The Economics of Wind Power

My posting below, Broken Wind Turbines, seems to have touched a nerve. Several commenters dispute my contention that wind turbines are unreliable and uneconomic.

I have tried to get, from Texas, detailed information about wind power output. The wind power industry seems to have gotten it declared “secret.” Hardly a promising sign that it is delivering what its promoters contend. Others have found the same thing. This posting is from The Energy Collective,

Vendors, owners, financiers often claim “trade secrets”, whereas in reality they want to obfuscate wind power’s shortcomings, a too-generous subsidy deal, or other insider’s advantage. It would be much better for all involved, if there were public hearings and full disclosure regarding the economics of any project receiving government subsidies, to ensure the people’s funds receive the best return on investment.

The Collective did manage to obtain the financials on a university wind power project and several others. Here are the figures from the project at the University of Maine:

Capital Cost and Power Production
Estimated capital cost $1.5 million
Actual capital cost $2 million; an overrun of 33%
The project was financed by UM cash reserves and a $50,000 cash subsidy from the Maine Public Utilities Commission.
Estimated useful service life about 20 years.
Predicted power production 1,000,000 kWh/yr
Predicted capacity factor = 1,000,000 kWh/yr)/(600 kW x 8,760 hr/yr) = 0.190
Actual power production after 1 year 609,250 kWh
Actual capacity factor for 1 year = 609,250 kWh/yr/(600 kW x 8,760 hr/yr) = 0.116; a shortfall of 39%
Value of power produced = 609,250 kWh/yr x $0.125/ kWh = $76,156/yr; if O&M and financing costs amortized over 20 years are subtracted, this value will likely be negative. 
Actual power production after 1.5 years 920,105 kWh
Actual capacity factor for 1.5 years = (920,105 kWh/1.5 yrs)/(600 kW x 8,760 hr/yr) = 0.117

Actual capacity 11.7% — and this is when the turbine was new. There is little doubt the return on investment for this project will be negative. And, this doesn’t even include “parasitic power” which would drive the return even lower (please read the posting to understand parasitic power).

The Collective provides several other examples, please read the entire posting. After reading, I believe it is unlikely that you will find much appeal to wind power in most locations.

Interesting, they believe that wind power is economical on the Great Plains. Given the number of broken turbines I have seen in Kansas, I question that — especially since no figures were given — but I give the Collective credit for balance and open-mindedness.

As one of the commenters to my original post said,

I like the notion of wind power helping communities and farmers.

I like that notion, too. Unfortunately, we live in the real world where resources are finite and our nation is running up huge deficits. The sooner we get more natural gas and new-generation nuclear power online, the better off both we and the environment will be.

As always, comments are welcome. Please keep them on point.

9 thoughts on “The Economics of Wind Power

  1. This is the point that gets me – estimated useful service life about 20 years.

    That is about half of a fossil-generation expected life. I have yet to hear someone who compares the costs of power development double the cost for wind compared to fossil because of that.

  2. There's a price that comes with health and environmental degradation due to the use of fossil fuels.
    Also wind power for the past decade has been a nascent technology. It takes time for a technology to improve and mature, and it requires investment and research.

    Wind power is constantly improving, the turbines are getting bigger, engineers are finding new ways to bring costs down, and there's a ton of work being done on the offshore front.
    It's important that the world continue to develop the technology and we will regardless of the naysayers.

  3. There is a price (dead birds and noise pollution) that comes with wind power.

    What do you do when it is -17°F (3 Feb. '11) and dead calm throughout the region? Tell people not to heat their homes?

    Please explain why it is "important" this technology be developed. I'd like to understand your point of view.

  4. Actually, Mike, bird mortality rates are commonly referenced out of context and then circle around blogs for people to repeat. The high number of bird deaths associated with wind turbines occurred with the older turbines, which were relatively low to the ground, particularly a few early wind farms in California. If you focus on modern designs, bird mortality is negligible.
    There have been concerns brought up about bats slamming into them and dying and I've read about some interesting remedies to this problem.

    Just thought I'd share.
    Exploration of energy solutions makes for interesting conversation.

  5. Frank Rooney – I have a question. Just what was the difference in the old design that caused bird mortality that has been resolved with the new technology? Thank you.

  6. One of the great myths….. fossil fuel degrades the environment…. so they say with no substance. Yet it is carbon that plants need to breath as we need oxygen.

    Fossil fuels have in the environment for eons in the form of decaying bio masses. The environment has varied over the millennial…. for what reason?

    To make a statement that is not steeped in fact is condescending and arrogance, hence the reason to not believe you.

  7. Hey guys, I'm studying oceanography and one thing I learned is that as we increase the amount of CO2 in our atmosphere it slightly increases the acidity of the oceans and even this slight increase is making it difficult for coral to cope. Coral reefs contain some of the highest levels of biodiversity on earth (and they're gorgeous, if you haven't seen once up close, I strongly recommend it!). So that is a way in which fossil fuels can have a negative impact on the environment.

    sorry, had to comment here. I'm a scuba nerd.
    cheers,
    Dan