The Levelized Cost of Electric Generation

I am surprised that geothermal is so cheap. The plant operating in California near the Salton sea has horrendous maintenance problems with superheated brine that they have to use as a heat source. You also place coal with CCS slightly above coal. CCS has yet to be shown to work so how can theu know this figure?

Willis are the non-dispatchables calculated at nominal or real capacity? I think the UK has numbers for actual availability for wind at around 17-25% which would have considerable impact on writing off the capital investment during the alotted 25 year timeframe for a windmill installation. Equally solar has to be discounted at a <40% ability to deliver on sticker output due to weather/daylight availabilities.
Secondly the minimum price of 7 ct/kWh for backup capacity would only apply to a plant that's already running. Power-ups and power-downs to meet spot demand is much more pricey due to non-optimal generation efficiency and increased maintenance costs and wear & tear.

Re: Ninh
The figures for the UK have wind at 27% of nameplate and solar at 10%.

The levelised costs factor in a $15 per metric ton cost for coal and gas that don’t have carbon capture.

Mark Jacobson, who is arguably Stephen Schneider’s heir at Stanford, insists that adding 13,000 turbines in the waters off Long Island (which is part of Stanford’s master plan for turning New York State 100 percent wind, water, solar) will produce no added costs to consumers. He considers anyone who links wind, water, and solar (Stanford’s Greek chorus these days) to higher electricity costs to be grievously misinformed.
So in love with wind is Jacobson that he is about to publish a peer-reviewed paper based on computer modeling indicating such offshore wind farms will meaningfully diminish the power of hurricanes as they approach the coast.
I recently asked if he knows anyone on a fixed income who struggles to pay already high electricity bills. I received no answer. From a lofty moral elevation, however, he did deign to call a critique of mine of Stephen Schneider, based on his sliding honesty scale, “sad.”
Thus, a self-appointed spokesman for “science,” one close to totally lacking any kind of practicality, uses new math to justify all manner of nonsense.
As I argue in “Don’t Sell Your Coat,” such nonsense is liable to have grievous consequences if left unchecked.

Willis, there’s a few things in the EIA’s numbers that are simply not credible. First the capacity factors for wind. The EIA is projecting 34 and 37 per cent for onshore and offshore. This is simply not achievable. For example, Hydro-Quebec’s two wind generating complexes in Gaspe, an ideal location, never achieved better than 18 per cent during their first three years of operation, and have never exceeded 25 per cent.
Second, the solar PV figure is not possible even in theory. Capacity factor is reduced by 50 per cent simply for diurnal variation. Winter insolation loss incurs at least another 15 per cent loss from lower sun angle. But the big one is cloud cover. Even light cloud cover reduces the amount of insolation by at least 80 per cent at the time of coverage. If you assume that 100 days per year will have cloud cover, that’s about another 25 per cent reduction. Leaving a reasonable annual capacity factor of about 10-12 per cent. Not the claimed 25 per cent.
And we haven’t even included the loss of generation from snow cover, or air blown dust. The latter is particularly serious. Even the normal dust particles in the air produce significant deterioration of the PV cells from light surface scratching resulting in loss of generation from reflection and diffraction effects. After as little as five years, operational experience has shown a loss of as much as half of potential generation from this.
John Marshall is entirely right, the CCS numbers are fantasy. It’s expected from the designs for CCS seen thus far that it will require at least 1/3 of total plant output to run the system.
Also not included are higher O&M costs for all other forms of generation that must vary their output because of renewable load on the system. Varying thermal generation output rather than producing at constant value has significant adverse effect over time on steam and regulating systems in all thermal plants. One utility I know has to do at least 100 reactor “maneuvers” weekly just to compensate for sudden surges and drops in wind generation even where that wind generation is less than 10 per cent of total installed capacity on the grid.
Finally, their variable O&M signficantly overstates the cost of nuclear fuel and signficantly understates the cost of coal or gas.

I had looked at the EIA estimates a number of times and had glossed over “dispatchable” and “non-dispatchable”. For reasons known to EIA, it looks like almost everything but variable generation (wind, solar, etc) is dispatchable. I suppose nuclear plants, coal plants and the big combined cycle plants are dispatched and have some load following capability, but when one comes off dispatch it’s a big deal. When the nukes come off dispatch, you get a press report. These units are also in a category known as base load.
In Regional Transmission Organizations (grid control) the terms are base load for continuously running and dispatchable for those that operate to meet changing demand. Wind, solar and some other renewables, depending on contract, end up as base load.
https://www.pjm.com/~/media/documents/manuals/m35.ashx
The true dispatchables are the peaking plants, that really can be turned off and on as required for demand. (You aren’t going to get today’s power needs by cold starting a coal plant). These run under several regimes. Some do not run unless there is high (expensive electricity) demands. An oil fired peaker might run only when the price of electricity gets above $275/MWh, which is the cost of the oil to power most of them. Many of these get capacity payments–that is they are paid for not running based on arcane formulas. Some of the others run based on demand and/or bid in on the next day’s market predictions. They may also get capacity payments for being inactive.
As Willis said, the grid is “jealous”. Demand for electricity is reflected in price. Price controls generation. It’s semi-capitalistic. We have regional control organizations that govern generation, set prices and make payments. The past few weeks have been an example of price and demand. Prices in much of the PJM (Pennsylvania-Jersey-Maryland) area which includes all or parts of NC, VA, PA, MD, DE, OH, WV, MI, NJ, KY, TN and DC, ran in the range of $750-$2500/MWh. Since my income is based on peaking plants, using renewable energy, operation, this period was pretty good. It beats the nice mild weather when the rates are i the $60/MWh range.
I wonder how much of EIA’s crystal ball gazing is self-serving. That is to make politically correct forms of generation more palatable.

If Wind and Solar are so “cheap”, why do tax payers have to subsidize them??

Most of the logic here is fine, but only if cost is the only thing that matters.

