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China Moves Into U.S. Wind Sector

Chinese wind turbine maker Goldwind…

Wind Energy Could Blow U.S. Coal Industry Away

Wind Energy Could Blow U.S. Coal Industry Away

WindEnergyClouds

It’s not enough to say that fossil fuels have to go or nuclear is hopeless (which are both probably true statements). The question is: What will replace them? Furthermore, how long will it take?

An intriguing headline appeared in CleanTechnica on August 4: Wind Could Replace Coal As US’ Primary Generation Source, New NREL Data Suggests. Wouldn’t that be nice? Is it even possible? (The article originally appeared in The Handleman Post on July 26.)

WindChart1

WindChart2

Though solar energy has become the poster child for renewable energy generally, the strongest player in the game, for now, is wind. Wind leads solar energy in capacity installed as well as output (world solar capacity passed 200 GW this year); and other than a few welcome cases (so far) where PV comes in under 5 cents per kWh, wind is generally cheaper.

It is worth noting that some of the world’s industrial giants have not only taken a keen interest in wind energy but have also taken the lead in sticking turbines in the ground. (Offshore makes up only about 2 percent, to date, as the above chart indicates.) GE and Siemens are on the podium, trailing only Denmark’s Vestas. The big three supplied 98 percent of the U.S. market last year according to the Department of Energy (DOE).

WindChart3

Passing the 400 GW mark this year, world wind capacity already exceeds U.S. coal capacity and will likely pass natural gas power capacity in the U.S. this year. It topped U.S. nuclear capacity many years ago, and has now caught up worldwide.

The point of this article is to assert that wind not only can but will replace nuclear as a source of carbon free, risk free energy, with no fuel cost and no externalities. The time has come to acknowledge that spinning wind turbines are the “air apparent.” Given a billion dollars to invest in power plants, which would you rather own, operate and collect income from? Which facility would you rather have in your back yard or your view? Related: Low Oil Prices Could Break The “Fragile Five” Producing Nations

At this point in the debate, the Old Guard will chime in: “Yes, but wind is intermittent, so the capacity factor is far below that of coal, gas or nuclear.” Are you sure about that? The article mentioned above begins with an astonishing claim: “The National Renewable Energy Laboratory (NREL) recently released data showing that the Capacity Factor (CF) for wind power can reach 65%, which is comparable to that of fossil fuel based generation.”

WindChart4

The key to such a high CF for wind is height. “[It’s] head is set among the clouds” is a pretty good translation for the caption under the top picture. At this stage of the game, a 35 percent capacity factor is a tap in. The further up you climb, the steadier the wind and the higher the capacity. The resource is also steadier offshore.

On the bottom line, gas combustion turbines have such a low factor because these facilities are generally only used during peak hours (the so-called Hundred Hottest Hours) when demand for air conditioning causes a spike in the overall system load. This month, extreme heat pushed Texas to a record peak of 69 GW. Though Texas leads the U.S. in wind capacity, it doesn’t blow so much during the day. 

WindChart5

Fortunately, the cause of everyone turning on their AC units is also the cure, sunlight; PV will probably take this market away from gas pretty soon. The capacity factor for sun in most of Texas is closer to 25 percent than 5 or 10. Therefore, $600 million dollars is better spent on 400 MW of PV than 1 GW of gas capacity, which still needs fuel; when the peak hours hit, the price of gas spikes with it while the price of solar falls to near zero, which is a different sort of problem, though a better one from the customer’s point of view. (Somewhere Over the Rainbow)

The DOE released its Wind Technologies Market Report this month . Eric Wesoff, the Editor-in-Chief at Greentech Media (GTM), wrote about some key takeaways from that report on August 11. First, though there are still uncertainties, the industry in the U.S. rebounded in 2014, after a dismal 2013, providing 24 percent of all new U.S. capacity. In short, “it’s a growing market with record-low prices.”

A Utility Dive article on August 20 seconds that conclusion: “This year will be big. Next year will be similarly big. What happens after 2016 is anybody’s guess because of concerns about the federal production tax credit.”

WindChart6

This chart ought to prove the point that wind has become a ‘credible resource.’ “Co-author [Mark] Bolinger [from the Lawrence Berkeley National Lab -- LBNL] noted that the number of states where wind accounts for a significant amount of in-state generation has changed drastically from just 10 years ago, reporting, ‘Wind power currently contributes almost 5 percent of the nation's electricity supply, more than 12 percent of total electricity generation in nine states, and more than 20 percent in three of those states.’" (Texas has more than twice the capacity of any other state).

