The Science of Doom

Recap

In Part I and IV – Wind, Forecast Horizon & Backups we looked at a few basics, including capacity credit which is basically how much “credit” the grid operator gives you for being there. If you are a 1GW coal-fired power station you probably get around 850MW – 900MW capacity credit. This reflects the availability that your power generation offers. The grid operator needs to ensure the region or country can meet the demand in any given second, minute, hour, day, week, month and year.

And so the grid operator’s calculation is a statistical one – given a “fleet” (always a strange name to me for such immobile units) of generating units how can we be sure that we can meet demand in every minute of the year? Conventional generation (gas, coal, nuclear) is mostly “dispatchable” – which means that, apart from unexpected outages, you can choose to run the gas plant or nuclear power station when you want.

Wind power, on the other hand, is not dispatchable. And it turns out that its capacity credit, as a proportion of actual capacity, reduces significantly as its penetration into the network increases. Another way of saying it is that wind is less reliable than conventional generation at any given point in time and this problem gets worse the more wind power you have available.

However, this doesn’t present some insuperable obstacle to using wind. What it means at the moment in various countries is that you can use windpower when the wind is blowing, and when it’s not blowing (or not much) you can crank up a gas plant. As wind power penetration grows in a given network the variability of this ever larger power source must result in less efficiency of the conventional units operating at part load or in reserve. Everyone agrees on this point. However, in this series so far we have not reviewed any actual papers or data on the loss of efficiency – something to look forward to.

Baseload Power

On a different point – the focus of this article – the intermittency of windpower raises an important question, especially as it is the cheapest source of renewable energy (given that hydro is “tapped out” in most developed countries).

Is it possible to generate base load power from wind?

If not, then there is clearly a limit to the growth of wind power. (We have already covered some real problems of high wind power penetration in V – Grid Stability As Wind Power Penetration Increases – those problems haven’t gone away). This is related to the question of the maximum reduction in GHG emissions from electricity generation while “keeping the lights on”.

Generally we can think of increasing wind power in a region as creating a benefit and a problem:

• the benefit – more wind power usually means more geographical dispersion which averages out peaks and troughs (see IV – Wind, Forecast Horizon & Backups)
• the problem – more wind power means peaks and troughs cause more problems for the grid (a 100MW unforecast fluctuation over a few hours is easily dealt with in most countries, but a 5GW unforecast fluctuation is more problematic)

So.. on with this article..

In Czisch & Ernst (2001), the authors consider a massive area wind power network. I don’t believe this paper is a complete answer because some questions are unanswered, but the idea is instructive.

As they state:

Europe currently has by far the highest installed wind power capacity of all regions in the world. However, this is not due to Europe being the best possible place to build wind power, but rather to a favourable political climate

It is a slightly different take on the question I asked in X – Nationalism vs Inter-Nationalism – why is Germany building windfarms in Germany instead of places with lots of wind?

In the graph below “Full Load Hours/Year” is basically a way of showing capacity factor (not to be confused with capacity credit). Capacity factor is average output/nameplate and depends how much wind you get – across the UK capacity factor is just over 30%, in Germany it is around 18%, in Oklahoma, maybe 41%.

In this genre of papers it’s common to dispense with the crazy idea of percentages – who can understand them? Instead of percentages, let’s use the much more intuitive idea of the output expressed as if the wind farm ran at full load for x number of hours in the year. So 2100 full load hours = the old school 24% (2100/8760)..

Anyway, via color coding (which at least follows a familiar pattern), we see why Ireland and the north of the UK has a windfarm advantage, along with European and African coastal regions:

Figure 1

The data above is based on wind speeds taken from reanalysis data (from ECMWF). “Reanalysis” is basically a blend of data and models filling in the blanks where data doesn’t exist. (See Water Vapor Trends under the sub-heading “Filling in the Blanks”).

Then they look at the correlation between different sites, based on actual measurements.

For people new to wind power, a low correlation is good. A high correlation is bad. Why? If you have 1000x 3MW wind turbines and the correlation of output power between the turbines is high then they will be producing 3GW some of the time, 1.5GW some of the time, and 0GW some of the time – their output power rises and falls in unison. If the correlation is low then they will be producing (for example) 1GW nearly all of the time – this is clearly much better – as one turbine slows down, another speeds up.

Low correlation implies sustained output. High correlation implies big peaks and troughs.

As we might expect – as the turbines get further apart their output power correlation reduces = good. For example, the wind in London is well correlated with the wind in Reading, England (60km apart), but not well correlated with the wind in Moscow (2,500 km apart).

And for any given geographical separation the correlation is higher (=bad) as we consider longer time periods. This is also expected. There might be considerable minute to minute fluctuation between two sites due to the turbulent nature of wind, but the average across 12 hours will be more correlated because the overall weather patterns cover bigger areas:

 

Figure 2

Super Grids

Now let’s look at longer time periods and longer distances (I don’t understand the dots in this graph):

Figure 3

The paper goes on to select the best regions, place large hypothetical wind farms in those regions and calculate the wind farm output:

The potentials described in the above section altogether make a capacity of nearly 950 GW and close to 2800 TWh annual electricity production. This is more than the total demand of the EU countries plus Norway which was 2100 TWh in 1997. The average production exceeds 2900 full load hours.

Electricity consumption in the EU has increased a fair bit since 1997 – EU consumption in 2014 was about 2800 TWh (which for reference is about 320GW continuously) – I’m not sure if this represents economic growth, adding countries to the EU or both.

But the regions that they propose have more than sufficient wind to meet much higher output. The population density is low and wind potential is high in the regions they select. Unlike the places where most European wind power is being built at the moment (with high population density and low wind speeds).

The key lines in the graph are the red line = demand and the black line = supply for one scenario:

Figure 4

Discussion

To me their paper doesn’t quite complete the picture. They provide some more insights, including transmission and storage requirements, and propose providing baseload power but not peak power for the whole of the EU. Given the potential wind power in the regions they select it’s not clear what limits actually exist.

The questions seem straightforward:

1. For a given scenario (nameplate per region) produce the usual graph of hourly output, not as a time-series, but in declining output order (e.g. fig 6 below), so we can see for how many hours the output drops below key values
2. Calculate the actual nameplate capacity needed in the various production regions to ensure “Loss of Load Probability” (LOLP) below the standard 9 years per century (or some other metric)

Armed with this data we would be able to see the number of wind turbines required and the transmission requirements between each region. And what, if any, pumped hydro storage would be needed in addition. And what, if any, conventional backup generation would be needed.

In a scenario with wind power producing a large portion of EU energy any problems get amplified.

For example – and this is just my example – if we built a wind network to supply say 320GW it might be a nameplate capacity of 900GW (something like 450,000 wind turbines of 2MW). But if our analysis showed that individual regions at any given time would be supplying most of the load, the nameplate capacity of the whole system might need to be 3TW (1,500,000 wind turbines). If the system instead had gas power as a backup for say 10% of the time when the wind “super-system” dropped well below the demand, the fuel cost would be relatively low, but the construction cost would be very high for the power supplied – because we would have built 300GW of supply to run just 10% of the time.

