In the UK, the CIVITAS group has just released an economic analysis of wind power. The scathing report confirms what we have been reporting for years here on WUWT: wind power is expensive, inefficient, does little or nothing to offset CO2, and isn’t economically viable without taxpayer funded subsidies. Oh, and they kill birds and bats, plus blight the landscape too.
They report:
[Wind-power] is expensive and yet it is not effective in cutting CO2 emissions. If it were not for the renewables targets set by the Renewables Directive, wind-power would not even be entertained as a cost-effective way of generating electricity or cutting emissions. The renewables targets should be renegotiated with the EU. [p. 30]
Energy experts warn that unwarranted support for wind-power is hindering genuinely cleaner energy
The focus on wind-power, driven by the renewables targets, is preventing Britain from effectively reducing CO2 emissions, while crippling energy users with additional costs, according to a new Civitas report. The report finds that wind-power is unreliable and requires back-up power stations to be available in order to maintain a consistent electricity supply to households and businesses. This means that energy users pay twice: once for the window-dressing of renewables, and again for the fossil fuels that the energy sector continues to rely on. Contrary to the implied message of the Government’s approach, the analysis shows that wind-power is not a low-cost way of reducing emissions.
Electricity Costs: the folly of wind-power, by economist Ruth Lea, uses Government-commissioned estimates of the costs of electricity generation in the UK to calculate the most cost-effective technologies. When all costs are included, gas-fired power is the most cost-efficient method of generating electricity in the short-term, while nuclear power stations become the most cost-efficient in the medium-term.
…
Besides the prohibitive costs, the report shows that wind-power, backed by conventional gas-fired generation, can emit more CO2 than the most efficient gas turbines running alone:
In a comprehensive quantitative analysis of CO2 emissions and wind-power, Dutch physicist C. le Pair has recently shown that deploying wind turbines on “normal windy days” in the Netherlands actually increased fuel (gas) consumption, rather than saving it, when compared to electricity generation with modern high-efficiency gas turbines. Ironically and paradoxically the use of wind farms therefore actually increased CO2 emissions, compared with using efficient gas-fired combined cycle gas turbines (CCGTs) at full power. [p. 30]
This means that the cost of having wind is not just carried by consumers but by the environment as well.
…
The report concludes:
[Wind-power] is expensive and yet it is not effective in cutting CO2 emissions. If it were not for the renewables targets set by the Renewables Directive, wind-power would not even be entertained as a cost-effective way of generating electricity or cutting emissions. The renewables targets should be renegotiated with the EU. [p. 30]
More here (and the report itself):
http://www.civitas.org.uk/press/prleaelectricityprices.htm
h/t to Brian H.
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Mike P. says:
January 11, 2012 at 9:28 pm
The study is flawed because it compared apples (wind) + rotten oranges (old gas fired technology) to fresh oranges (gas turbine technology).
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Mike, they can’t. The newer gas turbines are for base load. In other words you can’t use them to back up the wind. One must use the old gas tech. The reason is because the old tech allows for quick alteration in the output, whereas the newer tech cannot. I believe that was one of the many points the study was trying to make.
A physicist says:
January 11, 2012 at 4:57 am
Considering all the subsidies wind farms get, that’s no feather in their caps.
By the way, “physicist”, you never did answer my questions about your coal deposit. As such, any comparison you make with wind is null and void until you do.
“A physicist”
You goofed. You hijacked this thread with ridiculous and false calculations based on real estate, and since I’ve pointed it out that you confused swept area with real estate you’ve tried to wriggle out of it without admitting it. But you can’t. You said:
“Iowa’s average wind energy potential is (about) 350 Watts per square meter. And under one square meter of our Iowa farm, there’s enough coal to provide 350 Watts of electrical power for exactly … one year.”
So you were talking about real estate. The 350 watts per square metre relates to swept area, not real estate. In real estate terms it is around 1 watt per square metre for wind farms. By the way, physicists know that watts as a unit of power don’t have a capital ‘w’ when spelled as a word, unlike what you have written. That’s a very telltale sign, methinks.
So, as I said at the start, you haven’t got a clue. As I and others have shown, you are between two and three orders of magnitude out in your calculations, whether revenue or payback.
You goofed big time. To keep coming back and trying to justify your ignorance makes you look ridiculous.
RockyRoad wind power ain’t a “feather in their caps.”
It’s “money in Iowa’s pocket.” And “power in Iowa’s wires.” And “jobs in Iowa’s counties.”
That is why, when all the costs of wind are compared to all the costs of coal … as facts-on-the-ground based upon real-world experience … why, wind comes off looking pretty good.
As Warren Buffett and all the good citizens of Iowa have figured out, eh?
The significant problems we face today cannot be solved at the same level of thinking we were at when we created them. ~ Albert Einstein.
Warren in Minnesota says:
January 10, 2012 at 6:43 am
“@Pamela Gray:
Wind, geothermal, and solar power generation are most effective on-site and at a small scale. It works quite well if your goal is to stay off the power grid or are in a location where electrical power is not available (and there are several areas in NE Oregon where this is the case).”
