In a wind farm or wind power plant, individual turbines are interconnected with a medium voltage (often 34.5 kV), power collection system and communications network. At a substation, this medium-voltage electrical current is increased in voltage with a transformer for connection to the high voltage electric power transmission system.

The surplus power produced by domestic microgenerators can, in some jurisdictions, be fed into the network and sold to the utility company, producing a retail credit for the microgenerators' owners to offset their energy costs.

Grid management

Induction generators, often used for wind power plant, require reactive power for excitation so substations used in wind-power collection systems include substantial capacitor banks for power factor correction. Different types of wind turbine generators behave differently during transmission grid disturbances, so extensive modelling of the dynamic electromechanical characteristics of a new wind farm is required by transmission system operators to ensure predictable stable behaviour during system faults. In particular, induction generators cannot support the system voltage during faults, unlike steam or hydro turbine-driven synchronous generators. Doubly-fed machines—wind turbines with solid-state converters between the turbine generator and the collector system—generally have more desirable properties for grid interconnection. Transmission systems operators will supply a wind farm developer with a grid code to specify the requirements for interconnection to the transmission grid. This will include power factor, constancy of frequency and dynamic behavior of the wind farm turbines during a system fault.

Capacity factor

Since wind speed is not constant, a wind farm's annual energy production is never as much as the sum of the generator nameplate ratings multiplied by the total hours in a year. The ratio of actual productivity in a year to this theoretical maximum is called the capacity factor. Typical capacity factors are 20–40%, with values at the upper end of the range in particularly favorable sites. For example, a 1 MW turbine with a capacity factor of 35% will not produce 8,760 MW·h in a year (1 × 24 × 365), but only 1 × 0.35 × 24 × 365 = 3,066 MW·h, averaging to 0.35 MW. Online data is available for some locations and the capacity factor can be calculated from the yearly output.

Unlike fueled generating plants, the capacity factor is limited by the inherent properties of wind. Capacity factors of other types of wind power plant are based mostly on fuel cost, with a small amount of downtime for maintenance. Nuclear plants have low incremental fuel cost, and so are run at full output and achieve a 90% capacity factor. Plants with higher fuel cost are throttled back to follow load. Gas turbine plants using natural gas as fuel may be very expensive to operate and may be run only to meet peak power demand. A gas turbine plant may have an annual capacity factor of 5–25% due to relatively high energy production cost.

According to a 2007 Stanford University study published in the Journal of Applied Meteorology and Climatology, interconnecting ten or more wind farms can allow an average of 33% of the total energy produced to be used as reliable, baseload electric power, as long as minimum criteria are met for wind speed and turbine height.

In a 2008 study released by the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy, the capacity factor achieved by the wind turbine fleet is shown to be increasing as the technology improves. The capacity factor achieved by new wind turbines in 2004 and 2005 reached 36%.

Penetration

Wind energy "penetration" refers to the fraction of energy produced by wind compared with the total available generation capacity. There is no generally accepted "maximum" level of wind penetration. The limit for a particular grid will depend on the existing generating plants, pricing mechanisms, capacity for storage or demand management, and other factors. An interconnected electricity grid will already include reserve generating and transmission capacity to allow for equipment failures; this reserve capacity can also serve to regulate for the varying power generation by wind power plants. Studies have indicated that 20% of the total electrical energy consumption may be incorporated with minimal difficulty. These studies have been for locations with geographically dispersed wind farms, some degree of dispatchable energy, or hydropower with storage capacity, demand management, and interconnection to a large grid area export of electricity when needed. Beyond this level, there are few technical limits, but the economic implications become more significant. Electrical utilities continue to study the effects of large (20% or more) scale penetration of wind generation on system stability and economics.

At present, a few grid systems have penetration of wind energy above 5%: Denmark (values over 19%), Spain and Portugal (values over 11%), Germany and the Republic of Ireland (values over 6%). For instance, in the morning hours of 8 November 2009, wind energy produced covered more than half the electricity demand in Spain, setting a new record, and without problems for the network.

The Danish grid is heavily interconnected to the European electrical grid, and it has solved grid management problems by exporting almost half of its wind power to Norway. The correlation between electricity export and wind power production is very strong.

Intermittency and penetration limits

Electricity generated from wind power plant can be highly variable at several different timescales: from hour to hour, daily, and seasonally. Annual variation also exists, but is not as significant. Related to variability is the short-term (hourly or daily) predictability of wind plant output. Like other electricity sources, wind energy must be "scheduled". Wind power forecasting methods are used, but predictability of wind plant output remains low for short-term operation.

