Category Archives: Environment

The Dept. of Energy’s Energy Information Agency (EIA) publishes their take on the relative cost of electrical generation systems every year.  This year’s “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011” forecast the dollars per megawatthour prices from different sources of electricity in the year 2016.  The EIA use 2016 because the long lead-time for some technologies are such that they could not be brought on before 2016 unless they were already under construction.

Lets cover some terms here to make sure we understand, before we look at the Levilized cost table, what criteria the EIA used to assemble it.

Levelized cost is often cited as a convenient summary measure of the overall competiveness of different generating technologies.  Levelized cost reflects overnight capital cost, fuel cost, fixed and variable O&M cost, financing costs, and an assumed utilization rate for each plant type. For technologies such as solar and wind generation that have no fuel costs and relatively small O&M costs, levelized cost changes in rough proportion to the estimated overnight capital cost of generation capacity. For technologies with significant fuel cost, both fuel cost and overnight cost estimates significantly affect levelized cost. “

(Overnight capital cost is the total cost, even if it took several years to build, as if it could be built in one day.)

“The availability of various incentives including state or federal tax credits can also impact the calculation of levelized cost. The values shown in the tables below do not incorporate any such incentives.  .”

A 3% penalty is added to fossil fuel plants that have high CO2 emissions, and that adds to the “ …. cost terms      its impact is similar to that of a $15 per metric ton of carbon dioxide (CO2) emissions fee when investing in a new coal plant without CCS,..   The adjustment should not be seen as an increase in the actual cost of financing, but rather as representing the implicit hurdle being added to GHG-intensive projects to account for the possibility they may eventually have to purchase allowances or invest in other GHG emission-reducing projects that offset their emissions.”

This chart gives renewables no credit for available subsidies and fossil fuel plants(coal and natural gas) are penalized for CO2 emissions.

The “total system levelized cost”–  the last column in the chart– is the forecast cost of electricity in 2009 $/megawatthour for each of the examined “plant types”.

The first three natural gas cases would be considered standard power generating facilities and their prices range from $66 to $89 per megawatthour.   The next two are “backup/peak” cases. These unit are natural gas driven turbines designed to be put rapidly into or taken out of service in order to  meet a rapid change in customer electrical demand OR  an unexpected change in supply of electricity.  These turbines are not something you want on-line like a major coal, nuclear or natural gas power generating plant because of their high cost,  but the major plants are not flexible enough to meet rapid demand changes.  In the past, the need for these turbines was, although not exclusively,  to manage rapid demand increases.   But now that wind and solar power are now mandated to be in the mix,  irregular swings in supply must  also be met.  The wind can quit blowing or the sun quit shining resulting in rapid changes in supply that cannot be predicted.   At this time, if the electrical system is required  to take on an electrical supply from either or both wind or solar, the system operators typically have to install matching turbine capacity to meet the swings introduced in the supply by these renewables.

The column labeled “capacity factor” represent the percentage of the rated capacity that is actually delivered by the various types of facilities.  The totally reliable system would operate at capacity 100% all of the time. The major fossil fuel power plant’s inability to produce at rated capacity occurs about 15% of the time.  Often the majority of this loss is due to planned shutdowns for annual maintenance.

Further examination of the chart shows that only the plant type onshore “Wind”   ($97/megawatt hour) is in the ballpark versus the cost for fossil fuel based power-generating facilities.  And none of the wind or solar cases exceeds a capacity factor of  34%,  with solar thermal at 18%.   Many critics say that 34% is misleading high because wind can not be banked upon to meet peak system demand.

What can we conclude from the Department of Energy’s EIA calculations?   Neither wind nor solar are cost competitive versus fossil fuel plants.   And this is likely to remain unchanged for a long time to come.  Through lavish use of subsidies, these facilities can be made to look competitive. However, no matter how the renewable cost looks after subsidies, you are still paying the non-competitive difference as the Federal and State governments are using your tax money to pay for the subsidies.

A final thought on the EIA analysis.  In the real world, duplicate fossil fuel capacity has to be added to match renewable electric supply because it is undependable.  So the backup unit capital cost should be charged against the wind and solar cases to make this comparison reflect reality.  That, of course, would make these renewable energy cases look even less competitive.

