There are many examples where adding significant quantities of wind energy into a "NYISO-like" market (where hourly auctions determine the marginal price, and where all bidders for that hourly period get that marginal price, regardless of the actual cost or a steady price needed to obtain a reasonable return on investment (profit rate)) drops the marginal price. In Europe, prices can even go negative - that is, for some time periods, polluters using coal or nuclear generated electricity actually have to PAY people to take their electricity for that time period. Here are some examples:
http://www.eurotrib.com/story/...
And here is the a reason why the owners of coal burners, nukes and natural gas suppliers are not happy with wind turbine installations:
http://www.eurotrib.com/story/...
http://www.eurotrib.com/story/...
In places like Texas, negative prices are not allowed, so when prices drop to some preset limit, wind turbine generators are forced to shut down. This is called "economic curtailment", and in 2009, about 17% of the wind energy that could have been sold was prevented from being sold because it would have resulted in negative prices for electricity not sold under Power Purchase Agreements (most wind sourced electricity is sold via PPA's in Texas). This basically ruins the profitability of wind farm investments. And if it was your task to hobble any competition to pollution sourced electricity and for the fossil and nuclear fuels that are needed by these non-renewable generation systems, that would be a fine approach to pursue. After all, isn't Business a bit like Hockey Night in Buffalo, the "on the boards" part?
In 2008, German customers had a net savings of Euro 5 billion due to the MOE. In effect, this came out of the extraordinary profits that polluters can make whenever demand has to be supplied by a combination of mostly low production costs (nukes, coal) sources and some high priced ones (natural gas, oil). In addition, there were about E2.9 billion in avoided imports of natural gas and less need for coal (mostly imported in Germany) (E2.7 billion). Finally, the employment resulting from the manufacture of (plus some installation jobs) all those renewable energy systems avoided over E5 billion in unemployment costs. After all, where else do you employ ~ 300,000 people in high value added manufacturing these days? Furthermore, there were lower natural gas prices that resulted from lower demand for natural gas and coal caused by not using as much natural gas and coal to make electricity, so industrial and residential/commercial users also saved money.
And just what does it mean to cream off the extraordinary profits that, in WNY, would have gone to the 3 major coal burning plants (NRG Huntley, NRG Dunkirk, AES Somerset) if wind turbines had not made an average of 85.1 MW during the year? Odds, are, much more than all the protests of environmentalists who protest against the use of coal to make electricity, despite their best intentions of trying to do some good.
Most importantly, maybe the marginal pricing system (scam?) might finally get exposed to public scrutiny. The marginal pricing auction system (Locational Based Marginal pricing, or LBMP) was supposed to introduce competition into the formerly monopoly centered electricity generation business, and thus deliver the lowest price to consumers. But, that is theory; reality is quite different. In reality, the owners of low priced generators have discovered that they do not want to be the only generators in a region (as in NYISO A, or NYISO West), because then prices would remain at rock bottom levels. Besides, who needs an auction when there is no effective competition between fuel source suppliers.... Instead, to maximize the profits of low cost electricity producers, it is desirable to have most of the electricity sourced in NYISO Zone A by these ultra low cost, fully paid off coal burners and some of the electricity provided by higher cost natural gas sources. Even though natural gas (Ngas) prices are currently in the pits, brand new combined cycle (ultra efficient) plants cannot compete with the big coal burners. The thermal cost of Ngas delivered to WNY is about $6/MBtu (Ngas at $4.70/MBtu plus delivery at $1.30/MBtu), while coal, even at an expensive price of $75/ton for Appalachian still is only $3/MBtu on a thermal basis. The slightly better efficiency (50% for Ngas, 40% for coal) of methane gas turbine combined cycle systems (GTCC) just can't overcome the difference. And Ngas prices are presently only 50% of where they need to be to justify further investments in new wells.... In WNY, over 450 MW of coal burner capacity has been taken out of the market (boilers shut down), yet still, prices are deemed too low for new electricity generation capacity...
So, that's how big profits get made by coal burners in WNY, and when wind energy comes on line, it replaces some or all of the Ngas sourced electricity for that given hour, and thus drops the bid price of electricity. So the owners of the coal unit can make a regular profit for that hour, but not an extraordinary one. And since that is what they really crave, and what the executive management gets compensated for by extra bonuses, that is mostly what they care about. So, by forcing those operations to survive on regular profits, consumers get a better deal, but the owners of the coal burners don't get those fabulous extraordinary profits.
Of course, Ngas suppliers are not made happy by this turn of events, either. Ngas prices are quite sensitive to changes in demand for Ngas, and if less Ngas is being burned to make electricity, that puts price on suppliers to lower their price or at least keep prices less than they would rise to if demand for Ngas (and that includes fracked Marcellus and Utica Shale Ngas) was to increase. And since they, too, crave extraordinary profits like a junkie craves their fix and they really hate the thought of being saddled by regular profits (they would not have invested in the well if they thought that competitive pricing and regular profits, if any, would be the outcome of their investment), the Ngas supplier's happiness (and consumer's sadness) is affected by how electricity gets made and the prices that are paid for this electricity. But, if you use Ngas for home and business heat, or don't like paying higher taxes for schools or governmental operations (caused by various governments paying higher prices for Ngas AND electricity), then you won't have much sympathy for the Ngas folks.
Besides, coal and Ngas tend to be bought from outside of NY, and we have to export money to import those fossil fuels. Thus, wind energy also helps keep local money local, though there are ways to do a better job at that than is presently the case. And wind turbine derived electricity prevents the export of our wealth and income to people who often really hate NY'ers, like the oil and gas people in Texas and Oklahoma, or the truly despicable management in companies like Massey Energy (who in a just world would be on trail for murder of 29 coal miners in West Virgina from last year). But then, we have room for improvement on the justice aspect, too, , as the Golden Rule seems to morph into the Rule of Gold far too frequently these days.
Anyway, if you get a chance, check out the paper. Got any comments?
Nb41 |
