Wind Power, figuring out the actual cost

First, a little explanation.  The costs of wind are very difficult and it took me at least 10 hours to come up with a reliable figure.  This is because the subsidies involved are built into cost estimates from official sources from both the Federal Government and Wind Turbine manufacturers.  In addition, you will see a very optimistic view on replacement costs of parts that break and on the O/M – that is operating and maintenance of wind turbines.  One worker can basically be hired for a farm of say 4 wind turbines after they are installed.  No, I do not have links, this is based on deduction and is an educated guess.  Its based on the premise that the amount of work needed fits what the Government says it should.  This is rather optimistic as things tend to go wrong.  But for the sake of argument, I take the Government figures as they are and assume they are correct.  Even overly optimistic, the Government figures do not figure in ALL the costs when figuring out the end cost to the consumer. Needless to say,  I do not like optimism without decent explanation, so yes, I was encouraged to dig and dig I did.

First step, a traditional 1.5MW wind turbine costs 2.5 Million from a manufacturer.  This cost might be plus or minus a little, but for all intents and purposes it should be accurate for the terms of finding the true costs of wind over a life-time of 30 years.  The costs just start at the equipment, however.

The second step is to find out what tax breaks are given out for wind farms.  These are subsidies since they impact the actual final cost for the person who is purchasing the wind turbines.  The costs here are put into the final cost and are a part of the total price tag for said wind farm, which for the purposes of argument is the typical 1.5MW wind turbine in a set of 12 (which is done for simplicity which I will explain, but a set of 10 is rather normal too.)  But the price brackets for the actual cost to taxpayers (for tax-write-offs) is approximately 40% for the entire cost of the wind project.  Granted, this cost is not total, as it only includes the costs of capital improvements.  But the reason we apply this here is that the project only includes the actual equipment costs, which to save time I will state are stated to be worth 2.8 mil for a traditional wind turbine (1.5MW) and does not count the other parts of the project.  The reason this is more expensive than the 2.5 million price tag which is the traditional price (And this can lower for larger wind farms due to bulk discounts, but for the sake of argument, lets assume 2.8million (which included equipment purchases and transmission lines which are necessary to hook up wind turbines to the grid.)  40% of this added to it comes out to about 3.9 Million per turbine, or for our “particular wind farm” 47 million.

The largest hurdle to finding the true cost of wind power is in finding the true cost of the back-up power that is needed to supplement it.  Wind power requires approximately 70-80% back-up capacity and in some places the full 100% is needed.  This is normally done with NG generators which can flare up instantly and provide much-needed power to the grid to compensate for wind.  It is obviously not a cheap method, but I do admit that the NG method is not as expensive as it was in 2008 back when NG prices were rather high.  In 2008, the cost per KW/hr was approximately 10 cents per.  This is very expensive in terms of energy generation and the fact that we now have Natural Gas in abundance (the price has basically halved for NG) makes this not a bad way to go.

Needless to say, NG is a necessary source of power for the country as it provides the cheapest method for “on demand” power other than hydro which is not used as that in the US.  For simplicity, note that I did the exact calculations that I show here in Excel and that I am simply showing my work to a large extent and that all estimates are exact in the end.

But to the topic on hand, assuming 80% back-up (rather average wind farm set-up) we figure out that we need approximately a capacity of 14.4MW for a 12 wind turbine farm @ 1.5MW per turbine.  So you need to generate 14.4MW in gas for a 18MW wind turbine set up.  This is just what you need to construct, but assuming that a gas plant costs $1400 per KW generated, this equates to a gas plant needed which has a cost of $1400 * 14400 (MW) = ~ $20 million.  That is almost the same cost as 12 1.5MW turbines from their manufacturers, which is approx. 2.5million per turbine comes out to ~$30 million.  So the backup power that is required for wind increased the total equipment cost from 30 million to 50 million.  Assuming minimal fuel and just Operating costs, the total cost for NG comes out to approximately 23 million when you add up operating and fuel costs, which as I said are minimal since it’s a simple back-up system.  Normally, this number would be much higher if the plants were needed at higher utilization, but the fact remains, these plants are necessary for wind, and as such their costs should be included here.  70 million for our wind farm is now our total cost.

