This group brings together the best thinkers on energy and climate. Join us for smart, insightful posts and conversations about where the energy industry is and where it is going.

Post

Price of US Wind Energy at 'All-Time Low' of 2.5 Cents per Kilowatt-Hour

Wind Power Price Lows

It’s difficult to compete if you can’t calculate or agree on the true cost of your product. That sometimes seems the plight of the wind and solar power industries.

A just-released Department of Energy and Lawrence Berkeley National Laboratory report pegs utility-scale wind power-purchase agreement pricing as averaging $25 per megawatt-hour for projects that negotiated contracts in 2013. That’s cheap power.

But, as Stephen Lacey asked in a recent podcast, how do we calculate the true cost of intermittent renewables?

Lacey and The Energy Gang debated the findings of a recent study from the Brookings Institution that concluded that the costs of wind and solar “are higher than presumed when using a cost-benefit calculation model.” The Economist picked up that Brookings report, which ranked solar PV last and wind next to last, while gas and nuclear led the rankings.

The Rocky Mountain Institute’s Amory Lovins contributed an article to Greentech Media arguing that the Brookings Institution paper’s conclusions were wrong — the fruits of an analysis based on “outdated or otherwise incorrect data.” Lovins wrote that the author “assumed solar and wind to be more expensive and less productive than they actually are, and conversely assumed nuclear and gas combined-cycle to be less expensive and (for gas) more productive than they actually are. All knobs got turned in exactly the wrong directions.”

Lovins also pointed out that the low cost of wind is “consistent with real-world observations, such as when utility Xcel Energy proposed adding 550 megawatts of wind capacity to its system last year — not due to environmental motivations or state renewable-energy mandates, but because new wind power was the cheapest supply option from a list that included gas combined-cycle. Solar and wind similarly beat new gas plants in California electricity auctions.”

So, the most recent DOE analysis finds that wind power is at 2.5 cents per kilowatt-hour, an “all-time low.” One of the authors of the report, Berkeley Lab Staff Scientist Ryan Wiser, wrote, “This is especially notable because, enabled by technology advancements, wind projects have increasingly been built in lower-wind-speed areas.”

Key findings from the report include:

  • Wind is a credible source of new generation in the U.S.: Despite 2013 being a slow year for wind, “wind power [accounts for] 33 percent of all new U.S. electric capacity additions since 2007.” Texas continues to lead in installed wind capacity, with more than 12 gigawatts of installed capacity, while California, Iowa, Illinois, Oregon and Oklahoma all have more than 3 gigawatts of installed capacity. Wind power now contributes more than 4 percent of the nation’s electricity supply, more than 12 percent of total electricity generation in nine states, and more than 25 percent in two states, according to the report.
  • Turbine scaling is improving wind project performance: Average nameplate capacity, turbine hub height and rotor diameter have all increased substantially over the last decade, enabling wind project developers to economically build projects on lower-wind-speed sites. Projects in high-wind-resource regions are seeing a boost in capacity factors because of improved turbine performance. 
  • Falling wind turbine pricing continues to reduce installed project costs: “Wind turbine prices have fallen 20 percent to 40 percent from their peak in 2008,” according to the report, and these declines are driving project costs down. Installed costs averaged $1,630 per kilowatt last year, down more than $600 per kilowatt from the apparent peak in 2009.
  • Supply chain and import/export balance is recovering: The profitability of turbine suppliers rebounded in 2013, after a number of years in decline, although “more domestic wind manufacturing facilities closed in 2013 than opened.” Employment in the sector has been slashed. Despite these challenges, the data shows that “a decreasing percentage of the equipment used in wind projects has been imported. Domestic content has increased and is high for blades, towers, and nacelle assembly; domestic content is considerably lower for much of the equipment internal to the nacelle.”

Projections for the wind industry see strong growth in 2014 and 2015, with uncertain prospects in 2016 based on policy risk and the price of natural gas.

Photo Credit: Wind Power and Prices/shutterstock

greentech mediaGreentech Media (GTM) produces industry-leading news, research, and conferences in the business-to-business greentech market. Our coverage areas include solar, smart grid, energy efficiency, wind, and other non-incumbent energy markets. For more information, visit: greentechmedia.com , follow us on twitter: @greentechmedia, or like us on Facebook: facebook.com/greentechmedia.

Discussions

Robert Bernal's picture
Robert Bernal on Aug 25, 2014

Hopefully, prices will come down such that exponential growth can resume.

I don’t trust Lovings about his view on nuclear because he admits that renewables need “existing fueled plants and customer demand response”, and neglets to admit that it is possible to bring down the costs of nuclear via intrinsic mass production principles. He also fails to mention that nuclear can be made melt down proof. Thus, he limits the renewable potential and “bans” the nuclear potential in favor of the (edit, fixed link) “existing fuelled plants“. I have commented to his own blog as well (but it must be approved).

