Wind Power is Making Electricity Cheaper

[txlibdem]

Wind Power is Making Electricity Cheaper (Exxon: Wind to be Cheapest Source of Electricity)
May 2, 2011 By Zachary Shahan

Aside from the fact that wind power is cheap, there is another important factor at play here – merit order pricing.

Wind (and solar) have no fuel costs and low operating and maintenance costs (O&M). That means that once the systems are up and connected to the grid, they can afford to sell their power for very little money. In the case of wind, the O&M cost is about $0.01/kWh.

...

When the call goes out for electricity, wind can sell it’s power for about a penny and not loose money (at that moment). And, with a $0.018 feed in tariff (FIT), wind can actually give its energy away and still make money! That means that wind is always going to be able to underbid any fuel-burning producer.

What actually happens is that a call goes out for X units of electricity. The least expensive providers get picked up first — that would be wind, then hydro might be next, followed by nuclear and coal. If wind, hydro and nuclear can provide all X units, coal gets left out. And same could go for nuclear if wind and hydro can cover it all.

http://cleantechnica.com/2011/05/02/wind-power-is-making-electricity-cheaper-exxon-wind-to-be-cheapest-source-of-electricity/

This is information that bears repeating... I don't know if anyone posted this before (forgive the repeat). But let's get real. We need clean energy *and* we need cheap energy and today wind is making that happen.

[closeupready]

1. Then we must put a STOP to it, IMMEDIATELY.

Can't be having cheap energy! :mad: :sarcasm:

[Maine_Nurse]

2. Except, in practice, consumers in our state are paying more, not less. nt

[jpak]

22. Bullshit - thanks to the Mars Hill wind, farm folks on the County are paying 15-21% LESS

for their electricity thatn southern Maine.

yup

[Bill USA]

3. RECOMMENDED.

[kristopher]

4. You have part of the picture

Wind does exert a downward pressure on prices in the way described but only when it is being sold on the spot market. The part of that type of sale that is missing from the OP is that when the amount of electricity called for is satisfied by gradually moving up the bids by price, it is the final accepted bid price that determines the amount paid to all accepted bids. So wind can and coes bid $0.00 and sell all of their production in the specified time frame, but if the last bid is a natural gas plant that is selling for the $95 MWh, then the wind plant also receives $95 MWh.


If it is being sold on the spot market, though, it means that the production isn't pre-purchased or already committed to a specific buyer through a long term contract known as a power purchase agreement (PPA).

If a wind farm's owners do not have a PPA, that means the flow of cash is less certain and the financing is going to reflect that circumstance. If they do have a PPA for their entire output, then the financing will reflect that circumstance. It can mean the difference between 18%+ for venture capital for the nonPPA endeavor, vs 4% for the business that has a 20 year guaranteed cash stream.

The commitment by the buyer to purchase, of course, comes with a corresponding commitment on the part of the seller to deliver the power at a guaranteed price - which will be substantially lower than that available on the spot market.

it is this long term pricing structure that is, in several markets, already less expensive than new coal.

[Dead_Parrot]

5. "with a $0.018 feed in tariff (FIT),..

..wind can actually give its energy away and still make money!"

So, stuff other people pay for is cheaper that stuff you pay for yourself.

Welcome to burglary 101...

[kristopher]

6. That isn't how it works,,,

You must have missed it:
Wind does exert a downward pressure on prices in the way described but only when it is being sold on the spot market. The part of that type of sale that is missing from the OP is that when the amount of electricity called for is satisfied by gradually moving up the bids by price, it is the final accepted bid price that determines the amount paid to all accepted bids. So wind can and coes bid $0.00 and sell all of their production in the specified time frame, but if the last bid is a natural gas plant that is selling for the $95 MWh, then the wind plant also receives $95 MWh.


If it is being sold on the spot market, though, it means that the production isn't pre-purchased or already committed to a specific buyer through a long term contract known as a power purchase agreement (PPA).

If a wind farm's owners do not have a PPA, that means the flow of cash is less certain and the financing is going to reflect that circumstance. If they do have a PPA for their entire output, then the financing will reflect that circumstance. It can mean the difference between 18%+ for venture capital for the nonPPA endeavor, vs 4% for the business that has a 20 year guaranteed cash stream.

The commitment by the buyer to purchase, of course, comes with a corresponding commitment on the part of the seller to deliver the power at a guaranteed price - which will be substantially lower than that available on the spot market.

it is this long term pricing structure that is, in several markets, already less expensive than new coal.