AllenC says:
February 16, 2014 at 6:34 am
If Wind and Solar are so “cheap”, why do tax payers have to subsidize them??

Exactly. And why the others are so heavily taxed?
Also, Nuclear looks expensive. I thought It was cheaper.

Taliesyn says:
February 16, 2014 at 6:36 am
CCS is expensive.

And stupid.

I”m not an expert on this, but I have read before that you can use solar farms to create gas, which is a despatch able source. So, in theory, you can build up a reservoir of gas before you ‘switch on’ the solar source, always maintaining a sufficient back up store of gas to make the source, in effect, despatchable.
I’ve no knowledge about the economics of that but has that option been investigated in your data??

drumphil says:
February 16, 2014 at 6:37 am
Most of the logic here is fine, but only if cost is the only thing that matters.
———————————————————————–
What if traditional electricity costs 5c/kWhr and renewable costs 20c/kwHr. DId you ever think that maybe in that extra 15c/Kwhr that 6-8 cents of it is to produce energy to create the renewable energy? It is VERY likely that we are using more fossil fuels to produce renewable than we are traditional, it is just hidden in manufacturing in some unknown faraway land.

I worked in power cost analysis for 25 years. Some may benefit from understanding that there are two different major components to power cost: fixed cost, and variable cost.
Fixed cost relates to the plant, boilers, turbines, the personnel, the lights in the plant, etc. Fixed cost remains whether any electricity is produced at all.
Variable cost is directly linked to energy production. It goes up and down with production. For example, the cost of coal burned is variable cost.
PV solar and wind have a very high fixed cost, but zero variable cost.
Beyond that, as len said, there is the additional consideration of transmission cost.

Rhys Jaggar says:
February 16, 2014 at 6:59 am
“I”m not an expert on this, but I have read before that you can use solar farms to create gas, which is a despatch able source. So, in theory, you can build up a reservoir of gas before you ‘switch on’ the solar source, always maintaining a sufficient back up store of gas to make the source, in effect, despatchable.
I’ve no knowledge about the economics of that but has that option been investigated in your data??”
Such devices get tested in Germany. They electrolyse water, produce SynGas and turn that into Methane. The losses are about 50%. Critics say, as long as NatGas is available, this is just a method to lose energy.
In the graphic above, we should end up with 0.28 codt for energy produced via this detour.
Taking into account the solar capacity factor in Germany (800 sunhours a year, a third of what the EIA used) we would arrive at 0.84 .
It is probably still better than human slave labor.

I cannot find the references now (so take this with huge grain of salt) but I thought I had read that the reason the wind mtx costs “look” so odd is due to how the mtx is contracted out.
Also a lot of the end of life mtx costs are either born by the taxpayers during decommissioning or the units are just left standing and inoperative.
so that MAY explain why those costs are so odd, because they are not true.

And while we’re at it, Willis, here’s my presentation on oil and economy at the Center on Global Energy Policy at Columbia University last Tuesday. You should watch the whole thing, all 70 minutes. At a minimum, however, you should watch min 11-17.
http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers

glenncz said:
“It is VERY likely that we are using more fossil fuels to produce renewable than we are traditional, it is just hidden in manufacturing in some unknown faraway land.”
Can you actually support that with solid figures? It takes a lot of work to figure such things out accurately. Can you point me at some decent papers that have dealt with this issue?

Willis, there is an additional problem with solar power that most people don’t realize. Solar PV is converted to AC via inverters. An inverter is unable to change the power factor to match the demand of the load the way a rotational generator will. Specifically, an inverter will on supply real power and no reactive power to the grid. Therefore, even when the PV is producing, you still need to install large reactors (big coils) to the system, or keep a large generator spinning to supply the reactive power to the grid.
You say the power grid is a jealous bitch, and I agree. It is however the greatest machine ever built by man. The analogy I like to use is a thousand trains all traveling down parallel tracks, at the same speed, all connected by cables. If one slows down the rest have to pick up the load.

“I’m not believing that the maintenance on that monstrosity will cost only 30% more than dusting photovoltaic panels …”
There is another cost not mention about wind turbines: tear down and replacement cost when the windmill burns up. Fire departments go down wind of the 300 foot torch and put out the sparks so the neighbor’s barn doesn’t burn down also..
No partial recovery of anything, including the bolts holding the tower to the concrete base. Everything is scrap.
Now no one has spoken of the emeshed in the scrap of rare earth substances unable to be recovered (hazardous waste) nor the toxic fumes from the fires blowin’ in the wind. But, we can leave that to another day..

http://transmission.bpa.gov/Business/Operations/Wind/baltwg.aspx
The above link takes you to a BPA active chart showing their hydro, thermal and wind production, refreshed every several minutes. Watched over time (days/weeks), you develop insight into the extreme intermittancy of wind power.

Willis, your classification of types of generators is not entirely correct. No generator which includes boiler tank is really dispatchable for a simple reason: it takes several hours to heat boiler for megawatt steam turbine to operational temperature from a cold shut. And it is very wasteful to keep it at operational temperature without fully loaded turbine at maximal capacity. So all generators with steam turbines – coal, nuclear or peat-fuelled – are always kept working at installation capacity except when they are shut down for planned repair and maintanance. Their combined capacity for given grid must be equal to the base load, while every additional power is generated using gas turbines. This is the only type of generator which can be switched on in minutes and operate at any required power without any additional fuel consumption. So, while fuel costs are much lower for coal, peat, nuclear or other generator with steam turbines, their capital costs of construction are much higher. The prices you cited include both fuel costs and construction costs divided to all power produced for all projected period of use under condition of full employment. This condition can be satisfied only when all base load is served by steam turbines and all peak load by natural gas turbines.

