Wind power saving consumers money

As Zehner knows, there is a large body of evidence indicating that increasing our use of wind energy drives electricity prices down. A May 2012 study by Synapse Energy Economics found that adding wind energy in the U.S. Midwest would save consumers between $65 and $200 per year. Adding wind energy to the grid displaces the output of the most expensive and least efficient power plants first, so even relatively small additions of wind energy can cause major declines in the price of electricity. In addition, wind energy has no fuel cost, which protects consumers from fluctuations in the price of fossil fuels, much like a fixed-rate mortgage protects homeowners from volatility in interest rates.

While most American households would gladly see a significant reduction in the more than $1,000 per year that they spend on electricity, some wind energy competitors who want to keep their profit margins high view that as a bad thing. Zehner’s argument is not as blatantly self-interested, but is a bit more circuitous: wind energy drives electricity prices down, which encourages people to use more electricity, which in turn erases the environmental benefits of using wind energy.

That argument should make an economist’s head explode, as it assumes that consumers’ response to reduced electricity prices is so strong that they overcompensate by using so much more electricity that they actually end up spending more on electricity. In fact, economists’ data confirm that consumers’ “price elasticity of demand” for electricity is nowhere near strong enough to make Zehner’s argument valid.

While a consumer might switch from one soft drink brand to another if the price of one went down, Zehner is unlikely to see many consumers switching from hauling blocks of ice to using electric refrigerators and air conditioning if the price of electricity comes down. As a result, Zehner fails in his argument that wind will not produce the expected reductions in pollution, though he is correct that wind will drive down prices for consumers.

Zehner similarly fails in his unsupported attacks on the lifecycle environmental impacts of renewable energy. Every one out of dozens of peer-reviewed studies have found that the lifecycle environmental impact of renewable sources is at most a few percent of that of fossil fuels, as documented in a recent literature survey conducted by the National Renewable Energy Laboratory.

Finally, Zehner fails to understand that wind energy is being reliably integrated onto the power system today without a need for additional “backup.” Power grid operators have always held significant generation in reserve to accommodate unexpected swings in electricity demand as well as instantaneous failures at fossil and nuclear power plants. In contrast, changes in wind output occur far more gradually and are predictable, which makes it easy for grid operators to accommodate wind energy with these existing sources of flexibility. 

All data and analyses by independent grid operators, government entities, and utilities confirm that wind energy causes pollution reductions that are as large or larger than expected. As states like Texas, South Dakota, North Dakota, Colorado, and Minnesota have ramped up their use of wind energy in recent years, all have seen drastic declines in pollution from their electric sectors, as documented by U.S. Energy Information Administratioin data that tracks power plant fossil fuel use and emissions.
The data is clear that wind is a win-win for America’s consumers and environment. It is a clear sign of desperation when the best argument that wind energy’s opponents have left is that wind energy is too effective at reducing electricity prices for homeowners and businesses.

Vinson is senior director of federal regulatory affairs at the American Wind Energy Association and Goggin is manager of transmission policy.

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