To read the EIA levelized cost report click here.

cbdakota

Just for starters, lets say it so everyone knows where this posting is coming from:

Because Windpower energy is unreliable and thus cannot be scheduled as necessary  for transmission to customers, it does not make any significant addition to the US energy supply base.  Presently, it thrives only because financial slight of hand (subsidies) and legislative mandates requiring that it be part of the utility’s energy mix.  Moreover, and somewhat ironically, it does not result in a reduction of CO2 from fossil fuel burning; in fact it usually requires additional fossil fuel based generating capacity to provide the backup.

Until such time as reliable and economic energy storages systems are developed wind energy will be an expensive burden to the ratepayers.    If the government wants do spend my money to develop alternative energy sources, put it where it will have real value—energy storage.

Jon Boone posted “Oxymoronic Windpower (Part II:Windspeak)” on the MasterResource site and lists reasons why windpower is not presently a viable energy source:

Let’s examine the evidence.

1.Despite more than 100,000 huge wind turbines in operation around the world, with about 35,000 in North America, no coal plants have been closed because of wind technology. In fact, many more coal plants are in the offing, both in the US and throughout the world. Moreover, a Colorado energetics company, Bentek, recently published a study about wind in Texas and Colorado showing, in its study areas, that wind volatility caused coal plants to perform more inefficiently, “often resulting in greater SO2, NOx, and CO2 emissions than would have occurred if less wind energy were generated and coal generation was not cycled.” Further examination of fuel use for electricity in both states during the time of inquiry suggested that wind caused no reduction in coal consumption.

2.Unpredictable, undispatchable, volatile wind can provide for neither baseload nor peak load situations. It can only be an occasional supplement that itself requires much supplementation. Consequently, as Australian engineer Peter Lang once wrote, since “wind cannot contribute to the capital investment in generating plants… [it] simply is an additional capital investment.”

3.Wind technology does NOT represent alternate energy. Since wind cannot provide controllable power and has no capacity value, it cannot be an alternative for machines that do provide controllable power and high capacity value. Wind therefore is incapable of entering into a zero-sum relationship with fossil-fired capacity—that is, more wind, less coal. All other conditions being equal (demand, supply, weather, etc), more wind generally means more coal.

4.None of the considerable public subsidies for wind, indeed, not even state renewable portfolio standard (RPS) laws, are indexed to measured reductions in carbon dioxide emissions and fossil fuel consumption. Consequently, there is no transparency or accountability for how wind technology will achieve the goals set forth by those policy initiatives. This means that corporations with a lot of fossil-fired marketshare to protect have no obligation to replace it with wind. And they don’t. Because they can’t. Freedom from responsibility is a child’s fairy tale dream come true.

5.The work of a number of independent engineers—Hawkins, Lang, Oswald, Le Pair and De Groot—suggests that even the most effective fossil fuel pairing with wind, natural gas, will very marginally reduce overall natural gas consumption beyond what would occur using only natural gas generators, without any wind whatsoever.

6.Because oil provides barely 1% of the nation’s electricity, wind represents no threat to oil’s marketshare.

Regarding point no. 2 above,  the operator of the electrical distribution system has to provide power that meets the customer’s quantity demand very precisely at a steady voltage and frequency.  With coal, natural gas or hydro the base load can be managed.   To manage the demand peaks and valleys, natural gas turbines are often used as they can be brought on line or taken off line rather rapidly.  These facilities are under the control of power plant operations. Wind however is not controllable.  Sometimes the wind blows,  sometimes it doesn’t and it can change in a matter of minutes from high speed wind to medium speed wind to no wind and vice versa.

If a reliable and cost effective energy storage system were available,   the  windpower unit could direct its production into that system.  The storage system would allow the windpower unit to take advantage of the days when the wind was blowing forcefully and store the power.  This would significantly raise the ratio of delivered power as a function of rated power.  The electrical distribution system operators would know how much power was available and could  schedule it from the storage system.

Alas, no such energy storage system is currently available.

cbdakota