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.
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Levelized costs are statistical lies devised to support particular policies. They are fundamentally subjective and deceptive. For example, the MIT study of nuclear power assumed a 40 year plant lifetime, which meant the levelized cost would be jacked up because the production benefits would be so much shorter. An 80 year plant lifetime would be more realistic (barring politically motivated closure). Also, wind and solar levelized costs ignore opportunity costs resulting from the vast amount of land required to be removed from other uses.
A good discussion here. Read through to the modular reactors, e.g. NuScale. The author leaves out some very important features of modular reactors. They can be water cooled sitting in a pool with no circulating pumps or air cooled. They are thus 1000x safer than Gen 1 and 2 plants. The construction time is less than 1 year saving costs, and because the designs are identical, approval is faster. These features lead to far lower levelized costs.
http://books.google.com/books?id=aJhKAgAAQBAJ&pg=PA107&lpg=PA107&dq=mit+levelized+cost+of+nuclear+power&source=bl&ots=9dw-jpEqZj&sig=cZ_gQ6IY6bCyFDxr2cS1nGEl78E&hl=en&sa=X&ei=oN4AU5SzOsvtoATmlYLQDw&ved=0CF4Q6AEwCQ#v=onepage&q=mit%20levelized%20cost%20of%20nuclear%20power&f=false
Willis, a great article. It explains why my PG&E bill goes through the roof. Ant that’s exactly where warmists / warnists get their money. It would be nice to know how much of my extra electricity bill goes into pockets of Al Gore & Comp.
I don’t have figures on increased demand on electricity. My gut feeling is that we are witnessing a replacement of cheap dispatchable generators by expensive intermittent generators. All according to a “green” plan.
Also, I posted regarding fundamental problems with wind power a long time ago.
http://wattsupwiththat.com/2011/02/13/the-futility-of-wind-power/#comment-598728
In CA the Energy Commission has released 100m wind maps. We’ll get to that below. Each wind turbine uses 80 acres. That provides a 1/3 to 1/2 mile separation between turbines that occasionally disintegrate. The separation is needed to protect the neighboring turbines. I’ve posted this before, but here goes again:
To provide 10% of power needs in CA would require 10,000 1.5 MW wind turbines. On 80 acres each, you need 1250 square miles of land. Except there isn’t enough land area with the required wind speeds (the CEC wind speed maps at 100m AGL). That means the turbines need to be built off shore. 1250 sq miles translates to 500 miles of coastline with 7 or so rows of turbines from the shore out to sea covering a band 2.5 miles wide.
…click the link above for more…
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.
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)
<a href="http://www.sciencedirect.com/science/article/pii/S0960148114000469
"http://www.sciencedirect.com/science/article/pii/S0960148114000469
Thanks for another very good article, Willis. You’ve also prompted some very knowledgeable people to respond in comments and that increases the value of your efforts.
Re: Hoser says:
February 16, 2014 at 8:04 am
“levelized costs are statistical lies devised to support particular policies. They are fundamentally subjective and deceptive.”
I agree absolutely. I dealt with such studies for 20 years and the results are easily made into almost any stack-up their author wishes. Levelized comparisons always include two variables that rely on projections; future fossil fuel costs and future reductions in alternate energy capital costs. Projected interest rates, construction times and dozens of other variables aside, those two “in the eye of the beholder” variables alone are a license to whopperdom.
Anyone who seriously believes unsubsidized pv solar can ever get down to 14-cents per Kwh is smoking his or her own dope. If I gave you the solar cells for free, you couldn’t make that number.
“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://www.ft.com/cms/s/0/00eff456-3979-11e3-a3a4-00144feab7de.html#axzz2tVH5PW00
“The agreement was reached after the government guaranteed a price of £92.50 per megawatt hour for electricity produced at Hinkley Point C in Somerset. This “strike price”, which is fully indexed to consumer price inflation, is roughly double the current price of power.”
That’s 9.2 UK pennies per kWh, so not dollar cents It’s also given as the wholesale price , not consumer cost. So be careful when comparing to figures in this article.
The point is the price of nuclear generated power has just been DOUBLED in the UK and it’s safely index linked.
All other forms of energy have just become very competitive in the UK.
You write: “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”
I think that’s wrong. The costs you are listing, as I understand them, include both fixed and variable costs. If you need an extra unit of power and get it by adding one unit each of dispatchable and non-dispatchable, you are only going to run the dispatchable when the non isn’t producing, so it will be consuming less fuel than it would take if it were doing all the production, so the cost you have to add for it is less than your seven cents.
