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Published on May 1st, 2011 | by Zachary Shahan

61

Cost of Wind Power — Kicks Coal’s Butt, Better than Natural Gas (& Could Power Your EV for $0.70/gallon)

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May 1st, 2011 by Zachary Shahan 

 

This is part of an ongoing project to create a comprehensive resource page on all things wind. Chime in if you’d like to contribute by dropping a comment below. Or send me a message on Twitter @zshahan3 or Facebook.

What’s the cost of wind power? Well, of course, it depends on where you are and who you ask. But I’m going to do my best here to share some reliable information and put it in a useful context for you. Overall, wind costs have dropped significantly in recent years, and while wind is at least cost-competitive with coal and natural gas these days, looking at its true costs indicates it is much cheaper.

How to Measure Cost

There are a few different ways you can measure electricity cost. For example:

  1. Levelized Cost of Electricity (LCOE) — the utility way (the average cost over the lifespan of the project, initial investments plus operation and maintenance costs, not including externalities).
  2. Wholesale price — hard to get complete numbers on this; many sources will not divulge them.
  3. “All In” — taking into account externalities — health/environmental costs (yes, these are real costs that we pay that, of course, vary according to the energy source).

The figures you normally see and which are provided in most cases below are according to #1, LCOE, which artificially makes the cost of coal and gas cheaper than it should be. But don’t worry, I get into #3 a bit as well.

Now, a lot of people may bring in the issue of subsidies here. Taking subsidies into account, wind would fair even better, as total historical subsidies and current subsidies heavily favor fossil fuels. For more on this matter, check out this video of AWEA CEO Denise Bode taking on FOX News.

Wind Costs Compared to Coal & Natural Gas

The American Wind Energy Association (AWEA) announced at the beginning of the year that wind power was cost-competitive with natural gas in the United States.

“Wind’s costs have dropped over the past two years, with power purchase agreements being signed in the range of 5 to 6 cents per kilowatt-hour recently.” Elizabeth Salerno, AWEA Director of Industry Data & Analysis, said. “With uncertainty around natural gas and power prices as the economy recovers, wind’s long-term price stability is even more valued. We expect that utilities will move to lock in more wind contracts, given the cost-competitive nature of wind in today’s market.”

More recently, AWEA told investors at a wind finance workshop the same thing as well as the fact that wind is now beating coal in this category and a little more on why and what’s expected in the near future (generally).

AWEA figures show that the average wind PPAs are now being priced at about 6 cents per kilowatt-hour, the same price for energy procurements from a combined cycle natural gas plant. The group says wind is actually about 2 cents cheaper than coal-fired electricity, and more projects were financed through debt arrangements than tax equity structures last year, a possible sign that wind deals are winning more mainstream acceptance from Wall Street’s banks….

[AWEA chief economist Elizabeth] Salerno credits the breakthrough in cost to improved turbine design and performance, higher towers and longer blades, which have boosted the reliability and performance of wind power generation. Equipment makers can also deliver products in the same year that they are ordered instead of waiting up to three years as was the case in previous cycles, she said, calling it a sign of a mature supply chain.

The group estimates that 5,600 MW of new installed capacity is under construction in the United States, more than double the number at this point in 2010. Thirty-five percent of all new power generation built in the United States since 2005 has come from wind, more than new gas and coal plants combined, as power providers are increasingly enticed to wind as a convenient hedge against unpredictable commodity price moves, AWEA said.

While the above statements concern wind power in the U.S. (the lowest-priced wind power market), the trend is the same worldwide.

Wind Power Costs, Prices Dropping Worldwide

“Prices have dipped below €1m per MW for the first time since 2005, according to the latest edition of Bloomberg New Energy Finance’s Wind Turbine Price Index,” Bloomberg New Energy Finance wrote in February, 2011. For us Americans, that translates to about $1.48 million per MW.

The cost of electricity generated from wind is now at record lows: several projects in high resource areas (US, Brazil, Sweden, Mexico) display a levelised cost of energy – excluding the impact of subsidies but after including the cost of capital and maintenance – below EUR 50/MWh ($68/MWh). This compares to current estimated average costs of $67 per MWh for coal-fired power and $56 per MWh for gas-fired power.” (In $/kWh, the figures would thus be less than $0.068/kWh for wind, $0.067/kWh for coal, and $0.056/kWh for gas-fired power.)

