Wind Energy Costs


Like the corn-to-ethanol and solar industries, the Big Wind industry basks in political correctness and political favoritism. Big Wind has grown comfortable in its dependence on federal and state governments that decide which energy industries will be winners or losers — discrimination enforced by squeezing taxpayers, rigging the tax code and regulations, such as state-mandated “must-take” provisions and renewable portfolio standards, RPS. 

 

Various Big Wind promoters maintain the cost of wind energy is competitive with other sources of energy. As shown below, this is hardly the case. They often point to power purchase agreements, PPAs, between wind turbine owners and utilities to sell at 5 to 6 c/kWh as proof of market price parity.

 

However, costs are not the same as prices. Energy costs have to do with the unsubsidized cost of producing energy. Pricing that energy is greatly influenced by the level of subsidies. If that were not the case, wind turbine owners would not be fighting so hard for various subsidies, such as extending the 2.3 c/kWh production tax credit; its pre-tax value is about 3.4 c/kWh, depending on tax rates. This credit is not trivial, as the US average grid price is about 5 c/kWh.

 

The EIA calculates the levelized cost of NEW onshore wind turbine plants placed in service in 2018, capacity factor 0.34, 30-yr life, at $86.6/MWh, including transmission costs of $3.2/MWh.

These costs include various subsidies not available, or partially available, to other sources of energy, and exclude various hidden and not-so-hidden costs. Also, the assumed 30-yr life is grossly excessive, based on European experience; and the transmission cost is understated, based on examples in this article; and the costs of standby (sufficiency) and wind energy balancing are not included. As a result, comparison with other energy sources, based on the EIA data, becomes invalid.

 

NOTE: To illustrate the EIA understatement of transmission cost: The components of the US levelized cost of energy are 58% generation, 31% distribution, 11% transmission. As wind and solar plants are added, the T&D percentages are likely to increase; the EIA assumed a transmission impact on levelized cost of 3.2/(86.6-3.2) = 3.8%, about 1/3 of 11%; the EIA gives no explanation for its low estimate.

 

http://www.eei.org/issuesandpolicy/transmission/Documents/transmission_investment.pdf

http://www.harriswilliams.com/sites/default/files/industry_reports/final%20TD.pdf

 

NOTE: To illustrate the EIA understatement of transmission cost:  If the US investment in transmission were $7,000 million in 2007 without having to integrate wind and solar energy, then $8,902 - $7,000 = $1,902 was invested to integrate wind and solar energy, almost all for wind energy. US installed wind turbine capacity was 11,575 MW at end 2006 and 16,907 MW at end 2007, for an increase of 5,332 MW, at a capital cost of about $9,598 million, i.e., the transmission cost adder is about 1,902/9,598 = 19.8%. Similar calculations for 2008 through 2012 show percentages of 16.3; 19.7; 38.8; 40.8; 33.0; the EIA assumed a transmission impact on levelized cost of 3.2/(86.6-3.2) = 3.8%; the EIA gives no explanation for its low estimate.

 

http://en.wikipedia.org/wiki/Wind_power_in_the_United_States

http://www.greentechmedia.com/articles/read/transmission-investment-sees-its-largest-boost-since-2000

http://www.eia.gov/forecasts/aeo/pdf/electricity_generation.pdf 

 

NOTE: US installed wind turbine capacity was 60,007 MW at the end of 2012, which can produce 60,007 x 8,760 x 0.32 = 168 TWh/yr, or 4.4% of US energy generation. On a global basis, wind energy’s contribution is about 3.2%. 

 

Regional Variations in Capacity Factor: Based on a sub-sample of wind turbine projects built from 2007 through 2011, the regional average CFs in 2012 were:

 

- Central States..........0.36

- Great Lakes..............0.28

- Northeast.................0.24

- Southeast.................0.23  

 

These CFs reflect the quality of the wind resource. See page VII of URL.

 

2012 CFs for NEW projects commissioned in 2010 and 2011 were: 

 

- Central States...........0.370

- Great Lakes...............0.280

- West Coast................0.260 

- Northeast..................0.252 

- Southeast..................0.247 

 

See page 48 of URL. 

http://www1.eere.energy.gov/wind/pdfs/2012_wind_technologies_market_report.pdf 

 

Project capital costs are about $2,000/kW in the Central States; about $2,600/kW on 2,500-ft-high ridgelines in New England; and about $4,500/kW offshore. If O&M/MWh in the Central States is set at 1, ridge line New England is about 2, and offshore about 3.

 

As a result of a realistic 20-year life, instead of 30 years assumed by the EIA; a realistic CF of 0.25, instead of 0.33, or better, claimed to get permits; the higher O&M/MWh; the higher capital cost/MW, New England wind energy costs are at least 2 times Central States. Similar reasoning applies to offshore energy costs being at least 3 - 4 times Central States.

 

http://www.eia.gov/forecasts/aeo/pdf/electricity_generation.pdf

http://theenergycollective.com/willem-post/169521/wind-turbine-energy-capacity-less-estimated

 

A MORE REALISTIC COST OF WIND ENERGY

 

The below data are based on extracts from a report titled “The Hidden Costs of Wind Electricity”, December 2012, authored by Dr. Taylor and Tom Tanton. 

 

http://www.atinstitute.org/wp-content/uploads/2012/12/Hidden-Cost.pdf

http://eelegal.org/wp-content/uploads/2013/09/Hidden-Cost.pdf 

 

Assuming a realistic 20-year life of a wind turbine increases the levelized cost to $93/MWh; the EIA uses 30 years, the NREL uses 20 years. No wind turbine manufacturer claims 30 years. Some claim 25 years, others 20 years, but European experience indicates 20 years or less.

