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The Long-Term Hedge Value of Wind Power

Posted on 03/28/2013 by Alex Landon

Lawrence Berkeley National Lab recently released a report called “Revisiting the Long-Term Hedge Value of Wind Power in an Era of Low Natural Gas Prices.” The study compares a large sample of long-term power purchase agreement (PPA) wind prices to the cost of generating electricity from natural gas plants.  Unlike gas generators, wind turbines’ cost to produce does not depend on unpredictable fuel prices. This means that wind prices can be locked-in for long periods of time, providing a hedge against volatile natural gas prices.  The study found that wind energy is cost-effective under many natural gas forecasts and can provide value as protection against future gas price increases.

Report: http://emp.lbl.gov/publications/revisiting-long-term-hedge-value-wind-power-era-low-natural-gas-prices
Recorded webinar: https://www.youtube.com/watch?v=SeJCnx4-kZQ