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Discussion Starter · #1 · (Edited)
This post is for the 5% of the followers of this forum that need a better understanding of electric power finance because they don't know that wind and sun are free fuel.

First, electric power is not free. The major sources of electricity all have significant upfront capital investment, operating/maintenance costs (O&M), and residual costs. This is why electricity generation has been the domain of large public and private utilities.

For all electricity generation, capital investment includes engineering, installation, equipment, land, permitting, etc. O&M costs generally include the ongoing expenses such as fuel, supplies, routine maintenance, and repairs. Residual costs are frequently, but not always incurred at the end of the asset life and include decommissioning nuclear facilities, removing wind turbines, moth-balling coal plants, and the storage of radioactive materials in perpetuity. Each of the major electricity sources has a different mix of these costs.

Nuclear is capital investment intensive including substantial engineering and permitting time and costs. Nuclear fuel is "relatively" cheap considering its potential energy output. As a result, O&M is relatively inexpensive, especially if the government eats the insurance for catastrophic damage. The residual cost of spent nuclear fuel is unknown, but potentially massive because it is currently stored on plant location all over the U.S. and will continue to be until another solution is found.

Wind is also capital intensive but wind projects are very predictable compared to nuclear. You can site a wind farm and build it with a highly predictable schedule and cost. Yes, the fuel is free but O&M is not. Wind turbines need routine maintenance and repairs. Residual costs are very low and risk from catastrophic damage is non-existent.

Solar is more capital intensive than wind. The fuel is free for both thermal and PV. O&M is generally very low for PV and somewhat higher for thermal. Residual costs are low as is risk of catastrophic damage.

Natural gas is less capital intensive than other forms of electricity generation. However, O&M is very high because natural gas is comparatively expensive (sun is free, wind is free, nuclear is low). Because natural gas fluctuates in price, natural gas generation has high fuel price risk. Natural gas requires significant maintenance and repairs but residual are relatively low.

Clean coal does not exist. Coal is dirty in every way. Coal generation uses massive amounts of water for steam and requires massive cooling towers. When mined, they rip of tops off mountains and dump pollutants into streams. Erosion is a major problem. Coal burning dumps millions of tons of toxic elements into the air including mercury. (If you want your kids eating mercury sandwiches, you will like coal.) Moth-balled coal plants are a blight in many areas of our country now. And the cost of coal ash retention is high and can be devastating if containment is lost.

Hydroelectric is capital intensive and fuel costs (water) have significant environmental costs including damage to fisheries. O&M costs are generally low and residual costs are massive. Dams do represent potential terrorist targets that could be catastrophic.

In summary, all energy generation is capital intensive. Wind and solar do indeed have free fuel but that doesn't mean that O&M is free or that they are the cheapest electricity generation source. However, because their fuel is free, once built they do not have fuel price risk. They also have very low ongoing operating costs. And, they are not subject to catastrophic risk like nuclear and hydro.

Wind is clearly the most cost effective of the new clean, green generation technologies. Coal is cheapest, especially if you hate your children.
 

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What do you do when the wind stops blowing across a whole country?

Please explain about baseload and peaking plants, and all the costs associated with them.

If you have 1000MW of wind turbines, how much baseload do you need to support it and stabilize the grid?.. what are the costs of solving the inconstancy of wind power?
 

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Discussion Starter · #4 · (Edited)
Oh My

What do you do when the wind stops blowing across a whole country? Please explain about baseload and peaking plants, and all the costs associated with them.

If you have 1000MW of wind turbines, how much baseload do you need to support it and stabilize the grid?.. what are the costs of solving the inconstancy of wind power?
How much time do you have??? Do you think I don't know??? First, www.uwig.org is the Utility Wind Integration Group web site. It has lots of information on this topic.