 

After backing out the effect of accelerated depreciation for wind turbine plants, the levelized cost increases to $101/MWh. Accelerated depreciation rules, just for wind turbines, allow the entire investment to be written off in 5 years, to make tax-shelter spreadsheets look good. The 5-yr write-off period is unheard of in the rest of the utility industry.

 

Adding the costs of:

 

- increased frequency of start/stop operation

- keeping gas and coal plants available in cold standby mode

- keeping some gas plants in synchronous (3,600 rpm) standby mode

- operating more hours in part-load-ramping mode (extra Btu/kWh, extra CO2/kWh)

 

to balance the variable wind energy, adds $17/MWh for natural gas, and $55/MWh for coal, and reduces the CO2 emission reduction effectiveness of wind energy, as more and more wind energy is added to the grid.


NOTE: In synchronous (3,600 rpm) standby mode (high-speed idling, 24/7/365, no or minimal energy sent to the grid), the fuel consumption is 6 to 8 percent of rated fuel consumption.

 

Extra balancing NG fuel adds $6.00/MWh, extra balancing coal fuel adds $9.00/MWh 

 

Transmission system investments to gather energy from the wind turbines and transmit it from less populated areas, via HVDC and HVAC lines, to population centers adds $27/MWh.  

 

Thus, the total levelized cost of wind energy averages $151/MWh with NG back-up/balancing and $192/MWh with coal back-up/balancing.

 

Absent economically-viable, utility-scale, energy storage, variable/intermittent, non-dispatchable wind energy cannot exist on the grid, unless balanced by dispatchable coal, gas and hydro plants. For that reason, any levelized costs should be stated as a combination of:

 

- wind energy balanced by coal energy 

- wind energy balanced by gas energy 

- wind energy balanced by hydro energy

 

System costs can be determined by the weighted average cost of the combinations, as proposed in the Taylor/Tanton report. 

 

NOTE: Levelized costs are the net present value of the total cost of new construction (including finance charges during and after construction), maintenance, and operation of a generating plant over its lifetime, expressed in dollars per unit of output, i.e. dollars/MWh. They are used to compare various generating sources to see which sources are the most cost-effective when constructing new plants.

 

GROSSLY EXCESSIVE WIND ENERGY SUBSIDIES

 

The Taylor/Tanton report may or may not overstate, but it certainly performs a useful purpose to attract attention to the heavily-subsidized, wind energy boondoggle, and the inane crowing about wind energy being at grid parity, and the inane crowing about it lowering grid electric rates (BTW, not the rates of rate payers), whereas, in fact, that is merely so, because of the various subsidies, such as: 

 

- accelerated depreciation to write off the entire project in 5 years, 50% in the first year, just for wind turbines, plus 

- the 2.3 c/kWh production tax credit, PTC, for 10 years, or 

- in lieu of the PTC, receive a 30% investment tax credit, ITC, or 

- in lieu of the ITC, receive a 30% CASH GRANT at commissioning of the project, in case the wind turbine owner claims he has no taxes due against which to apply the ITC; “1603c clause of ARRA”, plus other 

- government grants, low-cost loans, and loan guarantees, plus 

- the socializing, via rate schedules, of various other costs that are mostly hidden/not-easily-identified, as explained in detail in the ATI report by George Taylor, Ph.D. and Thomas Tanton, each with decades of experience analyzing the economics of energy systems.

http://eelegal.org/wp-content/uploads/2013/09/Hidden-Cost.pdf

 

With enough money, even pigs can be made to fly, and even wind energy can be made to appear at grid parity, with much of the costs foisted off onto the public via the rate schedules, the tax code and government hand-outs..

 

GRID LEVEL COSTS, PER OECD REPORT

 

The historic cost data of wind turbine plants in various geographical areas are well known. This is not the case with grid level costs, except in countries that produce 10 to 20 percent of their annual energy with wind turbines.

 

In Europe, several countries, such as Denmark, Spain, Ireland, Portugal, etc., produced 10 to 20 percent of their energy with wind turbines at least 10 years ago. As their build-outs took place, more became known regarding grid level costs. It appears these grid level costs are significantly greater than claimed by various wind energy promoters.

 

The below Organisation of Economic Co-operation and Development, OECD, study quantified the levelized costs of the grid level effects of variable energy, such as wind and solar, on the grid. It includes three categories of costs:

 

1) Balancing: 

 

Wind energy balancing by cycling generating units requiring: 

 

- increased cold starts and stops. 

- increased warm starts and stops. 

- increased synchronous operation (3,600 rpm) in regulating mode

- increased ramping up and down while operating at part-load. 

 

All four cause increased fuel consumption and increased wear and tear of equipment, just as would be the case with a car. 

 

2) Grid Level:

 

- the costs of connecting wind turbines to grid. 

- grid reinforcement and extension. 

- the cost of energy losses to transmit the energy from wind turbines in remote locations to end users in population centers; such losses will be significant if transmitting from west of Chicago to the East Coast, as envisioned by the NREL.

http://theenergycollective.com/willem-post/169521/wind-turbine-energy-capacity-less-estimated

 

3) System Level:

 

- the costs of back-up (adequacy), i.e., keeping almost all EXISTING generators fueled, staffed, and in good working order to provide energy when wind energy is minimal, about 30% of the hours of the year in NE, about 10 - 15% of the hours of the year west of Chicago. 

- the costs of capacity payments, to offset the hit to the economics of existing generators, as these units will be producing less kWh/yr, but still are needed when wind energy is minimal. With less kwh/yr produced, the cost of each kwh must increase to cover fixed costs, but that cost will often exceed the grid spot price!