***
Sergey says:
February 16, 2014 at 8:56 am
Willis, your classification of types of generators is not entirely correct. No generator which includes boiler tank is really dispatchable for a simple reason: it takes several hours to heat boiler for megawatt steam turbine to operational temperature from a cold shut. And it is very wasteful to keep it at operational temperature without fully loaded turbine at maximal capacity.
***
Some capacity has to be run this way — obviously can’t run all units base-load all the time. Less economical/smaller units are run at low load at nite/weekends & full load day. Worked at a coal-fired plant that was often operated this way. The oldest unit was even brought down weekends & “bottled up” so retained a fair amount of heat & more quickly restarted — cut start-up time in half.

drumphil (February 16, 2014 at 7:36 am)

glenncz said: “It is VERY likely that we are using more fossil fuels to produce renewable than we are traditional, it is just hidden in manufacturing in some unknown faraway land.”
Can you actually support that with solid figures? It takes a lot of work to figure such things out accurately. Can you point me at some decent papers that have dealt with this issue?

The cost of a good is the cost of the energy plus labor and profit. Part of the labor cost is energy cost as well. This is especially true with products like solar panels from cheap labor countries like China. When buying panels we are really buying fossil fuels for mining, refining and production.

I talked to a former employee of Weeks Marine, which is a huge marine barge, dredge, towing and construction company. He laughed out loud when I discussed the logistics of mounting several thousand large wind turbines in offshore Long Island. He simply said it couldn’t be done successfully at any price. Construction, maintenance, and logistics would eat up every last dime you threw at it, and would be never-ending.

I don’t believe any of the figures put out for maintenance of solar or wind.

Jsut a nitpik…
Assumed utilization rate seriously impacts the levelized cost, also the delivered price of coal varies by 300 to 400% depending on region so a ‘national’ levelized cost for coal is pretty much meaningless information.
What we need are levelized costs for baseload, intermediate load and peak load.
I can pretty much tell without looking at construction costs that coal will come in very expensive in Florida and about as ‘cheap as dirt’ in Wyoming.

I find the wind number to be useless, as so many factors are site specific. Might as well rely on climate model projections. ;?p

A great article about the Bird Assassins can be found at:
http://www.masterresourse.org/2012/10/20-badthings-wind-e-reasons-why/
Not widely know our signer-in-chief extended a 30 year exemption to allow continued assassination of “protected” species by these bird mashers. Read the article at Heartland.org.

Willis: Did you read far enough to discover that these figures arise from a massive economic model? The costs for various fuels appear to be projections for the quarter century after a new plant opens in 2018. There is no free market in electricity, so we really don’t know how electricity production really costs. The best one could do is find out how much distributors are actually paying generators today for electricity from various sources, add in the cost of the subsidies the generators receive and adjust for known improvements and current price changes.
“This report presents the major assumptions of the National Energy Modeling System (NEMS) used to generate the projections in the Annual Energy Outlook 2013 [1] (AEO2013), including general features of the model structure, assumptions concerning energy markets, and the key input data and parameters that are the most significant in formulating the model results. Detailed documentation of the modeling system is available in a series of documentation reports.” http://www.eia.gov/forecasts/aeo/assumptions/

Some one should work up a post/thread:
“Civilizations Cost Related to an Earth First Cultized Electric Generation Failure”

itsonlysteam says:
February 16, 2014 at 9:13 am
So let me tell you how it really works in a ‘deregulated’ generation market in North America.
======================================================
The U.S. market is highly regulated. So what are you talking about?

OT
You would think that the Pres. and his staff of “Climate Change” belivers would think a bit before Pres. Obama the next day after his big “tax and spend” on Climate Change speach,,,, he goes golfing at Palm Springs Calif..
Not sure there is a more wasteful use of water resources on the planet.

The cost of necessary transmission lines should be included.
As for turbine maintenance, where are average figures for the cost of gear box replacements? Portsmouth, RI, got an estimate of $580,000 to $730,000 to replace one in a $3 million turbine that failed after 5 years of use.
“Most turbines require significant repairs and even complete overhauls in the 5-7 year range.”
TRIBOLOGY & LUBRICATION TECHNOLOGY
http://www.stle.org/assets/news/document/cover_story_06-10.pdf
Regarding the diminishing returns from renewables, ever hear of the ‘duck curve’?
http://www.sfgate.com/business/article/Energy-grid-duck-chart-used-to-wade-into-timing-4762718.php

richardscourtney says:
February 16, 2014 at 11:09 am
************
Amen Richard and kudos to you for that post. I wish to God that the leftist greenie solar and wind pushers would take the time and be open-mined enough to understand that. I believe their failure or refusal to acknowledge it (among other things) is at the root of their problem. They are so intensely obsessed with the emotional and spiritual need to demonize fossil fuels and nuclear power that nothing else matters to them. It’s like trying to reason with a brick wall.
I just hope and pray that our next president here in the U.S. has at least SOME understanding of what is wrong with the leftist green movement involving their belief system(s) and how they think. If he/she doesn’t, I cannot say that I will have a great deal of confidence in this nation’s long term future.

The first state in USA which deregulated electricity production was California, which introduced energy market in the industry. This led to disaster, since economical model was poorly thought out. When energy was in short supply, operators of the grid had to purchase energy at exorbital prices to balance load and generation output. I translated a monography about this experiment for Russian state energy monopoly which was formed to make market reform of Russian energy industry. The title was “Designing of energy market” and the prices were from this experiment. I believe them more than the prices above since they were based on real experience of the market, not on abstract calculation. Nuclear and coal plants have comparable costs of fuel for kilowatt-hour and comparable capital costs of construction. Fuel costs were 5 time less than for natural gas turbines, but capital costs 5 times higher. Now, with collapse of natural gas prices, this calculation can be different, but coal is still the cheapest way to generate electricity. And there is no alternative to 1000 MhW steam turbine!

jai mitchell says:
February 16, 2014 at 8:21 am
The EIA LCOE analysis is flawed.
NREL Estimates of LCOE for installed domestic wind in 2012/2013 BEFORE SUBSIDIES come in at 0.0675, the trend is that LCOE will continue to go down from there.
Offshore wind currently comes in at 0.185 (convert euros to dollars)
If these wonderful machines are such a bargain how is it that governments everywhere must hand out $billions in loans and grants to their cronies along with contracts with prices from $0.20 to $0.40 /kWhr from now to when the damn things collapse, in order to get anyone to even consider building one?

