Wind Energy FAQs: GHG Emissions and Power Prices

Greenhouse Gas emissions and Power Prices (2005-2020)

The Trump Administration has generally opposed federal mandates to reduce power sector GHGs emissions mainly because of the significant cost which it claims this will entail.

To check this, it is necessary to consider how power sector emissions, and power prices, have changed over the last few years. First, electricity prices..

Power prices.   The Energy Information Administration publishes monthly data on national electricity prices. To ensure comparability, we inflation-adjusted all prices to May 2020 using CPI information from the Bureau of Labor Statistics, and include the chart as follows;

The chart shows a marked seasonality to power price fluctuations from a spring low (corresponding with minimum electrical loads) to a summer high corresponding with peak loads). Must-run renewable capacity (traditionally hydro) has also tended to decrease prices in the spring. As more and more solar comes online, its summer peak is also gradually working to reduce summer peak loads and, as a result, it is also tending to reduce summer peak prices.

The chart also shows that, on an inflation adjusted basis, power prices have been remarkably stable over the last 15 years: indeed the 2019 year-average power price (10.61 cents per kilowatt hour) is actually slightly less than the 2005 average of 10.66 c/kWh. So much for rising prices due to renewables!

Carbon emissions. The Energy Information Administration publishes monthly data on carbon dioxide emissions from the power generation sector. We have applied our own estimates and calculations in order to produce the following graph which shows annualized (i.e. for the twelve months prior to the current month) carbon dioxide emissions from the entire US power sector  – by fuel type – for the period from 2000 to end March 2020. Note this only considers carbon dioxide and not methane leakage, NOx, SOx or other greenhouse gases.

It shows that annualized US power sector emissions  fell, from a March 2008 peak of 2,552 million tonnes, to a low of 1,660 million tonnes at the end of March 2020: a 35% decrease.

Of note: the Obama Administration’s Clean Power Plan (CPP) required the power generation sector to reduce emissions by 32% by 2030 relative to 1995 levels. Power sector CO2 emissions in 2005 were 2,487 million tonnes in other words the end March 2020 figure of 1,660 million tonnes represents a 33.3% decline from 2005 levels. Nonetheless; in 2019, the Trump Administration scrapped the CPP claiming that it would be excessively expensive to implement. As we have shown, there is no indication that power prices have risen as power-sector GHGs have fallen.

The following material presents power-sector GHG emissions in different ways which may help in understanding the material.

GHGs per unit of generation. Dividing total emissions by total generation gives average emissions per unit of electricity generated in the US. As coal use has been reduced while wind and solar have been rapidly growing, these have declined sharply. The following chart shows a steady decline from 0.638 tonnes per megawatt hour (t/MWh) in January 2002 to a low in March 2020 of 0.403 t/MWh which is equivalent to 403 kilograms per megawatt hour (kg/MWh) or 403 grams per kilowatt hour (g/kWh).

Also shown on this chart are average emissions from gas-fired generation. Over the same period, due to higher capacity factors and the replacement of older units, these have declined from a high of 524 kg/MWh to a low of 422 kg/MWh. Of particular note from this is the fact that the average CO2 emissions factor for US power generation at the end of March 2020 (403 kg/MWh) was lower than the average for gas-fired power generation (422 kg/MWh). In other words: gas emissions are now dirtier more carbon intensive than the system average.

GHGs avoided by generator type. By comparing the average emissions of each type of generator with the average emissions of the power sector as a whole (429 kg/MWh as noted in the previous graph), it is possible to get an idea of the amount of emissions avoided by each type of generator. This information is shown in the following graph,

GHGs avoided by generator type. By comparing the average emissions of each type of generator with the average emissions of the power sector as a whole (429 kg/MWh as noted in the previous graph), it is possible to get an idea of the amount of emissions avoided by each type of generator. This information is shown in the following graph,

The previous chart shows that as system wide emissions approach the average for the gas-fired generation fleet, the emissions avoided by gas-fired plant – relative to the system average – fall towards zero.  Indeed, emissions avoided by gas have never been more than hydro, were overtaken by wind in January 2016 and by solar in August 2018.

It demonstrates that over the period since 2005, inflation-adjusted electricity prices have been remarkably stable fluctuating from a low of 9.57 c/KWh in January 2005 to a high of 12.03 c/KWh in July 2008 and thereafter remaining largely unchanged from 2012 to the present day.

And from this data, it is reasonably clear that reducing power-system GHGs (and increasing the use of wind and solar) has not resulted in any significant change in electricity prices.

Menu