Important Note: While LCOE is widely used to compare various sources of energy, even not including the fact that it doesn’t account for health or environmental costs, it has its weaknesses. For example, LCOE for wind projects are often based on a 20-year lifetimes for wind turbines.

The oldest installed commercial wind turbines in the world, at Altamont Pass in California, were just replaced (or are in the process of being replaced) after 30 years of operation and the reason for it is a legal suit regarding endangered bird deaths — NextEra Energy Resources LLC, the company that owns the project, is replacing them with much more efficient turbines in order to reduce the number of turbines significantly.

The Department of Energy, which seems to use this 30-year assumption, found the price of electricity from new wind farm plants ranged from 4 to 9 cents per kilowatt-hour in 2009, which is competitive with other new power plants and essentially the same as AWEA reported above. However, if a 30- or 40-year lifespan were used for the projects, the costs would be much lower, as the huge majority of a wind project’s costs are from the initial investment (wind, the ‘fuel’, is free and there are minimal operating and maintenance costs).

Wind is MUCH Cheaper than Coal & Natural Gas (if You Know How to Add)

Now, as I hinted at the top, if you take the full health costs and environmental costs of various energy sources into account, wind comes out looking even better. A recent study out of Harvard found that if one adds in the hidden costs of coal then its actual price in the U.S. is more like 9-27 cents higher per kilowatt hour. The authors write:

Our comprehensive review finds that the best estimate for the total economically quantifiable costs, based on a conservative weighting of many of the study findings, amount to some $345.3 billion, adding close to 17.8¢/kWh of electricity generated from coal. The low estimate is $175 billion, or over 9¢/kWh, while the true monetizable costs could be as much as the upper bounds of $523.3 billion, adding close to 26.89¢/kWh. These and the more difficult to quantify externalities are borne by the general public.

This makes the true, “all-in” cost of coal electricity somewhere between 17 cents and 35 cents per kWh. You pay 8 cents or so per kWh on your electricity bill and then quite a bit more than that in healthcare costs, health insurance premiums, and with your tax dollars. Wind? It’s sticking to its original 4 to 9 cents per kWh.

As far as natural gas, I’m not aware of anyone doing a full cost accounting of it, or even counting in the health costs. It may not be as bad as coal when it comes to global warming emissions (though, some argue that), but it definitely emits more than wind. Additionally, water quality problems are a huge issue with natural gas, and since we are just discovering this (or it is just coming out into the open and the mainstream), I’m sure quantifying those costs is a huge task. However, again, you can be sure that there are significant costs and that there’s not the same issue with wind power.

Cost of Powering Our Cars with Wind

This is an interesting side note I thought I’d add. According to AWEA, based on the current cost of wind expressed in above sections, powering your electric vehicle with wind power would be several times cheaper than fueling up with gas now. “By powering our electric cars using wind, Americans can pay the equivalent of 70 cents a gallon at the pump,” AWEA stated. Interesting.

I don’t know how AWEA came to that conclusion — haven’t seen the calculations. If you have more info on this or want to try your hand at doing your own calculations, feel free to and shoot us your findings!

Google: Wind is Just a Good Investment, Cheap

While Google is known for its enthusiasm for clean, renewable energy now, something not often mentioned is that it is not only a clean energy leader because of its altruistic tendencies, but also because it just makes good financial sense. Catch this recent admission from one of Google’s higher-ups:

One of the main incentives for Google is financial returns. Rick Needham, Google’s green business operations manager, told me last year the North Dakota wind farms were an attractive deal for Google on the basis of the returns alone.

Wind power purchase agreements (wind is the cheapest utility-scale clean power out there) can set wind power rates around six cents a kilowatt hour for a 20-year contract, depending on location. It can sometimes cost even less with federal subsidies. As Lux Research analyst Ted Sullivan told me in an interview last year, “That’s pretty cheap.”

More sophisticated information on wind power costs, how it is driving the price of electricity down, and a look into my crystal ball to talk about the future are coming in my next article. Keep your eye out for it.

Related Stories:

Image via clarkmaxwell

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About the Author

spends most of his time here on CleanTechnica as the director/chief editor. Otherwise, he's probably enthusiastically fulfilling his duties as the director/editor of Solar Love, EV Obsession, Planetsave, or Bikocity. Zach is recognized globally as a solar energy, electric car, and wind energy expert. If you would like him to speak at a related conference or event, connect with him via social media. You can connect with Zach on any popular social networking site you like. Links to all of his main social media profiles are on ZacharyShahan.com.