Planetary civilization will need all the clean sources in order to effectively overcome ALL 21st century challenges. I like the idea that wind and solar have the potential to continue their exponential growth… If only their advocates would quit insisting that we need fossil fuels for back up!

Nathan Wilson's picture
Nathan Wilson on Aug 25, 2014

Baseload is the portion of demand that does not vary throughout the day.  Power plants are used to serve baseload demand if their fuel cost is very low, such as the case with coal and nuclear.  Solar and wind can be used to serve up to 20-40% of baseload demand, however because their variability and low capacity factor, the remaining portion would require fast ramping power plant to fill-in, and fast-ramping plants typically have higher fuel cost.

Modern nuclear plants like the AP1000 can load follow just fine.  When deployed on a grid along-side fossil fuel plants, the nuke will have lower fuel cost, hence the fossil fuel plant will do most of the load following.  If the grid were 100% nuclear, the nukes would load follow.

As far a backup, most dispatchable power plants require about 15% spinning reserves.  This assumption is that failures are random, and unlikely.  In contrast, solar and wind can require up to 100% available reserves (although the amount that is spinning at a given time depends on the weather).

Note that when thermal power plants provide spinning reserves (whether fossil fuel or waste powered), each plant turbine will have a minimum allowable output (typically 40% of nameplate output).  So without expensive energy storage (or expensive curtailment) for spinning reserves, solar and wind can never supply 100% of the grid load, even for short periods.

Your repeated claims that solar and wind will replace 90% of our electricity are unsupported by detailed studies by NREL and others.

Nathan Wilson's picture
Nathan Wilson on Aug 25, 2014

It’s important to mention that the 2.5 ¢/kWh wind power cost includes the Federal production tax credit (a subsidy worth about 2.3 ¢/kWh), but it does not include the cost of energy storage (which would be required if fossil fuel power plants didn’t supply the majority of grid power).

Furthermore, this cost reflects wind power in the windy central US plains.  In the rest of the nation, where more people and thus more electrical demand are located, costs are much higher: double in the Great Lakes and North East, and triple in the West (see fig 48 in the report). 

 

 

Robert Bernal's picture
Robert Bernal on Aug 25, 2014

The duckcurve from CAISO explains how solar will create less demand for constant baseload (because during the day, what used to be powered by baseload will be powered by solar). It also graphically explains how solar will physically require more backup. It does not note how much more backup would be needed should there be a cloudy day (or week!).

You suggest that this greater amount of backup can be achieved via wastes. Impossible! (1, because energy from wastes will be less than the total energy input into whatever products that create the wastes, and 2, because there will also be efficiency losses in the processes). However, (against my original claim) biofuels can be used for part of the mix if we can very efficiently convert photosynthesis for our needs without using much land. This means not giving into Jevon’s parodox!

Some environmentally conscious people don’t seem to mind using existing fossil fueled plants to feed (their waste) CO2 into algae biofuels to greatly extend perceived efficiency. This is what I object to, as this proceedure would become relied upon thus locking in FF in yet another way.

We sometimes forget that we need to power a 10 billion person civilization with exceeding amounts of energy!

Wind, biofuels and solar can be used as long as not too much land is used. We must back all of them (and advanced nuclear itself) with advanced nuclear produced ammonia, electricity in batteries or even from molten salt heat storage.

The less nuclear, the more land and material/mining inputs will be needed – plain and simple.

Robert Bernal's picture
Robert Bernal on Aug 28, 2014

Waste to fuels is a good management option, however, not adequate enough to fill in for the unpredictability for solar and wind only scenario. This is why the gas company (must) make money, for the time being. Obviously, we can’t be putting too many resouces into biofuels unless they truly have a high EROEI.

How are we to gain the energy for building, maintaining and recycling ALL the components of a non fossil fuelled infrastructure? This is why EROEI is very important. A safe meltdown proof nuclear would be desirable, if not absolutely necessary, to meet these demands and those of powering more people at higher standards.

Nuclear fails because the baseload threshold has to lower do to increasing solar. For backup, we will need nuclear produced ammonia, plain and simple.

You are afraid of radiation that is almost nonexistent in comparison to natural background levels. Your last sentence is also in complete denial of the facts.

Meanwhile, fossil fuels continue to kill the biosphere.

Robert Bernal's picture
Robert Bernal on Aug 28, 2014

Vehicle to grid. Why would anybody want to deplete their EV batteries, unnecessarily? Even so, better have 13 GIGAWATTS of ramping, JUST for California in ONLY 3 hours, due to solar (estimated in 2020 by CAISO). A lot of people would rather NOT be subject to such restrictions.