Ed P says: @ February 16, 2014 at 9:56 am
“There are two options”
The other option will soon be here: smart meters are being installed all across the USA (& soon in the UK). These will allow the grid controllers to switch homes partially or fully off when the renewables cannot cope and there is insufficient dispatchable generation….
>>>>>>>>>>>>>>>>>
You beat me to it.
Some links to go with your comment:

The Department of Energy Report 2009

A smart grid is needed at the distribution level to manage voltage levels, reactive power, potential reverse power flows, and power conditioning, all critical to running grid-connected DG systems, particularly with high penetrations of solar and wind power and PHEVs…. Designing and retrofitting household appliances, such as washers, dryers, and water heaters with technology to communicate and respond to market signals and user preferences via home automation technology will be a significant challenge. Substantial investment will be required….
These controls and tools could reduce the occurrence of outages and power disturbances attributed to grid overload. They could also reduce planned rolling brownouts and blackouts like those implemented during the energy crisis in California in 2000.

Investors see the Smart Grid and Smart appliances as a good investment oppurtunity.
Smart Meters, an attractive opportunity for Investors
This is Frédéric Bastiat’s Broken Window. Take perfectly good equipment and trash it so someone can sell you new. Expect to see the government (or electric companies) mandate smart Meters and the purchase of new appliances that can be switched off by the power companies.

Don’t want smart meter? Power shut off
The rollout of smart electric meters across the country has run into a few snags: one woman doesn’t want one, and ended up in the dark as a result.
You might not think that would be an issue. But it is, because Duke Energy is now beginning to disconnect any homeowner who refuses a new electric meter.

Energy InSight FAQs
….Rolling outages are systematic, temporary interruptions of electrical service.
They are the last step in a progressive series of emergency procedures that ERCOT follows when it detects that there is a shortage of power generation within the Texas electric grid…. With smart meters, CenterPoint Energy is proposing to add a process prior to shutting down whole circuits to conduct a mass turn off of individual meters with 200 amps or less (i.e. residential and small commercial consumers) for 15 or 30 minutes, rotating consumers impacted during that outage as well as possible future outages.
There are several benefits to consumers of this proposed process. By isolating non-critical service accounts (“critical” accounts include hospitals, police stations, water treatment facilities etc.) and spreading “load shed” to a wider distribution, critical accounts that happen to share the same circuit with non-critical accounts will be less affected in the event of an emergency. Curtailment of other important public safety devices and services such as traffic signals, police and fire stations, and water pumps and sewer lifts may also be avoided.

NikiFromNYC,
First you must complete the circuit.
Up to that it is just potential.

These “levelized” prices are nonsence. Peak load prices always are at least 3 times more than base load prices, and can be 10 times more if the peak load cannot be predicted 24 hour before the event. To instantly put generator under load, it must be kept rotated synchronously with the grid frequency, and this imposes additional costs. At least 10% of expected power increase must be kept in the form of rotating, but unloaded generators ready to be put under load. To keep them rotating, some gas must be burned without any electricity produced.

urederra says: @ February 16, 2014 at 6:46 am
…. Nuclear looks expensive. I thought It was cheaper.
>>>>>>>>>>>>>>>>>>>>>
It was cheaper until you add in new regulations, regulatory delays and protesters….

Silly me. I was taught to buy cheap and sell high in any sales course I ever took. I ran my business that way for nearly 40 years. According to this idiotic graphic, SCANA/SCE&Gouge is selling power to me at my house for LESS than this thing says they can make it. How do they do that? They don’t.
http://www.powerisknowledge.com/
The grid is selling wholesale power to the little power companies for $36/MWh, 3.6 cents per KWh, today. It varies with demand, of course. One great thing about power, like internet data, you can’t put it in a tank farm and starve the consumers until the price skyrockets, so they sell it for what they can get, today….$36/MWh. That’s the WHOLESALE price of producer’s cost PLUS PROFIT, the investors keeps screaming about. So, the chart is WAY HIGH! I’d guess $36/MWh is double what it costs to produce it, about $18/MWh, which makes more sense. SCE&Gouge is a producer with gas, coal and nuclear plants across SC. Make it for 1.8 cents per KWh and gouge me for 14.656c/KWh, thanks to the SC govt utility regulators, who work for the power companies. Here’s what South Carolinians pay their little electric companies:
http://www.orbgdpu.com/ratecomparison.htm
Orangeburg, SC, wasn’t big enough for SCE&Gouge to worry about back in the 20’s, so the town made its own electric/gas/water/sewer company, owned by the people, who pay 10.5c/KWh on this page from the SAME SCE&Gouge power plants as I do. They buy from SCE&G wholesale at the grid rate of $36/MWh from the first webpage and charge triple for their costs and profits.
I don’t see how anyone reading electric rates across America can believe “Levelized cost is the average cost of power from a new generating plant” is correct. We’d be paying 40c/KWh!
Electric car loads will drive power costs through the roof if they ever make them viable…..

