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Natural Gas Stands To Win As Offshore Wind Takes A Hit

Natural Gas Stands To Win As Offshore Wind Takes A Hit

The ongoing commoditization of offshore…

U.S. Offshore Wind Projects Hit by Surging Costs

U.S. Offshore Wind Projects Hit by Surging Costs

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Robert Bryce

Robert Bryce

Robert is a writer at Energy Tribune

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Wind Energy Hype: IEA Study Reveals the Real Cost of Wind Power

The wind energy lobbyists love to claim that installing new wind turbines is the cheapest form of new electricity generation capacity. In fact, I heard that very claim while at a party here in Austin a few weeks ago. But as usual, there’s the hype and there’s the reality.

Today, the International Energy Agency, in cooperation with the Organization for Economic Cooperation and Development’s Nuclear Energy Agency, released a study called “Projected Costs of Generating Electricity.” The results are yet another refutation that wind is the least-costly source of new generation. Using what it calls the “levelized costs of electricity,” a metric that includes key factors like the discount rate, construction costs, load factors, fuel prices, and carbon costs, the study found that nuclear power is the least-expensive option for new generation in North America, Europe, and Asia Pacific when the discount rate is 5%. Meanwhile, wind energy was often the most expensive option regardless of location and whether the discount rate was 5% or 10%.

Levelized Cost of Electricity for Nuclear, Coal, Gas, and Onshore Wind Power Plants

Energy Costs - 5% discount

Energy Costs - 10% discount
Source: OECD

When the discount rate was moved to 10%, then nuclear remained cheaper than other sources in both North America and Asia Pacific. Indeed, at that higher discount rate, the median cost for nuclear power in Asia Pacific is less than half that of wind. But nuclear’s economics falter in Europe under a 10% discount rate making it slightly more expensive than both coal and gas, but it remains substantially cheaper than wind.

The study collected data from 190 power plants in 21 countries. And while the IEA included numerous factors in coming up with their estimate of costs, this text from the report is critically important:

The electricity generation costs calculated are plant-level (busbar) costs, at the station, and do not include transmission and distribution costs. Neither does the study include other systemic effects such as the costs incurred for providing back-up for variable or intermittent (non- dispatchable) renewable energies.

Those two sentences are telling. While the IEA report shows that wind energy is usually more expensive than conventional generation, their cost calculations do not include two of the most expensive -- and controversial -- aspects of integrating wind energy into a given electric grid: the transmission lines needed to carry wind-generated electricity to distant cities, and the cost of backup generation capacity that must be available to assure that the intermittent electricity supplied by the wind turbines doesn’t cause the grid to go dark.

Expect wind lobbyists and environmental advocates to downplay the importance of this IEA report. But just look at the figures from the new IEA and consider the disparity in costs between wind and nuclear. Also look at the disparity in costs between wind and conventional generation, particularly in Asia. Then consider how much higher the costs of wind would be if all of the costs – that means adding in the transmission line costs and the backup generation costs – were factored into the equation.


The punchline here is abundantly obvious: Adding more wind energy to the US electricity grid will mean higher costs for consumers.

By. Robert Bryce

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  • Anonymous on May 11 2010 said:
    While your study shows Wind Energy to be more expensive, a lot of factors are not taken into account. One the use of the grid for transportation will shift energy use to the grid which will eventually help with our oil dependence on foreign nations that really dont like us very much. I am for the higher rates to get away from Mideast strife! You show nuclear as a cheaper alternative even though the waste issue has never been solved.
  • Anonymous on June 14 2010 said:
    Many U.S. cities are located on the coast. Off shore wind turbines would also be located along the coast. Nuclear power plants and large coal plants are not normally located inside or even near large cities. The article does not explain why wind turbines would add longer range power lines. In land we already have high voltage lines running across mountains, near lakes and through the plains. Why not locate the new turbines near the existing grid?The article also uses just on-shore wind. It does not explain the difference between "carbon costs" and "fuel cost". The only source of information for this article is a report from the Nuclear Energy Agency. The NEA has good reason to be biased and the charts use poorly defined terms.
  • Anonymous on May 28 2011 said:
    In response to #1 and #2.Nuclear power plants can be very small (some aircraft carriers have 8) and located just a few miles outside a city. On-Shore wind turbines have to be located on ridges where the wind blows to be most economical. As the closest and best ridges get filled, more and more distant ridges must be used. The farther the generation from the need, the greater the loss in transmission. Off-shore wind power is even more expensive than on-shore in almost all cases. So, with wind power, we see the law of diminishing returns.Solutions that reduce nuclear waste by well over 95% have been developed. Though they have not yet all been implemented. Nuclear power does not generate a large carbon dioxide footprint. And, at today's requirements, there is enough nuclear fuel to power the globe for over one million years. So, regardless of what we do with wind, it seems nuclear will be a necessity in the near future.
  • jackie cox on November 30 2012 said:
    lawyers, politicians, are not scientists, wind and solar provide around 2 % of our power supply, in spite of trillions lost (stolen) by opportunists playing the green card, like electric cars powered by coal fired power plants, the most disgusting barrys big political cash contributor , or eberhardts' lithium laptop battery car company, stolen by south african draft dodger elon musk, the internet philanthropist, has siphoned off near 1 billion to make around 2,000 cars, many in finland, continually losing money, nyse still allows the phony IPO's while the investment industry, using las vegas ethics, does things like calling teslas car of the year, when the reality is, deplete the battery, requires replacement, an experimental battery that heats up with use causing the car to creep along with its flashers on 40,000.00,battery replacement costs, and experiment which lithium laptop batteries expand beyond containment compartments in a few years. Don't drive in hilly country, or hot weather, no insurance company will insure for towing, a car company producing 11 cars a week, when break even is 44, without ever paying back the 1 billion investment, wikipedia lists elon as a philanthropist, and designer of all his ventures when in fact they are hostile takeovers, the philanthropist lie, exposed when he moves his new girlfriend home with his spouse and children who move out and ask for support to discover the philanthropist has no money. his claim to fame of designing pay pal is exposed as a 16 % interest when it was an idea of his school buddies, where he was an actual board member for a short time before being fired--barack hussain muhammad obama alias barry soretoe, etc etc uses several different social security numbers, a disbarred lawyer from south chicago like his spouse, developed ACORN architecture allowing the 2008 and 2012 election fraud---kenya dig it. When will responsibility authority arrest the fraud artist usurper, pretend president, looting our treasury in lockstep with the federal reserve bank, stealing, pretending money is more than the simple unit of measure it really is, easily managed by responsible accounting procedures

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