I like solar and wind because they will cause these huge variables that can only be met by the combustion of clean liqued fuels (and some bio-wastes). Once the carbon tax materializes, nuclear can be used to make ammonia. No big deal!

Robert Bernal's picture
Robert Bernal on Aug 28, 2014

Clearly, nuclear is NOT too expensive… Compare France and Germany. Now, we have the tech to make it safe.

Peter Grossman's picture
Peter Grossman on Aug 28, 2014

This is an interesting post on the economics of wind and sounds very promising.  I think that the test should be to remove the PTC permanently and various other subsidies as well as RPS mandates.  If this is an inexpensive as well as reliable way to generate electricity then none of these should be needed. (Before anyone gets too excited, yes, remove all subsidies–nuclear, coal, solar, etc.) But if all of this is true about wind, perhaps one also needs to explain why wind development in Spain has virtually halted since many of the industry’s benefits were “reformed.”

John Englert's picture
John Englert on Aug 29, 2014

We moved from weather dependent systems (sailing ships) and moved to thermal (steam ships). The low energy density and intermitancy of wind driven ships were no longer considered suitable. There’s probably a lesson there.

<a href=”http://transmission.bpa.gov/business/operations/wind/baltwg.aspx” target=”_blank”>BPA Balancing Authority Load and Total Wind, Hydro, and Thermal Generation, Near-Real-Time</a> 

John Englert's picture
John Englert on Aug 29, 2014

We moved from weather dependent systems (sailing ships) and moved to thermal (steam ships). The low energy density and intermitancy of wind driven ships were no longer considered suitable. There’s probably a lesson there.

http://transmission.bpa.gov/business/operations/wind/baltwg.aspx

Robert Bernal's picture
Robert Bernal on Sep 1, 2014

188 billion euros to power most of an entire country for many decades… sounds like a GOOD deal to me!

Over here in the good ole USA, we spent a full order of magnetude MORE just for a useless war in Iraq!

Robert Bernal's picture
Robert Bernal on Sep 1, 2014

More nuclear capacity would have been unjustified before this unseen, possibly excess CO2 related event. Nevertheless, we’ll all need a clean source of high EROEI in order to afford the negative ESOI values of clean liquid fuels necessary for additional peak output in the fossil free future.

Paul O's picture
Paul O on Sep 7, 2014
Robert Bernal's picture
Robert Bernal on Sep 7, 2014

Pumped hydro storage is the better way to smooth out even extreme variables associated with much renewable energy input. It would be, overall, far less expensive per unit of energy than V2G. Why? Because the ESOI for batteries is much less than that from PHS. Society can not afford to pay extra for power just because of silly fears of big engineering civil construction projects (for large pumped hydroelectric storage projects and advance meltdown proof nuclear such as SSTAR). I mean, if we are to even think about energy, we must think big, cause scales of economy is proven to cost less (and last longer to boot).

Search ammonia spills? Ya, it turns into a gas (just like any other dangerous combustionable material). That doesn’t mean we must continue to use fossil fuels. Batteries are best for cars, but industrial equipment WILL need liquid fuels (for some time). Thus, the very high eroei from closed cycle nuclear could easily “energy afford” the negative ESOI of ammonia (or other clean liqiud fuels).

Perhaps windpower too, since it does have a rather high eroei, however, much land and ocean would be needed to compensate for its diffuse and intermittent nature… and for the extra energy needed for it to build the much larger amounts of storage necessary because of these facts… and to account for whatever inefficiency of said extra storage.

The costs of spinning reserves can not afford to “pay” for everybody’s electric cars because that would greatly increase the overall costs of electricity which then paves the way for even more job losses to those countries which simply mass produces for itself, advanced nuclear. Jobs losses equates to less ability to afford that silly overpriced soft energy economy, anyways!

I do not tolerate depletion scenarios because I KNOW that humanity has been given EVERYTHING it needs to overcome depletion into an overheated biosphere. We can’t expect to become the space faring civilization God intended us to be without powerful energy sources and without PHS utility scale storage on the supply side.

Some environmentalists say that nuclear is “old” but I say fossil fuels (which the renewable must, in large part, be backed with, without massive PHS) is “sooo 19th century”!

Eric Wesoff's picture

Thank Eric for the Post!

Energy Central contributors share their experience and insights for the benefit of other Members (like you). Please show them your appreciation by leaving a comment, 'liking' this post, or following this Member.

Get Published - Build a Following

The Energy Central Power Industry Network is based on one core idea - power industry professionals helping each other and advancing the industry by sharing and learning from each other.

If you have an experience or insight to share or have learned something from a conference or seminar, your peers and colleagues on Energy Central want to hear about it. It's also easy to share a link to an article you've liked or an industry resource that you think would be helpful.

                 Learn more about posting on Energy Central »