Willis, your cost figures can’t possibly include the costs of backup generation for “renewables,” nor the cost of land for footprints hundreds of times that of fossil generation, nor the greater costs (about 5.5x, on a per-MW basis) for the generation equipment itself, nor the costs of otherwise unneeded substations and transmission lines from the remote locations of “renewable” generation. They plainly don’t consider the need to have spinning reserve running virtually all the time, i.e., burning fuel without injecting power into the grid, and the inevitable substantial use of quick-start generation with heat rates two to four times higher than baseload fossil generation – which means that more fossil fuel is burned to accommodate “renewables” than would be burned if there were no “renewables.” They plainly don’t consider the amount of unused capacity on the transmission lines to “renewables,” which have to be able to handle the full output of the “renewable” generation yet are effectively idle 3/4 of the time for both wind and solar – effectively multiplying the per-MWh cost of transmission for “renewables” by a factor of at least 3 over fossil generation. They don’t consider the unreliability of equipment – all you have to do to see this is drive over the Altamont Pass or Tehachapi Pass here in California, a few times, to see how many of the turbines ain’t turning. Also, the presence of “renewable” generation creates nightmares for managing congestion on major transmission lines and often requires the substitution of more expensive purchased power for cheaper locally generated power. In fact, “renewables” are one of the main reasons for establishing independent system operators (ISOs) and regional transmission organizations (RTOs), to deal with much more complex congestion management problems, which adds a further layer of bureaucratic expense to electricity costs in the form of grid management charges and “congestion revenue rights” (a form of prepaid transmission cost that adds substantially to a utility’s cost of transmission, and which represents a tradeable add-on to prices similar to carbon credits, and like them, creates no economic value).
In short, there are a lot of variables and inefficiencies associated with “renewables” that never seem to be taken into account, and in fact they are deliberately ignored by the people touting them in order to convince uninformed people to go along with what is actually a scheme for transferring wealth from low- and middle-income ratepayers and taxpayers to billionaire investors in projects that are both uneconomic and environmentally ruinous. Why should ordinary folk pay double and triple prices for electricity and extra taxes so that billionaires can get richer? Why should US manufacturing be made less competitive with needlessly higher electricity costs? That’s the real issue here, along with the environmental destruction and slaughter of wildlife caused by “renewable” energy.

All I know is that in Australia electricity prices keep going up. The Australian Bureau of Statistics shows that from Jun 2007 to Dec 2013 the consumer price index rose by 19%, but electricity rose by 111%.
A March 2012 paper, Australian Electricity Prices: an International Comparison, commissioned by the EUAA shows that Australia’s electricity prices are very near to the highest in the developed world and seemingly set to reach the highest.
“Rising electricity prices are having a major impact on the cost of living and of doing business. All Australians know this and are naturally concerned about it,” Mr. Roman Domanski, Executive Director of the EUAA said.
“This paper exposes the myth that Australia continues to have low, or even mid range, electricity prices. Electricity is becoming a lot less affordable for both households and businesses and our prices are now a source of national weakness rather than strength.”
AEMO publishes annual prices paid to generators but they seem to jump all over the place, and are clearly not connected to the prices I pay.
For Victoria, $27.62/MWh in 2004/5 to $54.27/MWh in 2013/14 (or 5.4 cents/KWh).
The Origin Energy website states that the average household consumes about 6.5MWh of electricity per year, and that costs $1500-2500 per year depending on location so that equates to $231-385/MWh or 23-38 cents/KWh. They also show a chart that indicates about 10% of that is GST tax, Government green schemes about 15%, about 10% goes to Retailers, generators get about 20% and networks 45%. (I suspect that network portion is increasing in order to cope with “non-dispatchable” power from solar and wind.)
Why won’t our governments tell us what the typical costs in Australia are for each power source in cents/KWH, given each gets an appropriate return on investment?
And then tell us in simple terms what goes into the average price of our electricity in cents/KWh.
ENOUGH!! Get rid of the CO2 tax, and then the Renewable Energy Target (Tax).

@Gail Combs –
Yes, CCS could cause a disaster that would make Chernobyl look like child’s play.
Incidentally, during the attempt to build a CCS plant in Queensland, Australia, they were unable to stop the CO2 from escaping as fast as it was being pumped into the ground.
And think what could happen if you had a highly pressurized CO2 reservoir under a major generating plant in, say, Los Angeles, and an earthquake compromised the reservoir? Another Lake Nyos – and worse.

I don’t believe the cost of the CCS technology. I do NOT find a less than 20% increase in cost anyway credible. I think people who are promoting CCS and wind put this chart together.
BTW… my last electric bill I am paying $0.284 per kwh, and it supposed to go up another 30% over the next couple of years to cover additional GREEN energy going in to the mix.

Wind power to electrical equipment is as ethanol to internal combustion engines – increases wear, shortens operating life, emits more pollution.

As I vaguely remember it, running turbines up and down is not trivial and takes time. Having the dispatchable turbines doing it all the time will not work at all.

My compliments Willis and to the many commenters who obviously work within the utility industry as do I. Let me offer further points and clarifications…
CCS capture at the SASK plant is costing about 25-30% of the plant capacity (the lead engineer told me). Because it is sitting on top of an enhanced oil recovery sink (EOR), Co2 injection cost is nil. Most of the existing coal fleet in the US is not so positioned, and will need to transport and inject into suitable geology. The enviros know this and are waiting to pounce. Thus, the true CCS cost is as unreliable as a climate scientists model.
Correction to en earlier post: A 600 megawatt supercritical coal unit can achieve full loading from cold startup in about 24 hours. It can throttle at about + or – 2mw per minute with a minimal load threshold of about 300 mw.
This winter, both PJM and TVA peaked due to colder than expected weather. They both came within a one unit trip of calling for rolling blackouts. Folks, this is scary stuff. Now for the kicker…in 2015 35-50 gigawatts of coal fired capacity is slated to come out of service due to the MATS rule.
Easy you say…we will just build gas plants. Ok, let’s go there for a minute. Gas is a home heating and industrial fuel…There isn’t enough pipeline capacity to handle even the gas plants we have today! (We had half our gas plants off in January due to lack of available gas).
Look at all that Marcellus gas in Pa., you say? Just 250 miles away from The New York area! You think you are going to build high pressure gas lines to the Hudson, cross over to the east side and up through Connecticut? Ha! The enviros will see you in court and the EPA will willingly settle with them.
Folks, brace yourself…as any utility engineer will tell you, this is going to be ugly.
But, hey…Bill Nye was on CNN today and said the debate is over and the consensus is real so get over it. He evidently knows a lot….