  • Grey Winters

    Bwahahaha. Just 3 years later and Germany, a leader in alt fuels is dumping alt fuels for coal fired power plants After a $130,000,000,000.00 in tax payer subsidies down the tubes Germans are calling alt fuels a massive money pit that is causing Germany to go bankrupt.

    • Bob_Wallace

      Oh, bullshit. Quit snorting Koch.

      Your comment is 100% fail.

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  • Ldave

    Zach, what do you think of Gemasolar’s accomplishment in Spain recently, operating a solar thermal power plant 24 hrs/ day using thermal storage vessels (molten salt), charged during the day, to provide continuous, on-demand 24 hr/day power? Of course, these are experimental projects, so they are off topic in a discussion of levelized costs and such. But it sure drops a flaming arrow into the throngs of naysayers that eqate renewables with ‘intermittant’ and ‘unreliable’, doesn’t it?

    • Rosa Goldman

      All such storage solutions not only add cost and diminish usable power (there is always a loss of energy involved), but they also underscore a certain impracticality of scaling off-grid kludges to a large system.

      • Bob_Wallace

        Yes, but you miss a most important point.

        There are times during which stored power is much more valuable than when that power might have been generated.

        We built over 20GW of pump-up hydro storage in the US many years ago because nuclear plants were putting out power into low demand nighttimes, but that power had great value in the middle of the day when demand exceeded supply.

        As we scale up renewable we will need storage to time shift power from when it’s readily available (and cheap) to when supply is sketchy.  Sure, we will loose a bit, but that’s just part of the cost of doing business.

        • Ldave

          Directly on point, Bob. I, personally, consider Gemasolar’s accomplishment a milestone in solar sourced electricity generation that began years ago right here in the states with Solar One. Most people are aware that a better battery would be most useful. With solar thermal plus storage, there it is right in front of you… a low loss battery for offsetting thermal production from electricity production.
          As far as ‘adding cost’ and ‘diminishing useable energy’, I can only refer you to their design. The plant started with a known daytime demand. They then built a standard power tower arrangement, using heliostats and a central tower receiver with molten salt as heat transfer fliud. Except that they built more heliostats than needed to meet daytime demand and used more molten salt than needed to drive a standard steam turbine for daytime demand. The excess mirrors create excess heat (which would otherwise be wasted, as this is heat in excess of demand), which is stored in the excess molten salt in a well insulated vessel, awaiting nighttime or passing clouds to be utilized for steam generation when temp gradient at central tower falls. The comment on the ‘certain impracticality of scaling off-grid kludges to a large system’ is rather ironic in that anyone with a basic understanding of thermodynamics knows that the larger the storage vessel for a thermal process, the more efficient it is; that is, the losses become less the larger the vessel is by an order of magnitude. So, in point of fact, to the above naysayer, in this case, scaling to large scale makes storage more efficient and, thus, more practical, not less. For the Gemasolar project, estimated losses relevent to storage as a function of instantaneously useful: 3%.
          And thankyou, Rosa, for playing naysayer right on cue.

          • Jeff Bullard

            But its still 5x too expensive even with Mojave Desert insolation and California energy prices. Even with the molten salt technology the power company and their Google investor wanted to scrap the plan and go with a photovoltaic system instead due to the falling prices of panels. The company went out of business and their German parent company went bankrupt before it was even built despite having federal loan guarantees. The Ivanpah plant will go forward apparently with new fananciers.

          • Bob_Wallace

            What number are you using for your “5x too expensive”? And how does that compare with what utilities are now paying for peaking power?

          • Dave Long

            Jeff:
            Regarding Gemasolar and similar plants planned:
            ‘Energy from the plant does not come cheap: it is costly compared with burning fossil fuels. Yet experts expect future plants to be competitive. “The cost of electricity generated from a plant like Gemasolar, if it were built in southwest US, would probably be in the range of 13 to 16 cents per kilowatt-hour,” says Glatzmaier. That’s thanks to the sunnier weather in the region, and government tax incentives. Trailblazing technology Gemasolar has set a precedent that others are following. “We have a [similar] plant under construction right now inNevada, which will come online December 2013,” says Bill Gould of SolarReserve. “That plant has a 120-megawatt capacity – the equivalent of 200,000, maybe 300,000 homes,” he says. Electricity from that site would be close to competitive with fossil-fuel power, which costs between 6 and 10 cents per kilowatt-hour. Such prices would also bring it into line with other…’
            5X more? Not. Cheap? Not yet. But remarkably competitive considering that coal and gas have been around a rather long time and are well established technologies.
            Also, I’ll reiterate this point once more: you’ve missed the point of the innovation. Photovoltaics are ‘intermittant’ sources. And as such can only augment what are known as ‘baseload’ sources, sources that can supply 24 hrs/ day, on demand. Solar thermal with storage represents a milestone transition to ‘baseload’ capability with solar source.