Some of these ideas are taken up by other papers.

In Archer & Jacobson (2007) the authors look at the statistics of wind energy across 19 sites in the midwest of the USA:

In this study, benefits of interconnecting wind farms were evaluated for 19 sites, located in the Midwestern United States, with annual average wind speeds at 80 m above ground, the hub height of modern wind turbines, greater than 6.9 m/s (class 3 or greater). We found that an average of 33% and a maximum of 47% of yearly-averaged wind power from interconnected farms can be used as reliable, baseload electric power.

From Archer & Jacobson 2007

Figure 5

Unfortunately, their description of “reliable baseload power” indicates they are “having a laugh” – let’s hope they didn’t really mean it.

After noting the problem of intermittency of wind power they state:

On the other hand, because coal combustion can be controlled, coal energy is not considered intermittent and is often used as “baseload” energy. Nevertheless, because coal plants were shut down for scheduled maintenance 6.5% of the year and unscheduled maintenance or forced outage for another 6% of the year on average in the United States from 2000-2004, coal energy from a given plant is guaranteed only 87.5% of the year, with a typical range of 79-92% (NERC 2005, Giebel 2000).

And in their wind power analysis they are then content when their hypothetical system meets this 79% threshold, given that is the (minimum) benchmark for one coal-fired power station. Hopefully readers of this series can see the problem with this threshold. Grid operators provide baseload power by combining multiple units of dispatchable power. No one is under the illusion that one coal-fired power station is nirvana. This was probably true even 100 years ago in England. Grid operators provide some statistical inevitability of keeping the lights on by using more than one power station.

The real question we want to answer is whether combining ever more distant wind farms can actually provide baseload power to meet grid operator requirements and therefore replace a network of conventional power stations. And how many turbines in each of how many locations, what transmission capacity, and so on.

The key curves are given below, with the blue curve being the key one representing the combination of 19 sites, with output power placed in decreasing order. As we can see, moving from 1 to 7 to 19 sites increases our minimum output:

Figure 6

It’s a useful graph. In this example we would put up 19 wind farms in a wide area, with the furthest extremes separated by almost 900 km. And for 90% of the year we would get more than 13% of the nameplate output. And for 95% of the year we would get more than 10% of the output.

So does that mean we should build nameplate capacity at 10x our required demand, and provide gas plants to match demand for the 2½ weeks a year that the wind farms can’t keep up?

It’s half an answer, like the earlier paper we reviewed. At least it gives us the graph we need to see (figure 6, their figure 3) for this specific geographical distribution.

Conclusion

Baseload electric power is not an optional extra – unless the population decides to vote for it, which seems unlikely. It does seem possible that the right combination of wind farms across a super-grid might be a solution for most of the EU’s energy needs. It needs to be evaluated in more detail and costed.

If the statistics of wind power variability make this solution a possible contender, then the costs will be a minimum of $1-5TN plus transmission costs. Perhaps $2-10TN. Perhaps more. I’m just trying to get a broad idea of the cost.

For the EU this is not such a large amount. Germany has already spent more than €40BN just to get 10% of electricity from wind power.

If the EU is serious about decarbonizing electricity generation then putting up wind turbines in Germany and central Europe – instead of investigating a European super-grid capitalizing on the best regions – is possibly a monumental failure of policy (maybe this subject has already been discussed and discarded).

Articles in this Series

Renewable Energy I – Introduction

Renewables II – Solar and Free Lunches – Solar power

Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns

Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation

Renewables V – Grid Stability As Wind Power Penetration Increases

Renewables VI – Report says.. 100% Renewables by 2030 or 2050

Renewables VII – Feasibility and Reality – Geothermal example

Renewables VIII – Transmission Costs And Outsourcing Renewable Generation

Renewables IX – Onshore Wind Costs

Renewables X – Nationalism vs Inter-Nationalism

Renewables XI – Cost of Gas Plants vs Wind Farms

Renewables XII – Windpower as Baseload and SuperGrids

Renewables XIII – One of Wind’s Hidden Costs

Renewables XIV – Minimized Cost of 99.9% Renewable Study

Renewables XV – Offshore Wind Costs

Renewables XVI – JP Morgan advises

Renewables XVII – Demand Management 1

Renewables XVIII – Demand Management & Levelized Cost

Renewables XIX – Behind the Executive Summary and Reality vs Dreams

References

High wind power penetration by the systematic use of smoothing effects within huge catchment areas shown in a European example, Czisch & Ernst, Windpower (AWEA), 2001

Supplying baseload power and reducing transmission requirements by interconnecting wind farms, CL Archer & MZ Jacobson, Journal of Applied Meteorology and Climatology (2007)

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In IX – Onshore Wind Costs we looked at the capital and O&M costs of building onshore wind power. We stayed away from converting the numbers into “Levelized Cost of Energy”, or LCOE, because it obscures too much – instead we just tried to get a rough idea of the costs.

The data presented in the article was a little dated and one of our commenters pointed to more recent values (corrected my information) for capital cost which makes it very simple:

Capital cost of onshore wind farms = €1M per MW nameplate. (The article itself had €1.2M per MW).

For reference, right now €1 = US$1.13, but at times during the last 10 years the rate has been above $1.40.

What does it cost to build a gas plant? Once again I’ll use out-of-date values, this time because a great textbook from 2009 has some pretty good breakdowns. And as we’ll see, the capital cost is not so significant, it’s mostly about the fuel cost.

These days, combined cycle gas plants are the fashionable item to have. Their efficiency is very high and they are relatively quick to build – typically around 2 years.

Figure 1 – From Kehlhofer et al 2009

The efficiency figures for the gas plant are output electrical energy at the high voltage transformer terminals / energy of input fuel.

Like onshore wind farms, combined-cycle gas plants are proven technology. You know they are going to work – in fact, many are built by EPCs (the costs we will look at are EPC costs) = “Engineering, Procurement & Construction” companies. You pay the money and the EPC gets the job done – a turnkey job. On commissioning they have to run the plant for x number of days or months at nameplate for the customer to sign off. Penalties and rewards apply. While I’m sure there are some sad stories out there, as in any industry – with competent management you will get a plant of a given efficiency, given operation costs and given construction costs.

Here are some costs, for combined-cycle and other conventional technologies. We will focus on the other technologies another time (for example, the nuclear data is not reliable because so few have been built recently):

Figure 2

So the capital cost of the gas plant is about $0.6M per MW, versus something like $1.1M per MW for wind (at prevailing exchange rates). These are nameplate values. As we saw, the actual “capacity factor” of wind is dependent on where you plant it. Oklahoma might be 41%. Ireland might be 31%. Germany might be 18%.

On the other hand, gas plants can run almost as much as you want. For well-designed and operated plants we have these figures, where reliability gives you what you lose from unplanned problems, while availability gives you what you lose from unplanned and planned outages (these are necessary for upgrades & maintenance):

Figure 3

So let’s run with 90% availability for the gas plant.