Willis wrote: Thanks, Frank. I didn’t have to read at all to know that the estimated costs of a new power plant that is started today, finished five years from now, and run for a quarter century will be the results of a model. Do you know any other way to estimate the costs and benefits of such a project?
Excellent point, Willis. One can get a pretty good idea of how much electricity generation projects currently cost to build, because there is a reasonably free market for constructing and funding such projects. It doesn’t take a sophisticated model to extrapolate from the costs of projects currently underway to a project that will be started soon. So capital costs are reasonably well known. However, fuel cost is much higher than capital cost for fossil fuel plants. The current cost of fossil fuels is known and extrapolation for fuel costs over the next decade is probably reasonable. (The boom in natural gas will hold down the costs of carbon-based fuels in the near future.) So, I would base that my cost estimates off of those prices, not the predictions of a complicated model trying to predict how the cost of different fuel sources will change over the next thirty years.
An investor contemplating building an electrical generation plant would ask how well the EIA’s model would have hindcast changes in fuel costs over the past half-century. Given the volatility we have seen over this period, it is unlikely that the EIA’s model would show much skill. Furthermore, no model can predict what government policies (carbon-tax? cap-and-trade?) are going to do to the marketplace. An investor would probably want to lock in a long-term supply contract with a large company supplying the fuel, reducing risk to both the electricity generator and the fuel provider. (The investor might also want a deal with the local public utility commission that allows him to pass on some of the fuel-price risk onto customers.) Finally, the investor will have arranged to recoup his capital investment over the first decade of operation, so that only his profit depends on fuel cost and electricity price in the distant future. So I would guess that the price of current short- and long-term fossil fuel contracts today would give us a far better idea of what electricity from fossil fuel plants will cost than the EIA’s model (with all of its assumptions and possibly hidden biases). A survey of the expert judgment of those actually in the business of running fossil fuel plants would also be extremely valuable.
In any case, the EIA should be reporting a range of possible costs (not a single value) and a list of the key assumptions that have the most impact on the range. Within that range, they could highlight prices that illustrate prices that show: a) the consensus of experts, b) straightforward extrapolation from current prices, and c) the output of their (non-transparent) model.

A minor point about your methodology:
“As a result, for all of the non-dispatchable power sources, those gray bars in Figure 1, you need to add at least seven cents per kilowatt-hour to the prices shown there, so you’ll have dispatchable power when you need it.”
You’re adding the full cost of the equal amount of dispatchable, but it’s less than that. For example, if you add “advanced combined cycle gas” as your dispatchable back up, it would only be required when demand was high and at the same time the non-dispatchable wasn’t working. If for example, that was 1/10th time, then the back-up cost would be the capital cost of the gas plant + the low maintenance cost given it’s only used 1/10th the time + the gas to keep it ticking over + the gas for the 1/10th the time it’s actually used. That might be 4 or 5 cents not 7.
On the other hand, there is another cost of using non-dispatchable power sources : the expensive switch gear required for very short term fluctuations. Despatchable power supplies have large rotating masses that store kinetic energy. Solar power can go from max to none in a few seconds as clouds move over.
I think the EIA figures for solar and wind are crap. Wind towers cost hundreds of thousands of dollars and last 15 or 20 years. They produce maybe 20% of their rated capacity, down to 15% as they age. When there’s no wind they produce no power, when it’s too windy they have to be tethered to prevent damage. I think the EIA is under-estimating the cost of wind power by taking the rated capacity and multiplying by an overly optimistic percentage for actual average production. The rated capacity assumes perfect wind speed, not too fast and not too slow. The wind is hardly ever just right. The solar and wind costs in the table just don’t look right. One trick I’ve seen in newspapers is to include subsidies in the cost equation. If the government gives say 20 cents a unit in subsidies and tax breaks, the newspaper article would take that off the cost of producing the power. Greenies can then say the solar and wind power is competitive with fossil fuel. Of course anything is viable if the government subsidies it enough. The true cost has to include the cost of those subsidies, as they just change who is paying not what it costs.
Could you check:
. What % is the EIA using for average production over rated capacity.
. Is the EIA cost for solar and wind the total cost of producing that power, or is it the cost to the generator after allowing for subsidies.

Sergey says:
February 16, 2014 at 11:59 am
The first state in USA which deregulated electricity production was California, which introduced energy market in the industry.
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BS. California re-regulated electricity production. The pols called it deregulation. Their stupid new regulation caused the problems. Then the pols declared from the mountaintops, “SEE, DEREGULATION DOESN’T WORK!”

Oatley says:
February 16, 2014 at 2:34 pm
“My compliments Willis and to the many commenters who obviously work within the utility industry as do I. Let me offer further points and clarifications…
CCS capture at the SASK plant is costing about 25-30% of the plant capacity (the lead engineer told me). Because it is sitting on top of an enhanced oil recovery sink (EOR), Co2 injection cost is nil.”
Drive up cost of electricity while stealing plant food from the ecosystem? Must be a Holdren idea. Nobody else in the Obama administration could be as destructive.

