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.
Discover more from Watts Up With That?
Subscribe to get the latest posts sent to your email.
If I hear one more “useful idiot” say that wind is free, I’m gonna laugh hysterically and directly in their face.
By that definition, coal is free. All you have to do is dig it up.
By that definition, gas is free. All you have to do is drill a hole in the ground and it comes right up.
Hydro is free. Just put a turbine at the bottom of a hill, and let the good times roll! Mother nature takes the water up the hill for free in the form of rain.
So ‘wind is free’ eh? …
All you have to do is build costly and unsightly windmills and stick them up all over pretty places, and THEN build an equal capacity of rapidly dispatchable conventional (coal, hydro, petroleum, etc) energy producing infrastructure that you don’t REALLY want to build just in case the wind doesn’t blow, and according to the numbers this is about 75% of the time? AND – When the windmill falls over it has to be removed. Has the cost for this been factored in? AND – it costs 4-5 times as much as coal and hydro?
Do I have the main points summarized correctly?
It would be beneficial at this point, if, when selecting a generator, that it be *sized* correctly for the motor starting loads one wishes to power during time ‘off the grid’; even starting a common household fridge with a smaller genny seemingly rated to *run* a fridge may _not_ start that same fridge’s induction-motor based compressor. There are a few tricks that can be used with a smaller generator to *start* a demanding motor load, such as powering up an unloaded induction motor spinning a bit of mass, which becomes a temporary inertial-mass powered ‘generator’ for the short period of time the heavier compressor load ‘pulls’ high current during start-up … particularly heavy loads include central air conditioner compressors; have a study or test performed (or at least look at the generator ‘surge’ ratings) by qualified personnel before spending the big bucks on a generator!
.
Oops … mea culpa; a re-do b/c of a formatting snafu …
It would be beneficial at this point, if, when selecting a generator, that it be *sized* correctly for the motor starting loads one wishes to power during time ‘off the grid’; even starting a common household fridge with a smaller genny seemingly rated to *run* a fridge may _not_ start that same fridge’s induction-motor based compressor. There are a few tricks that can be used with a smaller generator to *start* a demanding motor load, such as powering up an unloaded induction motor spinning a bit of mass, which becomes a temporary inertial-mass powered ‘generator’ for the short period of time the heavier compressor load ‘pulls’ high current during start-up … particularly heavy loads include central air conditioner compressors; have a study or test performed (or at least look at the generator ‘surge’ ratings) by qualified personnel before spending the big bucks on a generator!
.
I can’t determine several key assumptions used in the National Energy Modeling System (NEMS) used to produce these figures.
Tax breaks and subsidies for renewables
The AEO2013 Early Release Overview linked to the post has a note below Table 1 that reads:
“These results do not include targeted tax credits such as the production or investment tax credit available for some technologies, which could significantly affect the levelized cost estimate.”
BUT when I follow the link for Assumptions given in Footnote 3 on that same page, and follow the link on that page to a PDF document(PDF) I read:
“The Renewable Fuels Module (RFM) … Investment tax credits (ITCs) for renewable fuels are incorporated, as currently enacted, including a permanent 10-percent ITC for business investment in solar energy (thermal nonpower uses as well as power uses) and geothermal power (available only to those projects not accepting the production tax credit [PTC]
for geothermal power).”
So which is it? Do the figures include the effects of tax credits or not? The documents that EIA references contradict their text.
I am unable to find any discussion of plant lifetime. (It may be linked somehow but I don’t find it.) Nuclear, coal, and hydro plants have demonstrated lifetimes of many decades. Solar and wind plants generally CLAIM 20 year operational life, but to be charitable, the data is not available to support those claims. A skeptical person might note abundant evidence of both solar and wind farms failing well before their projected lifetime.
For a levelized metric, a poor or unrealistic choice of plant lifetime will have a very large effect on the results.
Good post; the numbers are similar to the UK numbers, so no big surprises. 2 points.
1) Gas back-up for the wind won’t be at 7c/KWh; as others have pointed out these backup plants will be run sub-optimal (about 70% load, but some days 0% load). This actually has quite bad implications for levelised cost, as well as being plain inefficient. A back-of-envelope suggest that it would actually cost about 10c/KWh for 1:1 backup.
2) I don’t believe the maintenance costs of wind either. Also, they should pay a much high connection cost than conventional power statons; wind is inevitably in the middle of nowhere and the juice has to be carried long-distance. There are additional stability management costs as wind >30% of total system which also aren’t represented.
Good points Alistair. A lot of transmission must be built to integrate wind turbines. This goes far beyond the immediate radial extension necessary to connect the individual windfarm, and involves a deeper reinforcement of the network to accomodate the big swings in power output that can cause area reliability problems with voltage swings etc. The cost of this extra transmission is rarely recognized for political reasons ( nobody wants to appear to be against wind/motherhood) yet represents major investment effectively unused 70% of the time.
