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E-M:/ Michigan renewable electricity -- cheaper than wholesale electricity!



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Enviro-Mich message from David Wright <wrightd@voyager.net>
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As the Michigan legislature returns to debate restructing the electric
utility industry, major environmental provisions continue to be ignored --
including requiring utilities to generate electricity using renewable
resources (like solar and wind).  The argument is that renewable generating
sources are too expensive.  

Well, last week the cost for generating electricity using Michigan
renewable resources like solar (photovoltaics) and wind was cheaper than
buying electricity on the wholesale market.  And, if someone doesn't
believe you, tell them to check the August 2 edition of the Wall Street
Journal.  

During last week's "blackout scare," as the utilities were asking us to cut
back on electricity consumption, the wholesale price for electricity spiked
to $2.50 per kilowatt hour (kwh) in the Midwest according to the Wall
Street Journal ("Soaring Prices in the Electricity Market May Prompt State,
Federal Regulation," August 2, Wall Street Journal, page C21).  The
following wholesale electricity transactions took place last week in the
Midwest (Source: "DJ Electricity Price Indexes", Wall Street Journal page
C21, DJ-Cinergy quote):

Tuesday      24,800,000 kwh purchased at $0.53 per kwh
Wednesday    12,000,000 kwh purchased at $0.18 per kwh
Thursday      1,600,000 kwh purchased at $1.83 per kwh

So how do these wholesale market prices compare to generating electricity
from renewables?  Using Michigan's wind, Traverse City Power and Light is
producing electricity using a Vestas Wind Generator at a real cost of
$0.055 per kwh (see http://www.traverse.com/wind/ for a description of the
wind generator and economic costs).  So this source is producing
electricity with NO pollution at a cost 1/3 to 1/33 the cost of purchasing
WHOLESALE electricity last Tuesday through Thursday.  

A major Michigan investor-owned utility is currently generating electricity
using photovoltaics.  This utility claims the cost for this electricity is
approximately $0.60 per kwh (I question this figure as other
providers--outside Michigan--are producing electricity from photovoltaics
for less than half this amount).  Even so, this "expensive" source was 1/3
cheaper than purchasing WHOLESALE electricity last Thursday.  At the more
plausible rate of $0.30 per kwh this source was almost half the rate of
WHOLESALE electricity on Tuesday and 1/6 the cost of WHOLESALE electricity
on Thursday.

So, when someone tells you electricity generated using renewable sources
costs too much, tell them Michigan renewable sources are cheaper than the
wholesale price of electricity.  And if they don't believe you, tell them
to check out the August 2 edition of the Wall Street Journal and ask them
to do the calculations again.

David Wright
Policy Specialist
Michigan Environmental Council

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