 

NOTE: Here is an article regarding the intermittency of wind energy in the UK, which concludes, absent economically-viable, utility-scale energy storage (not yet invented), nearly all existing generators are needed to provide continuous electric service, as required by a modern society, no matter how many wind turbines are built in the UK.

http://www.scientific-alliance.org/sites/default/files/Partington%20wind%20generation%20analysis.pdf

 

In the US, the costs of the above three items for onshore IWTs are minimal, about $5/MWh, or less, when the annual wind energy on the grid is only a few percent, because most grids have some spare balancing and transmission capacity to absorb variable wind energy. As the wind energy percentage nears 3 - 5% (the current US condition), the spare capacity of most grids is used up.

 

Because the costs are minimal, and because there is so much “noise” in the data, and because adequate, real-time, 1/4-hour performance data is usually lacking, various claims regarding wind energy operational and cost impacts on the grid, and CO2 emission reduction effectiveness, are made that cannot be verified; an ideal situation for IWT promoters to spin their deceptive yarns.

 

The costs of the above three items are about $7.5/MWh at 5%, about $16.30/MWh at 10%, and about 19.84/MWh at 30%, according to the OECD study. 

 

This is significantly greater than the about $5/MWh usually claimed by IWT promoters, but those claims are for when the wind energy percent is only a few percent, as is the case in most of the US. See page 8 of below URL. Corresponding costs for offshore wind turbine plants would be significantly greater.

 

These costs are a significant part of the US annual average grid price of about $50/MWh. Mostly, they are "socialized", i.e., charged to rate payers, not to wind turbine owners. As a result, wind turbine owners, with help of other subsidies, such as the $23/MWh production tax credit, and accelerated depreciation schedules just for wind turbines, can underbid other low-cost producers, causing them to sell less energy and become less viable over time, i.e., future investors would be less willing to invest in such producers, unless compensated with "capacity payments", that also will be charged to rate payers, not wind turbine owners; a free ride all-around.

http://www.oecd-nea.org/ndd/reports/2012/system-effects-exec-sum.pdf

 

COMPARISON OF COSTS OF OECD AND TAYLOR/TANTON REPORTS

 

The OECD report states higher estimated costs for Europe than the US, even though Norway and Sweden are doing wind energy balancing with hydro plants at low cost for Denmark, the Netherlands, Germany and the UK; all these countries have robust HVDC and HVAC interconnections. Spain, largely an island grid, is using pumped hydro and gas turbines for balancing (more costly than hydro) and Ireland, largely an island grid, is using gas turbines for balancing (more costly than hydro).

 

The OECD estimated costs for Europe are higher than US costs, because Europe has decades of real-time, grid operations data, and decades of energy systems investment data to get to high levels of annual wind energy, such as 10 to 20 percent, i.e., the OECD study had no need for "modeling with supercomputers" or engage in estimating future costs, a la NREL studies. 

 

NREL STUDY OF WESTERN INTERCONNECTION

 

The NREL study titled “The Western Wind and Solar Integration Study Phase 2”, issued in 2012, analyzes the effects of having a total of 33% wind and solar annual energy on the grid by simulating grid operations on a sub-hourly basis using computerized modeling. 

 

The Western Electricity Coordinating Council, WECC, a.k.a. Western Interconnection, including the western states of the United States, the two western provinces of Canada and a small part of Mexico, had 885,000 GWh of energy on its grid in 2012, of which wind energy was about 38,055 GWh, or about 4.3%, and hydro energy was about 170,000 GWh, or about 20%. 

 

At that low annual wind energy percentage most grids have enough spare part-load-ramping capacity to balance wind energy with only minor impacts on the efficiency of fossil-fueled generators and on their CO2 emissions, especially if much of the wind energy balancing is performed by hydro plants.

http://www.wecc.biz/Planning/PerformanceAnalysis/Documents/2012_WECC_SOTI_Report.pdf

 

The NREL extrapolating from the grid conditions at 4.3% annual wind energy to hypothetical grid conditions at 33% annual wind energy, 0.33 x 885,000 = 292,050 GWh/yr, with computerized modeling, and then make pronouncements regarding capital costs, operating costs, CO2 emission reductions, and rate payer cost savings, is beyond credible. This may serve the PR purposes of the AWEA, et al., to sway the public and legislatures, and to keep subsidies flowing, but will be of little use to grid operators. The NREL makes the claim capital costs for transmission system build-outs to go from 4.3% to 33% wind energy would be minor. This appears to be wholly unrealistic. See next section.

 

Here is a “Fast Facts” memo from the California ISO, CAISO, which indicates its grid's flexible generator capacity is nowhere near where it needs to be to accommodate increasing wind and solar energy on the grid. Any capital investment costs for increased flexible generator capacity, transmission system build-outs, and associated O&M cost increases, will be charged to rate payers via rate schedules and fees on electric bills, not to wind turbine owners.

http://www.caiso.com/Documents/FlexibleResourcesHelpRenewables_FastFacts.pdf

 

A much better approach would have been using the many years of existing grid operations data, emissions data, and cost data of the European countries that already have 15 to 20 percent of annual wind energy on their grids, and learn about their costs and CO2 emissions.

http://www.nrel.gov/docs/fy13osti/55588.pdf

 

The tendency in the US has been to underestimate wind energy costs to increase its political/economic attractiveness. As a result, the OECD report indicates lesser costs for wind energy than appears to be the case, based on the Taylor/Tanton report.

 

NOTE: Due to water supply conditions and reservoir storage capacities, the output of hydro plants cannot be augmented to increase energy production, as with a thermal plants. To maximize the capacity of wind energy balancing, the hydro plants would need to be centrally controlled.

