What does the production of power by wind cost? Since its California inception in the 1970s, the cost of wind energy production has dropped nearly 80% as a result of better scaling and improved technologies. Today commercial wind costs are on par with other power generation technologies. At the end of 2006, the wholesale wind cost for power generated by large scale wind farms in the United States ranged from 3.00 to 6.50 cents per kWh while the aggregate costs for power across were approximately 5.50 cents per kWh range across all production technologies.
Wind costs have reached the point where projects can be justified on a purely financial basis.
Production commercial utility scale wind power generators today have a typical capacity of 2MW (enough to power 400 houses) and are being installed in groups of 30 to 150 generators at a cost of $2 to $4 million dollars each. Significant cost factors include the wind turbine generator and tower, land acquisition, transportation and installation of equipment, power transmission and interconnection to the grid. Once in production wind costs are attractive, ongoing maintenance and operations average a little less than 1 cent per kilowatt hour.
Our appetite for electricity continues to grow, in the US demand for electricity is expected to increase 40% between now and 2030. New wind generation capacity is an essential component of any overall energy plan. Regardless of wind cost, it must be a critical component of our overall power strategy.
Advantages of Wind Power
- The source of power -wind- is a renewable and regularly available source of energy. While power generation fluctuates over short periods based on wind, long term generation is consistent and reliable.
- The cost of energy produced is very predictable and is not impacted by volatile prices and availability issues associated with fossil fuels in the 21st century. As world demand for oil increases and supplies diminish, wind power becomes a very attractive alternative.
- The environmental impact of wind power generation per unit of energy produced is substantially lower than conventional production methods. Wind power does not emit pollutants or green house gases. As a result wind power does not contribute to global warming and is a compelling tool to assist in avoiding massive climate change.
- Wind power solutions create more net new jobs in the economy than new capacity from other sources.
- Wind farms provide long term income to farmers and ranchers who allow installations on their property.
- Few of us realize that 48% of domestic water production is consumed by electricity production. Water in vast quantities is a critical component in today’s thermoelectric power production facilities. While efficient in their usage, in aggregate huge amounts of water are consumed by the generation of electricity with estimated losses of 9%. Wind power solutions do not add demand to this fragile infrastructure.
Power by Wind Cost and Disadvantages
- The challenges facing new wind power initiatives and effecting their cost and performance include:
- Since 2006, wind turbine costs have been increasing faster than technology improvements due to increased worldwide demand, poor dollar performance and a limited number of suppliers.
- Construction of wind driven power generation plants represents a heavy up front investment when compared to coal or natural gas where operational fuel costs are a large component.
- While there is an abundance of wind energy in the United States, finding locations with appropriate wind, available ground coverage and proximity to transmission facilities is challenging.
- Short term fluctuations in wind and consequent power production require extra care locally or on the network to assure stable supplies. Consumer power focuses on delivery during peak demand periods while maximum wind production rarely coincides with peak demand. Wind power needs to be part of a system that includes alternatives such as easy to spin up production combustion turbine natural gas facilities or hydroelectric reverse storage to maintain consistent power delivery on the grid.
- The cost figures used generally take into account the renewable energy Production Tax Credit (PTC) which presently provides an income tax credit of 2.1 cents/kilowatt-hour for production of electricity from utility-scale wind turbines. When removed from the equation, wind costs are not easily justified based strictly on the energy produced.
- Utility scale wind power has adverse environmental impact including disruption of habitats and mortality of birds and bats flying into the fans. It is noteworthy that the Audubon Society has largely remained quiet on this front because wind power’s overall impact on habitats compared to new coal or natural gas alternatives. Wind turbine bird fatalities are a negligible component of overall bird deaths caused by human endeavors.
More on the Production Tax Credit
Established in 1992, the Production Tax Credit has always included a near term expiration date. Since its inception, there have been 3 year-long lapses and the remaining renewals consistently passed at the last minute.
The wind cost calculations sited above take into account the PTC in determining the cost of wind energy produced. The economic case for new wind power is significantly weakened without this credit as incentive. This is clearly demonstrated in the marketplace by the significant (roughly 80%) drop in new wind power capacity addition in the 3 lapse years.
An argument insisting on strict economic feasibility has little merit in lieu of inherent government support of coal, oil and natural gas production and the consequential un-recovered social and environmental costs associated with health care and pollution.
The appropriate course of action is for congress to make the Production Tax Credit permanent or renew it with an extended expiration date therefore greatly reducing the risk costs in project feasibility assessments.
Prior to the recent financial collapse, the outlook was good for continued growth of wind production was excellent even in the face of a recession. There are provisions in the stimulus bill to encourage wind energy and green initiatives however at this time it is unclear if they are sufficient to overcome the lack of market capital and availability of partners looking for the project tax credits.
Longer term, wind power will be a significant component of our energy mix and should approach the Department of Energy’s goal of 20% by 2030.
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