Two other interesting points about the levelized cost as presented in Table 1 of
AEO2013 Early Release Overview
Capacity Factor:
For coal, oil, nuclear, and baseload natural gas (natural gas peaking plants are operated intermittently) the capacity factors range from 85% to 90%. Solar and wind have capacity factors ranging from 20% to 37%. Previous commentators have alluded to the rambunctious skepticism appropriate for even these low numbers.
Whatever you think of solar and wind versus coal, oil, an gas, and nuclear, if you want your energy from wind and solar you need to build roughly 3 times as many plants to produce the same amount of energy. Whatever their environmental, social, aesthetic, and financial costs, you pay them thrice – THEN you buy a backup plant that uses reliable technology and so can be dispatched when required.
Transmission costs:
Note the the transmission costs in Table 1 for baseload coal, oil, gas, and nuclear range from 1.1 to 1.2 $/megawatt-hour. That figure is so low because these plants tend to be big, and the costs per megawatt-hour of building new transmission infrastructure goes down as power levels go up. The transmission costs for solar and wind range from 3.2 to 5.9 $/megawatt-hour.
It costs roughly as much to dig a hole and set a pole for a 20 MW solar plant as for a 1200 MW nuke. Right-of-way, permitting, design costs don’t change dramatically as power levels increase, so smaller plants spend more per unit of delivered energy.
Here’s the thing about transmission lines: most people don’t like them. Intense political and legal battles ensue whenever new lines are proposed or (much more rarely) constructed. As with capacity factor, the smaller scale of solar and wind technologies mean that they need more poles, holes, wires, and right-of-way (much of it seized via eminent domain proceedings) than the comparable baseload generation technologies.
Willis Eschenbach, fair enough. I have been working with an Oil & Gas industry group on comments to some issues with the so called “Clean Air Act”. From an air-emissions viewpoint, the start-up/standby issues with using a combined cycle for anything but a narrow “steady state” band (i.e., nominal +/-15%) had a really large impact on the garbage (NOx, CO, and VOC) that got dumped into the air–to the point that the existence of the wind farm actually increased the total emissions over the exact same plant without the wind farm. I haven’t done the same analysis on cost/kW-hr (since the EPA has no interest in cost numbers at all), so you are probably right to assume that the combined cycle plant is as efficient in standby as steady state even though it significantly understates reality.
This has got to stop; I was under the impression that a cost/benefit analysis was part of their consideration when making proposed rule?
Is this not the case?
.
They should pay the TOTAL cost for implementation of the transmission lines to a facility! Do other ‘owners’ of competing generation plants bear the cost of lines to their plants?
Goose – gander – fair.
.
Willis,
The figures are fake. The cost of electricity retail is about 7c/kWh in PA, so in no way could the cost of PRODUCING that electricity be 7c/kWh as in the EIA. It is more like 3.5c/kWh.
What the EIA costs are is what energy WOULD cost if cap-and-trade and similar laws were passed. Resulting in a doubling of retail price.
With the population at large not noticing this doubling and voting those who passed such laws back into office.
Thus the energy is “levelized”, or the whole matter is run over by a steamroller.
The Energy Fairy which giveth us free unlimited baseline energy is much more credible than the above scenario.
One may be slightly distressed to see this item: Dr. Professor Emeritus John C. Chen passed away in late December 2013.
I am unable to find any references to a work published by him specifically regarding nuclear and ‘Energy Assessment’ for the globe save for a slide presentation and talks that were pretty much run of the mill …
.
Jim, The EPA is required by law to do a cost benefit analysis on new regulations and they do. Problem is they use benefit data from the eNGO’s and cost data from Energy Star. Energy Star is an EPA program where companies publish environmental successes. The Energy Star success stories are generally a tiny sample (dozens of wells usually) in a perfect environment for success and end up with generally low costs (when the company environmentalists are in control of projects, the project costs tend to not rigorously hit the project, enviro’s just are not project managers). When you try to scale any of the costs up you find that the numbers don’t scale up (e.g., one program said that the idea cost $5k/well and had a benefit of $50k/well/yr on the 9 wells tested, the idea was moved to 100 wells in another field and the costs were $85k/well and the benefits were $800/well). Energy Star leads to a one-size-fits-all regulation and outrageous economics.
One company posted a success in Energy Star where they went to 700 wells in one basin and instead of venting the wells to unload water they installed downhole plungers. There are 30,000 wells in that basin and the study was done on 700 cherry picked wells. Great Success. When EPA decided to control emissions on wellsites (Subpart OOOO) one of their big ideas was that every gas well must have a plunger installed. When we pointed out to the EPA that nearly half of the 500,000 gas wells in the US have downhole pumps and nearly 3/8 were free-flowing without the need for venting or plungers, we were able to get that particular rule exorcised (but the eNGO’s promptly sued the EPA [unsuccessfully] to reinstate it). We estimated the total cost of Subpart OOOO to be nearly 1,000 times the EPA estimate and the benefits to be 1/100th of their benefit estimate. Industry groups were able to get rid of a considerable amount of counter-productive nonsense, but not nearly all.