Who is going to make our global scientists understand an easy point.
Generally speaking, they are quite right of course, but there are many exceptions around the world that should be considered in place. Formulating, fixing and expanding a package to the whole world without any chance for the exceptions is not acceptable for such a community.
%4 of energy consumption in US houses and buildings is for warming the water. This or part of that can be given by solar cells. What is the problem?
Japanese produce electricity from an even small water fall to light a short alley. Small business plans are as important as the large scale projects. There are many reasons that make something feasible in somewhere, that it never can be feasible elsewhere.
It is obvious that all other resources are BABY energies. At the time being and for the near future at least, they can never be able to compete with fossil based fuels (FBF). As soon as any reliable source of energy can provide us all our requirements economically, there would be of course no chance for (FBF) anymore.
And about subsidies; Governments are responsible for many things against the people. Mostly in new fields the government should provide the requirements that private sector can dare to step forward and start a new business. The instrument here are TAX Exemptions, Low Taxation Rates and Subsidies. After some times and when the market can handle itself, the legal instruments are no longer extended. Same as a baby until the time that he/she can go on individually. These baby energies would never be a real threat but they may have some positive consequences and at least they can provide us some (%) of our energy demands, something is better than nothing.
Almost all the friends here in this debate, are not positive to windmills. Mostly want to cut the subsidies from this ORPHAN. I have a simple question; really do we have anywhere else, that receives subsidy and you never talk about it? I heard in DC there are subsidies on electricity or something else. The records are in recent WUWT posts (R/P, Nothing is sustainable.. ) Now let’s agree together NO SUBSIDY ANYWHERE. The market can find what to do, this is fair.
I saw the photo of the old windmill at the top of the post. It worked for many years satisfactorily. They! did not have enough studies on windmills. Apparently the first result is that we cannot have any expectation on large scale production form windmills, but it does not mean that it is dead, still there are locations that have necessary conditions to go on, and if somebody likes to follow up without any subsidies, what is the problem then? Who knows what would happen tomorrow? Robert Hirsch said Oil is going to be $500/b. More Hirsch On Peak Oil. http://www.youtube.com/watch?v=bGHpWOSsDZk&feature=share
Somebody said here, windmills are against birds!! What sort of argue is this? ASTUTE! Man-kind is killing more, isn’t it?
One more thing; For those that would like not to be mislead-ed:
1) The most effective power plants (GAS-LIQUID FUEL) generators output is %46;
2) Steam or Gas turbines single cycle output is max %25-%33;
3) Steam or Gas turbines combined cycle output is max %43;
all depends on weather conditions and altitude from free sea levels, let’s make %10-%20 less and take the safe factor of %80 of the above max outputs. This is to clarify that DON”T THINK here we are in LAS VEGAS! with our hero the FOSSIL.
And again:
The significant problems we face today cannot be solved at the same level of thinking we were at when we created them. ~ Albert Einstein.
A physicist says:
January 11, 2012 at 4:22 pm
kadaka (KD Knoebel) says: [after a lengthy calculation] … each square meter of ground would yield just $1.27 a year from wind power.
LOL … $1.27 per square meter?
Kadaka, please get back to us with an estimate of the annual value of the corn/soybeans that can be grown on one square meter of farmland.
Oh yeah … and please let us know whether you still think Warren Buffett and those Iowa farmers are making a foolish investment?
———————–
Ok let’s play the “retail corn game”. Using your methodology an 18oz box of cornflakes retails for $4.65, and takes 0.8 lb of corn. Since a farmer can produce 180 Bu of corn an acre at 56 lb per bushel you have approximately 1.5 boxes per square meter.
So there you have it $6.97 per square meter per year for corn vs $1.27.
Isn’t fiction fun?
Someone calculated Iowa wind power = $954,000,000 per square mile per year.
This converts to $89,437,500 for a 60 acre area.
Wind turbines need to be spaced 3-7 blade diameters apart.
Using a GE 1.5 MW 77 m (rounded to 80 m) blade diameter costing $2 million we have:
80.0 x 3 = 240 m is the closest placement possible
240 m is 57,600 sq m
57,600 sq m is 15.7 acres
60 acres / 15.7 = 3.8 equals number of turbines on a 60 acre area (round to 4)
1 GE turbine generates 1.5 MW peak power. Assume 25% average power 24/7 365 days per year
1.5 x 0.25 x 8,760 hours in 1 year = 3,285,000 kWh in 1 year
Assuming $0.12 per kilowatt hour (not a subsidized rate) gives $394,200 per unit or $1,576,800 in yearly gross revenue for a 60 acre wind farm (not exactly $89 million).
Cost of 4 turbines is 4 x $2 million = $8 million.
Years to recover initial purchase is $8 / $1.576 = 5 years.