[Dead_Parrot]

18. So, if car stereos are $200...

...And I sell my stolen ones for $50, the spot market price will drop to $150?
Cool, but there's no net gain there.

[kristopher]

20. With an eighteen cent feed in tariff the wind energy is purchased for 18 cents per kwh.

You also wrote, "So, stuff other people pay for is cheaper that stuff you pay for yourself. Welcome to burglary 101..."

I'm curious about the "logic" you've used to arrive at this. Are you saying that when my utility buys wind under a Feed in Tariff, it is being paid for "by other people"?

Who are those "other people"? As far as I know the prices paid by the utilities for all power is passed on to the us, the ratepayers.

"Welcome to burglary 101" should be rewritten as "Welcome to "I'm confused 101""

[txlibdem]

7. May I also mention that wind coupled with energy storage can sell any time of day

Thus fetching the highest price, instead of facing a possibility of having to take the lowest price, or even zero.

Energy storage then allows the wind farm operator to become a player in the peak power market... the most expensive power there is... that is currently dominated by natural gas peaking plants due to their "fast" ramp up time from zero output to however much is called for. Wind farms + storage allows them to get into that VERY lucrative market. No storage means they are at the mercy of the utilities (or the four winds, however you look at it).

[kristopher]

8. No it doesn't.

The wind farm can only sell power when it is producing power. The storage facility is another capital investment that has its own set of economics behind how it gets financed.

To operate the storage facility needs to buy power. You've seen in the OP and in my post #4 how wind is sold. Can you guarantee that 100% of the time the wind turbine will be the cheapest input power into the storage facility?
How do you do that when wind, on the spot price auction, gets bought every time and receives as compensation the same price as the highest bidder in the queue that was accepted? Why should the wind owner take a cut in revenue to charge a storage unit?

Storage must BUY power in order to operate. The power from the wind farm isn't "free" even when it is between two profit centers within the same company. And to justify the capital investment of the storage it must buy low and sell high - nothing else works.

So while there might be some times when the wind turbines produce electricity that is in excess of demand (this is called "spilled" wind) and that production could be purchased very cheaply by a storage facility, in fact most times in the current grid the least cost input into a storage facility will NOT be wind but will be either coal or nuclear. That is because they don't cycle up and down well, so in the early morning hours when demand is low they give special rates to try and keep their plants operating as close to full capacity as possible.

If you don't believe me, then look the world over and find all of those storage facilities that you claim work so well when coupled with wind. I mean we've installed about 225GW of wind capacity to date - how much of that is "coupled" with storage?

Can't find any?

Well, we are expecting to top 550GW by the end of 2017 - how much of THAT is planned to be "coupled" with storage?

Can you find any economic news where growth of wind "coupled" with storage is discussed or analyzed or forecast?

No, I didn't think so. That's because they are two entirely independent niches within the power system. What you'll find if you dig hard enough is that when it is all said and done and we have a carbon free grid powered by renewables, bulk storage will equal about 4-5% of total capacity.

[txlibdem]

9. Uh-oh, natural gas plants would be mad if wind started cutting into their profits

We wouldn't want that now would we?

[kristopher]

10. Sure we do; I guess you missed the part about the "100% renewable"

In your rush to try and paint me in a negative light I guess you didn't bother to actually read what was written.

Feel free to explain how the economics of storage work as you claim. Or since you seem to have a great deal of trouble actually dealing with the more abstract side of reality and such an explanation would require abstract reasoning, why not show how "coupling" wind and storage is a workable business model that someone is pursuing?

225 GW is a lot of wind turbines, surely everyone isn't pushing natural gas because they hate nuclear power, are they?

That your claim isn't it? Since I think nuclear power is a very bad way to address climate change you try to portray me as "supporting" natural gas?

You've latched onto me correcting you on this cockamamie idea of "coupled" storage as your way to try and smear me when in fact all I'm doing is explaining how the system works and what the best path is AWAY from all fossil fuels including natural gas.

In order for your accusation to have any basis, you need to be able to show that what you are claiming we need is - IN FACT - something that can be made to work in the present system.

So enlighten us. Explain how coupling storage with wind works economically. Who pays for building that coupled facility and how does it pay for itself once it gets built. Studies, real world examples of entrepreneurs making it work - anything at all to back up your claims that "this is what we need" will be at least a start in making your point.

If there are no studies or entrepreneurs then admit there is no mechanism and propose one that will work. What policy changes can be implemented that would make "coupled storage" better than how the present system works.