Ryan Wiser, the other co-author, adds: “Electric utilities now consider wind to be a mainstream energy source and part of the portfolio.”

The next item on the Report’s list shows rotors are getting bigger which makes for higher capacity factors and more power. According to the report, "Since 1998-99, the average capacity of wind turbines installed in the United States has increased by 172 percent, the average turbine hub height has increased by 48 percent, and the average rotor diameter has increased by 108 percent.”

WindTurbine

WindTurbineDiagram

Best of all costs keep coming down. LBNL reports that projects in 2014, on average, were installed at $1,710 per kilowatt, down $600 from the 2009 peak. This translates into cheap power. "The average levelized long-term price from a sample of wind power sales agreements signed in 2014 (and admittedly concentrated in the lowest-priced central region of the country) fell to just 2.35¢/kWh. These prices are below the bottom of the range of nationwide wholesale power prices, and compare very favorably to a range of projections of the fuel costs of gas-fired generation." Related: As Oil Industry Cuts Back, Prices Could Spike In Years Ahead

Most of the uncertainty referred to above stems from the expiration of the production tax credit (PTC) which still lingers for those projects that were begun in 2014 if they are up and running in 2016. The other primary uncertainty has to do with the price of natural gas. The GTM article concludes: “As for what happens after the PTC, Bolinger suggests that ‘the PTC actually has an impact on how these projects are financed.’

The structure favors tax equity funding, ‘one of the most expensive sources of capital.’ As the PTC fades, different and cheaper sources of capital will be available to wind project developers, according to Bolinger. ‘That shift to lower-cost capital will partially mitigate the loss of the PTC.’” In other words, we shall see. (For Report highlights only)

Wind Over Seas

OffshoreWind

Offshore wind is steady and it lies close to the largest load centers, i.e. big cities, where empty fields for planting wind turbines are few and far between (and those available are too pricey). The biggest drawback is the cost, as seawater is not only corrosive but the constant turbulence is hard on equipment, so it costs more to engineer the arrays to operate reliably for decades. The world’s largest offshore array is in England (the 630 MW London Array – the 300 MW Thanet Wind Farm is nearby); Britannia still rules some of the waves.

Another Greentech Media article of note was published on August 10: Europe Launches Offshore Wind Power Bonanza. It asks the question, ‘Is 55 gigawatts of new offshore wind by 2020 possible?’ According to the European Commission, approximately 130 GW of wind (mostly onshore) provided 8 percent of Europe’s electricity in 2014. Though offshore makes up only about 2 percent of total capacity worldwide (as noted above), the proportion in Europe is higher, and the push to continue is much stronger than in the U.S. where the first project, off the coast of Rhode Island, finally got a regulatory green light.

“Offshore wind is expected to boom over the coming years in Europe, building on a record year in 2014, which saw nearly $20 billion in investment, according to Bloomberg New Energy Finance. . . . Europe expects to see a 40 percent reduction in costs for offshore wind farms by 2020, a trend that has already started. Better installation techniques alone could cut up to 15 percent of costs, an important factor as increasingly large turbines are installed in deeper offshore areas. Large offshore wind turbines are now pushing 6 MW to 8 MW power ratings and are more than 500 feet tall. The size of offshore projects is also growing.”

WindChart7

Siemens, based in Germany, has begun testing its massive new 7 MW offshore turbine in Denmark. According to Cleantechnica, these units can each supply 32 million kWh annually which indicates a capacity factor greater than 50 percent (i.e. 4,500 hours per year). Another of its virtues is gearless technology: “A synchronous generator with permanent magnets converts the rotor motion directly into electrical energy without the use of a gearbox which normally steps up the low speed of the wind rotor to high speed for generating electricity. With the new technology, the entire drive train operates with significantly fewer components, making it lighter, more compact and less prone to wear.”

Smil’s Challenge

The fastest ramp ever for an energy source, from 1 to 20 quads, came from nuclear power plants between 1970 and 1990. (A quad is one quadrillion Btus, the amount of energy in roughly 175 million barrels of oil).

It took coal 70 years to get from 1 to 20 quads (1830 to 1900 – wood was top dog for a few millennia before that); it took oil a bit more than 40 years (from the Model T rollout in 1908 until 1950), and gas took about the same amount of time as oil (from roughly 1920 to the early 1960s.

