Tuesday, December 20, 2011

Cost of Wind — Kicks Coal’s Butt

Overall, wind costs have dropped significantly in recent years, and looking at its true costs indicates it is much cheaper.  There are a few different ways you can measure electricity cost. For example:
  1. Levelized Cost of Electricity (LCOE) — the utility way (the average cost over the lifespan of the project, initial investments plus operation and maintenance costs, not including externalities).
  2. “All In” — taking into account externalities — health/environmental costs (these are real costs that we pay that vary according to the energy source).
The figures you normally see are according to LCOE, which artificially makes the cost of coal cheaper than it should be. Without even taking externalities into account, wind is already beating coal.  Wind has gotten cheaper and cheaper while coal is getting more expensive (and that trend isn’t expected to change).


While LCOE is widely used to compare various sources of energy, even not including the fact that it doesn’t account for health or environmental costs, it has its weaknesses. For example, LCOE for wind projects are often based on a 20-year lifetimes for wind turbines.

The Department of Energy, found the price of electricity from new wind farm plants ranged from 4 to 9 cents per kilowatt-hour in 2009, which is competitive with other new power plants. However, if a 30- or 40-year lifespan were used for the projects, the costs would be much lower, as the huge majority of a wind project’s costs are from the initial investment (wind, the ‘fuel’, is free and there are minimal operating and maintenance costs).

If you take the full health costs and environmental costs of various energy sources into account, wind comes out looking even better. A recent study out of Harvard found that if one adds in the hidden costs of coal then its actual price in the U.S. is 9-27 cents higher per kilowatt hour. These and the more difficult to quantify externalities are borne by the general public.

This makes the true, “all-in” cost of coal electricity somewhere between 17 cents and 35 cents per kWh. You pay 8 cents or so per kWh on your electricity bill and then quite a bit more than that in healthcare costs, health insurance premiums, and with your tax dollars. Wind? It’s sticking to its original 4 to 9 cents per kWh.

Wind has no fuel costs. That is an advantage today, but with peak coal coming in the not-too-distant future, this is likely to make wind increasingly cheaper than coal. (Of course, if we just cut our coal use now, we wouldn’t even have to run into peak coal, but it seems that we aren’t so foresighted.)  There are numerous reasons to shift more to wind power and numerous reasons why it would help create a more secure, brighter future.

http://cleantechnica.com/world-wind-power/5/

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