          • Bob_Wallace

            Let me suggest a rework of this paragraph…

            ” Also, I’ll reiterate this point once more: you’ve missed the point of the innovation. Photovoltaics are ‘intermittant’ sources. And as such can only augment what are known as ‘baseload’ sources, sources that can supply 24 hrs/ day, on demand. Solar thermal with storage represents a milestone transition to ‘baseload’ capability with solar source. ”

            Photovoltaics are variable sources. As such they require ‘fill-in’ supply such as storage or dispatchable generation in order to totally replace old tech ‘always-on’ generation. Solar thermal with storage is possibly a very useful fill-in. It will have to compete with solar/wind production stored using other technologies.

          • Dave Long

            Certainly a valid reworking of that paragraph. But perhaps neither version, ‘intermittant’, ‘variable, or ‘fill-in’, really says it like it is. While solar resource isn’t intermittant in the same sense as wind, its major achilles heel is that it doesn’t present at night. At some point these plants around us that produce power at night will reach their lifetime end point. We may have all the daytime generation in the world from clean sources, but what shall we do with night? Now, I’ve seen the nighttime photos from orbit that show our lighting demands (alone), and they are significant. ‘Fill-in’ is, IMHO a bit of weak characterization of this, as half of the solar day is night, on average. It’s these both kinds of intermittancy that leads power generation operating companys to estimate that only up to about 15% of total load can come from these sources unless a gamechanger is found.

          • Bob_Wallace

            The Sun does shine during our peak demand hours. That’s real handy.

            We’ve got a couple/three options.

            1) Continue to use fossil fuels and really screw ourselves.

            2) Build a lot of nuclear and drive the price of electricity through the roof.

            3) Convert our grid to renewables. That means that we have to find ways to work with more variable inputs than we now have. (All generation is variable, just some more-so than others. Notice how San Onofre recently became absent?)

            The fill-ins for variable wind and solar will likely be dispatchable generation such as solar and biogas as well as storage. As someone who lives off the grid with solar I know that a combination of wind + solar + storage + dispatchable generation works. I’ve lived it for over 20 years (less the wind input).

            BTW, it’s 25% wind and solar for the Eastern grid, 35% wind and solar for the Western grid. 40% for the Hawaiian grid. EVs on the grid will take these allowable penetration levels higher.

            That’s for the grid as it now is, no additional storage or dispatchable generation. We’re busy converting from coal to natural gas. All that NG will be dispatchable generation which will allow penetration levels to go even higher.

            And I didn’t mention dispatchable load, except indirectly via EVs….

          • Dave Long

            Clearly, we’re on the same page here. I would dispute this statement however:
            BTW, it’s 25% wind and solar for the Eastern grid, 35% wind and solar for the Western grid. 40% for the Hawaiian grid. EVs on the grid will take these allowable penetration levels higher.
            It is my understanding that these numbers are for ‘renewables’, which include hydropower, which currently accounts for about 60% of ‘renewable’ generation, and is, notably, baseload quality power… its not variable and is on-demand. My understanding of things is, however, a moving target, and I’m willing to entertain visionary ideas. I have trouble, though, getting past the management of such a large fraction of variable generation.
            And kudos to you for operating a successful off-grid system. I’m not there yet. But I’m sure that you manage your daily usage based on generation. Can we really expect the average American to do that, given the disconnect the average person has from generation?

          • Bob_Wallace

            I’m pretty sure 35% = 30% wind and 5% solar. I’ll try to look it up tomorrow, but I’m running out of steam at the moment.

            I don’t have any expectation that the average American would be willing to manage their own power system. I do so only because it would have cost me very major money to hook to the grid.

            I think we will gradually move from a fossil and nuclear grid to a largely wind/solar grid with background inputs from geothermal, tidal and some biomass. Some more hydro than we have today. Hydro might go above 15%. But wind and solar are likely to be so cheap that they will store at prices hard for new hydro to match.

