Wind Power Blows Away Fossil Fuel Competitors

midwest-wind-powerStrong winds in the Midwest are normally regarded as dangerous and damaging as tornadoes frequently sweep through the region, often leaving paths of destruction. But on a positive note, these high winds can actually save residents money as wind power is proving to become a cheaper source of energy than natural gas.

According to Stephen Byrd, Head of North American Equity Research for Power & Utilities and Clean Energy, wind farms are signing power agreements at as low as $25 per megawatt-hour (Mwh) in the Midwest. Gas plants on the other hand, average at about $30 per megawatt-hour. Both gas and wind receive subsidies and tax credit, but even after tax, wind power remains cheaper.

Byrd explains that once a wind farm is built, it has almost no operating costs, keeping prices low. “The trick with both wind and solar is…the very high fixed costs to build these technologies. The ongoing variable cost is close to nil. So you’ve got to cover your capital costs over as many units of power production as you can. Which is why, in the Midwest, a wind farm can produce power at a capacity factor of 50-plus percent — that’s a lot of units of power to spread your capital costs over, and that’s why the cost of these agreements can be in the $25 range.”

Coal plants are also in danger of being out-priced by wind power in the Midwest. Coal averages at about $20 to $25 per Mwh, but requires labor, maintenance, and daily costs to operate. It also causes dangerous emissions, often associated with climate change and pollution. Byrd said, “…in the Midwest it’s fairly vicious competition between very efficient wind farms – which are always called on first because they have no variable cost – and coal and nuclear.”

As efficient as wind power may be in the nation’s breadbasket, it’s not necessarily that way across other regions. Areas with less wind flow clearly must rely on other technologies for power. California and Arizona are continuing to build up solar farms for power, and battery array systems have been introduced in the East as a way to store energy.  All three methods prove power can be harnessed without causing pollution, while staying productive.

Throughout the U.S., wind capacity has reached a total of 1,100 gigawatts after growing 60 gigawatts this year. Byrd says wind power is becoming a lucrative industry when established in the proper environment.  “I’m not suggesting that nationwide, wind is at or below the economics of a gas plant, but we are seeing in the best locations that wind is becoming good business — big business.”

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