US: Wind energy lowest-cost solution for meeting the Clean Power Plan

Wind energy consistently emerged as the best way to cost-effectively reduce emissions in a recent study by the nonpartisan Energy Information Administration (EIA). In the most in-depth economic modeling of the Clean Power Plan to date, the EIA found wind played a key role across more than a dozen scenarios that it analyzed, even with low gas prices, more energy efficiency, and greater use of nuclear energy.

“Wind accounts for 57 percent of the optimal energy mix to comply with the Clean Power Plan, according to the EIA,” said Michael Goggin, Senior Director of Research for AWEA, author of a white paper summarizing the EIA findings. “Thanks to its combination of low cost and zero emissions, wind energy has the largest role in cost-effectively meeting the carbon rule.”

EIA’s analysis is likely conservative regarding the wind energy opportunity, as EIA did not account for recent and continuing reductions in the cost of wind energy, as well as technological advances that have opened up new regions to wind plant development. Navigant’s recent analysis of the Clean Power Plan also found wind energy accounts for the vast majority of renewable energy additions under the lowest-cost compliance solution.

Making sure we keep the lights on will also be critical as states and utilities work to complete their plans on complying with the carbon reduction targets. Fortunately, wind energy already makes critical contributions to maintaining reliable operation of the power system.

Wind can reliably supply much higher amounts of electricity according to a report by the utility consultant The Brattle Group which found wind supplied at times as much as 40 percent on the main Texas grid earlier this year and 60 percent on the main utility system in Colorado. The National Renewable Energy Laboratory (NREL) reviewed studies by grid operators and others, which unanimously found renewable energy can reliably provide at least twice the level of emissions reductions that EPA’s draft plan called for from all sources.

The Environmental Protection Agency’s Clean Power Plan is expected to be released next week. The draft plan released in June 2014 proposed to cut national power sector carbon emissions by 30 percent from 2005 levels by 2030. 

Department of Energy (DOE) data show wind power is currently the fifth largest electricity source in the U.S., providing enough electricity to power the equivalent of 18 million average American homes. Since adding wind power displaces the most expensive, least efficient power sources on the utility grid, wind energy reduced carbon pollution by 126 million metric tons in 2014 – equal to 5 percent of power sector carbon emissions (or 26 million cars’ worth).

Thanks to technological advances and greater domestic manufacturing at over 500 facilities in 43 states, the cost of wind power has dropped by nearly 60 percent in just five years. Coupled with wind’s ability to hedge against increases in the price of natural gas – much like a fixed-rate mortgage protects consumers against interest rate volatility – wind energy comes out as the lowest-cost compliance option for nearly all regions.

EIA’s analysis shows natural gas prices increase by more than a dollar, or 15 percent, when gas is the primary tool used for Clean Power Plan compliance, whereas natural gas prices tend to decrease when wind energy is the primary compliance tool.

The finding aligns well with a report released earlier this year by the DOE, which found electricity prices were 20 percent less sensitive to fluctuations in natural gas prices in scenarios with large amounts of wind energy; reductions in gas prices resulted in $280 billion in economy-wide savings for the U.S. by 2050.

Once the rule is released, AWEA will work with the Solar Energy Industries Association (SEIA) to update A Handbook for the States: Incorporating renewable energy into state compliance plans for EPA's Clean Power Plan, a handbook first published in March 2015 that educates state officials about the benefits of using renewable energy as a compliance tool. The handbook interprets more than 1,000 pages of the draft EPA rule and technical support documents and provides step-by-step guidance to states on how to incorporate renewable energy into their state compliance plans.

Successful businesses increasingly value low-cost wind, see benefit of carbon rule to economy

Successful U.S. companies and other non-traditional purchasers are increasingly making direct investments in wind power to lock in its low prices and reduce their carbon footprints with many of them also publicly supporting the EPA’s carbon rule, including Google, Microsoft and Wal-Mart.

Low prices for wind energy have led to more than 60 non-utility entities to make long-term wind energy purchases, including Microsoft, Dow Chemical, Google, Ikea, Walmart, and other household names. Many have signed power purchase agreements (PPAs), for both onsite or offsite wind farms and direct ownership of wind projects, which allow them to directly contribute to a more sustainable electricity supply and walk the talk of corporate responsibility.

Just this past month, Facebook announced its new data center in Texas would purchase the output of a 200 MW wind plant and that thanks partly to its continued investments in renewables, “the carbon impact of one person’s use of Facebook for an entire year is the same as the carbon impact of a medium latte.”

More successful American companies are looking to build on this clean energy trend as representatives from Apple, Bank of America, Berkshire Hathaway Energy, Cargill, General Motors, Goldman Sachs, Google, Microsoft, PepsiCo, UPS and Wal-Mart pledged just last week to invest more than $140 billion in their efforts to cut carbon pollution, including by investing in renewable energy.

Investing in American wind power continues to be a good deal for the U.S. economy as wind supports 73,000 well-paying jobs, including nearly 20,000 manufacturing jobs. The DOE’s recently released Wind Vision report says with stable policies in place wind energy can reliably supply 20 percent of the country’s electricity, creating 380,000 jobs in the process.

Many states have already witnessed the economic and environmental benefits of growing wind energy thanks to state renewable energy laws that have helped diversify their energy mix and keep costs low for consumers.

A March 2015 Gallup poll found 84 percent of American voters want the U.S. to put more emphasis or the same emphasis on producing domestic energy from wind. Two-thirds of Republicans and Independents wanted more emphasis.