Snowtown II: Wind Power At A Cut-Throat Price!

Snowtown is a small rural community which is famous throughout Australia on account of how it once snowed there. Or possibly the place was simply named after a man called Thomas Snow. Either one. Land nearby is already the location of the imaginatively named wind farm Snowtown I, and is now the construction site for a brand new wind farm for which they’ve really gone out on a creative limb for and named Snowtown II. When completed towards the end of 2014 it will be Australia’s second largest wind farm and South Australia’s largest. One very exciting thing about this wind farm sequel is it looks set to provide some of the cheapest grid electricity in Australia. But more on that later. Now it’s time for me to give some bodacious details about this development.

Ninety Siemens wind turbines of three megawatts capacity will be erected on 80 meter high steel pylons for a total of 270 megawatts. The blades on 80 turbines will be 53 meters long while the remaining 10 will have 49 meter blades. Local farmers will receive $2.4 million a year for the use of their land and the expected lifespan of the wind farm is 25 years. Enough electricity will be produced to meet the demand of 90,000 Australians or 173,000 Italians. The total cost will be $439 million Australian which is $413 million US at current exchange rates.

The turbines are a gearless direct drive design. Not having a gearbox cuts the number of moving parts almost in half and saves money by reducing maintenance requirements by about 20% while having the disadvantage of increased weight. An interesting thing about this design is it rotates the generator around a shaft which is the opposite of how it’s usually done. Another interesting thing is that 10 of the turbines will have blades 4 meters shorter than the others meaning they will catch about 14% less wind. While this may seem a waste as it will make them less efficient in slow to moderate winds, they will be able to keep operating at very high wind speeds that can force longer bladed turbines to shut down and so makes the output of the wind farm more constant.

One thing I should probably tell you about Snowtown is the place really blows. It blows so much that the existing wind farm has an excellent capacity factor of about 42%. This is one of the reasons why the new development will provide electricity at very low cost. Just what the exact cost will be depends on a variety of factors, but since air is currently free this means wind power has no fuel cost and so the capital cost of borrowing money is the largest component. Using a 5% discount rate and a 25 year lifespan gives a capital cost of 3.1 cents per kilowatt-hour produced. This may actually be a little high as the current parlous state of the world economy means it might be possible to borrow money for less than 5%, but it would be almost correct for Australia and as these sorts of calculations often use a 5% figure there are benefits in being consistent. Note that in places such as Europe, Japan, China, and the USA it is possible to borrow money at a considerably lower rate which significantly decreases the capital cost of wind power for them.

In addition to the capital cost there are payments to farmers for using their land. While less than 1% of the land will be removed from use by the wind turbines and they will improve the land by reducing wind speeds, the payments do add up and increase the cost of electricity to 3.4 cents per kilowatt-hour produced. Then there’s the cost of maintenance, integrating wind power into the grid, and other miscellaneous costs. Just exactly what they will add up to for the latest direct drive wind turbines I’m not sure, but a very rough rule of thumb for modern wind farms is 2% of the total capital cost per year which gives a total amount of 4.3 cents per kilowatt-hour.

But are my estimates correct? To check that I’m not merely tilting at windmills of the mind, I looked up the costs of running a wind farm given by the United States’ National Renewable Energy Laboratory. Adding the latest figures from 2012 for the fixed and variable costs for wind power to the capital cost give a result very close to my own of around 4.4 cents a kilowatt-hour or about 4.1 American pennies. Given that the average cost of Australia’s mostly fossil fuel generated electricity is about 5.6 cents a kilowatt-hour that’s quite a bargain. And the cost may actually be lower because, generally speaking, the more modern a wind farm is the lower the maintenance costs.

Some people mistakenly believe that electricity from wind farms isn’t as useful as that from coal power because wind is variable in its output, but when it comes to selling electricity to customers wind and coal power are basically equal. In Australia our electricity market is divided into two parts. The main part is selling electricity to consumers and over the time scale that electricity is sold we can very accurately predict the output of wind farms making wind and coal power almost the same for this purpose. The other much smaller part of the electricity market involves stabilising the grid and making sure it can deal with sudden increases in demand or falls in the supply of electricity. In Australia we call this ancillary services. And when it comes to ancillary services wind power truly sucks. It sucks because the wind does not blow on command. But the solution to this is simple. Don’t use wind power for ancillary services. It’s a really stupid thing to do. While it’s not hard to find people on the internet complaining that wind is not suited for providing grid stabilisation, it makes about as much sense as complaining that steel wool is not good for polishing your car. It’s not supposed to be!

The low cost of electricity from Snowtown II combined with other developments such as the decreasing cost of solar power means that Australia will never build another coal power plant. This is something I’m very excited about. Renewable energy schemes like Snowtown II will leave coal for dead in Australia and that’s something you can take all the way to the bank. Local residents are also very excited about the wind farm and in fact it is the most interesting thing that has ever happened to Snowtown. If you don’t believe me, ring up the town and ask them. I dare you.