PowerFacts
EPSA PowerFact - Facts Prove Organized Markets Encourage Renewable Energy
FACTS PROVE THAT ORGANIZED MARKETS DO ENCOURAGE RENEWABLE ENERGY
- Organized markets host 79 percent of today's installed wind generation capacity, even though these markets only include 44 percent of U.S. wind energy potential and 53 percent of U.S. electricity demand. Moreover, renewable projects account for 44 percent (142,171 MW) of generation in Independent System Operator (ISO) and Regional Transmission Organization (RTO) interconnection queues. In Texas, 47 percent (39,555 MW) of all generation proposed is wind-powered. (Increasing Renewable Resources: How ISOs and RTOs Are Helping Meet this Public Policy Objective, ISO/RTO Council, October 16, 2007)
- The Utility Wind Integration Group in conjunction with the American Public Power Association (APPA), the Edison Electric Institute and the National Rural Electric Cooperative Association said that "well functioning hour-ahead and day-ahead markets provide the best means of addressing the variability in wind plant output." (Utility Wind Integration State of the Art, Utility Wind Integration Group, May 2006)
RENEWABLES ARE THRIVING IN ORGANIZED MARKETS FOR SIMPLE AND RATIONAL REASONS
- Organized markets in ISO and RTO regions are open to all those interested in investing and building new power plants. The price transparency of these markets lets developers know the value of their power, making investment decisions easier. With large geographic scopes (MISO in the Midwest covers 920,000 square miles, PJM in the Mid-Atlantic over 160,000 square miles), ISO and RTO markets help accommodate the variable nature of renewable generation such as wind energy better than smaller vertically-owned-utility service areas.
- The 5-15 minute dispatch of these large organized markets reduces the cost of integrating wind into the power system by taking advantage of wind diversity and the ramping capability of conventional generators. Additionally, the coordination of regional transmission planning makes it possible to build the transmission needed to bring renewable energy to market.
- The Carnegie Mellon University study, "Do RTOs Promote Renewables?" sponsored by APPA incorrectly credited Renewable Portfolio Standards with the large investments in wind energy. While individual state renewable requirements are important, if they were the only drivers we would not see wind development in Texas at nearly 40,000 MW, far above the state mandate of 5,880 MW. Likewise, the collective renewables mandate for states within the MISO footprint is roughly 12,600 MW, well below the 51,000 MW of wind energy currently in the interconnection queue.
WHAT APPA'S FUNDAMENTALLY FLAWED STUDY GOT WRONG
- The study, only analyzes the wind industry through 2005, when there was roughly 8 gigawatts (GW) of wind generation capacity in the United States. Since that time total installed wind capacity in the U.S. has doubled to 16 GW by the end of 2007. The study, which was released in December 2007, does not provide any good explanation as to why they failed to include data from 2006-2007. In fact, the U.S. Department of Energy in May of 2007 released a report finding that wind capacity increased by 27 percent in 2006 alone. (Annual Report on U.S. Wind Power Installation, Cost, and Performance, U.S. Department of Energy, May 2007)
- Using arbitrary variables the report essentially excludes California, Texas and New York three of the largest renewable energy states from its calculations. These states are all in organized electric markets and are some of the largest developers of wind energy. Through the first three quarters of 2007, roughly 1,000 megawatts of wind capacity came online in Texas, which is more than total current capacity in states such as Washington, Colorado, and Oklahoma, the leaders of wind development among non-restructured states. Also, the report generally excludes the Midwest ISO from its calculations, overlooking more than 2,500 megawatts of wind capacity in the region.
CONTACT: JOHN SHELK
(202) 349-0154or 703-472-8660
EPSA is the national trade association representing competitive power suppliers, including generators and marketers. These suppliers, who account for nearly 40 percent of the installed generating capacity in the United States, provide reliable and competitively priced electricity from environmentally responsible facilities serving global power markets. EPSA seeks to bring the benefits of competition to all power customers.