Guest Post by Willis Eschenbach
In early 2013, the US Energy Information Agency (EIA) released their new figures for the “levelized cost” of new power plants. I just came across them, so I thought I’d pass them on. These are two years more recent than the same EIA cost estimates I discussed in 2011 here. Levelized cost is the average cost of power from a new generating plant over its entire lifetime of service. The use of levelized cost allows us to compare various energy sources on an even basis. Here are the levelized costs of power by fuel source, for plants with construction started now that would enter service in 2018:
Figure 1. The levelized cost of new power plants that would come on line in 2018. They are divided into dispatchable (blue bars, marked “D:”) and non-dispatchable power sources (gray bars, marked “N:”).
Now, there are two kinds of electric power sources. Power sources that you can call on at any time, day or night, are called “dispatchable”. These are shown in blue above, and include nuclear, geothermal, fossil fuel, and the like. They form the backbone of the generation mix.
On the other hand, intermittent power sources are called “non-dispatchable”. They include wind and solar. Hydro is an odd case, because typically, for part of the year it’s dispatchable, but in the dry season it may not be. Since it’s only seasonally dispatchable, I’ve put it with the non-dispatchable sources.
OK, first rule of the grid. You need to have as much dispatchable generation as is required by your most extreme load, and right then. The power grid is a jealous bitch, there’s not an iota of storage. When the demand rises, you have to meet it immediately, not in a half hour, or the system goes down. You need power sources that you can call on at any time.
You can’t depend on solar or wind for that, because it might not be there when you need it, and you get grid brownout or blackout. Non-dispatchable power doesn’t cut it for that purpose.
This means that if your demand goes up, even if you’ve added non-dispatchable power sources like wind or solar to your generation mix, you still need to also add dispatchable power equal to the increased demand.
So there are two options. If the demand goes up, either you have to add more dispatchable power, or you can choose to add both more dispatchable power and more non-dispatchable power. Guess which one is more expensive …
And that, in turn means that the numbers above are deceptive—when demand goes up, as it always does, if you add a hundred megawatts of wind at $0.09 per kWh to the system, you also need to add a hundred megawatts of natural gas or geothermal or nuclear to the system.
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 …
Finally, I’m not sure I believe the maintenance figures in their report about wind. For solar, they put the price of overhead and maintenance at about one cent per kilowatt-hour. OK, that seems fair enough, there are no moving parts at all, just routine cleaning the dust off the panels.
But then, they say that the overhead and maintenance costs for wind are only one point three cents per kilowatt-hour, just 30% more than solar … sorry, that won’t wash. With wind, you have a multi-tonne complex piece of rapidly rotating machinery, sitting on a monstrous bearing way up on top of a huge pipe, with giant propellors attached to it, hanging out where the strongest winds blow. I’m not believing that the maintenance on that monstrosity will cost only 30% more than dusting photovoltaic panels …
Best to all,
w.
Usual Request: If you disagree with what I or someone else says, please QUOTE THE EXACT WORDS you disagree with. That allows everyone to understand exactly what you are objecting to.
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Exactly. And why the others are so heavily taxed?
Also, Nuclear looks expensive. I thought It was cheaper.
The 25% capacity value for PV they used demands 2190 sun hours per year. Or 6 sunhours a day.
Parts of Africa and parts of Australia will achieve that. And a few spots in the Andes:
http://solarjourneyusa.com/solarvsgas.php
And stupid.
“Advanced” seems an odd tag for technology. The next generation of power engineers will probably get a good laugh.
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??
Bob Green says “The true dispatchables are the peaking plants”
You are right in that the true dispatchable units are peaking plants, especially those that provide ancillary capacitance and then ramp up from zero almost instantaneously (typically very small plants).
However, all plants have a turn down and one thing not mentioned here is the initial install of wind generation in the MidWestern US destroyed a lot of coal plants which although equipped to move up and down, were never meant to move around in the way needed to off-set renewables. So in a regulated environment, there was a cost to wind generation that was just ignored … kind of like ignoring the cost a two footed driver has on your car.
Having had to suffer an old coal plant through this new dispatch regime, I am assured the new 800-1000 MW natural gas stations will be highly dispatchable with a sizeable turn down.
What I’m curious about as the power price normalizes to the price of burning Natural Gas plus efficiency losses, plus transmission, plus utility margins … how this plays out with many low efficiency plants being built as a hedge. My LED lighting might not be enough, I might have to properly install on site generation to mitigate the risk.
cgh says, “a few things in the EIA’s numbers… 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.”
You’re right, cgh. The average capacity factor for all German wind turbines was only 17.5% in 2012.
