Monday, February 11, 2008

The cost of wind

The blogger Jérôme à Paris is one of the best source of information about the cost of wind power. He both builds wind generating facilities, and also works on the financial side of the wind generating business. Hence he is exceptionally well informed about cost. Yet in the past Jérôme à Paris appears at times to have lowballed the cost of building wind generators. For example, in 2006 he claims:

"initial investments [in wind generators] are high, around 1000 $/kW. This is high because a kW of wind power produdes fewer kWh (typically, a third or a quarter as many) than a kW of coal, nuclear of gas)-fired power, due to the intermittent nature of wind. Thus the cost per kWh over the life of the plant of that investment is much higher. On the other hand, it is possible to invest small amounts as individual wind turbines are relatively cheap ($2-3M today for modern models).

Yet accordint to a press release from American Wind Energy Association, which à Paris notes, the U.S. wind energy industry installed 5,244 megawatts (MW) in 2007, while investing $9 billion while doing so. Now that comes to an investment of something over $1700 per KW, much higher than the $1000 a Paris claimed in 2006. By a Paris's own accounting the cost of wind power in Europe is even higher. He reported that in 2007, on shore wind generating facilities in Europe cost between 1200 to 1600 Euros per KW ($1745 to $2320). Off shore facilities were even higher, 2200 to 3000 Euros per KW ($3190 to 4350).

What à Paris is talking about is name plate power, or rated power. In the real world wind generators rarely produce their rated power, because the wind rarely blows as hard as the speed that would produce maximum generation. For example, if a wind generator is designed to produce its rated power at in a 20 MPH wind, it will not produce maximum power in a 10 MPH wind. Real world wind generation is rated by something called a capacity factor. The capacity factor is the average percentage of name plate power produced over time. So for example if a 2 MW generator averages producing 1 MW of power over a year, it has a capacity factor of 50%. If you install a 2.5 MW wind turbine, that sounds impressive, but if the capacity factor is 10% you are not producing much electricity for what you paid. Jérôme à Paris tells us for example, that the onshore capacity factor in Europe is 29%. He appears to be seriously fudging here. A Paris also tells us that the average wind turbine operates 2100, or 1/4th of the time. It would be impossible for a wind generator to have a capacity factor of 29% when it was only operating 25% of the time. Reports indicate that the capacity factor for Denmark is 20% and for Germany is 18%. Many British wind farms have a capacity factor of 20%, but some have capacity factors as low as 9%.

Why would à Paris fudge? The answer is simple. It takes a 30% capacity factor for a shore based wind farm to make money. Wind farms in Europe and the United States that produce power at a lower capacity factor stay in business because of government subsidies. Jérôme à Paris is in the business, and he does not want to show his business in a bad light.

A Paris also appears to fudge about off shore wind costs too. In a recent European Tribune post, à Paris claimed offshore costs ran from 2200 to 3000 Euros per KW ($3190 to 4350) Yet in a 2006 post for The Oil Drum, a Paris described and off shore oil project, he described an off shore project to building 60 wind turbines that produced 120 MWs for 378 million Euros ($550 million), which amounts $4.58. A Paris suggested but did not overtly indicated that he included the cost of interconnecting cables in his cost report. A 2007 report from Long Island power stated, "Generic estimates for European installations are expected to exceed $4,000 per kW before the inclusion of interconnection costs within a few years." Long Island power indicated that it faced a "$500 per kW premium on the North American GE turbine" over European costs. Long Island power reported its total cost would run an "estimate of $5,231 per kW (before interconnection)."

Long Island Power found that its offshore wind project, had a "green premium." It observed, "the Green Premium per MWh was calculated as the total cost per MWh of wind power versus
the total cost per MWh of the CCGT. Then to arrive at an annual dollar value we simply
multiplied the Green Premium per MWh times the number of “green” MWh’s produced by the
Project. That annual stream of dollar values was reduced to a net present value (“NPV”) in order to arrive at the NPV Green Premium. That NPV Green Premium was calculated to be $787 million. We also calculated the levelized Green Premium to be $153/MWh, or 15.3 cents per KWh, over the 20-year time horizon."

Long Island Power also indicated that its expected capacity factor was 38%. Thus LIP would be paying something like $13,766 per KW of real world generating capacity. Shortly after it received this assessment, Long Island power, canceled its off shore wind project.

15 comments:

Anonymous said...

