Monday, March 10, 2008

“Virtual wind”

Delmarva Power claims that it will be able to buy an equivalent amount of electricity from onshore wind. The bids are due today, which means we should be expecting to hear from the company about how it can buy renewable energy for less than the Bluewater Wind PPA. There are several reasons to doubt this claim.
First, onshore wind farms east of Texas tend to be smaller and less productive. Delmarva would have to put together power from a number of sources and move the electricity from hundreds of miles away, raising transmission costs. This will be particularly difficult during periods of peak demand, when the grid will be congested.
Second, there isn’t that much onshore wind power that isn’t being sold, and demand for renewable energy will continue to climb as more states ramp up their renewable energy portfolio standards.
Third, shorter term purchases of renewable energy will not provide the long term price stability that the Bluewater PPA will.
Fourth, using tools like renewable energy credits (RECs) will do little but help subsidize the construction or operations of wind power projects elsewhere. This is what
Hunter Armistead, the head of North American Operations for Babcock & Brown, calls “virtual wind.”
Fifth, buying renewable energy from hundreds of miles away will do little to reduce the demand for dirty power generation here in Delaware.
If Delmarva Power wants to buy more renewable energy, the company is free to do so. But it's worth noting that the company did not buy renewable energy in
its recent round of purchases, which saw the price it pays go up 15 percent.

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