Readers might wonder why some gas plants only run for 10% of the time – it’s not (usually) because they have been badly designed, it’s because those plants are designed as peaker plants, deliberately designed to run only when the spot price is high. You can’t store electricity, so at times of high demand and problems with general supply the spot price can be 10x the normal price (or much more). Some plants are designed to start up quickly, throw caution to the wind, grab the cash and turn off. They turn on a dime, so to speak.

And as we will see, the numbers don’t change that much if we chose 85% or even 80% availability. Of course, if you designed a combined-cycle gas plant to run as much as possible and you only achieved 80% availability year after year – you wouldn’t be doing a great job.

Let’s look at operations and maintenance costs. These conventional plant O&M costs have been broken up between “per MWh” costs and fixed annual costs. We saw with the wind farms that these two categories existed as well, but the numbers had all been converted into “per MWh” and we only had that to work with – a value around $14/MWh):

Figure 4

Figure 5

Comparing Combined Cycle Gas with Wind

Most discussions about “costs” throw out a number and the average reader can’t break it apart. If you are in one of the cheerleading squads this is excellent. Just pick your favorite LCOE quoted without any analysis, reference points, or clarity and “prove” your point. Hurray for my side!! We’re winning!!

Here, I will attempt to make it as clear as I can without equations (other than 1+1=2 and 10/2=5) how the costs compare.

Smaller gas plants are less efficient and have higher costs bases, and we are really interested in getting large amounts of power out of the door, so we are going to use the costs of the 800MW plant as the basis for our calculation (scaled up a little).

Let’s think about a reference 1GW plant.

For wind farms this means we have to think about where the wind farms will be located. For now, let’s think about Europe, which seems to average 25% capacity – that is, if you have 4GW of nameplate wind farm capacity you can expect over one year to average 1GW. (But note we’re using US currency). At the end, we will look at the magic of Oklahoma and what that does for our simple sums.

For the gas plant we will assume our 90% availability and so we need to build 1.1 GW of nameplate.

Now, a little conversion factor is necessary, if you produce 1GW (=power) for 1 hour you produce 1GWh (=energy), which is 1000MWh (=energy in different units). If you average 1GW of output and run for one year you produce (rounded up) 8.8M of these MWh (=8760 x 1000).

So both our wind farms and our gas plant are producing 8.8M “MWh” per year.

That’s so we can compare them.

Running Costs

Wind

• Fuel = $0 (nice)
• O&M = $14/MWh (can also be written as 1.4c/kWh) – from IX – Onshore Wind Costs

Combined-Cycle Gas

• Fuel = $ lots & lots
• O&M = fixed $10M + $2.50/MWh =  $1.10/MWh (i.e., $10M/8.8M MWh) + $2.50 = $3.60/MWh

The fuel is easy to calculate (we’ll come to that), but obviously the cost depends on the gas price which fluctuates a lot. Here is the European and US price, over 7 years to end-2014:

Figure 6

And the US price up to July 2015 (also in that strange British unit):

Figure 7

So we need a couple of reference points. We’ll pick $3, around the recent US price – and $10, the end-2014 European price.

Our favorite gas plant has an efficiency of 56.5% so we need to input 1.77 (=1/0.565) units of energy for every 1 unit we turn into electricity at the output transformer.

Energy data is wonderful. Usually in one report you can read gas production in billion cubic meters (volume, new school), later in trillion cubic feet (volume, old school), then in MBTUs (energy, old school), then in GJ (energy, new school), then in MWh (energy, not quite new school, but easy to convert from your consumer bill of kWh). Somewhere in the report the energy will also be quoted as MBoe (million barrels of oil equivalent – energy, very old school but also very contemporary). It’s all designed so you need to pay expensive consultants to explain the report to you.

In other news, Usain Bolt ran the 100m in a new stadium record of 61,336 furlongs per fortnight.

For simplicity, pretend 1 GJ (a billion joules – energy) = 1 MBTU (million British thermal unit). The correct value is 0.95 but forget that.

And 1 GJ (energy) = 278 kWh (energy) = 0.28 MWh (1W running for 278,000 hours = 1W running for 278,000 x 3600 seconds = 1GJ)

Sorry for all the numbers, but I think it’s helpful to show the paper trail, rather than just pull a rabbit out of a hat. For people interested, you can do the numbers yourself..

So – for each MWh output at the transformer, we need to put 6.4GJ (=1/(0.278 x 0.565) of gas energy into the inlet flange of the plant.

Roughly speaking, we see gas costs for our two reference prices (taking into account plant efficiency) of $19/MWh (6.4 x $3) and $64/MWh (6.4 x $10). What does this mean? Nothing changes for wind, but we can add up our running costs for the gas plant:

Wind

• Fuel = $0 (nice)
• O&M = $14/MWh

Combined-Cycle Gas

• Fuel = $ 19/Mhr & $64/MWh
• O&M = $3.60/MWh
• Total = $23/MWh & $68/MWh

Capital Cost

Now let’s look at capital cost. The gas plant can’t be built overnight, it takes a couple of years so converting the “overnight cost” to the real cost including interest adds about 10%. We’ll do the same to the wind farm, which probably takes longer to build out, but also it can start producing from day 90 instead of waiting until the end of how ever many years the wind project takes:

Wind – 4GW nameplate

• Cost = €4BN x 1.1 (for capital during startup) x 1.13 (exchange rate) = $5BN

Gas plant – 1.1GW nameplate

• Cost (see notes) = $0.75BN (includes capital during startup) x 1.1 (converting cost per GW to 1.1GW) = $0.83BN

If we do the nice simple calculation as I did in the wind farm example we can divide this capital cost by 20 for an annual cost. It’s simple, but unfortunately too simple:

• Wind farm capex = $250M per year (no cost of capital) = $28/MWh (for 8.8 MWh per year)
• Gas plant capex = $ 42M per year ( ” “) = $4.70/MWh (” “)

There is a annuity calculation that allows us to compare the cost year by year, depending on the life of the equipment and the cost of capital. I’ll present the results of the calculation and we will see that it doesn’t make a big difference for the gas plant (because the fuel cost is so much higher), but does have quite an impact on the wind farms.

By way of example, for capital upfront, if we take 1/20th of the cost per year, we get 5% of the total capex per year (=1/20).

But if we take into account a “cost of capital” of 8% per year, the capex “really costs” 10% of the total per year. So “cost of capital” has actually doubled our effective capital cost. This is normal.

So let’s look at the “real capex cost” for 15, 20 and 30 year lifetimes of equipment, at 5%, 8% and 12% cost of capital:

Figure 8

We see the ratios are the same. But because the gas plant costs 1/6 of the wind farm, the actual gas plant capex is very low compared with its fuel cost. In essence, it doesn’t really matter what values we choose when we look at the gas plant (it matters to the owner, but not to us, for our purposes of broad comparison). On the other hand, cost of capital (“interest rate”) and time of operation make a big difference for the wind farm because the capex costs dominates.