Large balancing areas (like ERCOT in Texas) have reduced requirements for backup. Small balancing areas have high wind farm correlation which means more backup is required. The larger the geographic area, the less correlated the wind conditions are (in other words, the wind is always blowing somewhere). With a flexible grid with adequate capacity, wind can move from where it generated to where it is needed. So, grid improvements will continue to make wind more viable.

Base load versus peaking: If you look at a chart of electric load, it looks like a jumble of up and down movements throughout the day. Load is lowest at 2:00am and generally peaks at 5:00pm when people get home from work. But, it also varies second by second.

Base load generally consists of power plants running 24x7 at full capacity. This is typically coal or nuclear. Peaking load is just that. Some peaking plants are only operating during peak loads during the day and are shut down at night. These are typically flexible generators that ramp up and down quickly - hydro and natural gas. Peaking power is generally priced higher than base load.

The energy market uses bids to determine who contributes and who goes off-line. This is called an economic dispatch, or spot market. Spot markets select the marginal price producer; i.e., the lowest bidder who then gets paid the marginal price (not the price they actually bid). Interestingly, because wind is free, wind can always win the economic dispatch; i.e., they are always better off operating because any revenue above their very low O&M contributes to profit. Natural gas, on the other hand, can take a bath if they bid too low because O&M costs are high.

So, the answer you are looking for is that we'll always need something besides wind and solar. Yes, I think that's true. However, Denmark is already at 20% wind and Spain is at 15% wind. Both have operated at 100% for extended periods of time. Denmark is planning on 50% in 2020.

Wind costs are generally from $40/MWh to $80/MWh. The difference depends on the wind regime; i.e., the capacity factor (Texas at 40% versus Indiana at 32%). In other words, with better wind the cost comes down. The cost of backup power, so-called integration costs, are generally very small. However, as wind penetration increases to 20-30%, they could be as much as $5-8/MWh (10%). There are DOE studies that analyze these costs in detail. Every situation will be different, of course, because of differences in control areas, wind density, and backup alternatives (hydro, natural gas,...).

How much backup is required for 1000 MWs of wind? If it is in a balancing area with 1% wind penetration, not much. If it is in a balancing area with 20% wind, it would be more, depending on the grid area and congestion. Not sure if a hypothetical question like this has an answer.

Solar is similar except that it only produces energy during the day. Unfortunately, it doesn't necessarily track with peak demand. Here is where smart appliances can help; e.g., a washing machine and drier that start when the sun is shining.

And finally, there are many future thinkers that believe that PHEVs can help with electricity regulation (the second by second fluctuations). If we have a million cars sitting on the grid all charged and ready to go, you can sell some power back to the utility to help knock the tops of the peaks and to provide the high-value regulation power to keep the grid in balance.
 

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Discussion Starter · #5 ·
OK

petroleum is ten to twenty times as
expensive as coal or NG.
I hate petroleum more than I hate coal. Petroleum is a smaller slice of electric generation and I don't know anyone that thinks it should be more, except King Faisal, Bin Laden, and Dick Cheney.
 

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To my mind solar also has significant environmental costs when you move beyond rooftops to open land. About the same as hydroelectric, I'd say. Tolerable, but wind looks better.
 

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Wind costs are generally from $40/MWh to $80/MWh. The difference depends on the wind regime; i.e., the capacity factor (Texas at 40% versus Indiana at 32%).

heh you are very optimistic here

Wind cost starts at $100 a MWh, and the best CF I have seen is 33%. You are considered lucky if your CF is 30%.

Show me wind at $40 and I will make you a billionaire.

Wind cant compete with coal or gas (or hydro). Subsidy is the order of the day. None of the wind in Texas will work without subsidy.

As for wind intermittancy - that is why regional grids should be connected. Unfortunately the mega utilities are loath to do that because it cuts on their profit, by increasing competition.
 