Dear Steve,
Your comment is not just a simple note. It is a short feasibility study when you go to a bank and ask for facility. Good Job, and thank you.
I have very good feeling on that, because I had a 25MW gas engine independent power plant (3unitsx9MW), and with the same results, I could get a 7 years repayment package, and I’m quite satisfied of that. I want to say that with your calculations you showed the right figures and those misleading dimensionless calculations by some of our friends were not acceptable, they would make the right corrections.
Now let me tell you that in combustion engines you know that air pressure due to altitude above free sea levels varies and this would affect the output by around %10. If you are in hot climate then there is less output that’s about another %10. There are still to come. Your best efficiency at sea level is %46, if you have any fault that makes your output below %41 then you should pay for the appropriate cost of the lost gas(natural gas) due to your inefficient output. when the network is not at peak then about another %10 is reduced because your engines are not working and you should not get paid for depreciation. This is just like we say when there is no wind then no income. Same problems. I have the experience of not to buying GAS as fuel. The contract is based on ENERGY CONVERGENCE AGREEMENT (ECA). So the fluctuation of FUEL is not a risk and the Government/Customer is sure that @zero rate for the fuel and the best output above %41 would get the required efficient power at the right time. Now what is the difference of a gas engine that is the most efficient CARB power generator and the WINDMILLS as you showed and proved in simple words, my package is a 7 years facility and you showed it is available in 5 years for the windmills. For such contracts the banking system is more satisfied to have a 7 years arrangement. The sound is good and congratulation to you for your excellent job. I hope our friends would get it, they have abilities far above of such simple things.
Regards.
I should add that if I was offered this business I would pass. Without taking into account permits, land purchase, constructions costs, ongoing maintenance etc, it would take me 5 years to get just the purchase price back.
However, if someone were to guarantee me four times the normal rate, this would be an excellent investment. My capital would be tied up for several years, but there would be no risk to my capital and the high returns would continue several years after my original investment was paid back to me.
ACCKKII says:
January 12, 2012 at 8:47 am
————————————————–
“I live in the country and use a lot of electricity and propane (much of it work related). I looked at alternative power sources to save money (solar, heat pump, wood pellets, diesel). The cheapest was diesel at about twice the rate I was paying. Plus there are laws for how much fuel you can legally store on your property and how it is stored (a double enclosed tank with a berm, for example). It’s easier to just pay the government rates I’m afraid (but they are working on that as well).”
Steve,
Sorry,
This was not my comment. Maybe there are some misunderstandings both sides. This is your calculation:
“1 GE turbine generates 1.5 MW peak power. Assume 25% average power 24/7 365 days per year
1.5 x 0.25 x 8,760 hours in 1 year = 3,285,000 kWh in 1 year”.
Do you have anything hidden in your mind not disclosed here?
Take the rate (4 cents)—–> 3,285,000KWh in 1 year X $0.04= $131,400—-> assume 100,000.
And you said:
“Cost of 4 turbines is 4 x $2 million = $8 million.”
So:
– one should sell the power @ur momisugly 4 cents;
-one should buy GE @ur momisugly $2 million (this is not the right price- $1.5 million/MWh is the min rate for combined cycle power plants not for the windmills);
– The government gets %13 its share;
The “ONE” should be crazy to do. And…Where is the subsidy?
About what I wrote earlier:
Oil/Gas market is risky. You always should pay as an end user the oil/gas prices for your power plant/generator. This is impossible because there is no place in your pocket for such huge variations in base prices. Your contract with your off taker is for:
1- a period that can be short/long term;
2- saving against energy rate fluctuation, otherwise you are gone;
Less the price and cost for the fuel, you have removed your risks. Energy Convergence Agreement ECA is for this purpose and it means you are just a Mobilized Labour (ML), and you get only your wage for converting energy (labour+machine+depreciation). Then the rate (4-8 cents/KWh) is okay. If you add the fuel cost to that, then min 12 cents is something still risky (material included rate). Here again, where is subsidy? The fuel is subsidized not the ML, who is this ML to SUBSIDIZE the people and why?
4 cents is the market value for electricity. There must be something missing in your assumptions. 5-10 years is fair for any job plan. GE never makes generators that there is no chance to sell it.
From A physicist on January 12, 2012 at 4:36 am:
You could have used this link to the abstract, which also hints as to what lies beyond the paywall (bold added):
The paper is available here. From the introduction it is clear it’s looking at mythical costs such as those from climate change (global warming), there’s computing of costs and dangers from carbon capture and storage (CCS), etc. Conclusion #5 mentions eliminating mountain top removal (MTR) coal mining. Really, the whole thing amounts to nothing but a Green declaration against coal, seriously biased. For example:
Approved by Greenpeace and James Hansen, the federally-funded anti-coal activist who has willingly been arrested to oppose coal as an energy source. Yup, you have indeed selected a great source for your wind-over-coal argument. Truly.
Now then, do you actually have any “facts-on-the-ground based upon real-world experience” that support your assertion?