Lets review our total operating costs:

• Wind = $14/MWh
• Combined-Cycle Gas = $23/MWh (@$3/GJ)  – $68/MWh (@$10/GJ)
• Extra operating cost of gas over wind = $9/MWh (@$3) – $54/MWh (@$10)

So now we can calculate the total cost. Overall, if we look at the difference between the two tables, i.e., the capex difference, and add the opex difference, at recent European gas prices, for 20 year+ time horizons, wind is a little more competitive than gas plants (unless the cost of capital gets too high). At recent US gas prices, wind is way more expensive than gas.

Hey, wind is cheaper than gas

Hey, gas is cheaper than wind

Something for everyone.

Semi-Conclusion

Lots of numbers. It’s deliberate.

If you just want the answer that helps your cause, there it is – pick the one you like. If you want to understand the real story, a little work is needed.

What we can see is that even for quite different costs of construction for the gas plant, it won’t affect the comparison of gas vs wind. This matters a lot for a gas plant owner, along with the plant efficiency. But it doesn’t have much impact on our comparison numbers.

All of the numbers calculated can be questioned. There is no right answer. But hopefully everyone can see that the values that affect the cost comparison are:

a) price of gas, and

b) capex cost of wind turbines along with interest rate and lifetime of the turbines

We’re Not in Kansas Anymore

Let’s consider Oklahoma. Now the capacity factor has jumped up to 41%. So our upfront capex cost to produce an average 1GW has reduced from $5BN to about $3BN. Lovely. I recalculated the numbers (gas capex hasn’t changed, opex hasn’t changed for either):

If we pick 8% and 20 years we see that wind power capex is only $25/MWh more than the gas capex cost.

So with our “gas opex adder” of $9/MWh for cheap “I can’t believe it’s not Christmas” US gas, wind is still pricey. Wind is still $16/MWh more expensive ($25-$9).

But with our “cor blimey what are those Europeans doing” opex adder of $54/MWh, wind is now $29/MWh cheaper ($25-$54) than gas.

And last but not least, who’s the buyer?

Route 66

If we have a local buyer for this 1GW of power, we are in good shape. Although the current low US gas prices still make wind a little more expensive than gas in the Oklahoma example, recent history might make a wind power entrepreneur feel positive.

But suppose our customers are in New York. It’s about 1,000km in old money to get from windy Oklahoma to New York. We have a 2.5GW nameplate wind farm, so during windy periods we are producing 2.5GW. Now we need to get it 1000km.

According to our calculations in VIII – Transmission Costs And Outsourcing Renewable Generation this will cost around $2.5BN, give or take a little (or maybe a lot).

So we have almost doubled our capex price. Possible we have moved (in the wrong direction) past our European example, to a worse cost base. At our benchmark 8%, 20 year lifetime we are at capex approaching $70/MWh. Add in opex of $14/MWh = $84/MWh. So we are way more pricey than gas if we want to supply New York.

Of course, we can redo our calculations for a wind farm closer to New York, and on the minus side we might have a lower capacity factor for wind, but on the plus side maybe we can connect to a nearby under-capacity transmission line. Or worst case, we might need to build a transmission line – but it will be a lot shorter.

The gas plant has a constraint too – building gas pipelines aren’t cheap. (I forget the numbers I learnt but they might be in the same order of magnitude as power transmission lines for similar GW).

However, the gas plant entrepreneur is lucky, they can look at a map of gas pipelines and a map of power transmission lines and pick the optimized spot. It’s quite likely they will be able to tap off an existing gas pipeline and connect to an existing transmission line.

The benefit of incumbency and decades of infrastructure that they don’t have to pay for.

Conclusion

A bewildering array of numbers.

If you want to get your hands around the problem, it takes a little work, but it’s not so hard. Gas plants are cheap to build by comparison with the fuel costs. The fuel costs dominate. Wind farms are very expensive to build, have no fuel costs but still cost a bit to look after.

Gas plants can mostly be cited where you want – so you choose close to pipelines and close to transmission lines. Wind farms are often (but not always) subject to more location constraints – what you gain in better capacity factor (more wind) you might lose in building expensive transmission.

Which is cheaper per MWh of energy delivered to the customer? It depends.

So many cheerleaders with so many confident answers. And yet the right answer depends on the situation, the gas price, the cost of capital, the current capital cost of wind turbines, and most of all, where you are citing the wind farm and where your customers will be.

If there’s a lesson, it’s that turning a complex problem into one number doesn’t reduce confusion, it increases it.

What’s the average age of the population of Japan compared with the USA? The comparison can be a useful one. Still, it would be nice to see the demographic bulge – the graph of population vs age is much more useful than one number.

What’s the average weight of the population of Germany vs Mexico? Now we are really getting to a useless number (don’t we want to know the proportion of under 10s and over 70s before we draw any conclusions? And the average height of Mexicans vs Germans?)

If you add a carbon price to gas, wind will look better. You can easily do that yourself with the numbers in the article.

For people convinced that decarbonization is urgent, any extra cost of wind is of no issue. For people convinced that decarbonization is a total or partial waste of time, any extra cost of wind just illustrates how pointless the exercise is.

I make no comment on those points – I simply wanted to get an understanding of the cost comparison (here’s hoping I didn’t miss a factor of 1000 in one of my calculations).

If you want to figure out how to get to 50% renewables (% of electricity production) none of these numbers help.

Baseload Power and Messianic Storage have not yet been covered. That’s still a mystery.

Articles in this Series

Renewable Energy I – Introduction

Renewables II – Solar and Free Lunches – Solar power

Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns

Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation

Renewables V – Grid Stability As Wind Power Penetration Increases

Renewables VI – Report says.. 100% Renewables by 2030 or 2050

Renewables VII – Feasibility and Reality – Geothermal example

Renewables VIII – Transmission Costs And Outsourcing Renewable Generation

Renewables IX – Onshore Wind Costs

Renewables X – Nationalism vs Inter-Nationalism

Renewables XI – Cost of Gas Plants vs Wind Farms

Renewables XII – Windpower as Baseload and SuperGrids

Renewables XIII – One of Wind’s Hidden Costs

Renewables XIV – Minimized Cost of 99.9% Renewable Study

Renewables XV – Offshore Wind Costs

Renewables XVI – JP Morgan advises

Renewables XVII – Demand Management 1

Renewables XVIII – Demand Management & Levelized Cost

Renewables XIX – Behind the Executive Summary and Reality vs Dreams

References

Combined-Cycle Gas and Steam Turbine Power Plants (3rd Edition), Rolf Kehlhofer et al, PennWell (2009)

Notes

Construction times:

Their LCOE calculations:

Breakdown of the plant costs for interest:

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In 2014, Germany produced 56 TWh of electricity by wind power (BP Statistical Review of World Energy June 2015).

Over the last 10 years Germany produced 422 TWh by wind power. At the end of 2014, the country had 39.2GW installed nameplate capacity (EWEA: Wind in power 2014 European statistics), which looks like a capacity factor of 16% (this understates the factor as the wind power installed in December 2014 can’t contribute very much – if instead we use installed capacity at end 2013 – 34.3GW – this gives a capacity factor in 2014 of 19%, so the correct value is in the range of 16-19%).

