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Should we build wind farms close to load or invest in transmission to access better wind resources in remote areas? A case study in the MISO region

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  • Lamy, Julian V.
  • Jaramillo, Paulina
  • Azevedo, Inês L.
  • Wiser, Ryan

Abstract

Wind speeds in remote areas are sometimes very high, but transmission costs to access these locations can be prohibitive. We present a conceptual model to estimate the economics of accessing high quality wind resources in remote areas to comply with renewable energy policy targets, and apply the model to the Midwestern grid (MISO) as a case study. We assess the goal of providing 40TWh of new wind generation while minimizing costs, and include temporal aspects of wind power (variability costs and correlation to market prices) as well as total wind power produced from different farms. We find that building wind farms in North/South Dakota (windiest states) compared to Illinois (less windy, but close to load) would only be economical if the incremental transmission costs to access them were below $360/kW of wind capacity (break-even value). Historically, the incremental transmission costs for wind development in North/South Dakota compared to in Illinois are about twice this value. However, the break-even incremental transmission cost for wind farms in Minnesota/Iowa (also windy states) is $250/kW, which is consistent with historical costs. We conclude that wind development in Minnesota/Iowa is likely more economical to meet MISO renewable targets compared to North/South Dakota or Illinois.

Suggested Citation

  • Lamy, Julian V. & Jaramillo, Paulina & Azevedo, Inês L. & Wiser, Ryan, 2016. "Should we build wind farms close to load or invest in transmission to access better wind resources in remote areas? A case study in the MISO region," Energy Policy, Elsevier, vol. 96(C), pages 341-350.
    • Handle: RePEc:eee:enepol:v:96:y:2016:i:c:p:341-350
    DOI: 10.1016/j.enpol.2016.06.011
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    References listed on IDEAS

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    8. Pechan, A., 2017. "Where do all the windmills go? Influence of the institutional setting on the spatial distribution of renewable energy installation," Energy Economics, Elsevier, vol. 65(C), pages 75-86.
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    10. Peña, Ivonne & L. Azevedo, Inês & Marcelino Ferreira, Luís António Fialho, 2017. "Lessons from wind policy in Portugal," Energy Policy, Elsevier, vol. 103(C), pages 193-202.
    11. Dorsey-Palmateer, Reid, 2020. "Transmission costs and the value of wind generation for the CREZ project," Energy Policy, Elsevier, vol. 138(C).
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