Thursday, December 28, 2006

Blowing in the Wind

Today in the NY Times this article discusses some of the problems with wind energy. Particularly that it produces less power when it is hot and on hotter days people use more energy. So in order to insure that power is maintained backup generators are needed.

Electricity does not fit a conventional intro to economics model. Typically electric companies are regulated monopolies. Would we be willing to sacrifice a guarantee of electricity for lower pollution? One way to combat the problem of low production during peak demand is to alter electricity prices depending on the time of day or the amount of wind produced. I wonder if it would be feasible or if our demand for electricity is that influenced by price? In the short run probably not much, but in the long run people might find ways to adjust to these price spikes.

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