Third step is the fun part.  After you have found your costs that have nothing to do with the actual price of the wind turbine as I have already done…you can try to figure out the actual cost.

Third step is figuring out the actual costs of installation.  I will assume that these costs are fixed at once every 30 years since wind turbines are said to last “30 years.”  In actuality, they have been found to last just 21 years, but lets focus on “optimistic numbers” for now.  The costs of concrete, of installation, of machinery, of computers and tech support and of course of training the maintenance people has to be all figured in at the start of this episode.  For simplicity, I also factored in the costs of land leasing and of road clearance.   These are all the “misc. Costs” that go into setting up a wind farm.  The largest cost here is huge at approximately 400k per turbine for concrete and installation.  This is average based on commercial prices.  This cost is also in 2005 dollars (as are most of the figures here since the best source I could find was Remember, I used 2005 prices and the figures for road construction is not considered in the, but that was easy to estimate.  Note: Remember these figures are for wind turbines that are situated on ideal land that does not need extensive changes made to it.

That being said, the numbers I come up with might be inaccurate since those figures might have subsidies built into them, the document from was not clear on this.  The total costs of installation and all of the mentioned above comes to just shy of 500k.  This does not include yearly costs so adding those:

35k per year for O/M.

16k per year for parts.

5k per year approx for land lease.

And adding those over a 30 year time period (Since as I mentioned that is the time period I am using for ALL calculations comes up with a cost in 2005 dollars of just under 1.7 million dollars.)

Total costs all told are therefore approximately $1.7 Million * 12 (turbines) = 20.4 Million $

This is costs over 30 years, so total costs for our mentioned wind farm are now at ~91 million $.  Remember, the list cost of wind power is 30 million $, but the true cost to everyone is $91 Million for this entire farm.  There are additional costs which are relatively minor that I did not consider, and its possible the costs are higher on a magnitude of 1-2 Million at the most, as I mostly rounded figures down.  Remember, that a lot of the numbers are also based on 2005 dollars, so the costs for that reason might be higher.  I used the lower figures to make wind glow so to speak.

Well, the total costs is just over 3 times the actual cost of the turbine from the manufacturer, well lets figure out the cost per KW/hr.

If we multiply 18000 KW by the number of hours in 30 years (lifespan) we get 157,680,000 total KW/hr.  This is assuming the plant works at 100% efficiency, which for all practical purposes, it does not.

Second step is to multiply out the actual efficiency.  Without going into details, most wind turbines work at approximately 25% efficiency.  This is an average and although some might get higher (better more sustained winds) the general idea is that we must multiply total power by 25% to find the actual power produced. Some people at this point might point out that the NG plant that we also paid for with the wind produces power, but this is included in the efficiency of total power produced.  You see, with wind you must keep that power as standby kind of like a second car.  It can not be used for anything because if the wind dies, the NG must be unused or mostly un-used to take this into account.  So the efficiency stands.

44,150,400 is now our total KW/hr.  Also remember, that if we wanted to be exact, we would also figure out the efficiency of the power provided and subtract out power which is forced to be wasted.  For wind power, this tends to happen quite a bit and it is a hefty portion of the total power provided.  Right now, the laws are set up so that ALL power provided by wind sources are paid for regardless of whether they are used.  This should be noted.

But in any regard, lets find out our cost per KW/hr.  If you have been following along, the total here might be off as I simply eyeballed it as I wrote.  But the excel work is where I am taking this figure from:

Total cost per KW/hr is: $.077

This number is far from what is claimed by the wind power companies, and even our own Federal Government.  As noted, I did not take into account certain facts and figures, but the actual cost per KW/hr is probably twice that in reality.