If this windpower replaced coal-fired power stations at about 900g/kWh of CO2, this last 10 years of wind has reduced Germany’s CO2 emissions by 380M tonnes CO2. And over the next 20 years (assuming 17.5% capacity factor) this installed base will produce 1,200 TWh, reducing CO2 emission compared with coal of 1080M tonnes CO2.

At current costs (see last article), which understates the country’s expense, Germany has spent a capital cost of €39BN, plus some considerable O&M costs.

As wind power increases in grid penetration, the benefits reduce a little – basically you will be ramping up and down conventional generation more, as windpower gets priority. This ramping up and down reduces efficiency (how much is a question we will look at in another article). Even though Germany has about a 10% average penetration of windpower, at peak windiness times, wind power might easily be over 50% of the power in the network, leading in fact to curtailment at certain times (see V – Grid Stability As Wind Power Penetration Increases).

So, well done Germany.

However, CO2 is a well-mixed GHG. So CO2 emissions from Germany are exactly the same as CO2 emissions from the US. That is, whether the US or Germany reduced their emissions by 380M tonnes of CO2 over 10 years makes zero difference to the climate.

Suppose Germany had installed this 39GW of nameplate capacity in the mid-west of the US:

Figure 1

The average capacity factor in Oklahoma in 2011/2012 was over 41%.

Let’s assume that the capital costs outside of buying the turbine are the same (grid connection, land cost, access roads, regulatory compliance, etc). In that case German windpower investment of 39.2GW of nameplate could have produced 2.3x the energy (41%/17.5%).

Instead of reducing CO2 emissions by 380M tonnes CO2 to date, and a potential 1,080M tonnes over the next 20 years – the reduction would have been 870M tonnes to date and 2,500M tonnes over the next 20 years.

Why not?

Just add a page to the national energy production figures which shows the benefit. It’s not hard to understand.

I don’t want to pick on Germany, but it’s a nice concrete example. When you spend over €40BN on something it’s no longer a hobby. Why not get two and half times the environmental benefit?

It’s a serious question.

Articles in this Series

Renewable Energy I – Introduction

Renewables II – Solar and Free Lunches – Solar power

Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns

Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation

Renewables V – Grid Stability As Wind Power Penetration Increases

Renewables VI – Report says.. 100% Renewables by 2030 or 2050

Renewables VII – Feasibility and Reality – Geothermal example

Renewables VIII – Transmission Costs And Outsourcing Renewable Generation

Renewables IX – Onshore Wind Costs

Renewables X – Nationalism vs Inter-Nationalism

Renewables XI – Cost of Gas Plants vs Wind Farms

Renewables XII – Windpower as Baseload and SuperGrids

Renewables XIII – One of Wind’s Hidden Costs

Renewables XIV – Minimized Cost of 99.9% Renewable Study

Renewables XV – Offshore Wind Costs

Renewables XVI – JP Morgan advises

Renewables XVII – Demand Management 1

Renewables XVIII – Demand Management & Levelized Cost

Renewables XIX – Behind the Executive Summary and Reality vs Dreams

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Onshore wind seems to be the lowest cost renewable energy source (perhaps excluding hydro – I haven’t looked into the costs of hydro because it is mostly “tapped out” in developed countries).

Wind power (onshore) is a mature technology – when you buy a wind turbine and install it, you know it’s going to work, and you can have some expectation, at least across a wind farm of many turbines, of your O&M costs. You can have a reasonable expectation that it will run for perhaps 20 years. (Of course, you can’t have certainty on any item like lifetime or O&M costs, but this is true of any piece of equipment).

You also know – based on meterological data for the location – roughly how much energy it will produce. This is the capacity factor – the percentage of energy produced vs the “nameplate” value (the nameplate tells you the output if the wind is blowing at the maximum value).

So if you install a 2MW turbine in some parts of the UK or Ireland, or coastal regions of Europe, you might get 30% of that as annual output – 2000kW x 8760 hours x 30% = 5.3M kWh (written another way – 5.3 GWh annually). If you install the same turbine in some parts of Europe, or other parts of the UK, you might get a little over half that – 3M kWh (3GWh).

You can have some confidence in the annual energy production in advance.

Depending on the regulatory structure in the country/state in question you can have a reasonable idea of how long the process of approvals will take, and the grid connection costs (we’ll come back to grid connection later).

If we compare this with building a gas plant, or a coal-fired or nuclear power station then wind is more “modular” and there is a lot less project risk – if you want to produce say 500 MW annually (4,380 GWh) from a given technology then you could build a 550 MW gas plant (expecting certain downtime each year). From design through to startup might take a few years and there are all kinds of “little” problems that can cause significant delays. All of these can be mitigated one way or another, but many plants are late. It’s just the reality of complex projects.

And by the time of startup, the gas price (your fuel) might have doubled in cost from when the design commenced (also it might have halved). Most “expert” predictions of future gas and oil price ranges are only accurate when the price doesn’t change much, so large fluctuations are difficult to deal with. It’s a bit like predicting the weather tomorrow will be same as today. You are mostly right but how useful is that prediction?

To get the same output of 4,400 GWh from wind farms you need to install around 1,000 2MW wind turbines, depending on location (this calculation assumes 25% average output – 2GW x 8,760 x 0.25). You don’t have to wait 5 years before your investment starts producing energy that you can charge for. You can install around 20 a month for 4 years and be producing energy from month 1.

So there are a lot of project benefits for wind. On the downside for wind, you have to stump up most of your cash at the start, so you are a little more dependent on interest rate risk than a gas plant builder.

There are three main downsides to wind:

1. It’s not “dispatchable” so it doesn’t create baseload power – another way to say this is that wind power at significant grid penetrations gets very little “capacity credit” – something needs to provide power when the wind is not blowing, or not blowing much – we looked at this in IV – Wind, Forecast Horizon & Backups and in Renewable Energy I
2. A lot of places where you might want to install wind farms there is no transmission grid, so there is a cost which is not usually factored in to wind power costs. Building transmission grids is expensive –VIII – Transmission Costs And Outsourcing Renewable Generation. Another way to look at it is you are constrained to put the wind farms where the wind blows best, rather than at a convenient point on the grid. The same is true of nuclear power, of course – for reasons that are unclear to me they are mostly get built a long way from big cities. Gas and coal power stations can have more flexibility. But the ideal place for a wind farm is often on top of an inaccessible hill with no transmission line for 100km.
3. Wind has a very low energy density, so requires a lot of land. We will come back to this important point in a future article. This is why Europe has high projections for offshore wind despite major problems with offshore.. In places with high wind and low population density like, say, Oklahoma this is not so much of an issue.

Of course, many people don’t like wind farms cluttering up the countryside but I’m just going to ignore that. Many people don’t like roads or telegraph poles or coal-fired power stations or nuclear power stations or changing the color of phone boxes (what are they?) or the large quantity of birds killed each year by cats..