Some additional stats from Italy: wind has an average load factor of 18-19% and a renewable energy industry report has recently estimated the cost at 1900€/Kw. The rise in prices was connected to the higher prices of turbines and delays in their delivery (up to 2 years) as well as surging compensations requests from the local authorities for the land use/landscape damaging.

Jerome a Paris said...

It's easy to pick and choose numbers to make them say what you want, but do note the following:

- average availabilities differ per country and per continent; they are generally higher in the US than in Europe;

- constructions costs/prices have increased significantly in the past 2 years from increasing commodity prices and from pricing power by suppliers that have more demand than they can cope with;

- comparing today's prices in euros to prices in dollars from 2 years ago further brings into the picture the drom of the dollar; that's no specifically a wind phenomenon.

I'm not in the wind business, I'm in the energy finance business, financing wind as well as thermal, oil&gas and, yes, nuclear. What's needed is that risks be properly understood and that revenue be sufficient to repay debt. I have zero incentive in my work to underestimate costs or to overestimate revenue, quite the opposite.

One thin I will never understand is why so many partisans of nuclear are so hostile to, or dismissive of, wind. And I say that as a Frenchman who lauds EDF's nuclear programme all the time.

Charles Barton said...

Hay Jerome, Your information is better than most other sources, but I still find some problems with it. I have been known to make mistakes too. I just cannot understand how you can have an average capacity factor of 29% when you report an average operating time of less than 6 hours a day. Things like that bother me.

Anonymous said...

It is true that the capacity factor is dependent on the country: Ireland and Scotland are 35%, Spain 25%, England 24%, Italy and Germany 18%, USA 27%. These are subject to change, like hydro, from year to year. Also in Italy we have experienced lower load factor in the last years (also in windy years) because the best sites were developed first, and now the target for new project are 1700 hours/year versus the 2500/2000 typical of the first projects. And the cost has actually nearly doubled from 1000€/Kw to 1900€/Kw. But they remain highly profitable due to massive subsides (the highest in Europe) and high electricity prices.

Jerome a Paris said...

To be honest, I don't remember writing 29% about Europe because, as you point out, it's very high (Europe is in the 20-25% range and, quite often, even below that).

So it's either a typo, a mistake, a more local number (some projects do reach that) or an confusion with some US numbers.

Charles Barton said...

It was in a table in your post. Jérôme, I did not accuse you of doing anything dishonorable. As far as I am concerned the more accurate the data I have to deal with the better. I prefer to lay things out, and let the chips fall where they may. I have have what I call the air conditioner test for energy. That test is simple, older people, especially older people with chronic health problems, need air conditioning to survive the hot summer climate. Therefore no energy scheme which does not provide the electricity to run air conditioners, or which provides electricity at a rate higher than older people can afford, passes my test. I am afraid that the European power system does not pass muster. Your business, no matter how honorably you conduct it, is part of a system that does not provide affordable electric power to older people. You know what happened in Paris during the summer of 2003. Enough said.

jerome a Paris said...

What are you talking about?

When people have no air conditioning, the electricity source that powers that non-existing airconditioning is pretty irrelevant. The problem in 2003 was certainly not electricity generation (and by the way, France, with 85% nuclear power, is probably not your target, right?)

The problem of wind intermittency is real, but easy enough to manage technically in a network, and it is.

Charles Barton said...

My target is approaches to electric power, that make it needlessly expensive, and do not take into account human needs. My approach it to note that certain modes of producing electricity, produce very little in the Summer, when there is a pressing human neeed for it.

Anonymous said...

With wind you pay a lot more for electricity of less value having no or very little capacity credit (ability to replace other power plants). Of course it can be useful for supporting the grid in windy days and saving some fuel, but here in Italy after installing three thousand turbines we have not closed a single fossil power plant.

Charles Barton said...

Wind, will never displace fossil fuel burning power plants. They have to be kept spinning all the time, for the inevitable moment when the wind falters. Thus wind is not a part of the solution to the greenhouse gas problem. "Spinning" power plants emit CO2, and when they pick up the slack from the windmills, they emit even more. Wind generated electricity is the formula for people in the coal and natural gas business. Your point is well taken.

Karen Street said...

Anonymous, where do you get your capacity factors? The figures for the UK are higher than I have seen.

I'm with those who say that we need (almost) all sources of low-GHG energy, and are not yet ready to veto wind, nuclear, solar, etc.

Charles, I don't understand your point about spinning plants emitting CO2, as the complete life-cycle GHG from wind are very low, counting any energy fed into windmills, construction, etc. It would be useful to see statistics on how much wind lowers GHG emissions though, rather than the actual emissions from a wind electron. Emissions will be lower where hydro (rather than inefficient natural gas) is the backup.

