How Low Gas Prices Affect the Wind Energy Industry

A sign outside a gas station showing the price per gallon at $0.00.

Gas prices have taken a record-breaking dive that may mean just as much to wind energy as it does to consumers’ wallets.

Question: Will lower gasoline and oil prices hurt the wind energy industry?

Answer: No, absolutely not.

First, oil and gasoline are transportation fuels. But wind energy powers our electrical grid. While a few early adopters of electric vehicle and plug-in hybrid vehicle technology can take advantage of grid power for transportation, the vast majority of transportation fuel is still petroleum-based.

Second, the majority of the cost incurred by investors in a wind farm is from the actual cost of manufacturing, transporting, and erecting the wind turbines. You could say that it is a front-loaded investment with very little overhead cost to maintain for the remainder of its service life of 20-25 years. So short-term savings on petroleum are drastically reducing the overall cost to invest in wind energy.

This is dramatically improving the profit margins and attracting investment at a faster rate than usual. This lowered cost allows wind energy to compete directly with coal and natural gas as a source of electrical generation. As the cost per kilowatt-hour of wind energy continues to decline, we have seen contracts signed between utilities and wind energy power producers that are cheaper than coal and natural gas. Remember, once a wind farm is built, the fuel is free!

Walter Christmas (M.Ed.) is a wind energy technology instructor at Ecotech Institute.