 

NOTE: Denmark generated about 28% of its total energy with onshore and offshore wind turbines in 2012, but it uses the hydro plants of Norway and Sweden to balance almost all of it, because its domestic balancing capacity has been for some years, and still is, insufficient. Denmark usually generates wind energy at night when demand is low, i.e., it is exported (at low cost) to Norway and Sweden, according to energy flows over international connections. BTW, Denmark has the highest household electric rates in Europe, about 30.0 eurocent/kWh, including all fees and taxes; Germany is a close second, about 29.2 eurocent/kWh.

http://epp.eurostat.ec.europa.eu/statistics_explained/index.php?title=File:Half-yearly_electricity_and_gas_prices.png&filetimestamp=20131106132508


Computerized Modeling is Subjective: Computerized modeling usually is highly subjective, as are cost estimates, especially if performed by pro-RE people in government trying to “prove” the positive aspects of their RE programs.

 

The IPCC used its methods to “prove” global warming, but its computerized modeling was found to be flawed.

 

CAPITAL COSTS OF TRANSMISSION SYSTEM BUILD-OUTS

 

Below are some examples of the estimated capital costs of transmission system build-outs to accommodate wind turbines. The costs are much greater than claimed by the NREL in its various studies, so as to make wind energy look more competitive, and not to arouse the public, as any costs of the transmission system build-outs will be “socialized”, i.e., charged to rate payers, not to wind turbine owners. 

 

New England Example No.1: The ISO-NE performed a study of having 23% of energy delivered to the NE grid from wind by 2030. 

 

- Wind turbine plants, roads, tie-ins to transmission systems 7,500 MW, onshore x $2,600,000/MW + 4,500 MW offshore x $3,600,000/MW = $36 billion; 61.9% of costs.

 

- HVDC onshore overlay + HVDC offshore transmission systems + modifications to existing HVAC systems, per ISO-NE, $19 to $25 billion, say $22 billion, or 22000/12000 = $1.83 million/MW of wind turbines; 38.1% of costs. 

http://www.nescoe.com/uploads/2030_power_system_study_rev.pdf

 

Production: (7,500 MW x CF 0.30* + 4,500 MW x CF 0.40) x 8,760 hr/yr = 35,478 GWh/yr^, less losses.

 

* The current ACTUAL Northeast CF is 0.24. See URL. The ISO-NE study ASSUMES the CF will increase to 0.30; no basis is given. A starry-eyed "assumption"? Will NE wind conditions be sufficient for this assumption? I think not. 

http://www1.eere.energy.gov/wind/pdfs/2012_wind_technologies_market_report.pdf 

 

^ The current NE wind energy production is about 1,200 MWh/yr, i.e., almost ALL capital costs are yet to be spent.

 

New England Example No. 2: Northern Pass, an HVDC, north-south transmission system is planned from Franklin, NH, to Deerfield, NH; 187 miles; capacity 1,200 MW; capital cost $1.4 billion; 1400/187 = $7.49 million/mile, or 1400/1200 = $1.17 million/MW.

 

HVDC energy from hydro plants in sparsely-populated Quebec, New Brunswick and Labrador is fed into the system at the Canada-NH border and transmitted to southern NH, where it is fed, after conversion, into existing HVAC systems; any modifications required to the HVAC systems are not included in the cost estimate.

http://www.northernpass.us/project-overview.htm

 

Mid East Coast Example: Trans-Elect and Atlantic Grid Development are the project developers of the Atlantic Wind Connection, AWC. The AWC will be designed to transmit energy from 7,000 MW of offshore wind turbines to consumers in New Jersey, Delaware, Maryland and Virginia.

 

Construction period 2016 - 2026; the offshore HVDC transmission backbone will be built in five phases; total estimated cost $6.311 billion; this estimate likely excludes connecting the wind turbines to the HVDC backbone, as the locations of the wind turbines, spread out over an area of about 600 km x 40 km = 24,000 km2, or 9,266 sq miles, are not yet known. 

 

A series of offshore stations will convert the AC energy from the IWTs to DC and step up the voltage to 320 kV for transmission via HVDC lines to the onshore grids, where onshore stations will convert it to AC; 6311/7000 = $0.90 million/MW, comparable to the Northern Pass and Netherlands-Norway examples, which are 1.17 and 1.15 $million/MW, respectively.

 

The capital cost of the IWTs would be 7,000 MW x $3.6 million/MW = $25.2 billion, for a total project cost of $31.5 billion; transmission 6.311/31.5 = 20% of project costs. This does not include:

 

- any onshore grid modifications and 

- the extra OCGT and CCGT capacity required for balancing the wind energy, and 

- the above-mentioned wind turbine to HVDC backbone connection.

 

Energy production would be 7,000 MW x 8,760 hr/yr x CF 0.40 = 24.53 TWh/yr, less losses

http://cleantechnica.com/2013/01/17/atlantic-wind-connection-chooses-new-jersey-for-phase-i-offshore-transmission-backbone.


Ireland Example: Element Power plans to build 3,000 MW of wind turbines, 10 clusters of 300 MW each, in the Midlands of Ireland and transmit the energy, via the Irish Sea, to Wales. Element claims an estimated total project cost of 8 billion euro and a completion date by the end of 2018. This estimate appears low compared to similar projects in the US. See URL.

http://theenergycollective.com/willem-post/47519/base-power-alternatives-replace-base-loaded-coal-plants

 

- Wind turbine plants, roads, tie-ins to transmission systems = 3,000 MW x 1,800,000 euro/MW = 5.4 billion euro; 67.5% of costs.

- Wind turbine clusters feeding into new HVAC systems to a common point, conversion to HVDC, then, via the Irish Sea, to Wales; about 150 miles; capital cost 2.6 billion euro; 32.5% of costs.

 

Element Power does not mention the levelized (owning + O&M) cost of:

 

- reinforcing the Wales onshore grid to take the additional energy and, 

- the increased UK OCGT/CCGT wind energy balancing operations, etc. 

 

Likely, they will be “by others”, i.e., UK rate payers.

http://theenergycollective.com/willem-post/98061/irelands-wind-energy-export-plan

 

NOTE: For the above two examples, the percentages for transmission system capital costs are similar.