            The big question for me is whether storage will be battery or pump-up hydro. I thought it might be hydro but new battery technologies are emerging that are very promising. The MIT liquid metal battery, for example, is made from dirt cheap materials and a prototype has already exceeded 7,000 charge/discharge cycles with about zero performance loss.
            Another option is the Aquion sodium-ion battery that should be fairly cheap to manufacture and has undergone over 5,000 cycles by an independent lab with little or no performance drop. Aquion should be manufacturing in a few months, they’re right now setting up the factory.

            A year or so ago two or three California utilities (PG&E, SMUD and possibly one more) were talking about building new pump-up storage and
            another utility (San Diego?) was talking about a CAES facility. That talk seems to have gone quite and that makes me wonder if they aren’t seeing batteries as a more viable solution for storage.

          • Bob_Wallace

            I found the western grid part…
            May 26, 2010NREL Study: Western Grid Can Handle Increased Wind and Solar Power

            A new study shows that it would be possible for the Western power grid to draw 35% of its electricity from wind and solar energy sources by 2017. The Western Wind and Solar Integration Study (WWSIS), released by DOE’s National Renewable Energy Laboratory (NREL) on May 20, examines the benefits and challenges of integrating wind power, solar photovoltaic systems, and concentrating solar power onto the grid. The study concludes that while additional infrastructure isn’t needed, key operational changes are required to meet this target. The report focused on the power system operated by the WestConnect group of utilities in Arizona, Colorado, Nevada, New Mexico, and Wyoming.

            http://apps1.eere.energy.gov/news/news_detail.cfm/news_id=16041

            I just noticed that this doesn’t include Washington and Oregon with all their hydro….

          • Dave Long

            I stand happily corrected. I assume that the ‘key operational changes’ are very fast switching equipment, the availability of which has, no doubt, been driven by the accelerated development of variable renewables themselves. Arizona, Nevada, and Utah do have significant hydro on the Colorado: Glen Canyon and Hoover Dams.

          • Bob_Wallace

            IIRC the main operational change is to sell power in 15 minute rather than one hour blocks. That’s something easily done with computers running the actual transactions as opposed to guys on telephones.

            Seems that several wind farms are installing enough on site storage to allow them to be able to guarantee delivery in 15 minute blocks.

            A fifteen minute heads-up gives fast start-up gas turbines time to spin to full speed.

            Hydro, with the turbine spinning without load, needs no time.

          • JOE

            i want a windmill

          • Bob_Wallace

            Got some corn to grind?

          • http://cleantechnica.com/ Zachary Shahan

            i don’t think it will be on the US consumer to do that — will be on the utilities, with improved technologies. getting close, and would discount human innovation on such a minor (compared to what we’ve accomplished technologically) issue.

          • http://cleantechnica.com/ Zachary Shahan

            However, with a lot of wind, which mostly blows at night, a lot of solar, and a decent grid, i think it is more like fill-in.

    • http://cleantechnica.com/ Zachary Shahan

      Hey There,

      I’m a big fan of the pioneering work they’ve done there. As you said, these are early projects — price should come down with time. And they provide some great advantages that are hard to compete with these days. Love what Spain has done there. -Z

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  • Anonymous

    Could you find sources [articles] that explain how wind energy gets around intermittency issues? Can it be overcome with geographical distribution, electrical storage , or what? If storage, in what form and at what cost? Could it be used for uses for which intermittency is not relevant?
    Thank You, J.O.

  • Gth1087

    Thank God for the progressives/liberals in Europe for leading the way on wind power. Independent reports have consistently revealed an industry plagued by high construction and maintenance costs, highly volatile reliability and a voracious appetite for taxpayer subsidies. Such is the economic strain on taxpayer funds being poured into wind power by Europe’s early pioneers — Denmark, Germany and Spain – all have been forced to scale back their investments. Middle class American’s always pay the lion’s share for this crap; our money can be invested in other ways. Wind is free however; the cost of transferring wind to power is very expensive.

    • Anonymous

      I had to read this twice to get some idea of what you were trying to say.
      Oh, the wasted time….

      Wind is one of the two cheapest ways to make electricity and on the way to becoming the cheapest as natural gas prices rise and the price of wind turbines continues to fall.