Steve from Rockwood
You don’t need to do those calculations and make assumptions about efficiency and optimum spacing. There are lots and lots of windfarms out there in the world, and we know their acreage and their average power generation. From this data we can determine that, as a rule of thumb, one can expect around 1 watt of electricity on average from one square metre of windfarm. Your 60 acre windfarm would thus produce little more than 2 million units per annum, give or take a bit. It’s not going to be wildly different from what anyone else can generate per acre, is it?
$0.12 per unit is way too high – that would have to be to a rigged guaranteed market with guaranteed pricing. Electricity suppliers can’t get anything like that as a wholesale price using normal free market means. You would only be able to get that price when there is very high demand, but not for most of the day, most of the year. $0.04 per unit as a wholesale price would be more realistic, but for the sake of argument, let’s be generous and say $0.05 per unit as it gives us a nice round figure gross revenue of $100,000 per year. And, remember, that’s GROSS – you have some running expenses to pay.
The notional payback on your turbines then becomes many decades – exceeding the life of the units themselves, not to mention your own lifespan. Thus you can never recover your capital investment with wind power EXCEPT IN A RIGGED MARKET. Rigging markets in favour of the inefficient at the expense of the efficient is a huge waste of the nation’s capital. In such markets a small number of people get very rich at the expense of the vast majority, and the overall impoverishment of the nation.
If the USA wants to hobble its future and destroy its wealth then a massive rollout of windpower would certainly do the trick.
Steve from Rockwood says:
January 12, 2012 at 7:49 am
I should add that if I was offered this business I would pass. Without taking into account permits, land purchase, constructions costs, ongoing maintenance etc, it would take me 5 years to get just the purchase price back.
However, if someone were to guarantee me four times the normal rate, this would be an excellent investment. My capital would be tied up for several years, but there would be no risk to my capital and the high returns would continue several years after my original investment was paid back to me.
————————-
In reality, the wholesale price for electrictity (what you would receive with out subsidy) is half that quoted or 5.5 to 6 cents. So figure 10 years not five for the purchase price. Yep, the consumer/taxpayer is getting taken to the cleaners every time one of those things gets erected.
ScientistForTruth says:
January 12, 2012 at 10:03 am
———————————————————–
Just an engineer says:
January 12, 2012 at 10:24 am
———————————————————–
I tried to approach this from first principles in an attempt to not immediately discredit a certain physicist’s calculations. $90 million per year for anything on 60 acres seems impossible (except for certain banned substances).
So I started with the number of wind turbines. Perhaps 4 is too low. But even with 40 turbines and a generous selling price for electricity the $90 million is out by more than a factor of 10.
I used $0.12 per kWh to be generous. After all we know these projects are subsidized. And yes the actual price (to compare against a competitive form of energy) should be lower, less than half.
Another approach would be to deconstruct an actual wind farm. On the Cape Wind Farm in PEI there are 16 units operating on a footprint of 250 acres for a total power generation of 10 MW.
This means 23 GWh per year. At a more reasonable price of $0.05 these units will produce $1.156 million in gross revenue. Operating costs are estimated at $250,000 per year (I doubt this is true because there are 2 people employed full-time and that alone would eat half the budget, but I’ll go with their lies – in fact I suspect they hired only 2 people and the rest are on contract – but I digress). This produces a net income of $906,320. The cost of the 16 units was not disclosed. Let’s assume they cost $1 million each, so the initial investment was $16 million, plus the land cost, plus construction. I’m going with $20 million.
The pay back period on this installation is 20 years (if at all). A hint about the longevity of these systems can be found in the agreements wind farms have with the land owners. They typically run for 20-25 years at a value of up to $10 per acre (wow, what a deal). So over the life of the wind turbine, at normal market rates, you would be lucky to get your money back without interest.
Again, if I were to participate in something like this, I would want 4 times the going rate or I wouldn’t even be talking about tying up my money for so long.
But an even greater evil lurks. My electricity bill (which has gone up about 38% over the past few years) has a base rate for electricity of $0.062/kWh. Then there is a peak use rate and then a rate when I exceed a certain limit of kWh. Then a delivery charge and finally a 13% tax (the electricity company is owned by the provincial government which gets 8% of the 13%, the remainder going to the federal government). If I divide my electricity bill by my usage, my actual “all-in” rate is $0.12 / kWh. On a brighter note, the provincial government introduced a green energy rebate just before the last election so that I receive 10% of my money back. Final note: the $0.12 calculation is after the rebate.
ACCKKII says:
January 12, 2012 at 8:47 am
————————————————–
I live in the country and use a lot of electricity and propane (much of it work related). I looked at alternative power sources to save money (solar, heat pump, wood pellets, diesel). The cheapest was diesel at about twice the rate I was paying. Plus there are laws for how much fuel you can legally store on your property and how it is stored (a double enclosed tank with a berm, for example). It’s easier to just pay the government rates I’m afraid (but they are working on that as well).