The U.S. uses about 100 quads per year and world demand is on the order of 500 quads. To be fair, that figure for nuclear power is a bit of a stretch since the number of Btus delivered was closer to 7 quads. But let’s be generous and ignore the inefficiencies in thermal power generation. (Source: Vaclav Smil, Energy Transitions, Appendix.)

In other words, the scale of what is needed to feed the world energy beast is enormous and it takes a very long time for even the best sources to move from being a rounding error to becoming the top dog, or even a major player at the very least. Even if low cost power and heat from the wind and the sun are the greatest thing since the Almighty said ‘Let there be light,’ going from a few percent of our energy requirements and a few quads, where they are now, to the top of the table won’t happen overnight. 

Mission Objectives:

Wind replaces Nuclear power
Electricity replaces Oil for Transport
Sunlight replaces Oil & Gas for Heat & Power
Wood replaces Coal
Efficiency: the One Thing to Rule Them All

Even if the table above were the agreed upon summary of mission objectives, and that is far from being true, it will still take decades to bring about the stated results. The first objective seems the most likely to happen first, however, and sooner than you think.

Approximately 400 nuclear stations around the world produced 2,364 terawatt-hours (TWh) in 2014. (Source: Nuclear Energy Institute.) We don’t yet know what the average capacity factor for wind turbines will be in ten years’ time, but if that number gets to 50 percent, then it would take 600 GW of wind to replace the current nuclear contribution. With 400 GW now in place, the goal line seems already in sight.

Since existing turbines have a lower capacity factor than those to come (currently around 33 percent according to NREL), it will take more than 600 GW; for the sake of argument, let us say between 750 and 800 GW, with the next 400 having an average CF of 50 percent. 51 GW of wind capacity were added worldwide in 2014 (bringing the total to 370 GW). Even if that number did not grow, and another 50 were added every year, the crossover point would be achieved by 2022 or 2023. Related: Saudis Could Face An Open Revolt At Next OPEC Meeting

Note that Germany quickly replaced all 43 TWh of lost nuclear generation since shutting its fleet down after Fukushima with wind and solar power, so this is by no means a fantasy. Even without the PTC in the U.S., it is reasonable to assume that more than 50 GW will be added each year. China is the world’s top market (adding 23 GW in 2014) and they do not intend to slow down. Furthermore, as offshore wind becomes a larger part of the mix, with higher and steadier winds available, these numbers seem conservative.

The second item on the list of Mission Objectives will depend on several nebulous variables so it is much harder to predict. What will the price of batteries be in 2020? In 2030? UBS believes that once the price falls below $150 per kWh (and right now it is around $250) EVs will start to take over the car business.

When will that be? Navigant says the cost of materials is around $87. Elon Musk says he will be disappointed if the price does not get below $100 per kWh by 2020. Other important variables include the price of oil/gasoline and the level of world economic activity between now and then. Place your bets.

DonQuixote

Tilting at windmills used to be an expression to describe someone ‘off their rocker’ who was pursuing a fantasy or fighting an imaginary enemy, as was the case with Cervantes’ hero Don Quixote (Part 1, Chapter VIII):

Just then they came in sight of thirty or forty windmills that rise from that plain. And no sooner did Don Quixote see them that he said to his squire, "Fortune is guiding our affairs better than we ourselves could have wished. Do you see over yonder, friend Sancho, thirty or forty hulking giants? I intend to do battle with them and slay them. With their spoils we shall begin to be rich for this is a righteous war and the removal of so foul a brood from off the face of the earth is a service God will bless."

"What giants?" asked Sancho Panza.

"Those you see over there," replied his master, "with their long arms. Some of them have arms well nigh two leagues in length."

"Take care, sir," cried Sancho. "Those over there are not giants but windmills. Those things that seem to be their arms are sails which, when they are whirled around by the wind, turn the millstone."


Don Quixote symbolized a dying age, the age of Knights and Chivalry. Today’s dying age is based upon fossil fuels and nuclear power. Consequently, tilting at windmills should now be taken to mean someone who doesn’t realize there is no stopping them, i.e. windmills.

Nuclear power does not measure up (on price, on time to build, on fuel, on risk) and cannot compete with 2.35 cents per kWh. Fossil fuels, though they still measure up (at least until carbon gets a price), are finite. Resistance is futile, and the risk to investors who don’t get this is substantial and rising.