  • James

    You think farmer can make 1000 acres of wheat with electric tractors and combines? How about a 80,000 lb transport truck going cost to cost with frozen beef.
    When I see this I will know electric transportation is here.

    • Tony

      The irony is electric transportation is here. Investigate how locomotives and large mining dump trucks work. They do use diesel fuel but they also use electric motors to move that much weight. Maybe a 150hp hybrid farm tractor or semi is an alternative that could work with today’s technology.

      • http://cleantechnica.com/ Zachary Shahan

        Good point.

    • Bob_Wallace

      A tractor plowing a large field or a combine working grain doesn’t travel very far during the day. Lots of movement in a restricted area.

      Imagine a system in which a ‘big electric wire’ was located somewhere close. The tractor/combine ran on exchangeable battery packs. A truck brought charged battery packs into the field and took the discharged pack back to the charging station.

      Tractors and combines would be great were they run by electricity. Bunches of torque at your fingertips.

      The other option is biofuel. It’s likely we might never figure out how to run everything on electricity. But if we can run ‘almost everything’ with electricity then we could afford to do the last few percent with fuel we grow.

      Long distance trucks? Move to electrified rail.

      Having big trucks rumbling down our highways is inefficient. Once we have high speed rail it will be a lot cheaper and faster to send things by rail.

      • Waywardson286

        I have to disagree with ya Bob, and Not just because I’m a truck driver. I worked for a company in 04 that was contracted to fuel and service locomotives for the BNSF. There was one coal train that I serviced every other day on a regular schedule (everyday on a rush schedule during the holidays) that traveled approximately 500 miles on a round trip from the power plant in Fort Collins, CO to the coal mines in Gillette, WY. the fastest that train could make a round trip was about 27 hours, and that’s if nothing got in the way, like the dozen trains leaving Denver headed north or a backup of coal trains trying to get loaded and rolling again. The problem with trains is track and crew availability. There are places in nearly all major cities where trains become bottle necked and have to wait on each other. I once sat for 10 hours waiting for a train to make it to the fueling spot that never made it that day, because of the bottleneck issue. You put a couple hundred million dollars worth of meat or produce on a train and let it get bottle necked outside a city or trying to get to fuel and you’ll have rotten meat or produce, and meat packing companies going broke in a heart beat. Granted, trains haul more freight and because of that they use less fuel, but the time it takes to navigate through some major cities or into a rail yard to be unloaded is why trucks are better than trains, especially for time sensitive loads like meat and produce. A truck can run L.A. to New York in 3 days where it takes a train a week or more. As far as high speed rails are concerned, we’re not going to have high speed freight rails. For passenger trains sure, but not for freight trains.

        • Bob_Wallace

          What your really saying is that our rail system needs improvement.

          The CA HSR system was originally designed for freight on a separate set of tracks.

          Don’t know if it will happen, but there’s no reason we can’t work our way to a system that can move freight faster than trucks.

          Perishable loads could travel on HSR at night when the lines are not getting used for passengers.

        • http://cleantechnica.com/ Zachary Shahan

          your view of what trains are capable of is very limited by your experiences.

          check out the trains in Europe, China, and Japan — a completely diff story.
          unfort., such limited thinking is what keeps the US in the dark ages on this one.

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  • Anonymous

    I do the math in a simpler (but not as elegant) fashion.

    An EV like the Nissan Leaf uses about 0.35kWh per mile.

    The US average price for electricity is (was a few months ago) $0.1275/kWh.

    That means $0.045/mile, plus a little for charging losses.  Perhaps 10%.  Call it $0.05/mile for easy math. 

    ($0.1275 * 0.35 + 10% = $0.049)

    The operation-efficient option to an EV would be a 50mpg hybrid.  To drive a mile with a 50mpg ICEV you would need to fuel it with $2.50/gallon gas.

    (50 * $0.05 =$2.50)

    It’s not the physics way, but it’s easier for the average person to follow.

    (Of course we are likely to pay less for our charging power when we plug in off-peak.  Eight cent electricity equals $1.54/gallon gas in a Prius.)

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  • Anonymous

    Interesting article and discussion.
    The analysis needs to include further adjustments:
    ADD costs for real cost of state and federal transportation programs (maintaining existing roads, planning for new/improved transportation infrastructure, regional public transportation subsidies, etc.).
    SUBTRACT costs which subsidize current international security costs associated with imported petroleum.
    IT STILL LOOKS LIKE A PRETTY GOOD DEAL WITH ASSURANCE OF PRICE STABILITY, UNLIKE THE GASOLINE PRICE/UNCERTAINTY ROLERCOASTER OF THE PAST 35 YEARS.

