Sunday, August 5, 2012

Wind Subsidies Impacting the Viability of Generators in the US

There are a number of interesting items from the US media lately, bringing the structural economic problems of subsidies for intermittent generation into focus.

Exelon Corporation, long an advocate of carbon taxation, is now fighting for an end the the Production Tax Credit (PTC) for industrial wind turbines (Exelon Pushes to scrap wind subsidy).  While Exelon does own some wind capacity, it's half nuclear, and the remainder is largely natural gas (I believe mostly CCGT) - coal is not a factor at Exelon:
Wind power provides a fraction of power in the U.S., but once the turbines are running, they depress electric prices because wind as a fuel is free. At certain times, such as the middle of the night, wind power can help drive electricity prices to below zero
Another large US generator, Edison Mission Energy, looks as if it may enter bankruptcy protection (Edison Sees Possible Generation Unit Bankruptcy, Nuclear Probes).  This company is taking a public relations hit from problems that have idled it's San Onofre nuclear plant (it looks as if those problems are largely insured), but it is the twin burdens of low market pricing and high regulatory burdens, on it's extensive coal assets, that are pushing it towards bankruptcy.  An article from the Chicago Tribune provides details on the coal generation problems of one unit of the company, Midwest Generation.

Portions of the US will soon be holding the debates now being held in Germany, on how to subsidize increased natural gas, and coal, capacity to accompany the increased, by subsidy, renewable energy capacity.

This video from the region's system operator (MISO) gives some indication of the many issues involved in the electricity system, including the extend to which the variability of wind generation impacts price variability in wholesale markets:

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