Seeking Consensus on the Internalized Costs of Onshore Wind

Schalk, Yes, Internalized costs are a function of fixed and variable costs, but also, power grid dynamics and operations.  Since wind power generally makes up a smaller part of total power grids’ generation capacity and is often given 1st supply priority over more fully dispatchable reserve/backup power generation (natural gas & hydropower pumped storage for example), the published internalize costs tend to be driven towards minimum levels.  As the penetration levels of variable wind increases or the levels/mix of available dispatchable backup power or demand response decline, wind power capacity factors will directionally decrease and costs increase proportionally (as capacity factors directionally decline in order to reasonably balance power grids’ supply-demand; assuming limited available power storage capacities continue).

Besides normal variable wind/weather energy availability factors, environmental impacts on ‘at risk’ avian wildlife (bird/bats) will possibly become a growing operating constraint.  Capacity factors and costs will likely become increasingly impacted as wind turbine operations are possibly curtailed to protect avian wildlife during seasonal migrations and other potentially at risk wildlife movements; example daily sunset/sunrise movement behaviors of many bat species. 

It would be easy to deduce from your comment that the plateau in CF is due to lack of higher CF resource.  That would be incorrect.  The reason the CF has stagnated in the US is because there is little transmission reach to the best sites.  That will likely change a bit as ERCOT expands there grid and they get at some of their 50% CF region.  However, if these guys are successful running HVDC to western KS then we will see a rapid rise in average CF. 

This scenario is of grave concern to those who favor coal.  If Clean Line Energy is successful, they will enable wind to be economically deployed unsubsidized.  They currently are working on about 10 GW of HVDC.  However, most are not driven by academic discussions of possibilities.  If they get one of their power lines in, the press will light up with the potential for wind and I believe we will see an aggesive buildout of transmission capacity.  Lazards reports unsubsidized wind at favorable sites is running around $37 / MWhr.  At that price you can pay an awful lot of money to get your power to the east coast where the energy portion of the bill is more than twice that number.

Using Schalk’s spreadsheet for liquid fuel synthesis, I got the following results:

1) All windfarm output is used, and US central plains: with electricity cost of $50/MWh, 50% capacity factor, $1500/kW capital cost, 60% energy conversion efficiency, 20 year plant life, $100/kW-yr O&M, and 5% discount rate, the syn-fuel costs $4.54/GGE (gallon-of-gasoline-equiv).

2) Using off-peak wind only, bought at a discount: with electricity cost of $30/MWh, 30% capacity factor, $1500/kW capital cost, 60% energy conversion efficiency, 20 year plant life, $100/kW-yr O&M, and 5% discount rate, the syn-fuel costs $4.55/GGE.

3) For developing nations with 10% discount rate: assuming electricity cost of $50/MWh, 40% capacity factor, $1000/kW capital cost, 60% energy conversion efficiency, 20 year plant life, $50/kW-yr O&M, the syn-fuel costs $4.46/GGE.

Remember that for multi-GW scale syn-fuel plants, the capacity factor will always be higher than that of the individual wind farms, since each GWatt of fuel plant will be matched to 1.1-1.2 GWatt of wind farms, with little curtailment (See Archer-Jacobson-2007).

This could be viable with a modest carbon tax, assuming the fuel allowed vehicles which had substantially greater fuel economy than is possible with gasoline (e.g. hydrogen in fuel cells, ammonia in ICEs or fuel cells).

The University of Minnesota believes the wind-to-ammonia concept is sufficiently promising to have built an 40KWatt demo plant as described here.  It’s meant to be a proof-of-concept for an 8MWatt community-scale fertilizer plant (for 150,000 acres of corn), but as the size is further scaled up, it should approach the fuel-plant efficiency and economics described above.

Yes, Roger, in the US, natural gas is by far the cheapest energy source, once plant capital costs are included.  This is true of electricity generation, syn-fuel production, and even more so for use as a transportation or direct heating fuel.

The whole alternative fuel concept is really only viable for fossil fuel importing nations/regions (of which there are many), as well as a future US in which fossil fuel use must decrease (whether due to resource depletion or environmental/climate concerns).

But this does show that the cost of transportation fuel need never be higher than what the Europeans currently pay.  So fuel scarcity will never drive us to dramaticly restructure society, force other solutions involving lifestyle change or restrictions on consumer choice, nor will we be forced into widespread wildlife habitat destruction in the name of biofuel.

Hmmm, not sure why you are using $53 / MWhr when the PPA numbers for the central region are coming in around $20 / MWhr (figure 45) in the same report.  It appears your interest is not particularly objective.  Of course, the whole point of building the HVDC is to access the better sites which will be at the low end and, in fact, Barnard is saying that he is hearing industry experts suggesting further downward trends.  There is already transmission access to mediocre and even good sites and those are what are producing the high numbers that you try to portray as likely for the future.  Almost none to the great sites have suitable transmission access.  I invite you to take a moment to look at the maps and turbine siting in this post.  It is quite clear that the best sites are nearly untouched and it correlates with lack of transmission access. 

Also based upon my read of their site, it would appear that Clean Line Energy is well along on getting their right of ways.  What do you consider ‘a long way off?’  It sounds like you have better information.  Could you please cite credible sources that suggest that Clean Line Energy’s projects are delayed and that HVDC is a long way off?  Do you think it is further off then large scale use of CCS for example?  Also, Texas is in the process of expanding transmission to high wind areas.  I have not gotten my hands on the transmissio line maps.  But it is hard for me to imagine that they are going to be building transmission out to their low CF regions.