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ExxonMobil says wind is cheapest form of electricity generation

by Jerome a Paris Fri Jan 28th, 2011 at 08:51:36 AM EST

Sometimes, a graph says it all. This one is from ExxonMobil's yearly review of energy statistics and trends, called Energy Outlook: A view to 2030:

as usual, the full disclosure: I work in the wind business, helping projects get financing, and I write about wind - full list of articles here


If you look at the fine print, you see two provisos:

  • to be cheaper, wind requires that carbon emissions be taxed to some extent (with no taxation, coal and gas-fired electricity still look cheaper). At heart, putting a price on carbon is a political decision which will be taken and accepted to the extent people accept that they have a responsibility towards future generations and show a willingness to bear (some of the) cost for highly diffuse externalities. Someone will pay for all that carbon in the atmosphere, we just don't know who or when exactly; putting a price on carbon is a collective way to acknowledge that cost and integrate it to current modes of power production. What is certain is that wind imposes no such externality on future generations and that, even if that cost is not taken into account, the cost of wind power is not that different from that of coal or gas-fired power.
  • Exxon notes that the cost of wind excludes the cost for backup capacity and additional transmission. But this applies just as much to individual coal-fired or gas-fired plants: a big 2GW coal plant presumably needs the same capacity available on standby in case there is a production or transmission failure in that plant, yet you never hear the argument about backup costs made about coal-fired power, because the power system has long been designed to cope with such needs. But the reality is that this makes the system able to deal with wind intermittency just as well, for low and medium penetrations, at almost no additional cost. Wind power is intermittent but predictable, just like daily changes on the demand side; so current systems can manage just fine. The real issue is the potential future scenario where wind penetration is so high that you could conceivably have times with high demand, low wind, and not enough remaining capacity to cope with such demand. In such cases, you would indeed need to pay for spare generation capacity to cope with the lack of wind power generation. But beyond the fact that such scenarios are rather far off (you'd need wind at 30-40% penetration, rather than the 5-10% you have today), the price for such backup, even if borne exclusively by wind power assets, would be rather low (backing up each wind MW by a gas MW, which would represent a massive over-investment even compared to worst case needs, would only increase the price of wind kWh by 25% or so).
And of course, the cost of coal and gas ignores the massive indirect costs we bear today when producing and transporting gas and coal - the cost of military deployments in the Gulf (Qatar, the largest gas exporter in the Persian Gulf, is basically a large aircraft carrier for the US military) and elsewhere, the health costs from coal mining, and the unmeasured costs coming from depending on supposedly unstable suppliers (remember the "gas weapon" which we're putting in the hands of the Russians by buying their gas?)

So the conclusion can be that wind costs roughly the same as traditional power sources - with none of their drawbacks, whether troublesome exporters to deal with, dangerous mining practices for local communities or unhealthy, and durable, by-products. And it's ExxonMobil saying so.

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Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jan 28th, 2011 at 08:52:50 AM EST
Wait, according to the Carbon Capture and Storage doesn't even reduce the cost even after accounting for the savings from reduced emissions?

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jan 28th, 2011 at 09:03:17 AM EST
is that CCS is not penalised by the price of carbon given that CCS emits no carbon (supposedly).

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Jan 28th, 2011 at 09:42:29 AM EST
[ Parent ]
But that CCS is more expensive that $60/ton

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jan 28th, 2011 at 09:50:14 AM EST
[ Parent ]
It is at least saying that coal or gas with CCS (however they calculated costs for CCS...) will be (in 2025) costlier than coal or gas without it. And very considerably costlier than wind or nuclear. They're not doing CCS any favours.
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jan 28th, 2011 at 12:36:37 PM EST
[ Parent ]
This is simply accuracy. CCS is inherently insanely expensive due to the massive quantities of carbon that needs storing - there is no cheap way to do that.
by Thomas on Fri Jan 28th, 2011 at 01:13:25 PM EST
[ Parent ]
Quite. But accuracy from Exxon-Mobil may be saluted.
by afew (afew(a in a circle)eurotrib_dot_com) on Sat Jan 29th, 2011 at 02:03:58 AM EST
[ Parent ]
Gah, according to them.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Fri Jan 28th, 2011 at 11:45:30 AM EST
[ Parent ]
Ah-ha!
by afew (afew(a in a circle)eurotrib_dot_com) on Fri Jan 28th, 2011 at 09:15:29 AM EST
So what are the costs of backup capacity and transmission that are excluded?

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Fri Jan 28th, 2011 at 11:10:26 AM EST
First of all, when you project wind incursion into the grid, you also must project what kind of grid will then exist. The various possibilities in the projected grid would have widely varying associated 'backup' costs. There are renewable based projected grids which need minimal backup costs, as the evolution of the grid itself provides it's own backup.

furthermore, there are already huge advances in technologies used to "store" windpower, such as compressed air. so predicting what future costs might be is completely dependent upon what scenario one chooses.

