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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@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.
@R. de Haan –
Yes, and where does Musk think the electricity to power his contraptions comes from? Not wind or solar, you can bet on that. Manufacturing and charging his jalopies burns more carbon than any gasoline- or diesel-powered car.
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.
@ur momisugly Claude Harvey –
Thanks for adding the power factor management and synchronization problems to the list of problems I cited in my post – these also are serious issues. The variability of wind does indeed make it extremely difficult to synchronize and to maintain a steady power factor, and when these are not maintained it can do enormous damage to equipment running on the current. Yet more difficulties and inefficiencies, raising hell with the entire process of dispatching generation from all sources to load. Wind power is probably substantially shortening the operating lives and impairing the reliability of anything exposed to it. Yet another cost not factored in
The obstinate ignorance and economic illiteracy of “renewables” proponents never ceases to amaze.
Wind power to electrical equipment is as ethanol to internal combustion engines – increases wear, shortens operating life, emits more pollution.
They forgot Capacity! There is not the capacity in wind farms to power New York, let alone the US, China, India, Europe and others!
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.
Too many picky comments, imo.
Willis has it essentially correct – of course the numbers are approximate.
For the mainstream media, we have to dumb it ‘way down:
Grid-connected Wind Power: It doesn’t just blow – it Sucks!
Grid-connected Solar Power: Stick it where the Sun don’t Shine!
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….
EIA. stats have been politically manipulated like this for many years. An old government trick to falsely frame the debate. When you point out the trick you are called a conspiracy nut. Sound familiar.
In the US Congressional hearings may smoke out the malfeasance but that requires political will. Since many on both sides of the aisle benefit from green power schemes that is often lacking.
Thank you to those with the skill to educate posting here.
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.
Willis, when it comes to estimating the cost of a coal fired electricity plant, the most accurate estimate in my opinion would be to look at the actual cost of producing electricity from a coal plant in 1995. Add 20% to cover the cost of inflation and be done with it. Anything over that is cost due to increased regulations, ridiculously long environmental delays and GREEN fantasies, which can and should be removed.
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.
A couple of interesting numbers …
According to the Pickens Plan, “The clean generation provided by wind capacity installed through 2008 will displace approximately 44 million tons of carbon dioxide annually.”
http://www.pickensplan.com/wind/
According to the US EPA, total US Carbon Dioxide Emissions in 2008 were about six thousand million metric tons.
http://www.epa.gov/climatechange/ghgemissions/gases/co2.html
A very expensive small drop in a big bucket.
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.
====================================================================
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!”
drumphil says: @ur momisugly February 16, 2014 at 7:36 am
…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?
>>>>>>>>>>>>>>>
Yes: WIND POWER FRAUD: WHY WIND WON’T WORK by Charles S. Opalek, PE
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.
I always like to check the figures. I have done a quick comparison with UK figures on my blog
http://manicbeancounter.com/2014/02/17/understanding-the-us-eias-levilized-cost-of-electric-generation-figures/
In summary:-
1. EIA assumes capacity utilisation for onshore wind is 34%. In the UK in 2012 it was 26%. Adjusting for this would increase the cost of electricity from onshore wind per kwh from $0.087 to $0.117.
2. Cost of electricity from biomass seems low. If they are true, the UK could adopt this best practice, and save UK energy consumers $500m per annum on subsidies.
3. Transmission costs are vastly understated. Wind turbines tend to be located a great distance from consumers. The EIA probably only includes the transmission costs for the electricity generator, and not the much greater additional national grid costs.
In summary, the real costs of renewables to the consumer would appear to be understated.
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.
Willis,
Maybe a few more factors – this is from a comment at
http://www.redpowermagazine.com/forums/index.php?showtopic=84772
“IHRunner
Posted 30 January 2014 – 01:29 PM
interesting addition to this. the enviromentalist nuts who praise the windmills. who are now exempt from killing bald eagles.
we had a truck come in and make a rush delivery for us. rest of his truck was mobil 1 55 gallon drums of oil. i ask. “whats that for” driver says “them springfield windmills”
he makes a delievery every other week. the motors medium is oil. and because of the massive weight its needs to be replaced often. i had no idea they used that much oil.
so windmills use oil and kill bald eagles. W**. and now they gripe about the amtrak. holy peets. morons “
richardscourtney says: @ur momisugly 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.