After I stumbled on an article about a Gates investment going down the drain I was amazed to read that thanks to the shale revolution and the decline in power use in Texas had pushed the electricity price as low as $ 38,- per Mw = 10.000 Kw = $ 0,0038 cents per Kw (3Kw for $ 0,01.14)
causing Gates power plant investment going belly up: http://www.zerohedge.com/news/2014-02-14/bill-gates-energy-co-files-bankruptcy#
It shows some insights in the profits that are made over the backs of us poor suckers hooked at the grid although in Texas electricity prices are still very low compared to what Anthony pay’s in California and what I pay in Germany.
http://www.electricityone.com
One thing should be clear:
We have to get rid of Government policies, programs, subsidies and market manipulations ASAP or we end up paying through our noses for our energy and lose our biosphere on the go as the morons have decided it would be a good idea to co-feed coal power plants with wood pallets to save the planet from humanity..
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.
David Friedman says:
February 16, 2014 at 8:42 am
You write: “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”
I think that’s wrong. The costs you are listing, as I understand them, include both fixed and variable costs. If you need an extra unit of power and get it by adding one unit each of dispatchable and non-dispatchable, you are only going to run the dispatchable when the non isn’t producing, so it will be consuming less fuel than it would take if it were doing all the production, so the cost you have to add for it is less than your seven cents.
=============================================================
Supposition. Some may find it a better business decision to run the dispatchable all the time, and leave the non-dispatchable down. Building of non-dispatchable is government driven, not business driven.
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.
…thanks Willis.
the chart is pure fraud. wind and solar are much more expensive than that chart. if that chart were even remotely correct there would be no need of incentives of 60 to 80 cents a kilowatt for private enterprises to install solar or wind.
THEY ARE LYING.
***
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.
http://www.wnd.com/2014/02/scientists-tricked-into-believing-this-lie/
the above link is what is really at stake. climate change /warming / lies are all for one end. control.
so while I appreciate WUWT and the fantastic science that is on display the real fight is for our freedom.
cheers
drumphil (February 16, 2014 at 7:36 am)
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.
David Friedman says, “so the cost you have to add for it is less than your seven cents”
Gamecock replies, “Some may find it a better business decision to run the dispatchable all the time, and leave the non-dispatchable down.”
So let me tell you how it really works in a ‘deregulated’ generation market in North America. In regulated markets, I would say the bias to wind is higher by ‘feed tariff’s and such.
When the wind blows, the dispatchable power gets pushed off. If you are in the unfortunate situation where that is ‘old coal units’, then they go down to ‘min stable’ and get dispatched back up when the wind generation gets out of the way. Where there is dispatchable gas, it will be priced in with a price model that pushes the system to the marginal price of gas. Cogen is priced in at 0 because power is a byproduct. I’m sure Nuclear would be a price taker as well just taking what it gets. If portfolio bidding is allowed in a deregulated market, whether for system stability or capturing marginal price spikes, the net effect is to push the price up. In a regulated market, the feed tariffs and connection agreements do the same.
The net effect is all power prices are being pushed to a bet against the natural gas price. So roughly 2 times the price of gas per GJ for the generation plus transmission plus 20% internal ROI. When nat gas gets back to 6$/GJ, that easily puts the power at a household’s meter to 20 cents/kwh. That is why where I live there is 4GW of gas generation in a 10GW market being planned to hold onto market share while we take the step change UP in price into this brave new world.
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.
northernont says:
February 16, 2014 at 7:29 am
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.
_____________
Correct.
I don’t believe any of the figures put out for maintenance of solar or wind.
@ur momisugly General P. Malaise says:
February 16, 2014 at 9:08 am
“http://www.wnd.com/2014/02/scientists-tricked-into-believing-this-lie/
the above link is what is really at stake. climate change /warming / lies are all for one end. control.
so while I appreciate WUWT and the fantastic science that is on display the real fight is for our freedom.
cheers”
How right you are.
The time has come to fight back and clean House:
http://www.washingtonsblog.com/2014/02/nothing-will-fixed-us-criminals-arrested-top-us-official.html
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.
Good post, thank you Willis.
Repeating from previous posts:
http://www.wind-watch.org/documents/wp-content/uploads/eonwindreport2005.pdf
(apparently no longer available from E.ON Netz website).
Re E.ON Netz Wind Report 2005 – see especially:
Figure 6 says Wind Power does not work (need for ~100% spinning backup);
and Figure 7 says it just gets worse and worse the more Wind Power you add to the grid (see Substitution Factor).
Same story for grid-connected Solar Power (both in the absence of a “Super-Battery”).
___________
From our 2002 paper at http://www.apegga.org/Members/Publications/peggs/WEB11_02/kyoto_pt.htm
“The ultimate agenda of pro-Kyoto advocates is to eliminate fossil fuels, but this would result in a catastrophic shortfall in global energy supply – the wasteful, inefficient energy solutions proposed by Kyoto advocates simply cannot replace fossil fuels.”
C’mon good people – try to keep up! 🙂