Wind Farms have been gaining popularity at a very rapid pace in the United States. As rapid as this growth has been in recent years (see chart below), wind farms still have plenty of room for growth. Renewable energy makes up just ~2% of electrical production in the United States. And, wind energy is a small portion of that 2%. (see US electric net generation). Critics talk about noise and bird deaths attributed to wind turbines but I will explain below why I think these are exaggerated concerns. A more serious criticism however comes from the intermittency of wind and the challenges associated with low-wind days in crucial parts of the country; many argue this could be a limiting factor in the widespread adoption of wind farms. As with any fast growth industry, investors have taken an interest in wind; this article may serve as a primer for those trying to project where the wind-energy market is heading.
The United States is making an obvious push towards alternative energy; in part due to environmental concerns such as carbon emissions and in part due to the country’s increased distaste for dependence on foreign oil. As a result of this consensus of opinions, legislation such as Cap and Trade has moved forward. It would seem that the perceived financial toll that future legislation is having on the projected-revenue streams of electric-power producers would be tilting valuations more favorably towards alternative-energy electricity producers. So, with the perceived value of alternative-energy based producers increasing, what is it about wind-power that has allowed it to take the lead over other alternatives like solar?
An obvious consideration is the cost per kilowatt hour (kWh) of generating capacity. To approach this problem, I take a long-term approach for identifying leading technologies — and therefore don’t consider government incentives. This argument is based on the assumption that sooner or later, it will be evident which technology is worthy of subsidizing and that public policy will follow these bottom-line cost considerations. You may disagree, and enter the political clout of various industry-lobbying groups into your calculations. Maintenance costs of various plants must also be calculated, but are not within the scope of this article which is intended to be a starting point. However it is you decide to calculate your numbers, you need to start with the raw cost of electricity capacity; we use cost per kWh of generating capacity when comparing technologies.
The actual cost per kilowatt of electric capacity that a power plant is capable of producing is a product of two factors:
- dollar cost per kilowatt of generating capacity
- capacity factor
Capacity factor, the second listed factor, is a very simple concept. Perhaps, it is best explained by example. Solar energy plants don’t produce electricity at night and very little electricity on cloudy days. Likewise, wind power does not run at 100% capacity all-year long either. For this reason, power plants are given a capacity factor. For example, onshore wind-power plants have an average capacity factor of 0.39 and Solar thermal has a capacity factor of 0.32 according to the NREL. See this page for a more in depth (yet painless) comparison of costs for competing alternative-energy electric suppliers.
So, by using numbers from the NREL to compare construction costs per actual kilowatt of generating capacity, my math works out as follows for construction-cost estimates on a kilowatt bases:
- Coal: $3,234
- Wind-Onshore: $4,316
- Wind-Offshore: $6,922
- Solar-Photovoltaics: $27,888
- Solar-Thermal: $14,072/kilowatt
The numbers just jump out at us in this format. Nuclear is another interesting comparison (see the link above). And solar, in its current state, is still far from competitive according to these costs based on NREL data.
Regarding the environmental criticism of wind energy previously mentioned (birds deaths and noise), the Department of Energy (DOE) released a report that, in my judgment, effectively disputes these criticisms. In regard to the bird deaths, the total number of avian deaths is compared to avian deaths from various man-made causes. House cats for example cause over 1,000 times more avian deaths than wind turbines, and – get this — birds smashing into buildings and widows cause over 5,500 avian deaths to each one avian death currently caused by wind turbines. In regard to the noise complaints, the DOE compares the decibel levels of a wind plant at 350 meters to various common noises that we are regularly exposed to. One example included is a car traveling 40 miles per hour at 100 meters. The DOE’s avian deaths and wind-turbine noise charts that effectively summarize their arguments can be seen here near the bottom of the page.
Criticism regarding the intermittency of wind is a much more serious concern in my opinion. Periods of low wind can last for days, not just hours. Ambitious visions such as those highlighted in a DOE report titled “20% Wind Energy by 2030” (summarized in the link above) must address this issue of intermittent wind. There are various techniques used by wind farms to store energy with varying degrees of capacity and efficiency. These considerations are complex and sometimes based on not-yet-present technologies.
John allowed me to publish this original article – thanks John! He runs a site called Fuel Efficiency which is focused on alternative energy news. If this article caught your interest, check out the section about wind energy.