- How does investing in wind power impact the Texas economy?
- How can wind impact spot market energy price?
- Can Texas depend on wind power?
- Does the wind blow when we need it to?
- If the wind is out in West Texas, how do we get it where it is needed, along I-35?
- What will it cost to install new transmission for the CREZ?
- What is Spinning Reserve and how does wind energy affect it?
- How can ERCOT predict “wind events”?
- Is storing wind energy for times of peak usage an option?
- What is net capacity factor?
- What is the Federal Renewable Electricity Production Tax Credit?(PTC) and how does it affect wind generators?
- Do wind generators receive government subsidies?
- What are the environmental impacts of wind power?
1. How does investing in wind power impact the Texas economy?
For every 1,000 MW of generation from wind, the total economic benefit is approximately $1.2 billion. In Texas for every 1,000 MW of new wind, the industry creates 2,959 jobs during construction (over 1-2 years) and 435 local long-term jobs. The Department of Energy, Energy Efficiency and Renewable Energy, “Forecast Economic Development Impacts from Wind Power in Texas, ” June 2008. Wind power will insulate Texas from the volatile price of oil and gas, attracting more manufacturing, and reducing energy market costs for ratepayers. With enough wind energy capacity in the marketplace, other energy sources will have to lower prices to compete. This is demonstrated by wind’s impact on spot bids in the energy marketplace.
2. How can wind impact spot market energy prices?
In the ERCOT market, bids for energy are placed by all electricity generators. Bids are accepted on a low-to-high basis to provide the energy required to meet the demand of all consumers; therefore, electricity generators must bid high enough that they can cover their variable costs, but low enough to be selected to generate power (otherwise they receive no revenue). Wind has zero variable costs, so bids by wind power generators into the market are very low, even zero. With wind in the mix, demand is often met (supplied) with lower-priced electricity than without wind in the mix. This leads to customers paying less for electricity. This already occurs today in West Texas, where wind has lowered local prices. The wind generation planned throughout the Competitive Renewable Energy Zones (CREZ) will add 11,553 MW of wind capacity, and once Texas adds the necessary transmission capacity, wind will have the same impact in large urban areas, and even electricity customers that do not use wind power will benefit.
3. Can Texas depend on wind power?
Wind is a proven technology that can be counted on to provide a significant amount of electricity to the market and benefit all Texans.
The wind, of course, is a variable resource, but modern grid management techniques allow for the smooth integration of several thousand megawatts of wind generation without adversely affecting the reliability or stability of the system. Wind generators are part of an integrated fleet of electricity generation technologies (including natural gas, coal, nuclear, biomass, and solar) that provide the power to meet consumer demands every hour of every day. Reliability is obtained from the collective performance of the fleet, not from the perfect performance of any single generator. Power plants of all types are constantly coming on and going off line. More traditional power plants tend to shut off when power prices are lower, but there is always a need for some power. The electrical system, as a whole, already must be capable of responding to swings in electrical usage by customer – swings of as much as 25,000 MW in a single day.
Using available forecasting techniques, the grid can handle wind variance with little to no impact, even with the increased capacity that CREZ wind will bring to the state. The electrical system operators need a forecast of total expected system wind generation (supply forecast) just as they need a total expected system load forecast (demand forecast). They also need day-ahead forecasts as well as hour-ahead forecasts and event forecasts. ERCOT recognizes this need and has developed forecasting tools for the electrical system operators. Neither load forecasts (demand) nor wind forecasts (supply) are perfect but they are both vital operation tools.
The wind industry has never considered itself to be the only answer to our energy needs, but it is certainly a significant part of the solution to meeting future energy demands with sustainable, domestic resources.
4. Does the wind blow when we need it to?
Most electricity is consumed between the hours of 7 AM and 10 PM, and power produced during these hours is called on-peak power. Wind produces the majority of its power on-peak, during this high-use period. ERCOT 2007 Aggregated wind power data summary. However, there are seasonal variations in the wind: Texas wind tends to die down during the days in some summer months, and it picks up in the fall and spring, generating on-peak power at approximately 60% between December and May. When the wind is used to generate a significant amount of electricity throughout the year, more expensive resources are conserved. These resources can then be used to supplement wind power when the wind is not blowing, thus lowering the costs of those resources and overall electricity prices.
5. If the wind is out in West Texas, how do we get it where it is needed, along I-35?
The best sites for wind generation are in West Texas, the Panhandle, and along the Texas coast. However, these resource areas are remotely located from the major population centers in the state. The challenge is to provide sufficient transmission infrastructure to carry the electricity from where it is produced to where it is needed.
The Texas Legislature recognized this challenge and in 2005 passed a law that increased the amount of renewable energy generated throughout the state and provided the Public Utility Commission of Texas the authority to ensure that sufficient transmission infrastructure would be constructed.
This foresight demonstrated by the Legislature led to the Competitive Renewable Energy Zone (CREZ) process whereby the best wind resources across the state were identified and the transmission service providers have been identified to enhance the existing ERCOT grid both to access the remote renewable resources and to enhance the underlying stability of the system.