Vesta

Vestas Ventum Facit

By Henry Hewitt for Oilprice.com

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Leave a comment
  • Koka on August 24 2015 said:
    Wow, amazing analysis, great job, terrific figures.
  • give-me-a-break on August 24 2015 said:
    This is all great....as long as you dont build any of those eye-sores near me. I see them near Kemmer. Blighting the ridgeline. Ugly. Consuming miles of sightline, while the coal fired plant in Kemmer consumes a couple of square miles. When I drive by, 1/4 of the windmills are not working on any given windy day. And then of course, in most parts of the country where I live, the wind almost always stops blowing once the sun goes down. What I care about is that the lights come on whenever I flick the switch, 100% of the time, that it costs me as little as possible and that I dont have to look at it or hear it, thump, thump, thumping away
  • John on August 25 2015 said:
    “Analysis of Wind Farm Performance in UK and Denmark” by Dr Gordon Hughes, is a Professor of Economics at the University of Edinburgh. The 2012 study has used data on the monthly output of wind farms in the UK and Denmark reported under regulatory arrangements and schemes for subsidizing renewable energy. Normalized age-performance curves have been estimated using standard statistical techniques which allow for differences between sites and over time in wind resources and other factors.
    The normalized load factor for UK onshore wind farms declines from a peak of about 24% at age 1 to 15% at age 10 and 11% at age 15. The decline in the normalized load factor for Danish onshore wind farms is slower but still significant with a fall from a peak of 22% to 18% at age 15. On the other hand for offshore wind farms in Denmark the normalized load factor falls from 39% at age 0 to 15% at age 10. The reasons for the observed declines in normalized load factors cannot be fully assessed using the data available but outages due to mechanical breakdowns appear to be a contributory factor.
  • James Rust on August 25 2015 said:
    These numbers appear to be fantasy published by NREL as a means to promote President Obama's goal to abolish use of our abundant, cheap, geographically distributed fossil fuels of coal, oil, and natural gas.

    James H. Rust, professor of nuclear engineering
  • Stephen T. Harris, CPL on August 25 2015 said:
    I have to say, this is one of the optimistic cheerleaders I have read on wind energy, ever. Unfortunately, the facts are way off and it borderlines false hyperbole. It will take seven Kansas size states completely covered with the machines to replace one day's worth of oil imports (fossil fuels is stupid - is everything carbon a fossil? of course not), coming into the U.S. Does he really think that after all of CA condors are Cuisinarted (you and I kill a condor - 15 year felony - Windmills get annual waivers...huh?) and most of CA's (aka the United States) land mass is covered with "windmills," if that is what you call these giant rotators, the real public, not the dumb as a tree stump "greens," finds that their deserts and open ranges are killing everything that flies or crawls...will continue to tolerate this nonsense? Where are the real environmentalists when needed? John Muir would be turning in his grave to witness these giant machines in the sky like aliens invading. So much for protected wilderness under the Dims. Google "windmill caused fires" and see what happens to the land around one of them when they catch fire. Full disclosure, as a professional landman, I have leased much land for windmills and pv installations. I did it because it is my job, not because it makes sense. This isn't rocket science...unless you are in an oil boom land mass area, most farmers and ranchers across parched areas out west are hurting and will, with little questioning, lease their land with little real money waived in front of them. It is far easier than leasing land for oil and gas as 99% of the lessors for wind know almost nothing about windmills and have no real understanding what is about to happen to their land.
  • fred on August 26 2015 said:
    You Fred Flintstones are so funny.Get over it.The tech is here,its working and it isnt stopping,its growing.And will continue too.Renewables will and are changing the world,stupid assertions to the contrary doesnt change that.I now return you to your job,making widgets and buggy whips.
  • Arthur Brennan on August 27 2015 said:
    Wind remains as unreliableas, well, the wind, and trying to reduce that unreliability is quite expensive. Windmills are a primitive technology that for good reason can only be supported by exagggerating dangers such as global warming. The technology just plain sucks and gobbles up enormous tracts of land in the process. One nuclear power plant occupies a few hundred acres, while the equivalent wind farm requires
    over 50,000 acres. And when you need power the most - during hot days in July, wind supplies th eleast power. Wind also requires enormous backup. Perhaps the biggest lie in this pack-of-lies article is that wind can obtain a capacity equal to that of fossil fuelplants. That is totally meaningless, since capacity has little to do with reliability.
    Figures vary, but on average a windmill average around 30% capacity, and comparing nameplate capacities , as this article does, is just plain fraud. A 30MW wind farm will typically supply only a third of the power of a 30MW fossil fuel plant.
    The future of power is neither solar nor wind, but probably molten salt reactors, which produce power at a fraction of the cost of either solar or wind,, have a lifespan 3 times longer than either,and is safer than either solar or wind. Molten salt is not going to eliminate our whooping crane population the way wind will.
    Molten salt reactors can be located near the end user, unlike wind. It also can eliminate nuclear wastes by burning them as fuel and we have enough nuclear wastes to power this country for 1000 years. Using conventional uranium fuel
    is essentially an insignificant cost of operating a molten salt reactor,. Only energy- ignorant souls see any possible future for wind when molten salt reactors are on the horizon, as they will be in the near future. Wind power is tan incredibly stupid way of producing unreliable, expensive power. Without its massive govt subsidies
    no one would ever build a windmill.
  • Jack Farrell on August 27 2015 said:
    When do you have to pump oil up into water towers, from the ground up into surface tanks, along pipes to processing centers? Answer when the wind blows.

