03 January 2011

A Reader Writes in With Renewable Energy Questions

A reader of this blog, c1ue, has send in an comparison of wind energy costs versus hydro and fossil in the Pacific Northwest.  He has asked for some feedback on his findings that wind is far more expensive than hydro and fossil.  His commentary is below, please offer responses and critique in the comments.
Wind, Hydro, Coal, and Natural Gas electricity generation: real life data comparisons

Some of you may have seen this article: "Pacific Power seeks 20 percent rise in electricity Rates."
The new requests come on top of rate increases earlier this year that added about 5 percent to customers bills.” . . .

Company officials acknowledged that it's a terrible time for rate increases, but said the investments were in many cases being driven by state and local mandates for more renewable power and pollution controls.
This prompted me to wonder exactly what impact renewable energy has had on Pacific Power – legally known as PacifiCorp. (Pacific Power is how PacifiCorp is known in Oregon)

Fortunately there is a resource to investigate this: the PacifiCorp FERC reports. The FERC is a federal agency responsible for many things, but in particular administers accounting and financial reporting regulations and conduct of regulated companies.  Thus pretty much all utilities must file a report with the FERC, including Pacific Power/PacifiCorp. PacifiCorp’s 2009 FERC report is embedded in the Washington Utilities and Transportation Commission web site

From this report, a snapshot of Wind vs. Hydro vs. Coal vs. Natural Gas can be taken.  My spreadsheet can be found here [spreadsheet updated, see comment here].

Of course there are caveats and questions:

1) Are construction costs based on absolute value at time of construction, or are scaled to some common value of dollar in a given year? The latter seems likely as many of the hydroelectric projects were constructed 50 or even 100 years ago; The Pioneer Hydroelectric project has a completion date of 1897 and a cost of 10,738,733 dollars. 100 years ago this number was 2/3rds of the entire GDP of the United States.

2) Are construction costs including/excluding subsidies? Depreciation?  Depreciation certainly is in the part of the report for coal facilities, but not specifically for hydroelectric and wind.

3) Are operating costs reflecting subsidies? Depreciation?

4) The Wind/Hydro data is from one section – the coal and natural gas are from another. There are therefore questions arising in how accurately some of the categories map such as: How exactly are Wind/Hydro operating costs per MWh calculated? And how does this method differ vs. the coal/natural gas operating costs including fuel?

No doubt there are more.

Regardless, the data paints an interesting picture on how wind electricity generation compares against hydroelectric, coal fired, and natural gas fired electricity generation.

1) Comparing the average of all wind electricity generation plants vs. all hydroelectric generation (minus inactive plants):  Wind cost 1.5x as much per MW installed with 12.3x the operating cost per MWh generated. This reflects that total wind facilities were 12.5x peak load capacity vs. hydroelectric but cost 21.3x more.

In addition, the 12.5x multiple of wind generation peak capacity only generated 5.9x total electricity vs. hydroelectric -- or in other words, 2.1 MW installed wind generation capacity was necessary to replicate 1 MW of installed hydroelectric in terms of actual electricity generated.  Said 2.1 MW cost 3.2x as much as hydroelectric to build and 24.6x as much to operate.

For a weighted average – as many hydroelectric installations were very small – the wind electricity generation improves in average operating cost (only 8.1x vs. 12.3x) but construction costs increase from 1.5x to 1.9x

2) Comparing wind electricity generation vs. coal fired electricity generation: Wind cost 2.9x more to construct and 102,672x to generate 1 MWh of electricity. Note that the construction cost difference is almost certainly too high since decommissioning costs are not included for coal fired electricity generation.

3) Comparing wind electricity generation vs. natural gas: Wind cost 4.1x more to construct and 18,305x more to generate 1MWh of electricity.  Comparing the wind average against a single relatively modern natural gas plant, wind cost 3.1x more to construct and cost 47,092x more to generate 1MWh of electricity.