report from the Illinois Power Agency shows wind and other renewables reduced
wholesale power prices, boosted economic growth
CHICAGO, IL (April 10, 2012) – Illinois residents and businesses
saved over $100 million in power costs thanks to wind and other renewable
energy sources, a result that highlights the broad importance of wind energy to
the state’s economy.
In a study prepared for the Illinois General Assembly late last
month, the Illinois Power Agency (IPA) found that adding wind power to the electric
grid reduced wholesale power prices by $176.8 million while simultaneously
creating jobs and other economic opportunities for residents and businesses.
The conclusion affirms that renewables are a positive addition to the state’s
“When the sun is shining or the wind is blowing,” the report
states, “the combined output of renewable generators benefits all customers by
bringing down the market price of electric energy for all resources operating
at that time. This is because wind and solar generation can effectively bid in
at a zero fuel cost.”
According to the study, renewable resources lowered Illinois’
average locational marginal price (LMP) for electricity by $1.30 per
megawatt-hour (1.3 cents per kilowatt-hour), for a total savings of more than
“This landmark study affirms what the wind industry has known
for years,” said Wind on the Wires Policy Manager Kevin Borgia. “Wind energy
has no fuel cost, which allows wind generators to bid lower spot market
electricity prices than any traditional energy source. This translates to lower
power prices for Illinois ratepayers and businesses.”
The IPA analysis confirms similar studies from Massachusetts and
New York, which also found wholesale price-reductions from incorporating renewables
onto the power grids in those states.
Illinois businesses are also enjoying strong growth from the
manufacturing of wind turbine components and construction of wind farms in
Illinois, the study notes, highlighting a 2011 Illinois State University (ISU)
report on the economic impact of wind energy in the state.
The ISU report found that the first 2,422 MW of wind installed
in Illinois has created over 13,000 temporary jobs and nearly 600 permanent
jobs in the state, while also providing new business to construction,
engineering and manufacturing-related firms. These new opportunities were in
addition to the millions of dollars paid to Illinois landowners leasing space
to wind farms, and millions in new property taxes that wind developers pay to local
governments in Illinois.
Despite the positive findings, the IPA report also highlights
the need for additional action to ensure Illinois ratepayers fully benefit from
wind energy. The IPA analysis notes that renewables can be a hedge against
electricity price volatility, but those benefits are not captured by a reliance
on one-year contracts for renewable energy certificates (RECs), which has been
the IPA’s primary mechanism for procuring renewables since 2007.
A REC is a derivative product
of renewable energy, it is not physical energy.
A reliance on one-year RECs subjects Illinois ratepayers to volatility
in both REC prices and fossil fuel prices because of the laws of supply and
The price of energy from wind
is near an all-time low. Consumers would
benefit from locking in long-term power-purchase agreements (PPAs) for wind
energy now. Such long-term PPAs are
standard in the renewable energy industry.
Longer term contracts will lock in these low prices for a 10 to 20 year
period. They also provide a stable
revenue stream necessary for new generation to be built, bringing additional
jobs and economic development to the state.
The full study can be found at the IPA website: http://www2.illinois.gov/ipa.
Wind on the Wires is a 501(c)(3) nonprofit organization
based in St. Paul, Minn., which is comprised of wind developers, environmental
organizations, tribal representatives, public interest groups, clean energy
advocates, farm groups and businesses providing goods and services to the wind
industry. Our mission is to overcome the barriers to bringing wind energy to
market by addressing technical and regulatory issues, as well as through
education and public outreach.
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