  • AndrewW

    DOE provide some real facts, which are better than AWEA-cheerleaders.

    Wind will still be expensive in 2016, $.15-.19 kWh:

    Intentional misinformation is killing the green movement.

    • Anonymous

      The Department of Energy reports the 2009 average wholesale price of wind-electricity as approximately$0.045/kWh.

      It was up about a penny higher than 2005 prices due to a now-resolved shortage of wind turbines. High demand for turbines allowed manufactures to hike turbine prices which forced production prices higher.

      Page 32…

      http://www1.eere.energy.gov/windandhydro/pdfs/2009_wind_technologies_market_report_slides.pdf

      Four and a half cents. And a range of about 3.3 cents to 5.3 cents. Add in the 2.2 cent PTC and subtract out undisclosed wind farm profits to arrive at the production costs. Ballpark = a nickle.

      • AndrewW

        You keep missing the point: the price that utilities pay for wind is not the COST of that electricity. DOE has the costs correct – $.15 – $.19 per kWh. Subsidies make up the difference in price/cost. The suggestion that wind electricity COSTS less than NG or Coal is just silly ignorance.

        The reality is that many of the wind farms built in the last few years will NEVER perform profitably without subsidies of 60-70% (current).

        We need “clean, affordable and scalable electricity” to solve our energy needs – wind is not.

        • Anonymous

          OK, Andrew, educate us.

          1) Where is the roughly ten cents per kWh subsidy you claim? The ten cents in excess of the recognized 2.2 cent PTC.

          2) Do you think coal should be charged for its “hidden costs” – the health and environmental damage which it causes and which we pay via tax and insurance premium dollars? The additional nine to twenty-seven cents per kWh.

          3) Do you think we should recognize the roughly six cents per kWh subsidies which nuclear receives?

          4) Do you understand that the current price of NG-electricity is artificially low due to market glut and the price of NG is likely to be as much as 50% higher next year? Furthermore, do you realize that the ‘six cents’ price for NG is for a plant that is on 24/365, and not a NG plant which has to spread its fixed costs over fewer than 24 hours a day?

          Oh, and how about the subsidies NG receives. Include them or not?

          And please read my comment to which your replied.

          Production cost, if you want to figure out what it is then take the wholesale 3.3 cents to 5.3 cent range, add in the 2.2 cent PTC and subtract out undisclosed wind farm profits to arrive at the production costs.

          Ballpark = a nickle.”

          • Jeff Bullard

            @Bob “1) Where is the roughly ten cents per kWh subsidy you claim? The ten cents in excess of the recognized 2.2 cent PTC.”

            Its in an accelerated 200% depreciation benefit provided by the federal tax code to wind farms to help them recoup invested capital. It allows wind farm to deduct accelerated depreciation from their tax. The depreciation deductions range from 15% – 30% of capital investment each year for the first five years of operation. That adds up to about 5 cents/kWh of power generated plus the approx 2 cents/kWh PTC. Additionally wind farms (and solar) receive property tax reductions that usually come in at about 70% reduction depending on state which is a massive amount of tax savings considering the amount of property. It all adds up to about 12cents/kWh in tax benefits.

            To be fair, oil and gas plants also get the depreciation of capitol tax benefit, but at a much lower rate and spread out over the lifetime of the facility rather than first five years.

          • Bob_Wallace


            That adds up to about 5 cents/kWh of power generated plus the approx 2 cents/kWh PTC.”

            Five plus two does not equal ten plus two.

            And, is it not the case that wind farms have to choose between accelerated depreciation and the PTC?

            “Allows PTC-qualified facilities installed in 2009-13 (2009-12 in the case of wind) to elect a
            30% ITC in lieu of the PTC. If the ITC is chosen, the election is irrevocable and requires the
            depreciable basis of the property to be reduced by one-half the amount of the ITC. If the ITC is chosen, the election is irrevocable and requires the
            depreciable basis of the property to be reduced by one-half the amount of the ITC.”

            American Recovery and Reinvestment Act of 2009

            Now I could spend some time verifying/disproving your “80% recoup of capital ex”, but I’d rather you document it.

            I suspect you are adding 30% ITC and 50% depreciation basis to get 80%. And that ain’t right. It’s a misunderstanding of depreciated value.