 

US Example: Investor-owned utilities and transmission companies invested a record $34.9 billion in transmission ($14.8 billion) and distribution ($20.1 billion) infrastructure in 2012, according to the Edison Electric Institute. The spending on transmission was about 24% greater than 2011, the greatest year-over-year percentage increase since 2000.

 

The spending is driven by many factors, including large transmission projects and interconnection of renewables, such as utility-scale solar and wind projects. EEI found in another report that about 75% of transmission spending through 2023 will be to integrate solar and wind projects. All these costs will be socialized, i.e., charged to rate payers, not to wind turbine owners.

 

http://theenergycollective.com/katherinetweed/320261/transmission-investment-gets-largest-boost-2000

http://www.greentechmedia.com/articles/read/in-texas-big-wind-jumps-on-new-transmission

 

The NREL has proposed the US get 20% of its energy from wind by 2050, or about 1,000 TWh/yr. During the past 15 years, the US has invested at least $25 billion in transmission systems to support 60,000 MW of wind turbines that can produce 170 TWh in 2014. 

 

The $25 billion would have been much greater, but for the use of existing spare transmission capacity. That spare capacity has been used up and the heavy lifting in terms of investment in augmented onshore and entirely-new offshore transmission systems is about to happen. 

 

As it took about $25 billion for transmission investments for the first 170 TWh/yr production level, future wind energy increments of 170 TWh will require at least $50 billion of transmission investments each. The above New England and Ireland examples show about 33% of total capital costs (wind turbines + transmission systems) is for transmission systems.

 

An ADDITIONAL energy production of 1,000 - 170 = 830 TWh/yr will require at least 830/170 x $50 billion =  $244 billion to be invested by 2050 just for the HVDC and HVAC transmission system build-outs, for example, to transmit wind energy from west of Chicago and the Atlantic Ocean to population centers.

 

Netherlands-Norway Example: There exists a 580 km-long (363 miles), underwater, HVDC line from the northern tip of Holland to the southern tip of Norway; capacity, 700 MW; voltage, 900,000 V; cable resistance at 50 degrees C, 29 ohm; cable losses at rated load, 2.5%; capital cost, 600 million euro ($780 million); in service 6 May 2008; 780/363 = $2.15 million/mile, or 780/700 = $1.11 million/MW; a second line is planned.

 

NOTE: Comparing the above New England Example No. 2 and the Netherlands-Norway Example, the onshore HVDC cost/mile is about 3.4 times the offshore cost/mile.

 

Sweden Example: HVDC underground cable, plus VSC systems; 1,440 MW (2 x 720 MW) 300kV; ordered by Svenska Kraftnät, the national grid operator; completion in 2014.

 

- ABB HVDC cable, 1440 MW (2 x 720 MW) 300kV, 125 miles; turnkey cost $160 million ($1.28 million/mile)

- Alstom Grid’s MaxSineTM Voltage Source Converters (VSC); turnkey cost $320 million

 

For 125 miles total cost $160 + $320 = $480 million, or $3.7 million/mile

For 200 miles total cost $568 million, or $2.84 million/mile

For 250 miles total cost $632 million, or $2.5 million/mile

For 400 miles total cost $824 million, or $2.1 million/mile

 

http://energy.gov/sites/prod/files/2013/05/f0/HVDC2013-Hingorani_0.pdf

http://123seminarsonly.com/Seminar-Reports/024/76914100-Comparative-Evaluation-of-HVDC-and-HVAC-Transmission-Systems.pdf

 

Western Interconnection Example: The NREL studied a wind energy increase from 38,055 GWh (4.3%, CF 0.26) in 2012 to 292,050 GWh (33%, CF 0.26) on the Western Interconnection by 2050. 

http://www1.eere.energy.gov/wind/pdfs/2012_wind_technologies_market_report.pdf

 

The capital cost for just the HVDC and HVAC transmission system build-outs will be

(292,050 - 38,055)/170,000 x $50 billion = $75 billion; see above New England examples. 

 

Based on the above examples, for the NREL study titled “The Western Wind and Solar Integration Study Phase 2”, issued in 2012, to claim transmission system capital costs to go from 4.3% to 33% wind energy will be “minor” is a high order of obfuscation and deception of the public and legislators.

 

THE MISO AND ERCOT GRIDS

 

The MISO grid has more than 11,000 MW of wind CAPACITY on its grid, but that capacity produces about 8% of annual energy on MISO's grid. For that level, OECD calculates about $12/MWh for the below cost items:

 

1) Balancing: 

 

Wind energy balancing by cycling generating units requiring: 

 

- increased cold starts and stops. 

- increased warm starts and stops. 

- increased synchronous operation (3,600 rpm) in regulating mode 

- increased ramping up and down while operating at part-load. 

 

All four cause increased fuel consumption and increased wear and tear of equipment, just as would be the case with a car. 

 

2) Grid Level:

 

- the costs of connecting wind turbines to grid. 

- grid reinforcement and extension. 

- the cost of energy losses to transmit the energy from wind turbines in remote locations to end users in population centers; such losses will be significant if transmitting from west of Chicago to the East Coast, as envisioned by the NREL.

http://theenergycollective.com/willem-post/169521/wind-turbine-energy-capacity-less-estimated

 

3) System Level:

 

- the costs of back-up (adequacy), i.e., keeping almost all EXISTING generators fueled, staffed, and in good working order to provide energy when wind energy is minimal, about 30% of the hours of the year in NE, about 10 - 15% of the hours of the year west of Chicago. 

- the costs of capacity payments, to offset the hit to the economics of existing generators, as these units will be producing less kWh/yr, but still are needed when wind energy is minimal. With less kWh/yr produced, the cost of each kWh must increase to cover fixed costs, but that cost will often exceed the grid spot price!

