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Wind 'competitive with gas' in US

Published at: Mar 31, 2014
source: Wind Power Monthly

published by

UNITED STATES: Wind energy is competitive with natural gas in the US when a number of previously unconsidered factors are taken into account, according to a new study.

The Visualising the Production Tax Credit for Wind Energy study by the University of California and Syracuse University shows wind costing only $0.0035/kWh more than gas when levelised over the 20-year life of a typical wind project.

This is the result of taking into account the cost of the environmental impact of gas power stations, as well as the predicted volatility of wholesale gas prices.

"The true cost of electricity from wind power and natural gas are effectively indistinguishable, yet because the cost of carbon emissions is not included in the market price of gas, wind has not been a competitive form of energy use in most of the United States without government pricing support," said Jason Dedrick, associate professor at Syracuse's School of Information Studies.

The analysis started with data from the US Department of Energy (DOE) concerning the levelised cost of energy from a new wind farm and from a combined cycle gas plant. But the analysis developed a new cost-calculating method that incorporates long-term factors that are not included in the DOE figures.

The study shows that the recently expired production tax credit (PTC) subsidy for wind is large enough to compensate for the "average estimated social cost" of carbon dioxide emitted by natural gas combustion.

In the absence of a carbon tax, the researchers claim that the PTC can serve as a stand in, to make the market reflect the true cost of energy.

Current national-average estimates from the DOE are $0.087/kWh for wind and $0.066/KWh for gas-fired energy, making gas appear as a much cheaper alternative.

But adding in the other factors finds an adjusted levelised cost of electricity for wind of 0.092/kWh, versus 0.0885/kWh for gas.

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