David Keith estimates that wind can be on 70% of the time, if the US grid is linked together.

Please, let's not pick and choose on the low-GHG sources of electricity, finding policy people knowledgeable on some, but not on others. Nuclear may be lower GHG emitting than wind with its backup, and cheaper today (though maybe not tomorrow), but under many circumstances, wind power makes more sense. And there's energy security--don't put all of our energy eggs in just a few baskets.

Charles Barton said...

Karen, I am not vetoing wind, but I feel that the cost and reliability issues are not fully appreciated. Ironically, wind advocates have come up with a highly centralized grid plan, that involves massive installation of hyper redundant wind generators to compensate wind's disadvantages. Even with massive and highly redundant arrays and grid links, that make wind far more expensive than nuclear power, wind is still less reliable in terms of system capacity factor than nuclear power is. Unfortunately, the reliability problem with wind is more seriously felt in the summer, when power demand is at its peak. I am open to dialoguer about this, but wind still fails the "keep Charles Barton's air conditioner running test, on the hottest days of the texas summer. Wind fails the test, even when massively overbuilt, and when connected to a massive grid. From the viewpoint of my air conditioner test, wind power is an enormous waste of money.

Do I discount all renewables? Not at all. Geothermal works in California, and probably should be expanded. ST power certainly could be a source of daytime peak power in the Southwest, provided materials costs don't get out of hand. ST with molten salt has potential as a source of base power, at least in the Southwest. This is far from proven yet. A practical implementation of the technology is still needed to judge its cost effectiveness. Again materials costs may be a killer of this solar technology, but that remains to be seen.

I have already stated that I regard solar water heating as cost effective, and think that in at least some instances solar space heating can be. Geothermal for heating and cooling (heat pump) is also cost effective, and probably in the next generation will begin to replace natural gas for space heating.

Randal Leavitt said...

The only feasible energy source for a technology based civilization is nuclear fission. This fact is so clear in makes my eyes water. Wind systems are intermittent. If you want the electric trains to run on time this is a total show stopper. Solar panels dont work in the dark, both dark nights and dark winter days. Geothermal energy has to be pumped up out of the ground using electricity. What is the point? Fusion is a pipe-dream. We live on a very unusual planet that is loaded with stored energy, stored in uranium and thorium atoms. Consequently we live in a place where such energy abundance combines with chemical abundance to give rise to life itself. Simpler celestial bodies are devoid of this excitement. It is ridiculously easy to tap into this heavy metal energy to build weatherproof energy generators for our healthy life style. We stand facing the possibility of building paradise. This prospect terrifies many people, and they want to run back into the forest to starve and fight and be sick in short, miserable lives, just like our ancestors had. Not me - I want to seize the bright future and expand life to the next level. It is time for the butterfly to emerge from the caterpillar.

Anonymous said...

www.dragonfly-windturbine.com

The Next Generation Wind Turbine!

Anonymous said...

It`s plain stupid to not use windpower and instead create massive amounts of toxic waste which will cost much more to future generations than any other source of energy.

Stop beeing stupid for your childrens sake!

Nuclear energy kills people...thousands of maintanance workers have died since mankind startet to use nuclear energy for civil purpose.
France (and Europe) seems to be a little bit more educated on that issues than Americans who still claim nuclear energy to be anywhere near green.

There are other alternatives...dragonfly windturbines is a start.
TU Delft is working on the laddermill project to use jet streams.
In Italy they are investigating kite karusells www.kitegen.com.

Another alternative...for fuel, diesel and jetfuel is bio-oil.
The breakthrough was 2008 by a German biologist. The technology to breed plancton in open pools is available. phyto plancton is valuable biomass which can be burned or oil (70%!!!) can be extrated and refined to any product that can be made out of oil...cheaper than oil drilling too and contrary to nuclear energy it is safe, clean and co2 neutral.
You can feed it to life stock...it is more healthy than sojabeans...more productive for fuel than sugarcane and burns even more emission free.
Aquacultures can be cheap now...infact the biggest prawn producer uses the open pool design from the Germans to feed its fish.
Food will be cheaper and if it is done right the poorest countries in the world would produce this renewable ressource and trade it fair!!
BioGas can produce Energy.

How does it come that all nuclear enervy supporting folks are old men?
Would it be uncool to depend on plancton products?

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