This series is about more practical energy considerations like how a grid works, how much power can be produced, what it costs, and so on.

Not hurting peoples’ feelings is for another series.

Costs

This numbers I’ve extracted come with quite a margin of error. If you buy one 2MW wind turbine you might pay $X. If you buy 10 you might get a 5% discount. If you buy 500 you might only pay 75% of $X per turbine. One year the prices will be lower because of exchange rate fluctuations and raw material costs. The next year they will be higher. If you negotiate better you might pay 15% less than the next guy for the same quantity in the same month. And so on. This is true for all purchasing. There is no “one price” in real life for most items.

Here I’m just trying to put a stake in the ground so we can get an idea what wind energy costs.

Onto numbers.

Blanco (2009): the capital cost of installing a 2MW (nameplate) wind turbine ≈ €2.4M, of which just over 70% was the ex-works cost of the turbine. (In 2009 this was about US$ 3.4M with the exchange rate quite high, at €1 = $1.4, vs today around €1 = 1.11).

Figure 1

As explained in the previous sub-section, wind energy is a capital-intensive technology, so most of the outgoings will be made at this stage. The capital cost can be as much as 80% of the total cost of the project over its entire lifetime, with variations between models, markets and locations. The wind turbine constitutes the single largest cost component, followed by grid connection.

After more than two decades of steady reductions, the capital costs of a wind energy project have risen by around 20% over the past 3 years. The results of our survey show that they are in the range of 1100–1400 €/kW for newly-established projects in Europe.

And The Economics of Wind Energy from 2009 has similar data:

Figure 2

So again installing a 2MW turbine and connecting it to the grid costs around €2.4M.

If we look at the capex cost of this wind turbine over 20 years in a many parts of Europe with a capacity factor around 15%, we see that it produces 53M kWh (2000 x 8760 x .15 x 20), so ignoring the cost of capital, a capex cost of 4.5 c€ per kWh. In Ireland and many parts of the UK, with a capacity factor around 30%, we get 2.3 c€ per kWh. This kind of cost is also written as €23/MWh – €45/MWh.

Operations and maintenance cost vary of course. Current estimates seem to be around 1-1.5 c€/kWh or €10-15/MWh. Some of these costs are “fixed” in that they are legal or regulatory so cannot be tied to the energy output while others are clearly related to the energy output (replacing parts, etc). And there is a lot of variability in all of these costs.

So to put this in a different perspective, for our 2MW turbine, running at an attractive 30% capacity in a high wind location, the O&M cost is around €53,000 – €79,000, and over 20 years (again ignoring cost of capital which increases the cost of initial payments vs later maintenance costs) this equates to €1.1M – €1.6M, which is not insignificant in light of the capital cost.

Of course, the long term maintenance costs are quite unclear, as there isn’t a lot of 20-year data on wind turbines, and no long term data at all for current generation products.

The 20-year life is also a value that exists more for planning purposes than a real consideration of actual lifetime. Many conventional power plants were given something like a “30-year life” yet are still operating 50 years on. In those cases, the “lifetime” was more for planning and purposes of financial measurement, rather than the belief that after 30-years they would fall apart. And the “30-year” plants still operating after 50 years may have had a number of expensive refits during that period.

If we sum it up in a “proper financial metric” like Levelized Cost of Energy (LCOE), we need to include the cost of capital and take into account the capacity factor. And then take a view on the number of years the wind turbine will operate.

All this does is obscure the costs, as anyone used to trying to compare the cost of different types of power will attest. So we will stick with raw numbers for now. It makes it easier to compare other forms of energy generation that we will look at in subsequent articles.

The International Renewable Energy Agency (IRENA), 2012 had higher costs:

Installed costs in 2010 for onshore wind farms were as low as USD 1,300 [€1100] to USD 1,400/kW [€1200] in China and Denmark, but typically ranged between USD 1,800/kW and USD 2,200/kW [€1500-€1800] in most other major markets. Preliminary data for the United States in 2011 suggests that wind turbine costs have peaked and that total costs could have declined to USD 2,000/kW for the full year (i.e. a reduction of USD 150/kW compared to 2010). Wind turbines account for 64% to 84% of total installed costs onshore, with grid connection costs, construction costs, and other costs making up the balance..

At this time the exchange rate was around €1=$1.20, I added the € cost in [] brackets at that exchange rate.

The US NREL 2011 Cost of Wind Energy Review has $2,100 per kW installed cost. Converted to Euro at the prevailing rate we get about €1,500 per kW. So for our 2MW turbine (reviewed earlier) the US cost would be (in Euros) €3M instead of the €2.4M.

Figure 3

Their operating expenses are in a different format. Here a 2MW turbine would cost $70,000 per year to operate and maintain, or (in that year) about €50,000 – a similar number to the lower end of the range given in Blanco (2009).

They also provide a nice graphic showing (to me at least) why producing LCOE (levelized cost of energy) values is not particularly helpful:

Figure 4 – Any value you like!

The report comments further:

Although the reference project LCOE for land-based installations was observed to be $72/MWh, the full range of land-based estimates covers $50–$148/MWh.

Exactly.

The largest factor, and the reason why a generic cost per MWh for wind and solar is a useless number, is it depends where it is located. High wind, lower LCOE. Low wind, higher LCOE. I doubt anyone would have come up with “LCOE” if energy generation had been dominated by wind and solar in the past. They would have come up with something like “LCOE per % capacity factor”. The “reference value” of $72/MWh was at a capacity factor of 37% (note 2), a value rarely seen in new European installations. I think the average for the UK (from memory, not checking) is around 30% currently, and it has gradually increased over the past few years. Many parts of continental Europe have capacity factors below 20%.

The NREL report also shows the formula for LCOE (for those interested). I’m assuming that the reason they have nearly $80/MWh for a 30% capacity factor (figure 4)  – vs our figure of €23+€10/MWh = $46/MWh in that year – is due to the 25% higher capital cost along with introducing the cost of capital.

This illustrates an important point with renewables – from country to country and region to region there will be very large differences in their ability to convert to high penetrations of renewables.

One further point to be noted from these data points is that we can’t always assume the costs over the next few years will go down – as outlined in Renewable Energy I. Due to high demand, the capex cost of wind power increased for a few years.

As far as I can tell, the above costs are all free of subsidies.

Transmission Costs

The grid connection costs have been considered in the capex costs, but these pre-suppose that transmission is available, or paid for by “someone else”. In some countries like Spain, this (paid for by someone else) has been true. As wind power grows, moving the costs to the grid operator becomes more problematic. If you connect to an existing transmission line and add 10 MW this is probably fine. Once you add 500MW at peak wind periods you might overload that transmission line and a $500M upgrade may be needed. On the other hand, if you are lucky, you might be replacing conventional capacity on an existing transmission line and no upgrade will be needed.

So it should be clear that this is one of the wild cards. Each case is different, but in most cases there will be substantial cost to be incurred – once wind power becomes significant, which of course is the idea.