It's time to put up or ....

[OKIsItJustMe]

11. It's time to put up or…

Hmmm… Perhaps you could try harder not to talk down to your audience?


FWIW, txlibdem: Here is a new wind facility, which uses battery storage to level off variations, but, as the article points out, its storage capacity is far too small to provide the sort of around-the-clock availability you’re suggesting. (Naturally, you’ve got to start somewhere…)

http://www.nytimes.com/2011/10/29/science/earth/batteries-on-a-wind-farm-help-control-power-output.html?_r=2&scp=2&sq=laurel%20mountain&st=cse

Batteries at a Wind Farm Help Control Output

Jeff Swensen for The New York Times

Vince Ponikvar, an AES employee, with battery containers in the background at the company's Laurel Mountain wind farm in West Virginia.

By MATTHEW L. WALD
Published: October 28, 2011

ELKINS, W.Va. — Another wind farm opened on another windy ridge in West Virginia this week, 61 turbines stretched across 12 miles, generating up to 98 megawatts of electricity. But the novel element is a cluster of big steel boxes in the middle, the largest battery installation attached to the power grid in the continental United States.

The purpose of the 1.3 million batteries is to tame the wind, but only slightly, according to the AES Corporation of Arlington, Va., which developed both the wind farm, known as Laurel Mountain, and the battery project.

The installation is far too small to store a night’s wind production and give it back during the day when it is needed, or to supply power when the wind farm is calm for more than a few minutes. Instead, AES says, the battery will be a shock absorber of sorts, making variations in wind energy production a little less jagged and the farm’s output more useful to the grid.

The technology is young, and the finances are challenging. But the task of smoothing output, and the more ambitious one of storing many hours of electricity generated by wind production, seem likely to become ever more important as states require that a rising percentage of their electricity come from renewable sources.

…

The Stanford electrode http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=115&topic_id=318503&mesg_id=318503">I pointed to yesterday has the potential to be part of an economically feasible grid-storage facility, but, that technology isn’t here yet.

To see where the technology is at, you might want to check here:
http://arpa-e.energy.gov/ProgramsProjects/GRIDS.aspx

[kristopher]

14. An apt description of your remark to me.

It doesn't fit the dialog you are inserting yourself into, however.

[txlibdem]

12. I wasn't trying to "paint" you, I was trying to tag the Astro Turf natural gas supporters on DU

We both know that you may have your faults but being a plant for the natural gas industry isn't one of them. Can we get past the "you tagged me," "no; you tagged me" bit for a while.

I have a problem with your argument that wind power can be a reliable and major part of our energy mix without most of it being coupled with storage. All one has to do is look at the wind charts to see the falsehood of your argument. I know you're not stupid, far from it. But what perplexes me is that you continually repeat these impossible claims that storage levels of 4% or 5% will be adequate. You have stated it as fact innumerable many times and yet it's been disproved time and again by myself and other posters.

The facts: if only 5% of wind energy is able to be stored then we will NEVER be free of the yoke of dangerous and deadly fossil fuels. We will NEVER have a 100% renewable energy grid with such low levels of energy storage. These are indisputable facts. And yet you persist, time after time to pass pure rubbish off as fact.

Who is pursuing wind + energy storage??? Why is it important???
http://uk.ibtimes.com/articles/20111106/wind-energy-storage-combined-in-coal-country.htm
http://www.rechargenews.com/business_area/innovation/article258171.ece
http://www.theengineer.co.uk/opinion/comment/energy-storage-gets-second-wind/1008373.article
www.parliament.uk/documents/post/postpn306.pdf
http://www.guardian.co.uk/environment/2010/apr/26/gravel-batteries-renewable-energy-storage
http://www.supergen-wind.org.uk/docs/presentations/2011-03-25_Session8_AR_PresentingVersion.pdf

[kristopher]

13. There are no "astroturf natural gas supporters" on DU.

But that is a favorite claim by you and others towards those that reject nuclear power and you have aimed it specifically at me any number of times, so let's not pretend otherwise, ok?

But leaving that aside I'd like to see a response to the challenges I gave you. The fossil fuel and nuclear industries have spent a great deal of time and money to promote the idea that renewables can't work, or that the only way they can work is when each point of generation has its own "coupled" storage capability - an unnecessary requirement designed to make renewables appeaar prohibitively expensive. It is as if I said we can only build a nuclear plant if we match it with another nuclear plant to hold in reserve for when the primary nuclear plant has to refuel or goes offline for any other reason.