Here’s the bottom line question: what is Mr. Buffett offering for the right to put a wind turbine on your property? What are the terms? Your earlier post claimed a square mile of Iowa farm land was good for roughly a billion dollars of annual wind power earnings. If you assume a 10% cap rate, an investor would be willing to pay 10 billion dollars for an income stream of 1 billion dollars a year. So then the question becomes what is the capital investment required to turn that square mile into a super windfarm: deduct that from the 10 billion value of the developed property and what is left is what an investor would be willing to pay for the use of the land. Divide that by 640 and you have the purchase price per acre.
Don’t let your family and neighbors sell out cheap just so Warren Buffet can move up a place or two in the list of the world’s richest people: hold out for what it’s really worth. If the above calculation is significantly higher that Buffett is offering there are only two possibilities: (a) Buffett is a really, really greedy capitalist, or (b) you’ve over-estimated the reasonable income potential for that use of the land. If (a), eventually a just ordinarily greedy capitalist will come along and meet your price. If (b), you’re stuck growning corn/soybeans (thank you by the way; I consume them both).
If wind power makes economic sense, then even if you take away all the subsidies investors will be able to offer landowners a better price for the land than its current use and still make a buck for themselves.
In the end, it doesn’t matter what analysts like Ruth Lea say: in a free market some investors with a higher tolerance for risk will try a new idea. If the fundamentals are sound, eventually they will find a way to make it work. Once something is shown to work the more timid follow. Having some supposedly wiser central authority subsidize a particular technology just distorts decision making.
It is rarely necessary to subsidize a good idea; it is usually essential to subsidize a bad one.
From A physicist on January 11, 2012 at 4:22 pm:
The $1.27/m² figure is full-blown retail, at a retail residential electricity rate that seems exorbitant to me here in Pennsylvania. So it represents the displacing of energy the farmer would be otherwise getting from the utility and requires owning their own wind turbine and equipment.
For what the farmer would actually be getting, this document from the Union of Concerned Scientists, of which Kenji Watts is a beloved member, puts annual payments to farmers by the wind turbine owners at “…around $2,000 to $5,000 per year for each turbine, depending on its size.” However this document could use some updating, as seen down in the “Successful Wind Farming” section where they have an example of a retired Iowan farmer whose turbines are owned by Enron Wind Corp.
There is a November 21 2011 article on a site clearly advocating wind power, “Iowa Town reaps windfall from turbines”:
http://governorswindenergycoalition.org/?p=423
At 60 acres a megawatt, which converts to 242811.385 m² (ignoring significant digits), that’s $3000/242811.385m² = $0.012355269/m². Yup, the farm owner would see just over a penny for every square meter.
It’s undoubtedly a good deal for Buffett, he’s a seasoned investor who’s ridden bubbles before. And that’s what wind power is, a bubble, buoyed by government support including subsidies and mandated use of renewables. With tax credits and depreciation write-offs, the invested capital is not out there for long before being reclaimed. With utilities being forced to buy renewable energy, the market is assured for the moment.
But when carbon trading refuses to materialize, and as exasperation over high electricity prices continues to show up at the ballot box, policies will change. It’s already started in Greener-than-thou Europe and elsewhere. True conservationists are speaking out about the effects of the bird choppers, as well as the bats they kill, etc. The bust will come.
Businesses have shown how they protect themselves with renewable projects. The assets get transferred to a subsidiary. When hitting the end, after the investment is recouped and profits go away with increasing maintenance costs, the subsidiary goes bankrupt.
So yeah, it’s a good investment for Buffett.
For the Iowa farmers, they have invested nothing. Yup, it looks good for them now. From an investment of nothing they get some steady income, hopefully they got a per-turbine deal rather than with revenue sharing. Farming alone can be more profitable than wind-farming alone, but generally they can farm around the turbines and access roads, so it’s like they’re getting paid twice.
But as the turbines start breaking down and the owning company sees the profit go away, as the bust commences, the farmers could be stuck. With the turbines increasing the profitability of land, the property values are going up, which means the property taxes are going up. If the owning company goes bankrupt and the payments stop, the farmer has turbines he can’t touch as he doesn’t own them, which may well affect the rest of his property as they deteriorate. There are still the property taxes to pay.
And as payers of property taxes find out, government will willingly raise property taxes but will outright refuse to lower them without judicial intervention. You build a shed, “improving” the property, your property taxes go up. Tear one down, they don’t go down. Build another, they go up again. After the turbines are carted off for scrap, even if everything doesn’t go belly-up and it’s a “normal” termination of the arrangement, those higher property taxes will remain.
Short term gain, long term pain. Plus there’s the not-mentioned slimier aspect, family farmers as a group are normally on the desperate end of the financial spectrum, one or two bad years away from total collapse. It’s a given some of those signing agreements feel they can’t afford to not sign.
Tell you what, you come back in ten years and tell us how great a deal it turned out to be. I’ll bet at least some will have wished they’d mined the coal on their property instead.
