The Cape Wind offshore wind project will reduce wholesale electricity prices for the New England region by $7.2 billion over 25 years, finds a new report published by economic consulting firm Charles River Associates.
The report shows that ISO New England, the electric grid operator, first dispatches electric generating units with the lowest-cost fuel. Because Cape Wind's fuel – wind – is zero cost, the report states that Cape Wind will displace higher-priced and fossil-fueled units, thus resulting in an average savings of $286 million per year in New England.
The increase in price suppression was attributed primarily to an increase in power-plant retirements and a larger price difference between natural gas and fuel oil, the report notes.
Price suppression in wholesale electric markets that occurs as a result of wind power projects has been documented in Europe and in several U.S. power markets. According to Charles River Associates, price suppression from wind power was noted in the 2009 report, which stated, ‘All of the wind resource potential could provide downward pressure on the marginal prices for energy within the New England electricity market…This price pressure would ultimately benefit New England consumers.’
Cape Wind is a 468 MW offshore wind farm proposed for Nantucket Sound. The project has secured federal and state approvals, as well as a lease from the federal government.