Additionally, 25% is an unrealistically optimistic number for solar PV capacity factor. Germany has the most solar generating capacity of any country in the world, but its 2012 average capacity factor was just 10.5%. An Arizona site might double that, but there’s no way they’ll get to 25%.
Based on this 2012 report, the German nation-wide average wind capacity factor for 2012 was apparently just under 17.5% [45867 GWh/yr / (29.9 GW * 24 * 366) = 0.1746]. I.e., actual generated power was 17.5% of nameplate capacity, despite the fact that a lot of their windmills are pretty new, and electricity prices there are so extraordinarily high there (thanks to “green” politics) that there’s a strong incentive to keep the turbines well-maintained and running. Where electricity prices are lower, that incentive fades. I expect wind to blow, but that really sucks. Believe it or not, PV fared even worse — it’s average capacity factor in Germany in 2012 was only about 10.5%.
Caveat: There’s a new 2013 version of that German report out, but I’ve not yet redone the arithmetic.
I am suspicious of the hydro cost. It should be heavily dependent on the location, so a single average cost has no real meaning. Carter tried to kill the water projects when he came in out office, of course that was when oil was $10.
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.
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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.
Sorry Willis I don’t believe statistics generated by gob’mt apparatchiks. Over time I have found the newsletter “Access to Energy” most reliable. Maintenance on Wind Turbines must include the raptor and bat skeletons and blood of the 500K endangered species slaughtered by GE turbines.
I’m no environchondriac but these devices do not engender economic sense. And it is cheap energy that makes an economy great.
Chemical Engineering Chair, Lehigh University Professor John Chen, did an Energy Assessment for the globe some years ago. I suggest you read it because it stresses the importance of nuclear power. It implies we are wasting ENERGY & TIME on the alternative intellectual masturbations. It was written before the Balken and Marcellus NG finds. Available on his website or Lehigh’s.
In my humble opinion we will always have plentiful natural carbon energy.
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.
“I’m not believing that the maintenance on that monstrosity will cost only 30% more than dusting photovoltaic panels …”
You may be underestimating the cost of maintenance of solar farms Willis. Ahem-
http://www.abakus-solar.us/blog/solar-farm-pv-power-plant-grounds-management-vegetation-control/
Solar panels only output DC and the trend is for a micro-inverter on each panel so if one inverter goes down you don’t lose the output of many panels. Also inverters don’t last as long as the panels and so monitoring and replacement costs accrue.
I don’t see any security with wind turbines but I wouldn’t want to leave my solar panels within easy reach of sticky fingers in remote locations would you?
Not just a simple matter of dusting off the panels by all accounts-
http://www.adelaidenow.com.au/news/south-australia/apy-solar-generator-lying-idle/story-e6frea83-1225999762268
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.
glenncz says, “What if traditional electricity costs 5c/kWhr and renewable costs 20c/kwHr.”
Sorry, as I mentioned above. If we keep this fuel mix we are building out down to 20c/kwh in 2018, that would be fortunate. I would say 20% higher is likely and much higher possible.
Directionally correct. Intermittents are not dispatchable by definition. But neither is base load that is run flat out all the time for cost and efficiency. All nuclear and newer supercritical coal are base load. Dispatchables include peaking gas turbines, spinning reserves (older less efficient coal) and theoretically CCGT (but much more efficient and less expensive if run as base load.
The numbers are fudged with respect to capacity factor, especially solar. They are fudged with respect to lifetime. Supercritical coal is over 40, wind is under 20 due to gearbox failure ( and maintenance is understated). The results have been politicized.
Willis’ point about having to add dispatchables to renewables in like proportion remains the biggest fudge of all.
To really understand the build out of the grid, the Dispatchable sources need to be further subdivided into baseline and peaker units.
Baseline sources such as nuclear and coal take days to weeks to bring on line from a cold plant and need to run as near to full capacity as possible to run efficiently.
Peaker units can be taken on or off line in minutes.
To keep the grid balanced, baseline capacity should not exceed minimum load.
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.
Some of these numbers look a bit suspect to me.
Nat gas power plans are typically intermediate and peaker capacity. Hence capacity factors around 25-50%, not 85%, are more common. I think this understates the cost of natural gas compared to coal. By the way, the last year has been characterized by gas to coal switching, ie, coal is gaining share.
Nuclear cost seems understated. The overnight (if you could build the plant over night) cost is quite competitive for nuclear, but environment and legal challenges tend to make the construction period protracted, and financing costs tend to pile up. These can add 50% to capex–I don’t know if such costs are properly captured here, but they don’t seem to be.