    Does power have to be steady to save money. Hell no.
  • Jack Farrell on August 27 2015 said:
    We don't need no stinkin' government subsidies, carbon taxes or sales back to the dumbed down utility grid. The transmission lines from windmills to market are already in. Industry has learned how to save much more than the subsidy without government restraints crud(e)ing up the works.
  • George Reeves on August 27 2015 said:
    The numbers in this report are mysterious. At $1710/kw of capacity, a 30% capacity factor, and 2.35 cents per kwh the annual revenue is $61.76 per kw of installed capacity. This is a gross return of 3.6% to pay for depreciation, maintenance, and cost of capital. It cannot be unless there is some hidden funding source. The taxpayer? Is this whole industry just another government bad idea? In Denmark where a lot of their power comes from wind the cost of electricity is near 30 cents per kwh. That is about right if wind is as expensive as this report says.
  • Mark Richardson on August 29 2015 said:
    You bring up a good point. However, you are off some for not using at least the average capacity factor 35% for all wind as reported by LBL. The reported utility purchase contracts averaging 2.35 cents likely have turbines with a capacity factors around 40%. Using 40% I come up with 4.8% doing the math the same as you did.

    Most wind is developed receives a 2.3 cent production tax credit for the first ten years of purchase agreements that typically span 25 years. Adding the tax credit added and some assumed discount rate puts the number at around 4.5 cents that is within the range of the unsubsidized cost of wind determined by financial advisory firm Lazard: http://www.seia.org/sites/default/files/resources/Levelized Cost of Energy - Version 8.0.pdf#overlay-context=research-resources/lazards-levelized-cost-energy-analysis-v80

    Using 4.5 cents takes ROI to 9.2%. These are rough numbers but it's clear wind costs to utilities as reported by purchase contracts are within the range estimated Lazard and far less than those in Denmark or others across the Atlantic.
  • Mark Richardson on August 30 2015 said:
    George Reeves you bring up a good point. However, you are off some for not using at least the average capacity factor 35% for all wind as reported by LBL. The reported utility purchase contracts averaging 2.35 cents likely have turbines with a capacity factors around 40%. Using 40% I come up with 4.8% doing the math the same as you did.

    Most wind is developed receives a 2.3 cent production tax credit for the first ten years of purchase agreements that typically span 25 years. Adding the tax credit added and some assumed discount rate puts the number at around 4.5 cents that is within the range of the unsubsidized cost of wind determined by financial advisory firm Lazard: http://www.seia.org/sites/default/files/resources/Levelized Cost of Energy - Version 8.0.pdf#overlay-context=research-resources/lazards-levelized-cost-energy-analysis-v80

    Using 4.5 cents takes ROI to 9.2%. These are rough numbers but it's clear wind costs to utilities as reported by purchase contracts are within the range estimated Lazard and far less than those in Denmark or others across the Atlantic.
  • Francisco on August 30 2015 said:
    Great article!!

    Congrats!
  • Spurwing Plover on August 09 2016 said:
    Windturbines are hazerdous to birds and bats their terribly noisie and they ruin the landscape the stupid eco-wackos who want them need to have one in their own neighborhood

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