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Profile Costs of Wind Energy: Why are Utilities Overpaying?

By Tyler McNeal -- September 15, 2016

“Profile costs exist due to the fact that wind has bad timing; when the wind is blowing strongly the market isn’t demanding high amounts of electricity and vice-versa.”

With nearly a century of federal government oversight in electricity markets, one might expect the regulatory equivalent of a well-oiled machine, in this case the Federal Energy Regulatory Commission (FERC).

To its credit, FERC has generally given favorable treatment to market-based solutions opposed to top down control. [1] However, the push for green energy has changed how many markets behave for the worse. Far from a well-oiled regulatory machine, we have a Rube Goldberg device that produces curious outcomes. One great example is the way utilities gladly overpay for wind power.

In “Profile Costs as a Component of Integration Costs in Wind Energy”, published in Stanford University’s Comparative Advantage (Vol.…