Hydro is a fantastic dispatchable resource. If can be turned on and off very quickly, although it does depend on adequate water in the respective reservoir. The EIA does note this in the footnotes, but hydro would ordinarily be considered a dispatchable resource. Also, hydro pairs very nicely with renewables, which are intermittent. Thus, when considering storage solutions for renewables, hydro is often presented as the preferred solution.
Offshore wind costs look about right at 22 cents per kWh. However, the total capacity which could feasibly be installed on the east coast (really, the DC to Boston corridor) is about 12 GW, representing 2,000-3,000 turbines. I think, in terms of physical spacing and proximity to load centers, I think we’d be challenged to put even this many in the water, but it’s theoretically possible. You can find more on this in our report prepared for DOE, with specific modeling assumptions starting after page 164.
http://energypolicy.columbia.edu/events-calendar/global-oil-market-forecasting-main-approaches-key-drivers
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
Willis: “I’m not believing that the maintenance on that monstrosity will cost only 30% more than dusting photovoltaic panels”
I agree and not only that cost, I’ve got one more fer ya that maybe hasn’t been figured in yet? Disaster/Mayhem/Doomsday insurance cost – (IF IT EXISTS??) Almost two years ago and ignored by MSM concerning a wind turbine erected near the north bank of the Mystic River (1000’s years of silt…) at the border of Everett and Charlestown, Mass:
http://charlestownbridge.com/2012/03/08/mwra-insists-wind-turbine-is-in-perfect-order/
1)”As reported last week, the new wind turbine in Charlestown has apparently sunk about 2 inches causing significant worry that the structural integrity of the 426,000 pound turbine is at risk.”
2)”The blades for the turbine were produced in China and sent by boat to the US and off-loaded in Chelsea and then trucked to Charlestown.”
As I see it, given that the MRWA was too stupid to pick an intelligent engineering firm to do the work correctly the first time – why should anyone believe they found an intelligent one to fix it?
In the disaster/mayhem/doomsday department there is, just across the street, a (?) MW natural gas fired electric plant by National Grid, (used to be called the “Edison” plant). Having this behemoth fall over (1) onto the plant in a hurricane or having a Chinese blade fly off (2) and hit critical components of the power plant certainly meets my description.
On top of that they erected it only a few hundred yards off the approach to Logan runway 15. With a maximum blade tip height (364 feet), and glide slope altitude at 2.5 miles away from “the numbers” of runway 15 about 700 feet. Not a lot of clearance either way IMO.
Are wind turbines required to be underwritten for calamity and, if so, I wonder how the coverage amount is calculated?
————-
Also –
http://blog.aimnet.org/AIM-IssueConnect/bid/39814/Cape-Wind-Agreement-Adds-Burden-to-Massachusetts-Employers
Supporting the EIA chart’s numbers concerning offshore wind power, back in 2010 National Grid agreed to pay 20.7 cents per KWH for power from the Cape Cod Cape Wind (which is still in limbo but will hopefully DIE a miserable death).
Turbines degrade rapidly with age due to operation in a harsh and unforgiving environment and due to difficulty of maintenance. See full details at REF: http://www.ref.org.uk/publications/303-response-to-professor-mackays-comments-on-wind-farm-economic-lifetime-research. The Government chief scientific advisor tried unsuccessfully to refute the results of Prof Gordon Huighes.
You all realize that these “levelized cost” comparisons of competing types of electrical generation are misleading or meaningless due to government environmental mandates and regulations artificially driving up the operating costs of the dispatchable technologies while reducing the operating costs including financing of the non-dispatchable technologies. Remove the Obama EPA onerous and outrageous regulations on dispatchable technologies which drive up the costs, and wind solar etc become irrelevant.
This bloke knows how to keep an eagle eye on our electricity market-
http://www.wattclarity.com.au/
I work at a utility that just bought another 100MW of wind energy. It was $.024 per kWh fixed price for 20 years. That is a firm fixed price where the plant owner takes all of the risks, includes all maintenance costs, etc. The subsidies help get them down to this level from .07, and the site is a very good wind resource, very cheap land, no wheeling, but the other part of it is that the big wind suppliers (NextEra and Duke) are very competitive. They have sweetheart deal on GE turbines, have their own gearbox repair factories, etc.
We’ve been working on permitting a new coal plant for about a decade now. It doesn’t look likely to ever get built. People laugh when you bring up nuclear.
Your only real choices for new generation are wind and gas. You build gas to keep the lights on and you buy wind because it is state mandated, is a hedge against inflation, and may help contain the cost of production if gas prices go up. And you do everything in your power to keep your existing coal plants running forever, because they are your only source of fuel diversity and you’ll never be able to rebuild them.
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?