Moody's Investors Service: Midwest Utilities Replace Coal with Wind Power
Jairo Chung is an associate vice president in Moody's Global Infrastructure Finance Group. She joined the Utilities team in August 2013. She is responsible for a portfolio consisting of investor-owned electric and gas utilities.
Amid the uncertainty surrounding the new presidential administration's environmental policies, wind power prices in the Great Plains region are now averaging around twenty dollars per megawatt-hour. According to a new report from Moody's Investors Service, many utilities are capitalizing on this cheap wind, using it to grow rate base or replace inefficient coal-fired assets.
What's Caused Average Wind Prices to Drop So Low?
Wind turbine technology continues to advance, improving the performance and longevity of the assets. At the same time, competition among manufacturers has lowered the price of materials and installation costs. The ability to forecast wind generation patterns has also improved substantially over time, which significantly reduces risks associated with investment.
On the other side, demand for clean energy has certainly helped drive supply. As of this year, twenty-nine U.S. states have some version of a renewable portfolio standard, which requires utilities to sell a specified percentage of renewable energy.
Consumers today are generally more conscious of where their electricity comes from. New market entrants, including corporations and community choice aggregators, are buying directly from renewable generators.