6. What will it cost to install new transmission for the CREZ?
The CREZ plan will cost approximately $4.93 billion to transport more than 11,500 MW of new wind power from five wind-rich regions of West Texas to more populated regions of the state. Once these transmission lines are built, consumers are expected to save $3.4 billion per year on electricity, plus $1.68 billion in fuel cost savings. In general, as the wind generation penetration increases, it displaces the higher cost of thermal generation and tends to put downward pressure on all energy prices. GE Energy, Analysis of Wind Generation Impact of ERCOT Ancillary Services Requirements, page 9-9, March 28, 2008,
7. What is Spinning Reserve and how does wind energy affect it?
System operators must predict both supply and demand of electricity since the production of electricity must be balanced continuously and nearly instantaneously with its consumption. Spinning Reserve is the additional amount of energy the entire electrical system generates constantly in order to meet consumer demand at low-demand times or in the event of power loss. ERCOT keeps 2,300 MW of spinning reserves, enough to respond to the sudden unpredictable failure of two conventional thermal generators.
While wind events resulting in a dramatic increase or decrease in generation tend to take several hours to unfold, a thermal generator can shut down unexpectedly in 1/60th of a second. GE Energy, Analysis of Wind Generation Impact on ERCOT Ancillary Services Requirements, March 28, 2008. Extreme wind power increases and decreases will occur infrequently (up to 20% within 30 minutes), but are predictable with wind forecasting techniques. ERCOT – Wind Integration/Ancillary Services Requirements Study by Warren Lasher, System Assessment, March 7, 2008. During such events, ERCOT can utilize its Spinning Reserve to replace wind power that goes off-line.
8. How can ERCOT predict “wind events”?
Wind forecasting techniques are an essential part of wind generation management. ERCOT recognizes this necessity and has developed forecasting tools for the system operators. Furthermore, wind plant operators also rely heavily on wind forecasts in order to schedule their power as accurately as possible. The electrical system already must be capable of responding to swings in electrical usage by customers – swings of as much as 25,000 MW in a single day, so forecasting already falls within the purview of the system operator. Neither load forecasts nor wind forecasts are perfect but they are both vital operation tools.
9. Is storing wind energy for times of peak usage an option?
Electricity, once produced, cannot easily be stored. This is a characteristic that makes electric power unique: production and consumption of electric power must be balanced continuously and nearly instantaneously. This is a characteristic of all electricity production and is not unique to wind power. Storage is not required to integrate wind energy, but the advent of electricity storage will be a tremendous boost for renewable sources like wind energy and help to improve overall transmission system reliability.
10. What is net capacity factor?
A facility’s net capacity factor is the ratio of a generator’s actual energy production over some time interval to its nameplate capacity; in other words, average output in one year divided by the total possible output per year. No power plant’s capacity factor matches its nameplate capacity. Texas wind farms have an average capacity factor of approximately 44%, meaning that over the course of a year, the facilities produce 44% of the energy that could be produced if the wind were blowing steadily 100% of the time. In contrast, however, wind plants typically have lower capacity factors than nuclear facilities (NN%) and most coal-fired plants (CC% on average).
11. What is the Federal Renewable Electricity Production Tax Credit (PTC) and how does it affect wind generators?
Authorized by the Energy Policy Act of 1992, the Production Tax Credit (PTC) is a 2 cent per kilowatt-hour (kWh) corporate income tax credit for electricity generated by qualified energy projects, including wind power. Available during the first 10 years of operation, the PTC is adjusted annually for inflation. When the PTC is allowed to lapse, wind energy production declines. Thanks to the hard work of our industry leaders through the American Wind Energy Association (AWEA) and individual companies, Congress has passed a 3-year PTC extension for the wind industry (along with additional incentives) that will help avoid a recurrence of the boom-and-bust policy cycle that the industry has experienced from time to time.
12. Do wind generators receive government subsidies?
Yes. The Production Tax Credit, described above, is a tax incentive that motivates efficient production of renewable energy. However, wind is not a unique recipient of government incentives. All generation technologies (coal, natural gas, wind, nuclear, biomass, and solar) benefit from subsidies of one form or another. Nuclear power receives the largest subsidy, 38%, while wind power receives a 16% subsidy. Brendan Kirby; November 12, 2008.
13. What are the environmental impacts of wind power?
Wind is a completely renewable resource, and generating electricity with wind power emits no harmful pollutants and conserves precious water supplies.
Increased reliance on wind to generate electricity reduces output from conventional generators thereby reducing the level of harmful emissions released into the atmosphere. The 18,000 MW of wind generation enabled by the competitive renewable energy zone (CREZ) process in Texas will reduce sulfur oxide (SOx) emissions – a leading contributor to acid rain – by 16,200 tons and smog-creating nitrogen oxides (NOx) by 8,100 tons each year. Wind generation also helps to reduce mercury emissions (HG) from coal-fired generation, which contaminates wildlife up and down the food chain. Wind generation also avoids emissions of carbon dioxide (CO2) by 23,684 tons. Finally, wind does not require water to generate electricity, thereby reducing water consumption and preserving water for municipal supplies and agricultural activities.
Wind farms can extend across thousands of acres, but the wind turbines and access roads themselves occupy only a small percentage of land. Such a small footprint allows farmers and ranchers to continue to use the land for agricultural production and allows most wildlife to continue to enjoy their habitat. Other forms of energy generation require disruptive and polluting activities such as strip mining and heated water discharge that are harmful to both plant and animal species.
In addition to producing clean, renewable electricity for the obvious human health benefits of clean air and water, the wind industry is also committed to protecting the land and wildlife. The wind industry carefully studies the impact to avian and other species, and works to ensure placement of turbines on the least disruptive parcels of land. The industry endeavors to limit habitat fragmentation and conduct construction activities in an environmentally sensitive manner. Additionally, technological developments have also helped mitigate any risk turbines might pose to the bird population.