Because instantaneous electrical generation and consumption must remain in balance to maintain grid stability, this variability can present substantial challenges to incorporating large amounts of wind power into a grid system. Intermittency and the non-dispatchable nature of wind energy production can raise costs for regulation, incremental operating reserve, and (at high penetration levels) could require an increase in the already existing energy demand management, load shedding, or storage solutions or system interconnection with HVDC cables. At low levels of wind penetration, fluctuations in load and allowance for failure of large generating units requires reserve capacity that can also regulate for variability of wind generation. Wind power can be replaced by other power stations during low wind periods. Transmission networks must already cope with outages of generation plant and daily changes in electrical demand. Systems with large wind capacity components may need more spinning reserve (plants operating at less than full load).

Pumped-storage hydroelectricity or other forms of grid energy storage can store energy developed by high-wind periods and release it when needed. Stored energy increases the economic value of wind energy since it can be shifted to displace higher cost generation during peak demand periods. The potential revenue from this arbitrage can offset the cost and losses of storage; the cost of storage may add 25% to the cost of any wind energy stored, but it is not envisaged that this would apply to a large proportion of wind energy generated. The 2 GW Dinorwig pumped storage plant in Wales evens out electrical demand peaks, and allows base-load suppliers to run their plant more efficiently. Although pumped storage power systems are only about 75% efficient, and have high installation costs, their low running costs and ability to reduce the required electrical base-load can save both fuel and total electrical generation costs.

In particular geographic regions, peak wind speeds may not coincide with peak demand for electrical power. In the US states of California and Texas, for example, hot days in summer may have low wind speed and high electrical demand due to air conditioning. Some utilities subsidize the purchase of geothermal heat pumps by their customers, to reduce electricity demand during the summer months by making air conditioning up to 70% more efficient; widespread adoption of this technology would better match electricity demand to wind availability in areas with hot summers and low summer winds. Another option is to interconnect widely dispersed geographic areas with an HVDC "Super grid". In the USA it is estimated that to upgrade the transmission system to take in planned or potential renewables would cost at least $60 billion. Total annual US power consumption in 2006 was 4 thousand billion kW·h. Over an asset life of 40 years and low cost utility investment grade funding, the cost of $60 billion investment would be about 5% p.a. (i.e. $3 billion p.a.) Dividing by total power used gives an increased unit cost of around $3,000,000,000 × 100 / 4,000 × 1 exp9 = 0.075 cent/kW·h.

In the UK, demand for electricity is higher in winter than in summer, and so are wind speeds. Solar power tends to be complementary to wind. On daily to weekly timescales, high pressure areas tend to bring clear skies and low surface winds, whereas low pressure areas tend to be windier and cloudier. On seasonal timescales, solar energy typically peaks in summer, whereas in many areas wind energy is lower in summer and higher in winter. Thus the intermittencies of wind and solar power tend to cancel each other somewhat. A demonstration project at the Massachusetts Maritime Academy shows the effect. The Institute for Solar Energy Supply Technology of the University of Kassel pilot-tested a combined power plant linking solar, wind, biogas and hydrostorage to provide load-following power around the clock, entirely from renewable sources.

A report from Denmark noted that their wind power network was without power for 54 days during 2002. Wind power advocates argue that these periods of low wind can be dealt with by simply restarting existing power stations that have been held in readiness or interlinking with HVDC. Electrical grids with slow-responding thermal power plants and without ties to networks with hydroelectric generation may have to limit the use of wind power.

Three reports on the wind variability in the UK issued in 2009, generally agree that variability of wind needs to be taken into account, but it does not make the grid unmanageable; and the additional costs, which are modest, can be quantified.

A 2006 International Energy Agency forum presented costs for managing intermittency as a function of wind-energy's share of total capacity for several countries, as shown:

Increase in system operation costs, Euros per MW·h, for 10% and 20% wind share

	10%	20%
Germany	2.5	3.2
Denmark	0.4	0.8
Finland	0.3	1.5
Norway	0.1	0.3
Sweden	0.3	0.7

Capacity credit and fuel saving

Many commentators concentrate on whether or not wind has any "capacity credit" without defining what they mean by this and its relevance. Wind does have a capacity credit, using a widely accepted and meaningful definition, equal to about 20% of its rated output (but this figure varies depending on actual circumstances). This means that reserve capacity on a system equal in MW to 20% of added wind could be retired when such wind is added without affecting system security or robustness. But the precise value is irrelevant since the main value of wind (in the UK, worth 5 times the capacity credit value) is its fuel and CO2 savings.