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Wind Power Boom Benefits Consumers, Undercuts Coal and Nuclear

1 min. read

As wind power continues its rapid growth in the United States, the affects on power markets are being felt in a variety of ways. Three of those are discussed in a new article by Bloomberg.

First, it's benefiting consumers:

The wind power boom has benefited consumers in regions where wind development is fastest, contributing to a 40 percent wholesale power-price plunge since 2008 in the Midwest, for example.

Second, it's combining with cheap natural gas to hammer coal and nuclear power.

...Yet the surplus is creating havoc for nuclear power and coal generators that sell their output into short-term markets.

The impact is greatest in the capacity-glutted Midwest. There, Richmond, Virginia-based Dominion is closing a money- losing reactor and selling coal plants, Exelon warns of shrinking nuclear margins and an Edison International (EIX) merchant coal-plant unit has gone into bankruptcy.

[...]

The surge in wind generation is also squeezing the number of hours that fossil-fuel plants are needed to supply some wind- heavy markets, said Michael Blaha, the principal analyst of North American power research for Wood Mackenzie Ltd. in Houston. “It makes it economically harder for fossil units because when the wind’s up, it’s going to start depressing prices,” he added.

All these trends are likely to continue in 2013, and most likely beyond, as the price of wind turbines plummets, as the Production Tax Credit continues (at least for this year), and as the economics of competitors (e.g., coal and nuclear) can't keep up.