Wind to Save $7.2 Billion in New England

A recent study on the impact of the offshore wind project off Cape Cod says that the project will save electricity buyers in New England $7.2 billion over the next 25 years. I have blogged about this project in the past here and here.


Electricity prices in most wholesale markets, including New England (and Ontario), are set hourly, based on bids submitted by various generators. The price in the hour is set by the highest bid that will allow enough power to be produced to meet the demand. This aspect of electricity markets means that the price is set by the highest cost producer at a given time. This is almost always the fossil fuel producer, because they have to pay for fuel. Wind, waterpower, or even nuclear, by contrast, have almost no incremental cost, and so they submit bids that are close to zero. That means that they will reduce the average price of electricity in the market. What is striking about this study is the extent of the savings. $7.2 billion is serious money.

The impact of new wind contracts, as well as nuclear refurbishments and reduction in demand has had a dramatic impact on electricity prices in the wholesale market in Ontario. When my firm built its first turbine, the average wholesale price in the market was 5-6 cents/kWh. Today, it struggles to get above 2 cents. New generation capacity,that has low marginal cost to operate, like wind, reduces the price of electricity. And it reduces carbon emissions.

Saving money while reducing the climate threat – a winning combination.

Leave a Reply