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

11 June 2013 by Michael Goggin Michael Goggin

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.

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