Published: 06 November 2007 06 November 2007
Wind Power Reduces Electricity Prices
Financial support for wind power, which is in many regions still necessary, is often the subject of disputes between the renewables branch and consumer associations. Now, new studies show that wind energy is actually reducing electricity prices and thus helps consumers to get cheaper electricity.
By Stefan Hantsch, CEO of the Austrian Wind Energy Association ‘IG Windkraft'
‘If you consider the costs of supporting electricity production from renewable energy sources, don't forget their price-reducing effects to the international electricity prices.' That was one statement made by Dr Sven Bode from the German Arrhenius Institute and author of a wind power study for the Hamburger Weltwirtschaftsinstitut at the Austrian Wind Energy Symposium, which took place in October in St Pölten, Austria.
In terms of new capacity installed since 1999, wind power is (with the exception of natural gas) the most important new electricity source in Europe. Last year natural gas power plants with a capacity of 8,500MW were built. That was not much more than the 7,700MW of new wind power capacity in 2006. The European Union has set its 2020 target to triple the share of renewables, and wind power is the most promising way to meet this goal. The biggest threat to this development is the discussion about the costs of the support systems for renewable energies, for instance the German renewable act ‘EEG' or the Austrian green electricity act ‘Ökostromgesetz'.
In this situation a new perspective could help to bring a fundamental turn in the discussion. Studies from Germany and Denmark, but also from other countries like Spain, show that the price reduction caused by the additional wind power in the international markets induces a cost reduction that either decreases the extra costs of wind power dramatically, or even causes a positive effect. The different studies show a compensation for the costs of supporting wind power up to a factor of four. For instance, the yearly costs of supporting the 980MW of wind power, which are currently installed in Austria and supported by the ‘Ökostromgesetz', are between 2 and 5 euro per family. The price-reducing effects per 1,000MW wind, on the other hand, are between 2 and 9 euro according to the studies. Also, the German Ministry of Environment states in its evaluation of the EEG that the additional costs of supporting green electricity are €3 billion per year, but that the price reduction is some €5 billion.
Thus, when the European member states negotiate the ‘target sharing' for the 2020 goals during the next few months, they have to have the new message in mind: ‘Wind power reduces electricity prices'.