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.
Source: Great Lakes Renewable Energy Association (GLREA)