In the preceding sections, we provided estimates of emissions savings from wind power in Texas, California and the Upper Midwest. Our reduced form approach leverages the exogenous variation in hourly wind production to identify the impact of wind power on system-wide emissions. Looking to the future, accommodation of wind onto the grid will become an increasingly important issue, as wind was the second largest new source of installed capacity in the US in 2008 and 2009. This paper has provided strong evidence that the emissions savings corresponding to this growth in wind power will vary substantially depending on the fuel source displaced by wind. In particular, the share of coal in the existing generation mix strongly influences emissions savings from wind. This suggests that there may be benefits
to adjusting the existing Production Tax Credits to reflect the regional emission savings (or a proxy thereof) from a MWh of wind power.
Based on current trends, several competing forces will influence emissions savings from wind power in the future. First, gas is the leading source of new generation capacity in the US, due to decreasing fuel costs relative to coal as well as concern about stronger EPA regulation of coal plants. This would tend to increase the gas offset by wind power and reduce the emission savings associated with wind (although of course electricity generation from gas itself is less emissions-intensive than coal). Second, as wind capacity grows, the ability of existing gas generation to accommodate wind power will diminish, leading to increased cycling of coal plants (as seen in ERCOT), potentially increasing emissions savings. Finally, increasing wind capacity will likely require an increase in ramping of thermal generation, as the magnitude of shifts in wind speed is amplified into larger swings in aggregate wind generation. This increased cycling of thermal generation (in magnitude and potentially frequency) may erode the emissions savings per MWh of wind power as thermal generation is utilized less efficiently to accommodate wind. While it is unclear which of these effects will win out, it is clear that the resulting emission savings of wind power will depend critically on the factors highlighted in this paper. As such, this paper provides a transparent framework for updating and refining emission savings estimates as data on wind generation in more territories and across longer time periods becomes available.