Wind Underprices the Competition, But . . .

Wind Underprices the Competition, But . . .
Wind Underprices the Competition, But . . .
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Wind is now competitive with other forms of electrical generation and can undersell them when operating at maximum capacity, according to figures provided by North American Wind Power. The problem is that it cannot always operate at maximum capacity. When combined with other forms of generation in order to provide continuous power, it becomes more expensive.

The graph shows the levelized costs of electricity in 2010 dollars per megawatt hour for the main forms of generating electricity. Levelized costs are defined as follows: investment and installation costs, operations and maintenance costs, fuel costs, life of the generating unit, and energy generated by the unit. The horizontal axis breaks out the major forms of generation: wind , natural gas, coal and nuclear. Wind (represented in green) is represented both with and without the production tax credit, which awards a tax reduction per megawatt. (The renewal of this tax credit is now being debated in Washington.) Natural gas is burned in both combined cycle plants, which provide about 60 percent energy conversion, and peaking plants, which are much less efficient but can be turned on and off very quickly. Coal is represented both for conventional use and with advanced combustion, which includes extensive pollution control but does not include carbon capture and storage, which is still more expensive.

Nuclear actually beats both types of coal plants but the cheapest conventional source is combined cycle natural gas. Most new generating plants are of this type. Wind with the production tax credit is less expensive than everything else but more expensive than combined cycle without it. The problem is that wind must be supplemented by other forms of generation when the wind is not blowing. Gas peaking plants are most likely complement because they can be revved up and down on short notice. The best wind farms generate electricity only about 1/3rd of the time. If peaking gas plants provide the other 2/3rds, then the levelized costs go to $140 per mWh, far more expensive than conventional fuels. Even if wind could provide electricity 2/3rds of the time, the levelized costs would still be $104.56, higher than nuclear and conventional coal.

Only if wind is supplemented by combined-cycle natural gas does it become competitive. But then combined-cycle gas undersells wind without the production tax credit anyway, so why add the windmills? Unless a price is attached to carbon emissions, wind-generated electricity still does not make much sense.

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