 

According to the OECD report, the cost is about $5/MWh for item 1 and $7/MWh for items 2 and 3, for a total of about $12/MWh at 8% annual wind energy.

Note: None of these costs are charged to wind turbine owners.

 

Because of the low annual wind energy percent on the US grid, and the noise in the data, and almost nothing being measured, unverifiable claims can be made in impressive-looking NREL, et al, studies regarding fuel consumption, CO2 emissions reduction and cost impacts of wind energy.

 

At 10 - 20% annual wind energy on the grid, i.e., when MISO and ERCOT would each have about 20,000 MW on their grids, the above three items would be much greater in magnitude, and would have much greater costs, and the CO2 emissions reduction effectiveness would be much less, as was determined from the 1/4-hour real-time operating data of the Irish grid at 17% annual wind energy. See below Wheatley paper. The US, and many other countries, just have not yet gotten to that cost and ineffectiveness stage.

http://docs.wind-watch.org/Wheatley-Ireland-CO2.pdf


ERCOT GRID BUILD-OUTS


ERCOT has spent about $7 billion on several thousand miles of transmission lines to extend the grid from the about 10,000 MW of wind turbines (capital cost about $20 billion) in West Texas (Panhandle) to the population centers in Mid Texas, i.e., about 25% of the total capital cost of wind turbines + transmission. This percentage is within the typical range of 20 - 35 percent, as shown by several examples in this article.

 

Those costs were socialized via rate schedules, i.e., charged to rate payers (a surcharge of about $5/month for households), not to wind turbine owners. See above item 2.

http://www.texastribune.org/2011/08/24/cost-texas-wind-transmission-lines-nears-7-billion/

 

Also, ERCOT encouraged private investments in OCGTs and CCGTs to augment the quicker-ramping capacity on the grid (ERCOT's older coal plants were not quick enough), plus investments to implement other grid operation changes; the levelized costs are mostly socialized via rate schedules. See above item 3.


Wind energy promoters use the red-herring claim, "the US grid is aging, and these investments needed to be made anyway, so why charge them to wind turbine owners", but to build-out wind turbines in remote areas with few people and transmit the energy 500 - 1,000 miles to population centers clearly is mainly for the benefit of wind turbine owners.

 

The Pickens Plan: T. Boone Pickens planned to build 4,000 MW of wind turbines in West Texas (The Panhandle), and wanted the state to provide about 500 miles of transmission to population centers in Mid Texas; the Pickens Plan.

 

He may not have had enough friends in state government, because the state did not agree. Pickens got out of the wind business and lost about a billion dollars. He knew without the free transmission, his project was dead in the water.

 

Subsequently, the federal government increased the wind energy subsidies, the pressure of lobbyists representing multi-millionaires with tax shelters became much stronger, and the state government did build the transmission systems, too late for Pickens, but in time to benefit other wind turbine owners, and make their tax shelters pay handsomely; the costs were charged to rate payers, not to wind turbine owners.


MISO WIND ENERGY VARIATION

 

MISO’s energy sources are: Coal 48%, Gas/Oil 32%, Nuclear 6%, Wind 8%, Other renewables 6%.

 

On November 29, 2013, at 6 PM, wind energy was 6,000 MW; at 11 PM  8,312 MW; at 1 PM  1,602 MW, and remained at that level until 5:30 PM, while normal daily demand was increasing to its daily late-afternoon/early-evening peak, a clear example of wind energy being out of step with demand. As wind energy decreased, OTHER generators (coal and gas/oil) made up for the partially-predictable lack of wind energy, PLUS provided energy for the highly-predictable daily peak demand. 

 

There likely were some impacts on fuel consumption and CO2 emissions due to changes in part-load-ramping operation, start/stop operation, synchronous and stationary standby operation, to accommodate wind energy to the grid, but as little, or nothing, is measured in real-time, every 1/4 hour, any statements regarding fuel consumption and CO2 emission impacts are not verifiable.

 

https://www.misoenergy.org/MarketsOperations/RealTimeMarketData/Pages/RealTimeWindGeneration.aspx

 

WITH WIND ENERGY, COAL AND GAS PLANTS NEED CAPACITY PAYMENTS

 

The MISO grid will be used as an example to demonstrate the need for capacity payments. The NREL claims 33% wind and solar energy is feasible in its Phase 2 of the Western Wind and Solar Integration Study (WWSIS-2). As the MISO grid area has an abundance of good winds, but somewhat meager insolation, this exercise assumes 33% wind energy for the MISO grid.

http://www.nrel.gov/docs/fy13osti/55588.pdf

 

MISO wo/wind energy: Coal 52%, Gas/Oil 36%, Nuclear 6%, Wind 0%, Other renewables 6%

MISO w/8% wind energy: Coal 48%, Gas/Oil 32%, Nuclear 6%, Wind 8%, Other renewables 6%*

MISO w/33% wind energy: Coal 35%, Gas/Oil 20%, Nuclear 6%, Wind 33%, Other renewables 6%

* The current condition.

 

Big Production Decrease: 

Assume capacity factor of coal plants wo/wind energy = 0.85, then w/32% wind energy the CF = 35/52 x 0.85 = 0.572, an energy production decrease of (0.85 - 0.572)/0.85 = 32.7% due to wind energy.

 

Small Cost Decrease:

Assume cost fractions of coal plants wo/wind energy: O&M fixed 0.65 + O&M variable 0.30 + Capital 0.5 = 1.00

Assume cost fractions of coal plants w/32% wind energy: O&M fixed 0.65 + O&M variable 35/52 x 0.30 = 0.202 + Capital 0.5 = 0.902, a cost decrease of 9.8% due to wind energy.

 

A big production decrease and just a small cost decrease spells financial disaster for the coal plants, as would be the case for the gas plants. Wind energy cannot function on the grid without the balancing and backup performed by coal and gas plants. A conundrum!!