Hi, does anyone have a nice used 1961 Lotus Elite. I don’t want one in original condition – there is no such thing.
This car is quite a classic: a pretty, ultralight, closed two seater sports car, produced from 1958 to ’63; I think Colin Chapman’s first of this genre. Oh, and it’s got a fiberglass body. A real fiberglass body. No, steel frame for this baby. Did I say I didn’t want one in original condition? Well, now you know why. I have no desire to have the suspension attachment points ripped right outta the body when I hit that inevitable pebble on the road that’s just a wee too big.
Now, I know what you’re all thinking: whatever does a Lotus Elite have to do with a renewable energy source? And my answer is that it has absolutely, positively nothing to do with it.
You see, when ominous storm clouds are developing, and golf ball size hail starts rat-a-tat-tating down you can rest assured that that Lotus Elite was whisked into a garage ahead of time. So, in this it bears no similarity to a wind turbine which, assuredly, won’t be whisked into a garage. That Lotus will also happen to be in the garage if there’s freezing rain – the wind turbine won’t. Since it doesn’t have AC and, what the heck, it’d probably boil over anyway, that Lotus is likely to be reclining in the shade in that same garage. Not so with the wind turbine. Oh, and if it’s 20 below outside you can rest assured that Lotus is going to be in that garage as well since there isn’t a chance in hell it’s gonna start. Might as well get long underwear, looong underwear, for that wind turbine ’cause, again, it ain’t goin’ in a garage.
See, there’s no similarity between a Lotus and a wind turbine. Oh, there is one though; that wind turbine’s got fiberglass blades.

richardscourtney says: @ February 16, 2014 at 11:09 am
…. All energy is free…..
>>>>>>>>>>>>>
That has to be one of your best posts a real classic.
Now if we could only get that through a bunch of thick heads.

Something never mentioned with Wind power: According to an engineer I talked to, on the Columbia River the extremely expensive dam hydro turbines are wearing out much faster these days due to having to be adjusted so much because of the uneven power load forced on the BPA by the many wind farms in the area. Replacement parts are not only expensive, but impossible to have made in the US. These uneven loads are also very hard on transformers at substations.

Oatley says: @ February 16, 2014 at 2:34 pm
….Now for the kicker…in 2015 35-50 gigawatts of coal fired capacity is slated to come out of service due to the MATS rule….
>>>>>>>>>>>>>>>>>
Thanks for that confirmation of what I had already suspected.
The Institute for Energy Research says that the North American Electric Reliability Corporation evaluated four major regulations now being proposed or implemented by the EPA and“estimates that nearly a quarter of our coal-fired capacity could be off-line by 2018 and that as many as 677 coal-fired units (258 gigawatts) would need to be temporarily shut down to install EPA-mandated equipment.[ii] These EPA regulations must be implemented within a 3-year window and the mandated equipment takes about 18 months to install. Because EPA’s three year timeline is so tight and the regulations affect so many units, utility companies are not sure that they can meet the standards and ensure reliability of the electricity system at the same time.”
(wwwDOT)instituteforenergyresearch.org/2012/08/01/generating-companies-are-shuttering-coal-plants-at-record-rates-eia-reports/
It looks like a massive problem just-in-time for the next president and that is a gross understatement especially when 1/3 of the nuclear plants may also be shutting down. About 10% of capacity will be shutdown permanently and 1/2 of the remaining coal plants shutdown for an 18 month retrofit. Coal now supplies ~ 40% of our electric. It looks like the light at the end of the tunnel is an on coming train.
Get your diesel generators and supply tanks now before the rush folks.
Oh and do not forget the EPA has also targeted Wood Stoves. Looks like Holdern and Co. really do want us to die.

A most excellent discussion. I have also spent my entire career in the electric utility industry trying to explain the folly of grid-connected intermittent resources and the games people play with levelized cost forecasts. I am heartened to see how many of my fellow engineers are skeptical of the whole climate change scam.
Can anyone point me to studies that address the net impact of wind-turbines on CO2 emissions when the need to provide fast ramping generation reserves is taken into account? My intuition is that we are better off even from a CO2 perspective building a CCGT, than building windturbines with “back-up” ( as it it euphamistically phrased by greens) from gas turbines which presumably would have to be simple cycle. We knw the economics but can anyone point to the CO2 numbers on this?
Richard

Lightrain says: @ February 16, 2014 at 5:57 pm
………… Second, to increase WT efficiency why hasn’t someone desi9gned a horizontal system so all the major moving parts can be at ground level?
>>>>>>>>>>>>>>>>>
I assume WT is wind turbine.
You run small home windmills at least 80ft off the ground because that is where the wind is. Think trees.

Lightrain says:
February 16, 2014 at 5:57 pm
Second, to increase WT efficiency why hasn’t someone desi9gned a horizontal system so all the major moving parts can be at ground level?
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Environment Canada had a very large experimental vertical axis (VA) wind turbine just north of Lumsden, Saskatchewan for years. There are now many VA designs.
http://en.wikipedia.org/wiki/Vertical_axis_wind_turbine

What a shame. You use to be able to get good numbers from the US Energy Information Agency. Looks like CAGW politics have started to affect their numbers. In my opinion these numbers are way off because they are using some very basised assumptions. Too bad.

stas peterson says:
February 16, 2014 at 7:16 pm
Perhaps you have seen pictures of the Verazano bridge in Washington back in the 1930-40s. A little wind started the bridge oscillating and each breathe of wind added to it until the bridge was wildly swaying, Finally a bridge support snapped adding stresses to other supports, which soon failed also, and the bridge came crashing down,

Minor correction, it was the Tacoma Narrows bridge: http://en.wikipedia.org/wiki/Tacoma_Narrows_Bridge_%281940%29

Of course, Its true that to maintain environment healthy, and in order to save electricity its must to have a current collector in the generator. And above blog and comment discussion in very informative.

It may be of interest to do some investigation of the Danish Grid. They have a major maintenance problem with the 6000 odd turbines installed, quite a few for 20+ years. During that time baseload generation (dispatchable) using coal has increased by around 40% to cover the low efficiency wind turbines. Most of the environmentally friendly renewable power generated by the turbines is sold to the eco-friendly people in Norway and Sweden. Apparently the maintenance/overhaul costs of the older turbines will be higher in real terms than the original installation cost, leaving the Danish government with a substantial problem.

