EnviroEconomics.ca

The wind industry will hate this from the US Energy Department,

Expanding Use of Wind Power Feasible, but May Be Costly
Adding wind gets progressively more difficult as the amount used rises because of wind’s intermittent nature and the need for back-up power generation, according to the study. Without a better grid, the system would often waste large amounts of wind power because at many times during the year, the power grid would not be able to handle the amount of power that wind turbines were putting out.

In all of the recent Canadian carbon policy modeling, decarboinizing electricity and the electrification of energy are two important reduction pathways. Regardless of the scenario, with varying carbon pricing, electricity always wins with major expansions in the size of the electricity sector at the expense of higher emitting fuels. Decarobinzation follows, but a major point of contention has always been the shares of low emitting technology. Does wind capture all new supply? What about Nukes, and what about large hydro?

Modelling, using relative technology costs, suggests that wind is important but expensive at higher prices. Wind does come one with carbon pricing, but it comes on more in the baseline, meaning it is mostly competitive now with other generation. And with falling costs in time as more wind is installed (learning by doing lowers costs) and innovation occurs, we get more wind absent new carbon policy. Forecasts developed for NRTEE and others suggest that wind absent carbon policy will increase about 17 times between now and 2020. Modelling of carbon prices of about $60 in 2020, about the carbon price under Turning the Corner, then only increases wind deployment about 18% above forecast levels. This is then about 5% of total generation in 2020.

With carbon pricing, other generation types also supply decarbonization and meet new supply with fuel switching away from coal, including more natural gas, more hydro and more biomass. Nukes fill a gap in Ontario, but this is in the baseline given current efforts. But by 2020 it is unlikely that they will fill a role given relative costs and deployment difficulties.

So, wind is part of the solution, but so too is a portfolio of other stuff. And importantly for policy, subsidies to wind may be overcompensating some given current supply costs, and providing limited additionally given deployment regardless of carbon policy. This all may not sit well with the wind industry. But a balanced view in portfolio management pays.