 

Almost all EXISTING coal and gas plants need to be fueled, staffed, and kept in good working order to provide energy when wind energy is minimal, about 30% of the hours of the year in New England, about 10 - 15% of the hours of the year west of Chicago. i.e., absent economically-viable, utility-scale energy storage (not yet invented), nearly all existing coal and gas plants are needed to ensure continuous electric service, as required by a modern society.

 

The remedy is capacity payments to make ”whole” the owners of the coal and gas plants; these payments likely will be socialized via the rate schedules, not charged to wind turbine owners.

 

THE PRODUCTION TAX CREDIT

 

Note that the effect of the PTC is not included in the above ATI calculations. 

 

The PTC has been extended for one year by Congress and the President, but that one year extension means 10 years of PTC subsidies going to wind turbine plant owners who have begun construction of their turbines in calendar year 2013. 

 

The PTC provides owners with 2.3 c/kWh that the wind turbines generate over the next ten years, which is worth about 3.4 c/kWh in pre-tax income, as the PTC serves to reduce taxes dollar for dollar. The US Congress Joint Committee on Taxation estimates that the innocent-sounding, "one year" extension will cost American taxpayers over $12 billion over 10 years, for wind turbines with a construction start (not a service start) during 2013.

 

INTEGRATING WIND ENERGY TO THE GRID

 

Various wind energy promoters, such as the AWEA, NREL, et al, maintain integrating variable wind energy to the grid is similar to the minute-by-minute demand variations grid operators have had to deal with for decades. It is clear from the below report, this is not the case.

 

The report, dd November 2013, was jointly prepared by the North American Electric Reliability Corporation and the California Independent System Operator Corporation.

 

http://www.nerc.com/pa/RAPA/ra/Reliability%20Assessments%20DL/NERC-CAISO_VG_Assessment_Final.pdf 


COMPARISON TO OTHER TECHNOLOGY COSTS

 

According to the EIA, the levelized cost of energy from an:

 

- advanced NG combined cycle plant is $65.6/MWh

- advanced coal plant is $123/MWh

- nuclear plant is $108.4/MWh

 

http://www.eia.gov/forecasts/aeo/electricity_generation.cfm 

 

The assertion made by the AWEA, et al, wind energy is becoming cost competitive with energy from other sources, the holy grail of grid parity, is not the case, based on the more-inclusive levelized cost estimates in the Taylor/Tanton report.

 

WIND TURBINE PLANT ENERGY DENSITIES, W/m2

 

Wind turbine plant energy densities are less than 2 W/m2, as measured at the wind turbine, less due to energy losses to transmit the energy to the user. Here is an offshore example.

 

Offshore Example: The Anholt offshore wind power plant has 111 Siemens wind turbines, 3.6 MW each, for a total of about 400 MW, on 88 km2, 14 meter deep water, capital cost $1.65 billion; inaugurated on September 3, 2013; energy density = 400 MW x CF 0.40/88 km2 = about 1.82 W/m2; the CF of 0.40 as measured at the wind turbine is assumed, less due to energy losses to transmit energy to the user.

 

http://www.pennenergy.com/articles/pennenergy/2013/09/denmarks-largest-offshore-wind-power-farm-is-inaugurated.html

 

Onshore Example West of Chicago: Wind turbine plants west of Chicago have an average CF of about 0.36, as measured at the wind turbine i.e., the energy density is about 0.36/0.40 x 1.82 = 1.64 W/m2.

 

AREAS REQUIRED FOR NUCLEAR PLANTS AND WIND TURBINE PLANTS

 

According to Forbes, a power company in South Carolina is investing about $11 billion to construct two 1,100 MW nuclear reactors on about 1,000 acres, or 1.56 sq miles. Production = 2 x 1,100 MW x 8,760 hr/yr x CF 0.9 = 17,344,800 MWh/yr.

 

Wind turbine capacity west of Chicago required to produce the same quantity of energy: 17,344,800 MWh/yr/(8,760 hr/yr x CF 0.36) = 5,500 MW.

 

About 1,850 wind turbines, 3 MW each, 459-ft tall, 373-ft diameter rotors, CF 0.36, properly spaced to minimize airflow interference, would be required to produce the same quantity of energy, but it would be VARIABLE energy requiring OTHER generators to be more hours in inefficient part-load-ramping mode for back-up/balancing the wind energy, using more fuel/kWh and emitting more CO2/kWh, thereby partially offsetting what wind energy was meant to reduce. 

 

Land area required = 5,500,000,000 W/(1.64 W/m2) x 1 acre/4,047 m2 = 828,678 acres, or 1,295 square miles. The land can be used for agriculture, but any people living within 1.25 miles, or 2 km, from such wind turbines will find their quality of life, health and property values adversely impacted. Animals, especially birds and bats, will also be adversely impacted. See URLs.

 

http://www.wiseenergy.org/Energy/Setbacks.pdf

http://www.wiseenergy.org/Energy/Tourism.pdf

http://www.vce.org/Lempster

 

WIND TURBINES KILLING BIRDS AND BATS


Duke Energy Renewables, Inc. will pay $1 million in fines and restitution for unlawfully killing golden eagles and other threatened birds with its wind turbines, the Department of Justice announced Friday in its first criminal enforcement of the Migratory Bird Treaty Act.

 

Duke Energy Renewables Inc., a subsidiary of North Carolina-based Duke Energy Corp., pled guilty to violating the federal law that protects hundreds of bird species.

 

The company admitted killing 14 golden eagles and 149 other protected birds, including hawks, blackbirds, larks, wrens and sparrows, at two sites in Converse County, Wyo., from 2009 to 2013.