In the last article we looked at building long transmission costs and as a massive over-simplification suggested that a cost of $1BN per 1GW per 1000km was a handy guide. So, if we build a large series of wind farms to replace a 500MW gas-fired power station, it will be something like 2GW nameplate. If we want to add 2GW into our transmission line at peak times, and it’s 500km long we can expect to incur a cost of $1BN.

Note that there will be other complications – see V – Grid Stability As Wind Power Penetration Increases.

If we compare the transmission estimate of $1BN with building 2GW nameplate capacity of wind power – a capex cost around €2.4BN – we see it will be significant.

Conclusion

Wind power is a mature form of energy generation with fairly well-known costs, minimal risks, and the benefit of not being subject to fuel costs with large fluctuations. Any cost analysis is always out of date but at least here we can see approximate values for capital costs and for ongoing costs – and the basis for these values.

Depending on where you locate your wind turbine you can get a factor of 3 change in annual output so €/MWh and $/MWh are not useful metrics without a location guide.

A good estimate from a few fairly recent studies is:

• Capital cost = €1.2M per MW or $1.5M per MW of nameplate (including grid connection costs, but excluding bringing a transmission line to the area). So to convert that to cost per energy produced you divide that cost by the capacity factor (which depends on location and might be 15% in a poor location -40% in a prime location) / 8760 hours in the year / number of years you expect your turbine to operate – and you get € or $/MWh (excluding cost of capital)
• Ongoing O&M costs = €10-15/MWh

We will look at the costs of other forms of energy in subsequent articles.

Articles in this Series

Renewable Energy I – Introduction

Renewables II – Solar and Free Lunches – Solar power

Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns

Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation

Renewables V – Grid Stability As Wind Power Penetration Increases

Renewables VI – Report says.. 100% Renewables by 2030 or 2050

Renewables VII – Feasibility and Reality – Geothermal example

Renewables VIII – Transmission Costs And Outsourcing Renewable Generation

Renewables IX – Onshore Wind Costs

Renewables X – Nationalism vs Inter-Nationalism

Renewables XI – Cost of Gas Plants vs Wind Farms

Renewables XII – Windpower as Baseload and SuperGrids

Renewables XIII – One of Wind’s Hidden Costs

Renewables XIV – Minimized Cost of 99.9% Renewable Study

Renewables XV – Offshore Wind Costs

Renewables XVI – JP Morgan advises

Renewables XVII – Demand Management 1

Renewables XVIII – Demand Management & Levelized Cost

Renewables XIX – Behind the Executive Summary and Reality vs Dreams

References

The economics of wind energy, Isabel Blanco, Renewable and Sustainable Energy Reviews (2009)

The Economics of Wind Energy, European Wind Energy Association (2009)

RENEWABLE ENERGY TECHNOLOGIES: COST ANALYSIS SERIES – Wind Power, International Renewable Energy Agency (IRENA), 2012

2011 Cost of Wind Energy Review, S. Tegen, E. Lantz, M. Hand, B. Maples, A. Smith & P. Schwabe, National Renewable Energy Laboratory (2011)

Notes

Note 1: From Blanca 2009:

Note 2: NREL report says:

The annual average wind speed chosen for the reference project analysis is 7.25 meters per second (m/s) at a 50-m height above ground level (7.75 m/s at hub height). This wind speed is representative of a Class 4 wind resource (7−7.5 m/s) and is intended to be generally indicative of the wind regime for projects installed in moderate quality sites in the “heartland” (Minnesota to Oklahoma).

 

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With the big growth, or planned growth, in wind and solar in many countries you need to connect up new windfarms and solar arrays with people. This requires power transmission lines.

Electricity grids also have to match supply and demand on a second by second basis. This presents a problem, especially with renewables like wind or solar which may produce 1 GW during a sunny windy day and 0.01 GW during a calm night.

One solution put forward is “affordable storage capacity”. Let’s say for now, along with everyone (serious) writing reports, papers and feasibility studies, that there is no “affordable storage capacity”, except for hydroelectric storage, which is mostly “tapped out” in developed countries. There might be – via some as yet unknown technology breakthrough – but until then storage isn’t an option. If this happens – problem solved – and the world has a major breakthrough.

So we need baseload supply for times when intermittent renewable supply is not available (at the moment this requires a conventional power plant, as we saw in earlier sections, e.g. Part IV)

Or maybe not.

Perhaps instead we can put massive solar arrays in Arizona, massive windfarms in South Dakota, more massive solar arrays in Libya and connect up the supply to Germany, or any country that wants to transform its electricity supply into renewable energy.

Kind of a massive outsourcing exercise. After all, why put solar arrays in Germany when there is so little sun? Why put windfarms in Germany when it really doesn’t have that much wind? Why not put up windfarms in places with lots and lots of wind and not many people, and solar into places with the highest solar insolation and not many people?

All you need is to connect them up with transmission lines. Not very difficult. Not a technical challenge at all. As one commenter said in an earlier article “An Atlantic interconnector may sound fanciful, but a UK Norway link is a live project, and an Iceland project is under feasibility.”

So, it’s clear, we can get power from A (source) to B (population). It’s just a piece of wire.

But what does it cost? That’s the real question. Generally the answer is “pricey”. Because it’s very substantial pieces of heavy wire with large support structures to get it from A to B, and massive transformers or large banks of thyristors.

In one paper (Osmani et al 2013) I read the costs of building new transmission were quoted as $/kWh. Yes, a paper with a sense of humor..

Think of building a railroad. Your cost depends on the terrain, cost of material, and cost of contractors. And very important: the length – whether you are running from Washington DC to Richmond, Virginia or from Portland, Oregon to Fort Lauderdale, Florida. At the end you’ve built the railroad. If one person a day or 10,000 a day travels the railroad the cost invested will still be the same. So quoting $/passenger isn’t exactly useful for an overall idea of what it costs to build a railroad. Better to quote $/mile for construction across a few different terrains and let everyone else do the maths for different passenger numbers.

Quoting $/kWh for power transmission is about as useful as saying the average cost of a journey = $7.46, when averaging domestic & international plane flights, train & bus journeys, dinner with friends, and all those trips to the local 7-11.

Transmission Basics

There are two options with transmitting lots of power – a.c. (alternating current) or d.c. (direct current). AC is what you have in your homes, it is what is supplied by the grid, and it is how most power is moved around.

Once you get past a certain distance, DC is a lower cost option. The “break-even point” is always changing but in essence the actual transmission costs are always less with DC, but the conversion costs (from AC to DC and back to AC at the other end) are significant.

The crossover point is around 800km for overhead lines, and 50km for subseas lines (Electric Power Systems, Weedy et al, 2012 – and see extract for more details in note 1).

There is another important point – if you just want to get power from say Innamincka in central Australia to Melbourne, Australia (see Part VII where we looked at the failure, so far, to obtain power from 4km deep geothermal sources) then HVDC is a good choice. But if you want to add in the power from lots of wind farms or solar arrays on the way, then all those conversion stations will start to cost and using AC transmission would be better:

Figure 1 – Thyristor (top) and Thyristor Bank for AC-HVDC conversion (bottom) – these babies ain’t cheap

Cost Data

Finding quality data on transmission costs is not so easy. The people who really know are in companies that provide these construction services and their data is confidential, like any business.

