Fact check: Exelon’s faulty math (and logic) on wind’s consumer benefits

Investor-owned utility Exelon continued its attacks on wind energy in a recent speech at a conference organized by the Nuclear Energy Institute. In a trade press article about the speech, Exelon was quoted as saying that its nuclear power plants experience negative electricity market prices about 14% of the time.

The first and biggest problem with that claim is that it’s not true. Over two years’ worth of data from the MISO and PJM utility system operators, as compiled by Ventyx Velocity Suite, show that Exelon’s nuclear plants have faced negative prices about 1% of the time over the last two years, with two plants experiencing negative prices about 2% of the time.

Second, it is likely that at least some of those negative price instances were caused by the nuclear power plants themselves.

Third, these exceedingly rare and localized instances of negative electricity prices are likely to disappear in the near future. Instances of negative prices in Texas are down 60% this year from the same period last year and are expected to approach zero by the end of this year, thanks to the use of more efficient grid operating practices and the completion of long-needed grid upgrades. Planned grid upgrades in the Midwest are expected to greatly reduce or eliminate negative price occurrences in the near future, by similarly allowing more low-cost energy to reach the consumers who want it. Regardless, these rare and isolated instances don't harm consumers.

As AWEA and others have explained before, it is exceedingly rare for wind energy to set the market price in electricity markets. As a result, the claim that the wind production tax credit is having a significant impact on electricity markets is simply false, as the only time the production tax credit is reflected in electricity market prices is when wind energy is setting the market price.

What is true is that wind energy drives consumers’ electricity prices down by displacing output from more expensive power plants, which are almost always the least efficient fossil-fired power plants. This massive benefit for consumers and the environment is why the public overwhelmingly supports greater use of wind energy, and we are not at all apologetic about displacing higher-cost sources of energy. In addition, zero fuel cost wind energy protects consumers from fluctuations in the price of other fuels, much like a fixed rate mortgage protects homeowners from variations in interest rates. Last month, Synapse Energy Economics completed a report that found that doubling wind energy use beyond current standards in PJM would save consumers $6.9 billion on net every year by displacing higher-cost sources of energy.

Exelon is attempting to confuse the public by conflating this large and widespread benefit of wind energy, which is due to wind’s zero fuel cost and occurs regardless of whether a wind project is receiving the production tax credit, with the exceedingly rare and localized instances of negative prices. Fortunately, reporters and other experts are catching onto this sleight of hand.

In fact, Exelon’s CEO stumbled across this inconvenient fact in his speech, attempting to explain away wind’s beneficial impact on electricity markets by arguing (apparently without any evidence) that “It's not that the renewables are cheaper than any other generating source in the stack.” That claim was just as false as his 14% number.

Related articles:

Georgia Power to acquire 250 MW of wind; utility underscores strategy of portfolio diversity, April 29, 2013
Buffalo Dunes Wind Project: A lesson in export, affordability, and transmission, April 23, 2013
LBNL report: Low natural gas prices haven't detracted from wind's hedge appeal, March 11, 2013
U.S. electric utilities flock to lower-priced wind power, February 20, 2013
AWEA honors Alabama Power for using wind power to save dollars for Southeastern customers, December 3, 2012
Opinion: Wind energy delivers good value for Montana customers, November 26, 2012
First Wind's Bull Hill project now on line, highlights wind's affordability, November 20, 2012
Fact check: Exelon-funded report inflates wind integration costs, November 2, 2012
Alabama Power 'doubles down' on wind, October 9, 2012
IEA report finds cost of wind generation dropping as technology improves, June 7, 2012
WINDPOWER 2012 Update: Transmission for wind in western U.S.: Lower cost, lower variability, June 5, 2012
New study: Wind power can save Midwestern consumers between $3 billion and $9.5 billion annually by 2020, May 23, 2012
PTC, wind power bring cost savings to Iowa utility customers, May 10, 2012
Fact check: Lomborg lacking on wind's economics, emissions reductions, March 23, 2012
Mich. Public Service Commission: Renewable energy cheaper than coal, March 2, 2012
Fact check: American Enterprise Institute FAIL on study of wind costs, February 29, 2012
More savings for ratepayers in Southeast as Louisiana utility ups wind purchases, January 26, 2012
Southeast sees consumer savings, jobs from wind, but tax credit extension needed, January 10, 2012
Is wind power holding electricity costs down?, January 3, 2012


Stay informed

Take Action

Subscribe to the American Clean Power blog and receive the latest renewable energy news, policy updates, and opportunities to get involved.