• Peer-Reviewed
Energy Policy · 2004

The economics of large-scale wind power in a carbon constrained world

Joseph F. DeCarolisand David W. Keith

The environmental impacts of fossil-fueled electricity drive interest in a cleaner electricity supply. Electricity from wind provides an alternative to conventional generation that could, in principle, be used to achieve deep reductions 450% in carbon dioxide emissions and fossil fuel use. Estimates of the average cost of generation—now roughly 4¢/kWh—do not address costs arising from the spatial distribution and intermittency of wind. The greenfield analysis presented in this paper provides an economic characterization of a wind system in which long-distance electricity transmission, storage, and gas turbines are used to supplement variable wind power output to meet a time-varying load. We find that, with somewhat optimistic assumptions about the cost of wind turbines, the use of wind to serve 50% of demand adds 1–2¢/kWh to the cost of electricity, a cost comparable to that of other large-scale low carbon technologies. Even when wind serves an infinitesimal fraction of demand, its intermittency imposes costs beyond the average cost of delivered wind power. Due to residual CO₂ emissions, compressed air storage is surprisingly uncompetitive, and there is a tradeoff between the use of wind site diversity and storage as means of managing intermittency.

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