There are scenarios with no backup costs involved, though they may still be two decades in the future... but then that's the time frame we're investigating.

PS. In many parts of the wind world, wind incursion remains paltry. US is still 2% or so, China even less. This means the discussion of backup is premature.

the US still needs 300,000 MW to reach 20%, so let's keep the horse in front of the cart. Let's not forget that the "backup" issue is one created by those conventional players with the most to lose.

"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Sat Jan 29th, 2011 at 02:28:45 PM EST
[ Parent ]
Timehorizons are, however, important.
The french drive for nuclear and the danish drive for wind were preticipated by the same event - the 1970's oil crisis, and the net result of those policies was the near total decarbonization of french electricity in not much over 15 years, while after forty years Denmark still has among the highest emissions per KWH hour in the EU. And the projections for the carbon intensity, and price, of danish electricity in 2026 are still much, much worse than the present situation in France - For emissions, by a factor of at least 5.

Insisting that renewables are the answer means that we are choosing to use coal and gas in the decades it will take to mature those technologies, and the compounded carbon in the atmosphere from those decades of buisness as usual will stay there for centuries to millenia - this is not being green, it is, quite simply, a crime against the planet.

We know what it takes to kick the coal habit - and it is imperative that we use those tools, even if they are not the most politically popular at the moment.

Just to put the boot in, I am going to point out that the very same advanced grid and storage technologies that would also serve admirably to make nuclear power both more economical and more enviormentially friendly by fitting the infamous baseload supply curve that is economically optimal for nuclear to the actual demandcurve without the use of fossile based middle and peak producing powerplant. In fact, developments along these lines help nuclear far more than they do wind, because the total amount of MWH that a nuke based grid needs to store or otherwise shift in time is both smaller and a fixed quantity, which helps a lot with the economics.

by Thomas on Sat Jan 29th, 2011 at 03:57:54 PM EST
[ Parent ]
Thomas:
while after forty years Denmark still has among the highest emissions per KWH hour in the EU.

That's as may be, but a great deal of Danish wind power is actually exported, and reduces carbon fuel consumption and emissions elsewhere.

It also thereby reduces the profits of carbon-fired generators of course which accounts for some of the misleading propaganda.

Proponents of nuclear have no such excuses.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Sat Jan 29th, 2011 at 05:20:28 PM EST
[ Parent ]
All those points were addressed by Thomas at the top of a different subthread.

ChrisCook:

a great deal of Danish wind power is actually exported, and reduces carbon fuel consumption and emissions elsewhere.
Thomas:
It is exported.. primarily to Norway and Sweden, neither of which have any significant amount of carbon emitting generation capacity at all.  Net ecological  gain: Zero. Net economic cost to Denmark of using nordic hydro to loadbalance our wind capacity? Quite large. Danish wind electricity importsexports are mostly used to conserve waterhead behind dams in Norway and Sweden - this reserve of power is then exported back to us when wind is low at a much higher price. Which means two things - that the actual percentage of wind in the danish power mix is in fact rather higher than export statistics indicate, and that the price of this electricity, including storage outside our borders, is much higher than we admit.
ChrisCook:
It also thereby reduces the profits of carbon-fired generators of course which accounts for some of the misleading propaganda.

Proponents of nuclear have no such excuses.

Thomas:
French power exports, which are typically a heck of a lot larger, go to countries that do use coal. Net ecological gain: Large.


Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman
by Migeru (migeru at eurotrib dot com) on Thu Feb 3rd, 2011 at 04:07:16 AM EST
[ Parent ]
You continue to argue from false perspectives, failing to see the whole picture, the context.

Decarbonization, for example, is but one component of the energy picture, which must be analyzed over the entire supply chain and over the entire life cycle.

Further, several key renewable technologies are already mature, or are on the cusp, and wind has been mature for longer than the Danish governments have withdrawn support.

PS. agendas don't wear boots unless they can't stand up on their own merits.


"Life shrinks or expands in proportion to one's courage." - Ana´s Nin

by Crazy Horse on Sun Jan 30th, 2011 at 03:21:35 AM EST
[ Parent ]
Eh? The lifecycle footprint per kwh of nuclear is comparable or lower than that of wind, with the winner depending on the exact details of any given project.
It is much lower than that of solar.

