Doubling wind generation in PJM will save billions, even after adding needed transmission, report says

A study commissioned by the Energy Futures Coalition (EFC) shows that doubling the amount of wind generation in the PJM Interconnection (PJM) would drive down net energy prices, even after accounting for the additional transmission that would have to be built to bring the additional wind to market.

The EFC study, conducted by Synapse Energy Economics, examined the effects of approximately doubling the current projected wind power in PJM compared to what is mandated by current standards.

A report on the study released May 9 said that, by the end of 2012, wind power accounted for approximately 6,300 MW of PJM’s 185,000 MW of installed capacity, and provided over 12,600 GWh – about 1.5% – of the annual energy consumed. Over the next 13 years, existing renewable portfolio standards (RPS) in PJM states will result in “significant increases in supplied renewable energy,” with wind generation expected to provide more than 108,500 GWh of energy, or about 11% of total energy consumed, by 2026.

Using a ProSym production cost model, the study looked at the effect of approximately doubling the amount of supplied renewable energy from wind using two scenarios. One scenario distributed the additional wind around the PJM region while a second allowed for a portion of the total wind to come from higher-performing wind regions, including the Midcontinent ISO’s (MISO) region, and to be imported into PJM using HVDC transmission.

Overall, the report concluded that doubling the amount of renewable energy from wind would result in a net savings compared to the current RPS requirements of approximately $6.9bn per year by 2026. Notably, those savings are net of cost of building the additional transmission and firming generation resources necessary to accommodate that level of variable generation. The estimated cost of those increased investments ranged from $7.6bn in the PJM scenario to $8.0bn per year in the MISO scenario. The study also concluded that importing lower cost wind from MISO would save enough money to more than pay for the increased transmission investments needed to deliver the wind to PJM.

The additional transmission needed to incorporate additional wind energy would also serve to improve the overall flexibility of the PJM system, the report said. The retirement of coal-fired power plants and increased installation of newer, flexible gas-fired combined cycle and combustion turbines coupled with the necessary transmission improvements “will balance energy needs and allow the system to operate reliably, even with a relatively high level of variable energy from wind resources,” the report said.

More wind would mean cleaner air

In addition to cost savings, the study concluded that doubling the amount of electricity obtained from wind would reduce emissions by displacing more expensive and dirtier coal, gas, and oil-fired generation. Projected results included a 10% reduction in NOx and a 6% reduction in SO2, and reductions of other pollutants as well.

The study comes almost one year after another Synapse study showing considerable consumer savings would be realized through integration of wind resources into the MISO system.

Wind and transmission advocates were quick to applaud the report.

“[The report makes] a significant contribution to understanding that investing in new and cleaner sources of electric generation and the high voltage transmission required to bring it to market will benefit PJM by reducing the overall costs of production,” Jim Hoecker, former FERC chairman and counsel to the trade group WIRES said in a statement.

The American Wind Energy Association also had positive comments.

“This groundbreaking study confirms what we’ve been saying for a long time – that wind energy is a win-win for consumers and the environment,” Michael Goggin, AWEA’s senior electric industry analyst, said in a statement provided to TransmissionHub. “Wind energy also protects consumers from volatility in the price of fossil fuels, much like a fixed rate mortgage protects homeowners from interest rate fluctuations.

The study’s authors said the study provided a positive outlook for the future.

“These findings, based on the modeled year 2026, validate an economic preference for an energy future with greater levels of wind power than current renewable portfolio standards suggest,” the report stated. “It is a future where wind-powered resources displace a significant portion of energy that would otherwise be obtained from traditional fossil fuels, all the while retaining sufficient resource adequacy to ensure reliable grid operation.”