Adding more wind resources into the Midwest Independent Transmission System Operator footprint would drive down the average market price, assuming large amounts of transmission are built, Cambridge, Massachusetts-based consulting firm Synapse Energy Economics said in a report Tuesday.
The addition of more wind generation to the grid and heavily building out the transmission system would drive the wholesale power price down by $3 to $10/MWh in the short term, and nearly $50/MWh by 2030, the study says. This would reduce retail energy prices by $65 to $200 a year.
The study, "The Potential Rate Effects of Wind Energy and Transmission in the Midwest ISO Region," said that the downward effect on prices is "relative to a baseline case of no additional wind generation beyond the existing 10 GW in place in MISO today." The study was commissioned by Americans for a Clean Energy Grid, an outgrowth of the Energy Future Coalition, a group of foundations, corporations and associations that explores energy and environmental policy issues.
"Since wind energy 'fuel' is free, once built, wind power plants displace fossil-fueled generation and lower the price of marginal supply — thus lowering the energy market clearing price," Synapse said.
The study uses as a starting point the full portfolio of 17 proposed "multi-value" transmission projects proposed in MISO and examines other scenarios where up to $40.2 billion of transmission would be added in coming decades, but it did not account for the capital costs of building wind generation, or the reaction of other market participants to lower prices, the study's authors said at a presentation Tuesday in Washington.
The study also did not examine other regulatory factors, such as how wholesale price reductions would flow to retail consumers.
The energy market price impact would more than offset the costs of building out the transmission grid to the levels contemplated in the various scenarios, the study said. The price impact would be bolstered by a rise in natural gas prices and large retirements of coal generation, Synapse said.
