How expensive is wind energy? The answer will SHOCK you

Source: Simon Mahan, CleanEnergy • Posted: Thursday, June 5, 2014

It’s time to set the record straight. Wind energy is cheap. Really, really cheap.

For new wind farms installed last year in the Plains, prices reached $21 per megawatt hour (MWh). That’s effectively two cents per kilowatt hour ($0.021/kWh). Furthermore, the price for wind energy is stable and predictable for 20 years, unlike some electricity sources which require continual fuel inputs and are subject to price fluctuations. To put this in perspective, if these prices were locally available and you could run a house off 100% wind power, that’d be like living in Florida and paying a $23 monthly electric bill for your house – for the next 240 months. 

Avg. Household Monthly Consumption (Kilowatt Hours) Average Price (cents/Kilowatt Hours) Average Monthly Bill Monthly Bill with Cheap Wind
Alabama 1,187 11.40 $135.26 $24.92
Arkansas 1,120 9.30 $104.14 $23.53
Florida 1,081 11.42 $123.45 $22.70
Georgia 1,098 11.17 $122.73 $23.06
Kentucky 1,130 9.43 $106.54 $23.73
Louisiana 1,254 8.37 $104.99 $26.33
Mississippi 1,193 10.26 $122.49 $25.06
North Carolina 1,077 10.91 $117.45 $22.62
South Carolina 1,119 11.77 $131.64 $23.49
Tennessee 1,217 10.10 $122.98 $25.57
Virginia 1,117 11.08 $123.72 $23.45

Source: Energy Information Administration, data for 2012. “Cheap Wind” uses a price of $21/MWh from 2013.

Wind energy is really cheap and we can buy it here in the south. Alabama Power is purchasing 404 megawatts of wind power from Oklahoma and Kansas because it’s cheaper than building a new power plant in Alabama. Georgia Power is buying 250 megawatts of wind power from Oklahoma for the same reason. Southwestern Electric Power Company in Louisiana is purchasing 469 megawatts of wind power from Texas, Oklahoma and Kansas while the Tennessee Valley Authority is purchasing 1,542 megawatts from Iowa, Kansas and Illinois. But wind energy is still a small amount of each of these states’ total power, for now.

Can we get wind power for two cents per kilowatt hour in all the states in the south? Probably not…yet. Currently, there are some real physical and technical limitations to getting such a good price on wind energy in the South. And yes, there is a difference between the retail rate utilities charge their customers versus the wholesale price of a power purchase agreement. And no, a house generally can’t run 100% off wind power (without some sort of storage). But with more advanced wind turbines and more transmission lines, we can continue to bring really, really cheap wind power to the Southeast which definitely will reduce our power bills. We’re likely not far from that price point right now – estimates for wind farms in the south run somewhere in the $40-$60 per megawatt hour range. And wind power prices have been dropping steadily since 2008.

In light of the new carbon standards, cheap wind energy is a good thing since it can provide carbon-free electricity. All signs are pointing to the fact that homegrown wind power in the South is inevitable.