I hope it was a very informal consultancy, because you seem to be conflating the capacity factor and the efficiency, which are very, very different things
Not five minutes after I posted my comment, the same thought occurred to me, and I cringed. “Capacity factor” isn’t a parameter I considered at the time. That much said, and, uh, very informally, it occurs to me that solar’s predictability makes it an easier input to deal with, at least on a day-to-day basis when it’s installed in sunny places.
I have plenty of mixed views of solar and wind, especially the latter. Grid-scale storage is the holy grail, but we’re not there yet. But it seems that solar could be at least a worthy peak-period source, at least in principle.
Back to my informal consultancy, my role was simple. To render am opinion on whether PV panels work, with “work” defined as “delivering power at a cost-competitive rate. I concluded that this parity would likely be reached in the American Southwest between 2015 and 2020. I made this prediction in 2007, and I feel pretty good about it, considering the difficulty of predicting technology adoption and costs.
I also predicted that wind would “work,” which has been shown to be true, the intermittentcy issues notwithstanding. I gave a thumbs-up to ground source heat pumps, something that has gotten far less glamor but which I said was the lowest-hanging fruit. Within a couple of years of making that call, I noticed that these things were appearing at home shows along with the rest of the HVAC solutions. I still think this is underplayed.
I went thumbs-down on wave and tidal power. At the time, I thought that these were little more than excuses to obtain research grants, sort of like nuclear fusion but with even less basis. That one has turned out to be correct too, at least so far as I know. Anyway, “capacity factor” is interesting to me; it was beyond the scope of my inquiry at the time, but I’m interested in everything.
Also, since then, I’ve learned more about the operational limitations of solar, as in “keep your panels clean and free of shadows.” And don’t get me started on Germany’s bribe to the Greens. Finally: I know more than I’m letting on. My basic role then was to tell the financial manager whether he was being a complete fool by considering this or that subsector.
There IS roughly 20 nuclear reactors worth of power of storage in the US.
http://en.wikipedia.org/wiki/Pumped-storage_hydroelectricity
Pretty much more than “not an iota of storage”, don’t you think ?
Moreover, if “the power grid is a jealous bitch”, well, you just have to pay to have her do your wishes. I mean : change the price, each hour, up when non dispatchable are off, and you’ll see a lot of the demand disappear, to come back next hour when the price goes down because non dispatchable are on. Electricity is used in a lot of applications that can be switched on /off, depending on the price of power, by ad hoc electronic devices already available for a decent price.
Finaly, “the backbone of the generation mix” is NOT made of dispatchable source, but I won’t repeat Bob Greene at February 16, 2014 at 6:24 am, he says it all.
What a shame it is that the energy companies can effectively hold consumers to ransom and charge whatever they like.
An assertion that falls short given facts; you are as free as the next man to seek and implement alternative sources of energy to cause electrons to ‘flow’ in your ‘wires’, from solar to wind to your own natural gas-fueled 60 Hz 3-phase generator, if you so desire. The thing is, the ‘price to beat’ will be that offered by those ‘evil’ energy companies you just condemned, as they usually (there are exceptions) generate electrical power at scales (sizes) that work out to be the most economical.
.
@paqyfelyc, I followed your link. It claims that there is 127 GWh (127 billion watt hours) of pumped storage capacity “available” worldwide. Sounds like a lot, doesn’t it? Better think again. The U.S. generates 4 TWh (4 trillion watt hours) of electricity every year, and the world somewhere between 20 and 25 TWh.
This would make worldwide pumped hydro storage represent 0.5% of energy output, or 3% of U.S. output. But lets look more closely at the U.S., where according to the Energy Information Administration, we have 4 to 5 GWh of pumped hydro storage, representing about 0.1% of total output.
http://www.eia.gov/totalenergy/data/monthly/pdf/sec7_5.pdf
Then there is the cost of building pumped storage. I’ve casually looked into it, and am confident that the costs are very high. If I get a challenge here I’ll go run down the number. I believe that adding pumped storage raises the cost of generation about four-fold, but hasten to add that this is a guess from memory and could be wrong.
Jake J:
I support all you say in your post at February 18, 2014 at 2:25 pm but I write to provide a clarification to one of your points.
You rightly say
Yes, but you failed to add that this high cost is worth paying because it removes the higher cost of building, maintaining and operating power stations solely to provide electricity at times of peek demand.
Richard
The reason that there is so little pumped storage is that it is generally far cheaper to build excess conventionial generating capacity, especially gas turbines. Pumped storage is expensive, inefficient and feasible sites are hard to find..
