Sunday, January 20, 2008

Understanding the Economics of Wind Power

With the General Assembly back in session, the factoids about offshore wind are flying around with renewed vigor and velocity. I've been talking with some people about how to counter the misinformation that keeps popping up like rodents in a whack-a-mole game.
But the best way to counter the nonsense is to review the fundamentals of why a long term contract for offshore wind power makes sense for Delaware. I plan to review the economic costs, risks and benefits over the next few days.
But here's an interesting point that has been buried in the reports and analyses that have piled up on my desk over the last year: The projection that the wind farm would cost $6.46 a month is based on the assumption that natural gas prices will go down, significantly, over the next four years, and stay below current prices for much longer.

That's right; the cost of wind power is based on the market working its magic and driving natural gas prices lower. Of course, some may recall that market forces didn't quite work out for us back when electric deregulation led to the now infamous 59 percent rate hike.
H.B. 6 was passed in response to that unpleasant experience. Now those who want to derail the wind power proposal are, in effect, asking that we once again trust in the market.


Anonymous Anonymous said...

Excellent idea. Will be looking forward to it.

3:27 PM, January 21, 2008  

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