Simple answer on the dependability of wind power: When was the last time any warship or passenger liners powered strictly by sails built?
QED
Actually Rascal the changeover from sail to steam and later motor power was much slower than people generally suppose these days.
By the 1840’s the British colonies were clamouring for steam navigation because of its reliable mail schedules.
But these early steamships were very expensive both in terms of capital and operating costs so they had to be subsidized. And of course ocean going steamships used auxiliary wind power both for propulsion and stability..
The commercial trade stayed with sail for much longer, the famous or infamous Mary Celeste was a typical example of her day. The reason was simple, wooden ships were cheap to build and man compared to steam: and many passengers preferred them for their stability and silence. And with the types of cargo of the day schedules were not that important.
And well handled in favourable weather they could be much faster than steamships, clippers like the Cutty Sark could manage eighteen knots or so to a steamship’s eight. The fast liners did not appear for another thirty years and even then were not much faster. for instance the Titanic. The truly fast steam liner such as the Queen Mary is a product of the 1930’s.
It took until the 1880’s, the invention of the scotch boiler, the triple or later quadruple expansion engine and so on before the iron hulled steamship began to dominate the cargo trade. Even then the sailing trade remained a diminishing but important part of the business until German U boat piracy of the First World War put an end to them in the Atlantic: they accounted for the bulk of the tonnage sunk.
In the Pacific they survived until the Second World War did much the same but by then they were a very small part of the trade.
Kindest Regards
More on the North Cape Wind Farm. Their annual report 2009/2010 is here:
http://www.gov.pe.ca/photos/original/PEIEC.pdf
They bought 16 Vestas 660 kW turbines at a combined cost of $16.5 million and spent $3.6 million on construction.
Total investment $20.1 million.
They generated 32.42 GWh of electricity for gross revenue of $3.2 million. This equates to $0.099 per kWh which is a subsidized rate paid by the Province (taxpayers) to the provincially owned utility.
Annual direct costs are $225,000 but do not include maintenance of the turbines. This is done through a complex arrangement with Vestas which includes a penalty if the turbines fail to operate at their plate efficiency. In fact in 2010 Vestas paid the utility over $400,000 in penalties due to lost electricity production.
The installation covers 250 acres. Gross revenue per acre is $12,800.
When I look at the financials of this company it is obvious it could not exist on its own (without government financing and ongoing subsidies). They have $60 million in assets, $40 million in long term debt and seem to have gone through $3 million in cash last year despite net earnings of $4 million.
General Electric:
July 25, 2011
http://www.endurancewindpower.com/products.html
“Royal Bank of Scotland and Natwest Provide Financing for Endurance E-3120
Vancouver, BC July 25th 2011 – Endurance Wind Power, manufacturer of advanced wind turbines for distributed applications, has been approved for financing on their E-3120 50kW wind turbine under the Royal Bank of Scotland and Natwest’s new green fund.”
The Royal Bank of Scotland and Natwest have created a renewable energy team equipped with a £50 million green fund to meet the growing demand of businesses looking to install wind turbines and solar panels. Their renewable energy team, each independently accredited to advise customers by the Chartered Institute of Bankers, will help customers deal with uncertainties around planning, feasibility studies, and making environmental impact assessments in order to speed up the application process. The fund will allow customers to borrow up to 100% of the total investment value and can also be secured with alternative assets.”
A sample of investment:
How is that? When the banks are going to take back the money? Do you think the banks are charities?
Steve from Rockwood says:
January 13, 2012 at 6:28 am
“More on the North Cape Wind Farm. Their annual report 2009/2010 is here:
http://www.gov.pe.ca/photos/original/PEIEC.pdf
They bought 16 Vestas 660 kW turbines at a combined cost of $16.5 million and spent $3.6 million on construction.
Total investment $20.1 million.
They generated 32.42 GWh of electricity for gross revenue of $3.2 million. This equates to $0.099 per kWh which is a subsidized rate paid by the Province (taxpayers) to the provincially owned utility.”
Although I have some questions about “combined costs”, “which is subsidized rate” and “$0.099” but I leave it “as terms that I understood now”.
Let’s try and make some points clear, because I think we are talking about same things:
We have two systems on the table, A and B.
A- gas engine powered generators
B- windmills
system A is: investment on gas engines generator(G)+ fuel consumption+ depreciation+land+construction+infrastructure —-> price A= a
system B is: investment on windmills (W) + 0 rate for fuel consumption+ depreciation+land+construction+infrastructure(here is the Wind)——-> price B= b
Price in the market is= M
The market satisfying rate KWh is M which is equal to a. Why? because we assume that still there is not the system B, somebody is going to invest on it.
As you said earlier the investment on a windmill GE 1.5MWh is $2 million that is $1.33 million/MWh. For system A purchase rate is $5.0 million for 8.4MWh one gas engine (Hyundai) or $ 0.60/MWh.