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To my mind solar also has significant environmental costs when you move beyond rooftops to open land. About the same as hydroelectric, I'd say. Tolerable, but wind looks better.
heh - what exactly is the environmental cost of solar on bare land? Like it creates shade or what? lets be serious
 

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Discussion Starter · #9 ·
Perhaps

To my mind solar also has significant environmental costs when you move beyond rooftops to open land. About the same as hydroelectric, I'd say. Tolerable, but wind looks better.
My preference in the short-term (20 years or less) is wind, solar, and nuclear. In the long-term, I would hope solar wins out. As long as it isn't oil and coal, I'm pretty happy.
 

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heh - what exactly is the environmental cost of solar on bare land? Like it creates shade or what? lets be serious
If you've ever driven through Nevada...it is unreal how much wasted land there is that is getting lambasted with sunlight. I drove through about 6 months ago for the first time. The east bound and west bound freeways are literally about a quarter mile apart in some areas. There is just no reason to put them close together and risk head on collisions I guess. It like that for about 6-8 hours of driving. Very sparse towns. I don't think anything even grows there. Not even cacti.

I heard they were gonna put a Solar Farm in the Mojave desert and it became a big deal because apparently there are desert turtles or something around there. I'm curious how much Nuclear really costs without subsidies, when you include all of the building costs, and decommissioning alone must be astronomical, not to mention waste storage for the next 5 billion years or whatever it is.
 

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Discussion Starter · #11 ·
Agree

If you've ever driven through Nevada...it is unreal how much wasted land there is that is getting lambasted with sunlight. I drove through about 6 months ago for the first time. The east bound and west bound freeways are literally about a quarter mile apart in some areas. There is just no reason to put them close together and risk head on collisions I guess. It like that for about 6-8 hours of driving. Very sparse towns. I don't think anything even grows there. Not even cacti.

I heard they were gonna put a Solar Farm in the Mojave desert and it became a big deal because apparently there are desert turtles or something around there. I'm curious how much Nuclear really costs without subsidies, when you include all of the building costs, and decommissioning alone must be astronomical, not to mention waste storage for the next 5 billion years or whatever it is.
Desert tortoises shouldn't be discounted but I agree that the trade-offs seem obvious. I'd prefer developing deserts than watching the world melt down. Plus, if we don't do something about global warming, we may be fighting for food with desert tortoises.
 

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Discussion Starter · #12 · (Edited)
Ah, My Dear Mohsen

Wind costs are generally from $40/MWh to $80/MWh. The difference depends on the wind regime; i.e., the capacity factor (Texas at 40% versus Indiana at 32%).

heh you are very optimistic here

Wind cost starts at $100 a MWh, and the best CF I have seen is 33%. You are considered lucky if your CF is 30%.

Show me wind at $40 and I will make you a billionaire.

Wind cant compete with coal or gas (or hydro). Subsidy is the order of the day. None of the wind in Texas will work without subsidy.

As for wind intermittancy - that is why regional grids should be connected. Unfortunately the mega utilities are loath to do that because it cuts on their profit, by increasing competition.
You may be living in the past. Capacity factors have been trending up as site selection and turbine designs improve. Here are some quotes from Wikipedia:
"Typical capacity factors are 20–40%, with values at the upper end of the range in particularly favourable sites."
"In a 2008 study released by the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy, the capacity factor achieved by the wind turbine fleet is shown to be increasing as the technology improves. The capacity factor achieved by new wind turbines in 2004 and 2005 reached 36%."


Now, you mentioned that I would be a billionaire if wind was at $40/MWh. The DOE 20% in 2030 report has charts showing the best wind regimes producing power at $60/MWh (granted, most is higher but all is less than $100/MWh). So, are you right or am I right? The answer depends on how you count.

The recent extension to the PTC is 2.1 cents per kilowatt hour. This is $21/MWh. If you take $60/MWh and subtract $21/MWh, it is less than $40/MWh. This is why you are seeing PPAs in Texas coming in at the mid $40/MWh rate. So, I would say that your comment about subsidies is correct but I would say that wind energy is in the PPA market at about $40/MWh. And, the subsidies for wind aren't really unusual since coal, solar and nuclear get substantial subsidies too. I wouldn't be surprised if T Boone gets some subsidies for his natural gas.
 