I have worked in electrical generation all of my life. These estimates are just as useful as any other long term economic model. That is, they are based on a set of assumptions that can change the results and relative positions of each source. Some of the more important ones are capital asset lifetime, cost of capital and capacity factor. They are important because they impact the levelized capital cost.
There are some important implications to these facts. For instance, you would never build a nuke with the intention of load following. A nukes cost is dominated by capital cost, therefore it needs to operate near full capacity. Idle capital is economically inefficient. It also means that people with an agenda can, and do, make ridiculous assumptions to further political agendas. In one study I read they had assumed a nuclear cost of capital of about 15%. No one would build anything if the cost of capital is 15%.
Finally:
Load and generation must be matched on a real time basis on the grid. Renewables create a significant complication with keeping load and generation matched……because now the grid operator does not have real time control of all the generation. As others have said, and there are studies that show the same thing, at about 15% renewables it starts to get tough.
Another problem with renewables, as currently implemented, is that they do not pay the cost of the grid that they are still using and they are being paid all in retail rates to produce wholesale power. Nobody notices when only a few people are doing this via net metering, but when a significant portion of the ratepayers are net metering and are not covering the fixed costs of their grid connection then it becomes a problem.
Oatley says: February 16, 2014 at 2:34 pm
I am retired Utility, 10 years on the PJM. and Oatley is speaking the truth. I remember a winter in NJ when the gas pressure got so low that pilot lights went out. They were turning coal into gas to keep up the pressure and that was not enough. Many large heavy industry – Guarantee gas prices are going to go up and then Nuclear will be much cheaper. gas users had to shutdown. What will they do when they quit mining coal? Remember overhearing many conservations in the lunchroom between dispatchers about $2,000, $4,000 & higher per kWh electricity they had to buy.
A “smart grid” only helps if you can move electricity around. to do that you need MANY more EHV transmission lines (like the ones you see along I-80 west of Chicago). The envirowhacos would sooner let you cut off their arm than let you build any and it will be 20 – 30 years before they have half enough to do any good. $20 Billion plus for one from the Texas panhandle to DFW area for WIND, thus it is only good one way and then only 25% of the time. $20 Billion would have built at least 4 Nuclear power plants near an existing line. The logic escapes me.
The most efficient CCTG units use a steam turbine to get that efficiency and are the WORSE choice for backing up wind or solar. Coal and Nuclear work, but slowly. The older standard GT peaking units are the best, HOWEVER, the efficiency is so bad that you actually get lower CO2 emissions if you just forgot about the Wind/Solar and used a CCTG. The studies are on the internet. Google them. All studies that claim otherwise are bogus, envirowhaco propaganda. The efficiency of most coal, gas and even nuclear power plants drops to about 50% of rated efficiency at about 15% output. At 50% output it is About 1/3 as efficient as it would have been at 100% power, and below that you start loosing money. It takes about 10% of plant power just to run the larger plants and all of the other services (admin, shops, etc.) Even wind/solar are sucking power 24/7/365. Wind turbines have as many pumps, motors, control panels, lights, as a typical tug boat, or the average machine shop. There is analysis showing that Wind Turbines in the north sea of Ireland have actually used more electricity that they have produced – and these are the so-called cream of the crop off-shore Wind turbines. Seems like the designers didn’t think about how much power the heaters needed for the lube-oil and hydraulic systems needed to keep it warm enough to move.
So again, If this is really all about reducing CO2 then Nuclear is the ONLY answer. Maybe in 50 years they might come up with a new solar idea, but I would not count on it. If they do not start building NPP’s then you know it is a SCAM.
Chad Wozniak says: @ur momisugly February 16, 2014 at 1:58 pm
@ur momisuglyGail Combs –
Yes, CCS…..
>>>>>>>>>>>>>>>>>>>>>>>>
Since our District of Criminals is forcing this idiocy on us I thing the first plant should be built in the area between 17th Street NM and 15th Street NW on Constitution Ave. Plenty of places in the vicinity to store CO2 near that area too.
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.