UPDATE (Aug. 31, 2012): An updated version of the report is available here.
Adding more wind power to the electric grid could reduce wholesale market prices by more than 25 percent in the Midwest region by 2020 according to a new analysis conducted by Synapse Energy Economics on behalf of Americans for a Clean Energy Grid. The report found that wind power could drive down the wholesale price of power by $3 – $10 per megawatt-hour (MWh) in the near term and up to nearly $50 per MWh by 2030. Those savings would be passed along to consumers through lowering retail electricity prices by $65-$200 each year.
The analysis also found that new transmission is needed in the region to tap wind power; however, investments in transmission are small compared to the savings they would reap, providing more than a 2 to 1 return on investment throughout various scenarios.
“This analysis illustrates a basic fact about our power system – building transmission to unleash cheaper, domestic resources makes strong economic sense,” said John Jimison, Managing Director of the Energy Future Coalition and Americans for a Clean Energy Grid. “Transmission makes up the smallest sliver of the electricity bill, but can make power markets more competitive and drive down costs for everyone. Midwestern states where some of the most valuable and abundant wind power can be found have a real opportunity to capitalize on these findings and continue investing in the infrastructure they need to facilitate additional generation of clean power.”
In order to efficiently operate wind turbines that produce lower-priced power, the Midwest must invest in transmission infrastructure to move this electricity from where it is produced to where it is used. Synapse found that building out the transmission system will have a small impact on retail rates – i.e., an increase of approximately 0.1 to 0.5 cents per kilowatt-hour by 2021, but the modest increase would be dramatically offset by the greater price savings achieved from adding wind generation to the electric system.
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The Midwest Independent Transmission System Operator’s (MISO) board of directors acted last week to approve its plan to tap into the region’s huge wind resources and strengthen the reliability of the region’s grid. Deemed the MISO Transmission Expansion Plan 2011 (MTEP11), the portfolio of new transmission projects will allow more ratepayers to tap into one of the cheapest forms of new electric generation reports North American Wind Power.
The $6.5 billion investment in new transmission is needed to maintain system reliability, improve market efficiency, and allow for the integration of reliable, new generation sources. The project list includes 16 multi-value projects (MVPs) – lines that provide a range of regional benefits and are paid for through broad cost allocation.
In total, the portfolio will deliver more than double the return on investment for the region. For retail customers, analysts estimate that an $11 per year investment will yield $23 in savings on a typical electricity bill.
Other benefits of MISO’s transmission plan include:
- The creation of up to 39,800 construction and 74,000 total annual jobs from the portfolio of multi-value projects.
- The creation of $15.5 billion to $49.2 billion in net-present-value economic benefits over a 20- to 40-year time frame, according to MISO.
- The generation of up to $49.2 billion in benefits from the use of lower-cost generation and reductions in energy wasted through transmission losses.
Bill White, senior adviser to Americans for a Clean Energy Grid, recently published an op-ed in Roll Call applauding the Federal Energy Regulatory Commission for reaffirming its approval of the Midwest ISO’s multi-value projects (MVP) cost allocation plan, and for standing up to the small but vocal opposition looking to halt transmission projects that would lower energy prices and make the grid more reliable.
To read the full article, click here.
Columnist Larry Bell recently published a misleading critique of the state of the American renewable energy industry in his article “Too-Green-To-Fail Energy Policies Fail Achievement Tests.” Mr. Bell made a slew of errors (including misidentifying FERC Chairman Jon Wellinghoff as “Jon Wellington,”), many of which were pointed out by Michael Goggin in his article, “Fact Check: Larry Bell’s List of Errors.” To give you an idea of the number of erroneous statements in Mr. Bell’s article, consider this excerpt from Mr. Goggin’s response:
I’d recommend going back and reading the DOE report, as you’d find that it directly refutes almost all of your attacks on wind energy. For example, it’s hard to claim that wind energy isn’t abundant, when the report identifies enough economically viable wind resources to meet our electricity needs a dozen times over. It’s also difficult to attack wind’s emissions benefits when the report concludes that 20% wind would reduce CO2 emissions by 825 million tons in the year 2030 alone and 7.6 billion tons cumulatively, in addition to large amounts of other harmful pollutants. Moreover, the report finds 20% wind would save 4 trillion gallons of water cumulatively by 2030 and substantially reduce natural gas prices by diversifying our energy portfolio away from fossil fuels. The DOE study also finds 20% wind could create over 500,000 new jobs, making it difficult for you to claim that wind energy is not a powerful job creation tool.
Unfortunately, the misstatements don’t stop there. Mr. Bell also attacks the Midwest ISO’s (MISO) Multi-Value Projects (MVP) cost allocation proposal by stating that, “Federal Energy Regulatory Commission (FERC) Chairman Jon Wellington [sic, Wellinghoff] announced plans to impose a $300 million to $500 million surtax on utility bills to cover the costs of creating renewable power transmission lines across 13 Midwest states.” To begin addressing this misinformed statement, characterizing this as Mr. Wellinghoff’s plan is simply incorrect. Not only did the MVP plan originate from the Midwest ISO, but 83% of MISO states approve of the proposal. In addition, MISO’s proposal would proportionately allocate costs from new transmission lines to ratepayers based on reliability and economic benefits, not arbitrarily spreading the costs around as Mr. Bell would have his readers believe. What’s more, these additional costs are a small proportion of consumers’ utility bills, averaging about 7% nationwide and only 4% in MISO member Michigan. If every single “Starter Project” line proposed under the MVP plan were approved (an unlikely scenario that would cost $5 billion), Midwest ISO ratepayers’ utility bills would only increase by $0.60 per month — a number that looks much different than Mr. Bell’s alarmist “$300 million to $500 million surtax.”
The United States should make much-needed investments in transmission infrastructure to harness location-constrained renewable energy resources that will increase U.S. energy independence, increase national security, reduce costly blackouts, reduce greenhouse gas emissions, and create good manufacturing and construction jobs that can’t be outsourced. Misleading arguments such as Mr. Bell’s will unfortunately maintain the status quo, keeping the United States dependent on dirty fossil fuels and foreign oil instead of utilizing this opportunity to transition the United States towards a clean and safe energy future.