            And, please, get your facts from laws in effect, not stuff from anti-wind sites.

          • juangault

            i wanted to share an update to an article I read in the local newspaper while on vacation. It would be good to see the “bottom line” numbers on these projects, but looked through the lenses of local values.

            http://www.mauiweekly.com/page/content.detail/id/509765/Auwahi-Wind-Farm-Breaks-Ground.html

          • Bob_Wallace

            Thanks for that. If there is anywhere in the US that should be installing lots of renewables it’s Hawaii with the price they pay to gen power from oil.

          • http://cleantechnica.com/ Zachary Shahan

            Thanks. Hawai’i has some tremendous resources. In a perfect world, I think it would be the 1st state to go 100% renewable.

          • Bob_Wallace

            Hawaii might be second, Idaho has a big lead.

            84% hydro, 90% renewable total.

            Or maybe third. Washington State is about 80% renewable.

          • http://cleantechnica.com/ Zachary Shahan

            Good call. :D

          • bob

            Your vastly overestimating the value of early depreciation. It’s a basic time value of money equation * a modest percentage of the cost of building wind farms. (Actual benefit closer to 1/2 cent /kwh not 12 cents.)

            -Accountant

  • http://rucio.livejournal.com/ Rucio

    Subsidies aren’t accounted for here, nor the sale of green tags in addition to actual energy. Since taxpayers foot two-thirds to three-fourths of the cost of building a wind facility, that “externality” takes the cost from 6 cents to 18-24 cents per kWh. Green tags, or renewable energy certificates sell at about $50/MWh, bringing the cost of wind to 23-29 cents/kWh.

    • Anonymous

      Subsides are talked about in this article and will be handled more thoroughly in future releases of this ongoing series. Specificially, wind benefits from a 2.2 cent/kWh production tax credit (PTC). They pay a lower income tax rate on power produced, a benefit given to most new sources of clean energy.

      Please provide substantiation that “taxpayers foot two-thirds to three-fourths of the cost of building a wind facility”.

      • Dave

        I do a lot of contracting in rural Saskatchewan and have meet 4 people who have wind turbines… not one of them would do it again.
        Setup cost was justified by almost perfect conditions which never occure. The best one person got was about 50% of what he expected. Worst was 25% when running at 100% capacity.
        Bottom line is there are countries that tried going wind in a big way only to find it was a complete waste.
        You still need the traditional infastructure to supply power when wind cannot… why spend money on a second unreliable source.
        The key is an advancement in battery technology and a good source of energy like hydro and nuclear.
        The planet is at 6B people we are not all going to eat organic tomatoes and use wind power..

        • Dave

          Also our city is looking at putting up a large turbine. They project a 10% return on investment. BS when the government says 10% return it will probably be more like -30% once done. I would bet anything it will cost more and produce less than the people pushing this say it will.
          It is not going to fly though as there are enough reasonable people to see the folly in this stuff and there is a growing number of people outraged that the city is thinking of spending money on this.
          I love the idea of wind but expectations are not relistic.

          • Anonymous

            ” BS when the government says 10% return it will probably be more like -30% once done.”

            You just make up facts to suit your bias, do you Dave?

          • http://cleantechnica.com/ Zachary Shahan

            Dave, a ton of communities and individuals have benefited immensely from new wind farms. Wind is now over 20% of Iowa’s & South Dakota’s energy supply, and climbing…

            A Colorado utility had 55.6% of the electricity on its grid coming from wind at one point last year.

            Wind is driving down the cost of electricity around the world.

            You might want to look at its potential & benefits a bit more before trying to shoot down your local project.

            http://cleantechnica.com/2011/12/29/wind-energy-top-10-2011/

            http://cleantechnica.com/world-wind-power/

        • Anonymous

          “Bottom line is there are countries that tried going wind in a big way only to find it was a complete waste.”

          Some facts please. I’ve never heard of these countries.

          Have you ever seen anyone suggest that we run the world on nothing but wind power?

          Or eat nothing but organic tomatoes?

        • http://cleantechnica.com/ Zachary Shahan

          Dave, there are plenty of testimonials out there of farmers and
          others leasing their land that show wind as a great option. Of course, everything isn’t a win for everyone.

  • http://dottribes.com/iev Corina|EV

    Really amazing how low the price got! And a 20-year contract?! That would be a great accomplishment!

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