Economic Prospects for Wind Farming

Several American utilities have contracted to purchase electricity from ‘windfarmers’, and many others are beginning to explore this option. The value of conventional fuel and capacity savings will influence the terms under which utilities enter these contracts. A quantitative assessment of these savings is undertaken using computer models that simulate the dispatching of conventional capacity and calculate the reliability of this capacity. These models identify the conventional costs avoided by utilities as a consequence of windfarming. The impact of various levels of windmill penetration is simulated in five sites in the USA, representing a wide range of average wind speeds. The cost of wind energy is less than the value of fuel savings alone for utilities which possess substantial oil- and-gas-fired generating capacity and which serve sites with winds above 12 m.p.h. In such sites, 1kW of conventional capacity is displaced by 2–5 kW windmill capacity. Increased windmill penetration reduces the value of fuel and capacity savings per kW.