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Cash Crop on the Wind Farm:

A New Mexico Case Study of the Cost, Price, and Value of Wind-Generated Electricity

Prepared for presentation at the
North American Energy Summit Western Governors' Association
Albuquerque, New Mexico, April 15-16, 2004

By
Arjun Makhijani, Ph.D. President, Institute for Energy and Environmental Research
Peter Bickel, Ph.D. Professor of Statistics, University of California, Berkeley
Aiyou Chen Graduate Student, University of California, Berkeley
Brice Smith, Ph.D. Project Scientist, Institute for Energy and Environmental Research

Full Report [PDF, 1.7MB, 73 pages] | Slide Presentation [PDF, 152kB, 19 slides]

Table of Contents

Preface

Main Findings and Recommendations

Chapter 1: The Wind Energy Resource: An Introduction

Chapter 2: Wind Electricity Costs and Present Prices
A. Assessing the cost of wind-generated electricity - general considerations
B. Grid Integration Costs
C. Current Wind-generated Electricity Pricing: Avoided Cost

Chapter 3: Wind-Generated Electricity - A Model for a Spot-Market Contract
A. Evaluating the Degree of Market Development
B. The Unpredictability Discount
C. Credit for wind capacity

Chapter 4: Integrating wind energy into a distributed grid system with fuel cells and purchased power
A. Reduction of greenhouse gas emissions
B. A distributed grid example
C. Displacement of natural gas for use in transportation

Chapter 5: Wind Energy and Natural Gas

Appendix A: Assessment of the Cost of Intermittent Wind Output Using Spot-Market Prices
A. Optimal Sale Policy of Wind energy Output for a Future Time Period (Day-ahead, hour-ahead)
B. Autoregressive Models for Output
C. Example: Sale Prediction for April 2000 at New Mexico site

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April 15, 2004