As you may know, wind energy is something I am passionate about. If you are reading this, you may already know that the address of this blog is a subset of my website on wind power. With that in mind, you can see why I am excited for a reason to post an article like this.

It appears that the utilities have had some troubles with wind energy upsetting profit margins. To make things worse for the utilities, remember this article "40x Global Energy Needs Are Blowing In the Wind".

With a potential like 40x our global needs, and awareness growing daily, how does a power company compete or at least manage this type of competition? Bloomberg has an article on the subject that is quite revealing, even if you have to read it twice to really get the message.

What this all amounts to is this: After years of getting government incentives to install windmills, operators in Europe may have become their own worst enemy, reducing the total price paid for electricity in Germany, Europe's biggest power market, by as much as 5 billion euros some years, according to a study this week by Poeyry, a Helsinki-based industry consultant.

This tidbit of information, which will hopefully begin to contradict the usual lies about the need for hefty subsidies for the wind sector, has been publicised by EWEA, the European Wind Energy Association in a report on the merit order effect (PDF). This is the name for what happens when you inject a lot of capital-intensive, low-marginal-cost supply into a marginalist price-setting market mechanism with low short term demand elasticity.

You might simplify the above by saying; To produce power from fossil fuels, you need to collect and use the fuel source which costs money. Once a wind turbine in fully installed, if you need power, all you need is wind. This means when there is wind, there is no cost of fuel to make power. If the turbines are installed in an area abundant with wind, the production of power has almost no cost. The only real cost is the upfront equipment cost. If the utilities have huge incentives, as was the case in Germany, this means the upfront cost was largely paid by a third party. If the utility didn't have to pay for the equipment and the fuel - wind - is free, then the cost to supply power is nearly 0. Having a low cost production like this is what upset the utilities earnings. Supply was high compared to demand and there was no equipment cost to factor in because of the subsidy.

The way I see it, we need the utility, but we need it for stability. I want to see wind turbines in every back yard that gets regular or steady winds. Spreading the load to the residential level like this would mean our existing infrastructure could handle the new source. This keeps the impact to the environment down as well as the cost of the system.

Keep your eye on wind power. Follow the related link for some more study information on wind power.