 

http://www.huffingtonpost.com/2013/11/22/duke-energy-bird-fine_n_4326596.html

 

The remedy is operational curtailments, which will reduce capacity factors and increase wind energy costs, or lobby the government to get "lawful" bird-kill permits. Some companies will do anything to "fight global warming".

 

Breaking News: Their lobbying was successful. Killing birds is now legal!! Who would have thought.

http://www.pbs.org/newshour/rundown/2013/12/wind-farms-that-kill-bald-eagles-are-now-protected-from-prosecution.html 

 

EIA LEVELIZED COST COMPARISONS

 

The EIA periodically publishes a table of levelized costs of various sources of energy. The EIA is comparing NEW plants, but the cost comparisons are flawed, because applying federal tax rates, depreciation schedules, and not counting various hidden and not-so-hidden cost impacts of variable wind energy, affects the values in the table. This is an irrational approach regarding comparing the costs of NEW plants.

 

There should be no problem for the EIA to use only capital cost estimates and only O+M cost estimates for NEW plants, and then compare levelized costs of new plant against new plant, without applying tax rates, etc.; it would simplify the EIA efforts and present a more realistic economic picture.

 

But there are various hidden and not-so-hidden costs, due to wind energy being on the grid, and due to gas and coal-fired generators being "paired" with wind energy, that the EIA does not identify nor quantify. These costs are being socialized via rate schedules, because it would be "unfair" to burden wind turbine owners with these costs, as they had made no provision for them in their tax-shelter spreadsheets.

 

The Taylor/Tanton report examined the EIA levelized cost methodology and quantified these costs. The AWEA does not want these costs known to the general public and legislators, as they would be casting a bad light on wind energy.

 

For example: The US has widely varying CFs for solar systems, because of insolation differences. Why not have a graph showing levelized cost vs CF? The same for wind turbine plants.

 

Here in New England, the CF for single-axis, properly-oriented PV solar systems is about 0.147, but because roofs are not facing due south, and are not at the correct angle, and the panels are aging (Chinese panels were found to age faster), covered with shadows, dust, snow and ice, the REAL WORLD CF is about 0.125, 18% less. The corresponding German numbers are 0.12 and 0.10. 

 

Yet, the CF numbers in the EIA table imply much greater PV solar energy production, as if New England conditions do not exist; an "official" method of fooling, befuddling the public, including legislators, etc.

 

Here in New England, ridge line construction costs of wind turbine plants are about $2,600/kW, (excluding transmission system build-out costs, etc.) and up, and O+M costs are about 2 times those in Kansas, while winds are just average, even on ridge lines. As a result, CFs are about 0.25 in the Northeast, but not anywhere near the 0.32 or better promised during permit hearings. 

 

Here is an article showing wind turbine CFs not being anywhere near promised values to get permits. Please read it.

 

http://theenergycollective.com/willem-post/169521/wind-turbine-energy-capacity-less-estimated

 

CONCLUSIONS

 

According to the Taylor/Tanton report, there are numerous hidden costs to wind power, including the cost of back-up power, the cost of extra transmission, and the cost of favorable tax benefits. And, the assumption of a 30-year life used in government calculations for wind power is optimistic, based on reports from European countries regarding the useful service lives of their wind turbines.

 

Including these hidden costs in calculating the cost of wind energy increases its cost by a factor of 1.5 or 2, depending on the power system that is used as back-up. Taylor/Tanton calculates

ratepayers are paying an extra $8.5 to $10 billion a year for wind energy compared to natural gas-fired generation, and this will only increase as more capacity is added.

 

Add to this the more than $12 billion that the American taxpayer is paying for the ‘one-year’ extension for the PTC, and one can see that the wind industry is a boondoggle at the expense of taxpayers and ratepayers, that is, slowly but surely, making the US economy less competitive.

 

The US economy is beset with a vast array of such wasteful, marginally effective programs, which, collectively, act as a wet blanket on the economy, preventing it from growing more rapidly and raising living standards, except of the few million well-connected, catered-to, households at the top. 

 

As a result, the Federal Reserve has to provide $85 billion/MONTH of credit to the federal government and banks to keep the present economy afloat, a.k.a. quantitative easing, or QE. The credit is created out of thin air, totaling about $3 trillion since 2008, and counting.

 

Europe and Japan are stagnating, largely because they also are afflicted by the same maladies and their central banks are similarly “pro-active”. 

 

REFERENCES:

 

Wall Street Journal, Renewable-Energy Tax Breaks Pass Despite Headwind, January 1, 2013, http://professional.wsj.com/article/SB1000142412788732363550457821579005...

 

American Tradition Institute, The Hidden Costs of Wind Electricity, December 2012, 

http://www.atinstitute.org/wp-content/uploads/2012/12/Hidden-Cost.pdf

 

Energy Information Administration, Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012, July 12, 2012, 

http://www.eia.gov/forecasts/aeo/electricity_generation.cfm

 

The Hill, Issa takes aim at revised wind credit, January 2, 2013, 

http://thehill.com/blogs/e2-wire/e2-wire/275301-issa-wind-power-credit-of-serious-interest

 

Forbes, Why It’s the End of the Line for Wind Power, December 21, 2012, http://www.forbes.com/sites/christopherhelman/2012/12/21/why-its-the-end...

 

Energy Tribune, Wind Turbines ‘Only Lasting For Half As Long As Previously Thought’, January 2, 2013, http://www.energytribune.com/69566/wind-turbines-lasting-for-half-as-long

 

OECD Report on Wind Energy Costs

http://www.oecd-nea.org/ndd/reports/2012/system-effects-exec-sum.pdf

 

Energy From Wind Turbines Actually Less Than Estimated?

http://theenergycollective.com/willem-post/169521/wind-turbine-energy-capacity-less-estimated

 

Wind Energy CO2 Emission Reduction Less than Claimed

http://theenergycollective.com/willem-post/89476/wind-energy-co2-emissions-are-overstated