I think solar is a much better way to go for peak power. I think grid-scale storage likely awaits breakthroughs in large batteries. Pumped hydro has an engineering elegance, but the costs are very high.
Really? Suppose the utility demand peaks on winter evenings with lighting and heating loads. How does solar power help?
Here is an Energy Information Admin report comparing costs of the various generating methods. I think there is a lot here to provide encouragement for wind (land-based, anyway) and solar. Storage is certainly the holy grail, but even without it you have attractive numbers.
Jake, the basic problem is that electric systems must be blanced in real time to work at all. This is not just a matter of adjusting demand to match supply as one might do with a natural gas or telephone utility. Wind and solar generation could essentially be offered free of charge, but the cost of collecting, storing, controlling and delivering the output to provide the reliable and constant supply demanded by society would still render the costs prohibitive. That is the thrust of this entire thread of comments.
Richard, I was thinking of summer afternoons when A/C kicks in. Solar makes plenty of sense for meeting that peak demand. It’s well suited to that use, as a supplement. It’s certainly not base load capable without storage.
Jake,
Willis Eschenbach made some mistakes, i just aimed at putting things right. For sure pumped storage is not perfect. But it does exist and works. And it is pretty cheap, actually : more or less the price of hydro power. Batteries have at looooooong way to go to be as cheap.
But Richard ( February 18, 2014 at 3:47 pm) give the point : for roughly the same price, a generating capacity that produce new power beats any storage utility ; without the green hassle
paqyfelyc says:
February 19, 2014 at 2:22 am (Edit)
paqyfelyc, I do love how you accuse me of making some vague unspecified “mistakes”.
If you think I made mistakes, how about you QUOTE MY WORDS LIKE I POLITELY REQUESTED, instead of you looking like a fool for just standing there and throwing mud at me …
w.
Correct me if I have a misimpression, but the drift I’m getting here is that non-dispatchable power sources are useless. I will admit that, when I researched solar and wind (and others, including wave power, which I rejected as unable to even recapture the energy used to make the machinery let alone pay back the cost of the equipment) I didn’t study the grid’s ability to use the power.
I assumed that the grid could use these electrons. This seemed like a safe bet at the time (and still does with solar), given how small a share of power would come from these sources within the investment time horizon that I was dealing with.
More recently, I’ve noted issues with handling wind generated power. In particular, at certain times of year, i.e., during some periods in winter, the wind farms on the Columbia River need to be shut off because, in combination with the dams, there’ll be too much power for the grid to handle.
I admit that this is perplexing. Maybe if the same financial group ever sees opportunities to make grid investments, I’ll study that side of things. I realize that my language here is conversational and imprecise, and will lead some other commenters to think I’m sloppy and unqualified. All I can tell you is that I focus on materialiality, not (usually, anyway) the fourth number to the right of the decimal point, and that I deal with people who have depended on my to translate the science into everyday English.
I feel very good about the calls I made on wind and solar, and about my views on storage. The grid definitely interests me. I have trouble believing the implications in some comments here to the effect that non-dispatchable generation is useless. At a VERY shallow level, my VERY cursory reading indicates otherwise. Wind generation looks like it’s growing at a rate of about 25% a year in the United States and is now 4% of the total; solar is growing much faster (more than doubling each year) but from a much lower base (0.2% of the total).
I could imagine the utilities nodding and winking at solar for nothing other than p.r. purposes given such low penetration, but not at wind when it’s at 4%. Perhaps this site will have more to say about the electrical grid in other posts. I’ll conclude by saying that, even though I’m in favor of renewables in general, it’s for reasons other than climate change, which I consider to be an unproven hypothesis.
Jake J:
At February 19, 2014 at 2:02 pm you say
That puts you in the same camp as most people who favour ‘renewables’: their “reasons other than climate change” are subsidies.
Richard
Jake,
The sole reason that so many wind-turbines are interconnected with utilities is the worldwide pandemic of misguided “green’ legislation forcing utilities to buy renewable energy through mechanisms such as “renewable portfolio standards” and hugely inflated “feed-in” tariffs Windturbines (or solar) would not otherwise be the choice of utility engineers, due to their intermittent, non-dispatchable output and the high cost of connecting this diffuse energy with a system that must remain stable every minute in terms of area voltage and power delivery. It is the cost of converting this constantly varying output into a stable supply through excess transmission, control and storage sytems that makes it virtually useless in practice ( as opposed to academic theories from Stanford). Dont take my word for it, here is a quote from James Lovelock, father of “Gaia” himself:
“You’re never going to get enough energy from wind to run a society such as ours,” he says. “Windmills! Oh no. No way of doing it. You can cover the whole country with the blasted things, millions of them. Waste of time.” (The Guardian March1st 2008)
Cheers,
the other Richard.