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Discussion Starter · #13 ·
Subsidies

As I was mulling the comparison of wind with and without PTCs, I couldn't help but think about Bloom Energy (Bloom Box). There entire business model is only viable with significant tax credits from the U.S. government and California. If these were removed, Kleiner Perkins would be out $400 million. Flushed.
 

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Solar in the desert?

Desert tortoises shouldn't be discounted but I agree that the trade-offs seem obvious. I'd prefer developing deserts than watching the world melt down. Plus, if we don't do something about global warming, we may be fighting for food with desert tortoises.
With apologies to my ecologist friends, I also have little sympathy for preserving the "fragile desert ecology". It is fragile precisely because it is a very hostile environment for life. I could be convinced, but so far I doubt that loss of desert species will trigger a domino effect that threatens humans.

On the other hand, there is an argument against desert solar arrays that I consider much more cogent. No one needs the energy out there. (Well, except for Las Vegas, and they really want a lot more than they need.) Desert solar only becomes important if it can be shipped to population centers. And that means lots of transmission lines, which means lots of steel and lots of right-of-way fights once you get into populated areas. It ain't free.
 

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If you've ever driven through Nevada...it is unreal how much wasted land there is that is getting lambasted with sunlight. I drove through about 6 months ago for the first time. The east bound and west bound freeways are literally about a quarter mile apart in some areas. There is just no reason to put them close together and risk head on collisions I guess. It like that for about 6-8 hours of driving. Very sparse towns. I don't think anything even grows there. Not even cacti.

I heard they were gonna put a Solar Farm in the Mojave desert and it became a big deal because apparently there are desert turtles or something around there. I'm curious how much Nuclear really costs without subsidies, when you include all of the building costs, and decommissioning alone must be astronomical, not to mention waste storage for the next 5 billion years or whatever it is.
Exactly. Environmentalism is the new (secular) religion. Some whining greenie hypocrite will complain that PV inconveniences some tortoise when millions of other species are getting stressed due to global warming.

These eco-freaks are worse than mideval churchmen as they hate science.
 

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Greenman, I think you are saying $60 in 2030 when 20% of production is wind. So this number is assuming huge economies of scale, and huge technological improvements as its 20 years away.

I know people who are building wind, and they tell me its over $100/MWh today.

The $21 PTC goes a long way. There is also the fact that wind is green and that is an extra $15 to $30 premium (unless the PTC takes that credit away).

Where I am, the utility will buy at $80. But people cannot justify wind - partly because the terrain and meterology is 28% CF.
 

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Discussion Starter · #18 ·
Nope

Greenman, I think you are saying $60 in 2030 when 20% of production is wind. So this number is assuming huge economies of scale, and huge technological improvements as its 20 years away.

I know people who are building wind, and they tell me its over $100/MWh today.

The $21 PTC goes a long way. There is also the fact that wind is green and that is an extra $15 to $30 premium (unless the PTC takes that credit away).

Where I am, the utility will buy at $80. But people cannot justify wind - partly because the terrain and meterology is 28% CF.
The $60/MWh is recently constructed wind farms in Level 7 wind areas. With a PTC of $21/MWh, the PPA number is often in the $40/MWh.

I don't doubt your people that are saying $100/MWh. In some areas of the country, big utilities are paying that much for green. Again, take a look at the best wind areas with good access to load and you will see much cheaper wind power.

The "20% in 2030" is just the title, not the data for current wind cost.
 

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Discussion Starter · #19 ·
Page 150, DOE's 20% in 2030

The chart on page 150 shows wind at $60/MWh in a Level 7 wind regime. Granted, this is not all or most of Texas but these wind areas do exist.

When we have grid connections to Montana, North and South Dakota, capacity factors will continue to trend up. There is lots of wind and not much getting in the way.
 
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