For example, if you want to find out what an LNG plant costs you might be able to dig through some annual reports of a few customers of LNG plants and see their capex costs revealed in expenses lines or in notes/discussion, but then you wonder why one plant of the same capacity was 20% more than the other. Maybe one of them negotiated a better deal with Bechtel. Maybe one customer provided some of the key services themselves and that reduced the price. Maybe another customer insisted on a given subcontractor or technology because of their view on the long term O&M costs and that increased the price. Maybe Bechtel was stretched on the last plant and gave a higher price and the customer didn’t have a better EPC to build it.

Onto power transmission costs which has similar challenges for the outside observer.

In reviewing the AEMO report for Renewables VI – Report says.. 100% Renewables by 2030 or 2050 – I found a link to a transmission costing report – Network Extensions to Remote Areas Part 2 – Innamincka Case Study – which was very useful (I have lost the link where I downloaded this report, I can email the pdf report to anyone interested). This looked at the cost of power transmission from a possible geothermal source in central Australia to a few population centers.

The costs are given in Australian Dollars, but the report was 2009 and the conversion from the greenback was at US$1 = A$1.20 so the costs are basically similar in US$, given the lack of hard data, changes in costs of various materials, and so on.

My summary of their table, followed by the table itself:

• AC transmission of 5GW – 1000 km (620 miles), 765kV double circuit line with series compensation – $3.3 BN to $5.1 BN
• as above but with two cities as stop off points – $3.9 BN to $6.1 BN
• DC transmission of 4GW – 1100km (680 miles), +/- 800 kV bipole – $2.5 BN to $3.5 BN

Click to expand

The report states:

Note that this study has not taken into account the following routing considerations which could add to the cost of the transmission options :

• a) Excessive wind and ice loading (the study assumed moderate winds with no allowance for cyclonic conditions and no ice loading)
• b) Minimization of visual impact
• c) Complexity of terrain

The indicative costs in this report exclude :

• a) Allowance for difficult terrain such as forested, hilly ,or mountainous
• b) Costs for access roads
• c) Statutory compliance costs
• d) Consenting costs
• e) Allowance for project scope accuracy
• f) Price contingency for exchange rate variation, manufacturing market pressures, and price of materials
• g) Interest During Construction
• h) Operating and maintenance costs
• i) Cost of losses

For example, if this was Europe or most parts of the US you would need to add “a lot” (maybe 25%) for additional costs to support the ice loading. If you have to consider very high wind conditions – that’s more cash. If you need to go through cities or over mountains, add “a lot more”.

So from this report, as a rule of thumb, think $1BN per 1GW per 1000km as the likely minimum. From the scaling in their calculations increasing the power by a factor of 10 increases the HVDC costs by a factor of around 4, but I can’t say whether that holds true if you want to increase by another factor of 10 (they weren’t trying to design for 10x the power).

If you live in a country which has an environmental lobby with political power then you can add “even more” due to costs of ensuring the lesser-spotted green frog is not at risk when putting up the necessary support structures:

If you want to ensure that a tower coming down doesn’t bring down the power transmission then you need two of the above for the whole journey, adding “a lot” to costs:

The cost of land access can be high, depending on the country and the right of easements given to utilities.

In future articles we will try to find other pricing points to see how this compares.

These costs also worked on the basis of keeping the losses below 10% for the 1000km distance. If you want to reduce losses then you need to spend more – bigger conductors (more cash), stronger support structures to support these heavier conductors (more cash).

Route 66 and Relocation Relocation

The US used 4,500,000 GWh of electricity in 2011 (Osmani et al 2013). This equates to an average (but not a peak) of just over 500 GW.

So if we wanted to bring 50GW of solar power from Arizona to the North East then we are looking at a distance of something like 3,500km and a cost (assuming the scaling holds from the report) of $100 BN, plus all the exclusions listed above. Maybe with economies of scale this might be $50BN, on the other hand it might be $300BN.

I’m just trying to some perspective  on the order of magnitude of the costs.

And for this distance, at the efficiencies noted, this would include a loss of at least 35% of the source energy. So multiply the cost of 50GW of solar in Arizona x 1.5 to cover the losses. And don’t forget to increase the AC-HVDC conversion costs at the source end by 1.5 – and so on. (Depending on the relative costs, it might be more cost-effective to spend less on solar arrays and more on transmission).

If we have distributed wind farms through the midwest and solar arrays in the southwest and we want to take that power around the country it’s clearly going to be a lot more. It all depends on the amount of power, the number of feed-in points, the number of extraction points, the distance, the terrain.. To do this we would probably have a mix of DC and AC lines. If the whole network was AC the cost might double.

We can see that locally-produced power has a large benefit over long-distance power. Moving, or outsourcing, power production has a significant price tag and a significant power loss.

Still, it’s a price point. When we have some approximate costs and efficiencies of local wind and solar production we can see whether the transmission costs justify the relocation.

Maybe someone has already done a detailed cost analysis of a “massive inter-state power transmission” project.

Articles in this Series

Renewable Energy I – Introduction

Renewables II – Solar and Free Lunches – Solar power

Renewables III – US Grid Operators’ Opinions – The grid operators’ concerns

Renewables IV – Wind, Forecast Horizon & Backups – Some more detail about wind power – what do we do when the wind goes on vacation

Renewables V – Grid Stability As Wind Power Penetration Increases

Renewables VI – Report says.. 100% Renewables by 2030 or 2050

Renewables VII – Feasibility and Reality – Geothermal example

Renewables VIII – Transmission Costs And Outsourcing Renewable Generation

Renewables IX – Onshore Wind Costs

Renewables X – Nationalism vs Inter-Nationalism

Renewables XI – Cost of Gas Plants vs Wind Farms

Renewables XII – Windpower as Baseload and SuperGrids

Renewables XIII – One of Wind’s Hidden Costs

Renewables XIV – Minimized Cost of 99.9% Renewable Study

Renewables XV – Offshore Wind Costs

Renewables XVI – JP Morgan advises

Renewables XVII – Demand Management 1

Renewables XVIII – Demand Management & Levelized Cost

Renewables XIX – Behind the Executive Summary and Reality vs Dreams

References

Electricity generation from renewables in the United States: Resource potential, current usage, technical status, challenges, strategies, policies, and future directions, Atif Osmani et al, Renewable and Sustainable Energy Reviews (2013) – paywall paper

Electric Power Systems, John Wiley & Sons Ltd, Weedy et al, 5th edition (2012) – textbook

Network Extensions to Remote Areas Part 2 – Innamincka Case Study, by Power Systems Consultants Australia Pty Ltd, for Australian Energy Market Operator Ltd, 2009

Notes

Note 1: Electric Power Systems, 5th edition (2012) has a good summary on AC vs DC:

 

 

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