-Complex life developed when oxygen became available to supply chemical energy through respiration.
-Agriculture and cities developed when crops were utilised on a large scale to source mineral chemical energy from the ground when it also interacted with solar energy in photosynthesis in plants; animal husbandry also utilised chemical energy from plants on a large and controlled scale.
-Civilisation and technology developed when metallurgy was developed to utilise various metals already concentrated by nature in the ground.
-Industrialisation on a large scale developed when fossil fuels were utilised which were already concentrated by nature in the ground.
All these are renewable and/or inexhaustible, except the last-fossil fuels. Something must be found that is largely inexhaustible and/or renewable to be as successful and dominant in the long run. Perhaps nuclear, but it is surprising just how much life in general and human society depends on energy utilisation and breakthroughs to flourish.
The second one above-agriculture and animal domestication, are interesting in that they utilise both chemical energy from the ground and solar energy from photosynthesis in a complex interactive fashion, which perhaps suggests that some form of complex combination of energy sources will be developed which could make a huge difference in the future.

How the UK grid handles a 1GW diconnection of a Nuclear generator (only 5 minute data available)
http://tinyurl.com/nb86eht
GE designed CCGT designed for load following:
http://www.ge-energy.com/products_and_services/products/gas_turbines_heavy_duty/flexefficiency_50_combined_cycle_power_plant.jsp

thingadonta says:
February 17, 2014 at 3:33 am
All these are renewable and/or inexhaustible, except the last-fossil fuels.
============================================================
I assure you that they are inexhaustible. I will be long dead when fossil fuels are unavailable to Man. The condition of Man 1000 years from now is of no interest to me. Double-ought zero.
Solar energy will be unavailable to Man in 4 billion years. 1000 years, or 4 billion years, there is no distinction to me.

Why must you add 7c to the wind power or solar power cost?
You should only have to add the infrastructure cost portion.

As a result, for all of the non-dispatchable power sources, those gray bars in Figure 1, you need to add at least seven cents per kilowatt-hour to the prices shown there, so you’ll have dispatchable power when you need it. Otherwise, the electric power will go out, and you’ll have villagers with torches … and pitchforks …
The $0.07/kW-hr number is the steady state performance of the combined-cycle natural gas plants. During start-up, stand-by, and shut-down you don’t have enough heat in the stack for the steam side of the process to work, so the actual performance is closer to $0.14/kW-hr. That is what you need to add to the prices shown.

Interesting the differences between actual historical costs and projected costs of generation. Here’s some historical data:
“August 2003 figures put nuclear costs at EUR 2.37 c/kWh, coal 2.81 c/kWh and natural gas at 3.23 c/kWh (on the basis of 91% capacity factor, 5% interest rate, 40 year plant life). With emission trading @ EUR 20/t CO2, the electricity prices for coal and gas increase to 4.43 and 3.92 c/kWh respectively” Generation figures for nukes include decommissioning costs, unlike other generation sources.
Source: http://www.world-nuclear.org/info/Economic-Aspects/Economics-of-Nuclear-Power/
Unlike government projections, industry data needs to be accurate. Nukes and coal are the lowest cost, which is why real-world power generating companies have been buying them.
But then along comes requirements for ‘renewables’ and a US President who campaigned on a platform of “Under my plan, electricity rates will necessarily skyrocket” Reference: http://www.youtube.com/watch?v=HlTxGHn4sH4
So now we live in a world where China is building dozens of 3rd generation nukes that were designed in the USA with 100,000 years of fuel available, especially if you include the Japanese demonstration of collecting Uranium from seawater. But very little new construction in the US or much of the Western world.
I guess zero radiation-related injuries or fatalities at Fukushima after the tsunami claimed tens of thousands of lives just isn’t good enough.

Two other interesting points about the levelized cost as presented in Table 1 of
AEO2013 Early Release Overview
Capacity Factor:
For coal, oil, nuclear, and baseload natural gas (natural gas peaking plants are operated intermittently) the capacity factors range from 85% to 90%. Solar and wind have capacity factors ranging from 20% to 37%. Previous commentators have alluded to the rambunctious skepticism appropriate for even these low numbers.
Whatever you think of solar and wind versus coal, oil, an gas, and nuclear, if you want your energy from wind and solar you need to build roughly 3 times as many plants to produce the same amount of energy. Whatever their environmental, social, aesthetic, and financial costs, you pay them thrice – THEN you buy a backup plant that uses reliable technology and so can be dispatched when required.
Transmission costs:
Note the the transmission costs in Table 1 for baseload coal, oil, gas, and nuclear range from 1.1 to 1.2 $/megawatt-hour. That figure is so low because these plants tend to be big, and the costs per megawatt-hour of building new transmission infrastructure goes down as power levels go up. The transmission costs for solar and wind range from 3.2 to 5.9 $/megawatt-hour.
It costs roughly as much to dig a hole and set a pole for a 20 MW solar plant as for a 1200 MW nuke. Right-of-way, permitting, design costs don’t change dramatically as power levels increase, so smaller plants spend more per unit of delivered energy.
Here’s the thing about transmission lines: most people don’t like them. Intense political and legal battles ensue whenever new lines are proposed or (much more rarely) constructed. As with capacity factor, the smaller scale of solar and wind technologies mean that they need more poles, holes, wires, and right-of-way (much of it seized via eminent domain proceedings) than the comparable baseload generation technologies.

Willis,
The figures are fake. The cost of electricity retail is about 7c/kWh in PA, so in no way could the cost of PRODUCING that electricity be 7c/kWh as in the EIA. It is more like 3.5c/kWh.
What the EIA costs are is what energy WOULD cost if cap-and-trade and similar laws were passed. Resulting in a doubling of retail price.
With the population at large not noticing this doubling and voting those who passed such laws back into office.
Thus the energy is “levelized”, or the whole matter is run over by a steamroller.
The Energy Fairy which giveth us free unlimited baseline energy is much more credible than the above scenario.