on topics 
of interest to utilities and wind 
power once or twice a quarter.  
For the latest schedule, 
contact: 
Jeff Anthony 
Manager of Utility Programs 
janthony@awea.org 
414-967-5950 
 
Join the “AWEA Utility 
Working Group” 
The AWEA “Utility Working 
Group” meets twice a year at 
the annual WINDPOWER 
conference and at the AWEA 
Fall Symposium.  The focus of 
the meetings is to exchange 
ideas and “lessons learned” 
between utilities and to identify 
areas where AWEA can assist 
members.  Webinars and 
conference calls are convened 
periodically to provide current, 
up-to-date information that 
utilities need to address wind 
related issues.  To learn more, 
contact Jeff Anthony, AWEA 
Manager for Utility Programs at 
(414) 967-5950 or 
janthony@awea.org . 
 
 
 
Still other reasons include: 
 Regulatory Treatment – wind power is viewed very favorably by utility regulators and other 
stakeholders in regulatory proceedings 
 Economic Development / Jobs – wind projects contribute directly to economic development 
and job creation where projects are located 
 Customer Satisfaction / Green Pricing options – customer awareness and interest for wind 
power is increasing and many customers are demanding “green” options from their utilities for 
their use 
 
Wind Power’s Variable Nature  
The variable nature of wind output is best addressed by utilities in the same way they address 
variability in current generation and demand (load), which is to maintain sufficient flexibility and 
resources to match generation and load.  While wind energy introduces additional variability, most 
systems have available flexibility to accommodate the added variability.  At higher wind penetration 
levels, additional resources may be needed.   
 
Yet some continue to question whether wind power, which generates electricity when the wind is 
blowing, not on demand, is up to the task.  Based on a growing body of analytical and operational 
experience, the answer is a resounding “yes.”  Numerous wind integration studies and experience in 
parts of the country with high penetrations of wind power, as well as in Europe, indicate that 
integrating larger amounts of wind power into electric system operations is possible with only 
modest adjustments in operating protocols.   
 
State of the art wind forecasting techniques allow utilities and grid operators to anticipate and plan 
for increases or decreases in wind plant output.  With wind forecasting, changes in wind energy 
output are factored into grid operations much like load demand – both of which change over a 
matter of hours (not a matter of seconds, such as when fossil or nuclear plants trip off-line).  For 
more information on wind integration, go to www.awea.org/utility/wind_integration.html . 
 
What is the Cost to Integrate Wind Power? 
At wind penetration levels of up to 20% of system peak demand, experience shows that system 
operating cost increases arising from wind variability and uncertainty amount to about 10% or less 
of the wholesale value of the wind energy. These conclusions will need to be reexamined as results 
of higher-wind-penetration studies — in the range of 25% to 30% of peak balancing-area load — 
become available.  All results to date indicate that wind integration costs fall in the range of $5 to 
$8 per megawatt-hour – a very reasonable and manageable price when added to the cost of wind 
energy itself.  More information on this can be found in the U.S. DOE Report “20% Wind Energy by 
2030”, available at: www.20percentwind.org . 
 
What Are Some of the Key Benefits That Utilities Are Realizing with Wind Power? 
As described in the “20% Wind Energy by 2030” report (see link above), utilities have found that 
wind power typically reduces the need for generating electricity from natural gas fired power plants, 
significantly reducing fuel expenditures and reducing operating costs for utilities and ultimately, 
lowering rates for their customers.  These reduced fuel costs far exceed the incremental costs of 
adding wind power to their systems over time, including wind integration costs. 
 
Thus, increased wind power is actually saving utilities money, and is also helping to keep electric 
rates low at a time when other forces are causing rates to increase. 
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