I tend to think I have correct figures when I see another website that basically confirms the number:

But what is the actual cost of useful power?  This is a very difficult question as when the wind blows too much (which might make the turbine for instance generate a full 1.5MW as indicated, this power is included in the efficiency, and must be paid for.  But if the power is not useful and not used, what happens to this power?  The rest of the discussion here resolves around the unanswered question I posed earlier.  As noted, a 1.5MW turbine over its lifetime will only produce .4MW of power total.  This is due to the fact that winds are almost never constant even in the best areas for wind turbines.  33% efficiency is seen at select locations (these are rather rare, and the average of 25% is more accurate).  But the power that is actually useful is another question.  This is the reason that over time you must have all wind power completely backed-up as you add both more wind and you are located in a region where dead calms are common.  This goes especially for places such as Texas which I might add has a very high wind power utilization rate.

So what is the actual amount of useful power that is generated by wind power?  Well no one knows, because no one has bothered to study this issue.  In essence, the amount of useful power is probably in the neighborhood of 33%-50% since there is no way the grid can support more or less power then what is being used.  This means the power is wasted normally at hydro-electric dams which throw their generators into reverse (using up water power just to waste wind power that was not needed).  And that would in essence put the cost of wind power closer to 4-6 times or higher then other power sources.  But the truth is, assuming all wind power generated is useful, the actual cost per KW/Hr is like I said, and is roughly .077$.  This again is more than double the cost of other power sources, just as a note. (Coal and nuclear are both around 0.03$ with coal hovering between 3 and 4 cents depending on the actual fuel costs.)  Hydro-electric is the cheapest source of power out there as a note as a little under 0.03$ is the cost per KW/hr.

Notes:  Permitting costs were not counted in any of this.  The permits for wind power tend to be cheap in most states, so this cost should not matter.  Natural gas generators installed due to need of wind power also generate other power, but for the purposes here we only count the costs that the wind turbines REQUIRE.  We wouldn’t need the gas generators without the wind turbines, or if we wanted to we could install all gas generators and not wind turbines at all.  It should be noted that as wind power increases inside the grid, you have to go up to 100% back-up and the power produced by wind that is useful decreases as well.  It’s quite a lose-lose situation.

Wind power tax breaks vary by state.  Some states are more generous than others.  This is an average value for tax breaks that is used.  In addition, lots of estimates are used here, but for the most part, the figures work out to be mostly correct for the actual cost to the consumer/taxpayer.  That is the point.

Some additional material that showed my process was rather representative: A concise guide of energy prices in the UK:

Without Standby With Standby
litter-fired bubbling fluidized bed (BFB) steam plant
6.8 6.8
Onshore wind farm 3.7 5.4
Offshore wind farm 5.5 7.2
Wave and
marine technologies
6.6 6.6
Gas-fired CCGT 2.2
Nuclear fission plant 2.3
pulverised-fuel (PF) steam plant
circulating fluidized bed (CFB) steam plant
integrated gasification combined cycle (IGCC)

As you can see, my numbers for wind power are really either close to or are correct for the US versus UK.  It should be noted that wind power is more than double the price as seen here in the UK, which corresponds to the fact that the US has more wind capacity, (and so the efficiency is slightly higher.)

Sources: (Where links are provided, the link is where *most of the material was seen from.  In most cases, the material is other people’s figures and their workings of the official utility figures.)  For further reading on this subject, please do not be afraid to read up on this subject.  I will stand corrected if factual information on how my process of finding the true cost is wrong.  I showed my work so to speak so this is possible.  The figures where possible I attempted to find from the Government.  Some of the costs are estimates based on educated guesses, but the largest amounts of money are rather accurately portrayed.

H/T: RR (UK energy costs)

PS: Next, is an analysis of energy costs per every source now that wind power is in the bank.  Then maybe I will finish my series off finally (-;

2 responses to “Wind Power, figuring out the actual cost

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s