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utilities and wind power
Strategic Issues and Business Models
Utilities already incorporating wind power into their mix are finding a number of benefits to the clean, renewable energy source. Such benefits include:
- the avoided pollution that comes with a zero-emissions technology,
- a hedge against fossil and nuclear fuel cost risks,
- a hedge against future carbon mitigation risk, and
- enhancedcustomer satisfaction as a result of using an energy source that enjoys broad public support.
The use of wind energy necessarily offsets the generation from other sources of power generation, typically natural gas and sometimes coal-fired generation, on a megawatt-hour for megawatt-hour basis. In other words, for every unit of energy produced by a wind project, an exact amount of energy from a fossil-fuel plant is reduced. The more wind projects that are added, and the greater the increase in wind energy production, the less energy is required from fossil-fueled plants; consequently, a corresponding reduction in air pollutants, such as Mercury, SOx, NOx, and CO2, occurs. Many utilities are reducing their contributions to global warming by reducing CO2, a major greenhouse gas, as they increase the amount of wind energy on their system.
But there are other benefits for utilities to examine when considering bringing wind power into their power supply portfolios, including:
- 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 trends are expected to continue which will continue to make wind power very cost competitive with other generating options as manufacturing catches up with demand.
- Utility Financial Considerations
Wind projects have very short constructive 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.
- Customer satisfaction
Customers are increasingly expecting utilities to bring more “clean energy” on to their system to preserve and maintain our natural environment without emissions from fossil fuel generation.
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 jobs 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.
The AWEA Utility Working Group is exploring these and other aspects of wind power for utilities – see more on this group by clicking the link at the left. For general questions on wind power in general, please send an e-mail to windmail@awea.org. For more information, contact Jeff Anthony, AWEA Manager of Utility Programs at 414-967-5950 or janthony@awea.org.
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For More Information |
The following case studies and presentations provide information on specific utilities and utility wind projects that describe utility strategies and business models for wind project development:
Great River Energy,
G&T Co-operative experience with wind power.
Illinois Rural Electric Cooperative
Distributed Rural Electric Cooperative Wind System Application
Last Mile Electric
Co-op
The first customer-owned wind project exceeding 200MW.
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