The fallacy, as has been repeatedly pointed out to you, is the simplistic assumption that each individual point of power generation must parallel the performance of the total capability of today's grid. That claim is absurd on its face when stated bluntly since no source of generation in use today - renewable or not - can fulfill the same requirement.

It is this reduction of the broad problem to one that is to be solved by the characteristics of a single generating source that is basis of the fallacy you are pushing on others. In fact, what happens when we assemble all of the potential sources of renewable generation - the variable ones like solar and wind, together with the flexible ones like large and small scale hydro, geothermal, wave/current/tidal/isothermal, and biofuels/biomass the output can be regulated in much the same manner as today's grid. The 4-5% amount of storage is not determined by any need to "fill gaps" that other technologies cannot address, but rather (just like now) by the economic opportunity provided by the production of excess power from wind, hydro, or solar.

So really this is a case where intuition leads people totally astray - it isn't the down times for any generating system that dictate how much storage gets developed, but the amount of production that is in excess of what the grid can use at any given moment. That is true today with the centralized, large-scale thermal grid, and it will be true tomorrow with a distributed renewable grid.

[txlibdem]

15. You always accuse nuclear supporters of trying to "out" natural gas astroturf plants

Why do you care so much?

You rant about posters who are against natural gas and / or ponder who, if anyone, is a closet natural gas supporter on the one hand and then you brand them as nuclear supporters on the other hand. It sounds like a double standard to me.

I'm confused by your posts for that reason. Then you make false claims that energy storage will never exceed 5%, whether due to economic considerations or just because that's how the grid works or whatever else pops into your head.

The problem with that argument is that without high percentages of energy storage wind and solar will be unable to dethrone natural gas peaking power plants from their fantastically expensive lofty perch. These peaking power plants command the highest price for their energy of any type of power plant.

The facts are undeniable. If wind and / or solar had either 10 or 15 hours worth of energy storage they would be able to compete for that lucrative market. Of course, longer time of energy storage is better: solar and wind would be able to take over the entire peak power market because they are cheaper power sources than peaking natural gas. By a long shot.

[OKIsItJustMe]

16. It depends on how much generating capacity you have to play with

http://www.nrel.gov/docs/fy05osti/37657.pdf

Wind Energy Myths

Wind Powering America Fact Sheet Series

…

4 Wind energy is unpredictable and must be “backed up” by conventional generation. No power plant is 100% reliable. During a power plant outage—whether a conventional plant or a wind plant—backup is provided by the entire interconnected utility system.

The system operating strategy strives to make best use of all elements of the overall system, taking into account the operating characteristics of each generating unit and planning for contingencies such as plant or transmission line outages. The utility system is also designed to accommodate load fluctuations, which occur continuously. This feature also facilitates accommodation of wind plant output fluctuations. In Denmark, Northern Germany, and parts of Spain, wind supplies 20% to 40% of electric loads without sacrificing reliability. When wind is added to a utility system, no new backup is required to maintain system reliability.

…

DOE/GO-102005-2137 • May 2005

http://news.stanford.edu/news/2007/december5/windfarm-120507.html

Stanford Report, December 5, 2007

Study finds that linked wind farms can result in reliable power

BY LOUIS BERGERON AND STEPHANIE KENITZER

Wind power, long considered to be as fickle as wind itself, can be groomed to become a steady, dependable source of electricity and delivered at a lower cost than at present, according to scientists at Stanford University.

The key is connecting wind farms throughout a given geographic area with transmission lines, thus combining the electric outputs of the farms into one powerful energy source. The findings are published in the November issue of the American Meteorological Society's Journal of Applied Meteorology and Climatology.

Wind is the world's fastest growing electric energy source, according to the study's authors, Cristina Archer and Mark Jacobson, who will present their findings Dec. 13 at the annual meeting of the American Geophysical Union in San Francisco. Their talk is titled "Supplying Reliable Electricity and Reducing Transmission Requirements by Interconnecting Wind Farms."

…

"This study implies that, if interconnected wind is used on a large scale, a third or more of its energy can be used for reliable electric power, and the remaining intermittent portion can be used for transportation, allowing wind to solve energy, climate and air pollution problems simultaneously," said Archer, the study's lead author and a consulting assistant professor in Stanford's Department of Civil and Environmental Engineering and research associate in the Department of Global Ecology at the Carnegie Institution.