As we see investment ARunning Cost B ; depreciation A> depreciation B ( A is fast moving) ; Land A < Land B ; Construction A ~Construction B.
If I give you the rate b same as the rate a same as the market rate M, what is your answer, you want electricity I'll give you @ur momisugly rate M or a.
If the rate M is 6 cents/KWh then this would be a problem for system B and it should be subsidized. But if you are paying KWh for system A and you are saying the rate for system B MUST BE 4cents ( I don't know why), then my question is where it has come from? Where is the subsidy?
Here the ruler is the market price not the system that produces electricity. There are many more factors like existing infrastructures. If you don't have the required infrastructures for a fossil based fuel power plant then you should add this to your costs, wind in acting like an existing infrastructure.
I should add here, I cannot believe that the electricity from a fossil based fuel is 6 cents/MWh. Here I see something is subsidized.
Somebody said "electrons are not for buy/sell they must be under the government control" and "we should not pay for idle times in power plants".
Isn't this subsidizing?
If we ask the government to provide us the electricity @ur momisugly 6 cents/KWh from all available sources, do you believe it means " the no more subsidizing"?
@ACCKKI.
There are many diesel powered generating systems in operation in Canada. They seem to be the most efficient and reliable choice for remote communities and industrial operations (mines etc). I have leased facilities based on diesel power and can tell you the price is much higher than what I pay at my home (about 10 times). But in areas with existing electricity infrastructure diesel cannot compete on any scale. It is unlikely that the public utilities are subsidizing the base rates for electricity as many large electricity users (Inco Limited and Falconbridge Limited come to mind) have dropped their independent generation facilities and moved onto the public grid 100% several years ago.
The rate being offered to the wind turbine company at $0.099 / kWh is 50% higher than what the provincial utility is charging so it has to be a subsidy. When you look at the books of the wind company that is 100% owned by the province you can easily tell it is losing money by the truck-load. Gross revenue was $19 million, cash paid to employees / contractors was $9.8 million, interest paid on debt was $1.9 million, repayment on long term loans $6.2 million, repayment on short term loans $3.8 million. These costs alone total (9.8+1.9+6.2+3.8) $21.7 million which is consistent with the utility burning through $3 million in cash. The utility is spending 112% of its revenue and has been in business for almost 10 years.
The assets of $50-$60 million are very unlikely to have that value as they are using a 20 year linear depreciation model. But the $40 million in debt is very real. Without direct cash injections AND a subsidized electricity rate of more than 50% the normal rate PLUS the fact that ALL of their assets were purchased for them by the Federal and Provincial governments makes this “company” insolvent if it weren’t for the fact that everything is guaranteed by the Province. It is essentially a make-work project for a province with historic high unemployment.
The fact that Warren Buffet would buy into such a scheme just shows how willing governments are to give the publics money away in the name of job creation. Check out Vestas, the company that manufactures the wind turbines and guarantees the plate efficiency. They have cut their guidance for 2012, laid off 10% of their workforce, note a drop in government support (for subsidizing the industry) and their stock price is in the toilet, down over 40%.
http://www.reuters.com/article/2012/01/12/wind-idUSL6E8CC1RG20120112?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43
http://ca.finance.yahoo.com/echarts?s=VWS.CO#symbol=vws.co;range=5y;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;
You mention that the ruler is the market price and I agree. In Ontario the market price starts at $0.06 / kWh. This price represents all types of electricity – nuclear, hydro, gas, coal. I am not aware of any gasoline or diesel generation plants that feed into the public system. If you believe these numbers are subsidized then check out Trans Alta, a publicly traded Canadian producer of electricity (TA). The rates they receive would be public. I am not aware that they receive special subsidies (direct cash or higher rates) to generate electricity like the wind farms have. Recently they have bought into wind power – so maybe they have their hand out too. Nice dividend though.
Governments would never allow a privately owned gasoline or diesel power plant to feed into the public grid as these fuels are seen as “dirty”. This is why they are subsidizing wind and solar in the first place – not because they are competitive but because they are (supposedly) environmentally friendly.
Steve from Rockwood,
Says:
“@ur momisuglyACCKKII. There are many diesel powered generating systems in operation in Canada. They seem to be the most efficient and reliable choice for remote communities and industrial operations (mines etc). I have leased facilities based on diesel power and can tell you the price is much higher than what I pay at my home (about 10 times). But in areas with existing electricity infrastructure diesel cannot compete on any scale. It is unlikely that the public utilities are subsidizing the base rates for electricity as many large electricity users (Inco Limited and Falconbridge Limited come to mind) have dropped their independent generation facilities and moved onto the public grid 100% several years ago. The rate being offered to the wind turbine company at $0.099 / kWh is 50% higher than what the provincial utility is charging so it has to be a subsidy.”
I was thinking there should be some missing points between us, untold/unfolded points did not let us proceed, I was carrying water in a sieve!
First: let’s clean up what so ever we have discussed about:
1- I wrote “GAS ENGINES…” I should make it clear for you that my point was about NATURAL GAS not gasoline. From every 1 m^3 of this natural gas you gain 4KW electricity at sea level/ 25°c.
