Cape Wind Project Will Reduce Regional Electricity Prices By $7.2 Billion, Study Says
The Cape Wind offshore wind project will reduce wholesale electricity prices for the New England region by $7.2 billion over 25 years, finds a new report published by economic consulting firm Charles River Associates.
The report shows that ISO New England, the electric grid operator, first dispatches electric generating units with the lowest-cost fuel. Because Cape Wind's fuel - wind - is zero cost, the report states that Cape Wind will displace higher-priced and fossil-fueled units, thus resulting in an average savings of $286 million per year in New England.
The increase in price suppression was attributed primarily to an increase in power-plant retirements and a larger price difference between natural gas and fuel oil, the report notes.
Price suppression in wholesale electric markets that occurs as a result of wind power projects has been documented in Europe and in several U.S. power markets. According to Charles River Associates, price suppression from wind power was noted in the 2009 report, which stated, "All of the wind resource potential could provide downward pressure on the marginal prices for energy within the New England electricity market...This price pressure would ultimately benefit New England consumers." ...
http://www.nawindpower.com/e107_plugins/content/content.php?content.9627
http://www.democraticunderground.com/112711111
The merit-order effect: a detailed analysis of the price effect of renewable electricity generation on spot market prices in Germany
Sensfuß, Frank, Ragwitz, Mario, Genoese, Massimo
Abstract
The German feed-in support of electricity generation from renewable energy sources has led to high growth rates of the supported technologies. Critics state that the costs for consumers are too high. An important aspect to be considered in the discussion is the price effect created by renewable electricity generation. This paper seeks to analyse the impact of privileged renewable electricity generation on the electricity market in Germany. The central aspect to be analysed is the impact of renewable electricity generation on spot market prices. The results generated by an agent-based simulation platform indicate that the financial volume of the price reduction is considerable. In the short run, this gives rise to a distributional effect which creates savings for the demand side by reducing generator profits. In the case of the year 2006, the volume of the merit-order effect exceeds the volume of the net support payments for renewable electricity generation which have to be paid by consumers.
Can be downloaded here:
http://ideas.repec.org/p/zbw/fisisi/s72007.html
Irish wind generation costs analysed
25 February 2011
Wind generation in Ireland does not increase wholesale electricity prices and in fact, the trend is that it lowers them.
This is according to a study by Eirgird, the Irish grid operator and the Sustainable Energy Authority of Ireland (SEAI).
Eirgrid used detailed modelling tools to look in detail at the wholesale prices in the Irish electricity system in 2011.
The analysis showed that wind generation lowers wholesale prices by over Euro 70 million.
This almost exactly offsets the costs of the Public Service Obligation (PSO) levy...
http://www.edie.net/news/news_story.asp?src=nl&id=19468
http://www.democraticunderground.com/112711895
"The "merit-order effect"
Electricity produced under a FIT law can help to reduce the average cost of electricity by affecting the wholesale price. Because renewable electricity must be purchased before other sources, the size of the remaining demand to be purchased on the spot market is reduced. Under the "merit order" principle, plants with the lowest costs are used first to meet demand, with more costly plants being brought on line later if needed. The most expensive conventional power plants are therefore no longer needed to meet demand. If the FIT tariff (or price) is lower than the price from the most expensive conventional plants, then the average cost of electricity decreases, and this is called the ‘merit-order effect’. This decrease was estimated to be about € 5 billion in Germany in 2006.
http://www.worldfuturecouncil.org/index.php?id=425
Posted here at:
http://www.democraticunderground.com/112711897
Also:
Why generators are terrified of solar
http://www.democraticunderground.com/?com=view_post&forum=1127&pid=11729
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