…

http://www.stanford.edu/group/efmh/winds/aj07_jamc.pdf


The idea, greatly oversimplified, is that the wind is always blowing somewhere…

[txlibdem]

17. "backup is provided by the entire interconnected utility system" - yes, the peaking nat gas plants

We were discussing a 100% renewables grid, just FYI.

Your second link suggests a significant excess of wind power (1/3 for the grid, 2/3rds for transportation, which I take to mean recharging electric vehicle batteries since no subway passenger is going to accept a 1 hour delay while the wind gets its... um... second wind). This is the perfect scenario for energy storage coupled with wind as well. Your link agrees with me... your words do not.

PS, the wind is NOT always blowing somewhere. That is true worldwide but we do not have a worldwide energy grid, we have an American energy grid that can periodically take extra energy from either Canada or Mexico. Same winds by and large across each line of longitude... at least not enough to bet getting to work on time for. Your point does have some merit, though, if we add excess capacity and offshore winds along both the Pacific and Atlantic coasts. That will significantly extend the probability that most of the wind farms will have wind.

EXCEPT: you forget seasonal variations. From season to season the wind can vary greatly, sometimes dipping as low as 10% for months.
http://rredc.nrel.gov/wind/pubs/atlas/chp3.html

Winter: http://rredc.nrel.gov/wind/pubs/atlas/maps/chap2/2-02m.html
Spring: http://rredc.nrel.gov/wind/pubs/atlas/maps/chap2/2-03m.html
Summer: http://rredc.nrel.gov/wind/pubs/atlas/maps/chap2/2-04m.html
Autumn: http://rredc.nrel.gov/wind/pubs/atlas/maps/chap2/2-05m.html

Open all 4 maps and flip back and forth between them. You will see that sizable areas of the US get very low winds in one season while having great wind resources in another. So we will have to expand wind turbines farther than the "West Texas to Canada border" scenario if wind is to be relied upon.

Add offshore and you've expanded the time for which you can count on strong enough winds:
http://www.windpoweringamerica.gov/windmaps/offshore.asp
www.nrel.gov/wind/pdfs/40045.pdf - pages 8 and 9 show great seasonal variation for offshore winds as well.

So what are we to do???

We need triple the extra capacity that anyone else on DU is telling you (I'm right they're all wrong ) ;-) And as high a percentage as possible of all that wind must feed into energy storage so to cover for the daily hour-by-hour ups and downs in wind speed (page 9 above shows that offshore suffers much less from that than onshore wind but it's still there).

Next, we need to do the same thing with Solar PV and Concentrating Solar Thermal. In the north you need larger mirrors and larger heat storage tonnage for the Solar Thermal but it can be done... even in Canada. I expect that the American desert southwest will be our most important solar thermal resource but don't waste the sun in the northern states just because you need a concentrating mirror to get the most out of it. That is like throwing away FREE energy!

[OKIsItJustMe]

19. 100% renewables does not mean 100% wind (does it?)

So long as wind represents a fraction of the renewable grid, other sources can “take up the slack” for example, solar and wind naturally compliment each other. Winds tend to blow strongest on cloudy days and at night.

In the meantime, hydro (using reservoirs) geothermal, biomass, biofuels and “http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=115&topic_id=318694&mesg_id=318694">electrofuels” have the ability to be dispatched as needed (at least to some extent.)


In short, you’ll want more nameplate capacity than your actual demands. (This is also true of the less than 100% renewable grid.)

[txlibdem]

21. You've got it

Not 100% wind. That is a recipe for failure. Notice my last paragraph where I discuss the similarities and the synergy between wind power and solar power.

We didn't get into this mess overnight and oil didn't dominate/decimate only one industry; it has taken 100 years and fossils have insinuated themselves into hundreds of different aspects of our lives. Likewise, we cannot rid ourselves of our fossil fuels addiction with a single solution. Oil attacked us on all fronts and we need to attack oil and the other fossils on all fronts possible as well.

That means wind (both onshore and offshore), solar PV and concentrating solar thermal, geothermal electrical generation, hydro, wave power and tidal power; all of which need to feed into a system of energy storage that will vary by the source of the electricity but work in concert to form a far more reliable grid than we have now. It also means being smart enough to insulate our buildings well (and seal them from air escaping), LED lighting when it gets cheap enough and electric vehicles, better planned cities with excellent mass transit (all electric) so that much of the population won't even need a car, and using biofuels to tide us over till the entire fleet of vehicles in the nation are either converted or replaced with electric vehicles.

We must think of this fight as having multiple fronts and multiple solutions or we are dooming our planet... and probably our species as well.