2- Natural Gas Engines can provide us @ur momisugly %46 the output and the fuel rate is more reasonable and CLEAN ( I hope they don’t blame us for this one).
3- As you said; Diesel and let’s say combustion engines are generally the best for power generating due to their % output. Diesels engines are used as temporary or in industries where the grid is not available.
4- My package is based on ECA (an agreement without fuel- fuel is given by the customer that is normally a public authority).
5- The reason of ECA is to let the utility just do its job without risks of fuel rate changes.
6- ECA is not a short term contract. So it is obvious the utility (power plant) can never handle the contract unless it is clarified “the fuel rate is escalated” when any changes happen. It is preferred to let the material is provided by the government/authority.
7- ECA defines you as only a UTILITY nothing more nothing less. You are getting paid for just CONVERTING energy. You don’t have anything to give to the people as SUBSIDY. You are getting paid for wages and machine. This can be calculated easily in a feasibility study.
8- If the Government has to subsidize this part of electricity rate, THIS IS A MUST FOR THEM, we are part of the people that, they must support us to make jobs. Apparently there would be no difference between a government CONVERTING ENERGY UTILITY and OURS, that I am sure there are differences, we do it cheaper than ever.
Second: let’s agree together on some important issues:
1- The government is subsidizing electricity rate.
2- The government has made companies stop producing electricity because of the subsidized rates.
3- The government could give the companies their fuel @ur momisugly reasonable rates even ZERO! Because that 4-6 cents are just for the utility not the utility + fuel.
4- The government has put a new pressure on the shoulders of the taxpayers to build up new power plants to provide and substitute for the lack of electricity production by independent companies.
5- As long as there are any subsidizing system, we cannot blame any CONVERTING ENERGY UTILITY including WIND MILLS.
6- Electricity Subsidizing is inevitable.
Third: we must consider and analyze the real base price for 1 KWh without any subsidies.
1- The base price is the power rate that we gain from fossil based fuels/hydro. We may have 4 rates, coal based, oil based, natural gas based and hydro, depending which one can be available @ur momisugly end users site. Here we may have mean gravity electric rates by sources of production as well.
2- Windmills should be compared with above available base prices @ur momisugly end user’s site, even when there are no chances to have electricity according to (Third-1) above, the rate is defined by windmills.
3- Utilities can not be part of subsidies. Because they are part of the people, they work for the government/public authority.
4- Government should provide all the necessary supports as facilities, this would reduce the amount of subsidies. Actually the government is subsidizing the electricity as I understood from your comment. This is a reality everywhere. When the they are the owner of the utility you can never find how many (%) of the subsidy is for the utility and what part of that is due to the fuel. But when you have a contract as a private sector utility owner and under ECA terms & conditions, then the subsidy is applied to the fuel for sure. In this action, the government gain is the utility cheaper investment, operation and maintenance which is achievable under TENDER and competitive conditions.
Forth: Wind should be known as part of INFRASTRUCTURE (same as the oil fields). The reason is; it is not available everywhere by its relevant definitions.
Breaking News Buffett’s MidAmerican Utility Buys Three Iowa Wind Farm Projects.
Hmmm … that brings Buffett’s Iowa wind farm investment to four billion dollars.
And yet, Iowa’s energy prices are among the lowest in the nation.
Why is that, we wonder?
Hmmm … maybe that’s why Big Carbon has no liking for Warren Buffett?
Is it `cuz Buffett’s locking-in low energy prices for Iowa families, and sharing the wealth with Iowa farmers?
Hmmm … so maybe Buffett’s windpower engineers know more than they’re letting on?
As Buffett himself has said: “Energy utilities aren’t for getting rich; they’re for staying rich.”
More than that: not too strong, not too weak, not too cold, not too hot, from the right direction.
An experienced high-steel service mechanic weighed in on this. Few are able to handle the heights, and it’s extremely hazardous even for those who don’t “freeze” partway up. (And rescuing those who do is a whole ‘nother story; it’s damn near impossible.) The tools and supplies must be backpacked up, every time, and a single slip means probable death. There aren’t enough high-steel mechanics and techs in the country, much less the world given the huge plans for building monster windmills, to service them.
$100/hr doesn’t begin to cover it.
P.S. For off-shore windmills, multiply the difficulty by about 5X. And the frequency; salt water is very aggressive.
The highest Iowa radio mast (of several) that I ever personally climbed was only 600 feet. And so yep, my two high-school buddies and I can testify from personal experience (at 3:00 am on a moonlit Iowa night) that those prairie winds blow strong, smooth, and steady, at that altitude.
`Course, no one was paying us $100/hour. Heck, no one even know we were up there.
The point being, Brian, if you’re offering $100/hr for high steel work, then I don’t reckon there will be any shortage of Iowa farmboys wanting the job. Cuz there are folks who do like that view.