I am quite aware that decarbonizing electricity is not sufficient, but it is nessesary. If we do not have clean electricity, the electric car merely moves pollution from tailpipe to smokestack. If we do not have clean electricity, highspeed rail becomes a carbon hog. If we do not have clean electricity replacing fossile carbon industrial feedstocks with electrochemical processes is pointless, if we do not have clean electricity, cleaning up home heating is not possible. Virtually every single other ecologically friendly policy or technological solution rests on a unspoken base assumption that electricity production is clean, so making this assumption true as rapidly as possible takes priority over everything else. It is also important to keep in mind that while a lot of these policies will dramatically reduce overall energy use, by virtue of being far more efficient than current praxis, since they all amount to substitution of electrons for gas and oil, they greatly increase electricity demand, so our policy must accomodate this.

by Thomas on Sun Jan 30th, 2011 at 04:21:23 AM EST
[ Parent ]
If we believe ExxonMobil to choose nuclear over wind is to choose a more costly technology. I fail to see how that would increase the speed of getting rid of coal and oil.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se
by A swedish kind of death on Wed Feb 2nd, 2011 at 03:05:36 PM EST
[ Parent ]
in 2025.The entire point is that by that date we should be finishing the paintjobs on the last bits of our carbonfree generation capacity, not just commencing construction. Also. not counting backup and storage, which are factors that do absolutely horrible things to both the economic and green credentials of wind. (most wind is backed up by gas. This is not a climate friendly policy)

I must be failing to communicate how very urgent I feel this problem is. I am not advocating that we should maybe build one or two more nukeplants. I am advocating that we should send construction crews to every major coalfired powerstation on the planet, build reactors next to them, (fast, thorium and conventional all, as supply chain allows) appropriating the grid connections and cooling water, and celebrate criticality at each new reactor by blowing the fracking coal station to kingdom come

by Thomas on Wed Feb 2nd, 2011 at 07:28:25 PM EST
[ Parent ]
Thomas:
2025.The entire point is that by that date we should be finishing the paintjobs on the last bits of our carbonfree generation capacity, not just commencing construction.
So we should be commencing construction of the carbon-free generation capacity now. The political reality is that we have a bunch of morons in charge who think a massive investment in carbon-free generating capacity would be inflationary and we cannot have that because we're not in a debt deflation environment.

In addition, the same people will say that because of the economic crisis we can't afford to internalise the costs of fossil fuels.

Whether that is just successful policy capture by vested interests in the fossil fools industry or just economic obduracy by politicians, I cannot say. At the very least it is likely that the idiots in charge are easy prey for the skilled lobbyists of the incumbent fossil fool industry.

I find it extremely unfortunate that nuclear and wind advocates snipe at each other rather than making a common front against coal and gas, which both say at every turn is the real enemy. That's also a political reality.

Keynesianism is intellectually hard, as evidenced by the inability of many trained economists to get it - Paul Krugman

by Migeru (migeru at eurotrib dot com) on Thu Feb 3rd, 2011 at 03:58:47 AM EST
[ Parent ]
One thought which occurred to me recently: if the renewable energy is produced decentralised (i.e. "Bürgerwindparks" in Germany, rooftop Solar PV, etc...) then there should be no extra grid cost at all since not more power is transferred than without renewable. The energy fed decentralised into the grid then merely lessens the power transferred from utility owned centralised big powerplants!

And since power demand has always fluctuated greatly during each day fluctuation should not be an issue. If there is enough energy supply today and demand doesnt rise too much (in Western Europe, say) then all further decentralised renewable energy should cause no extra grid or back up cost at all. It will only cause less use of gas to balance.

Always interesting, Spain's electricity grid operator's website with real time supply and demand curves incl. archive. You can see that gas and hydro practically balance all wind, solar and demand fluctuation!

lazy link

http://www.ree.es/ingles/operacion/curvas_demanda.asp

by crankykarsten (cranky (where?) gmx dot organisation) on Mon Jan 31st, 2011 at 09:39:59 AM EST
[ Parent ]
of course I always mean decentralised renewable energy. Big stuff like offshore wind will need investment in the grid. However, not necessarily in energy supply as there already is enough today.
by crankykarsten (cranky (where?) gmx dot organisation) on Mon Jan 31st, 2011 at 09:41:32 AM EST
[ Parent ]
European Tribune - ExxonMobil says wind is cheapest form of electricity generation
a big 2GW coal plant presumably needs the same capacity available on standby in case there is a production or transmission failure in that plant, yet you never hear the argument about backup costs made about coal-fired power, because the power system has long been designed to cope with such needs.

I think about half of the swedish nuclear power was offline at the same time last year which led to higher prices, imports and some backup plants being used (at least one oil-fired iirc).

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

by A swedish kind of death on Fri Jan 28th, 2011 at 04:03:04 PM EST
Biocoal makes an interesting part of the back-up portfolio if we are taking baseline coal generating capacity offline, since a pile of biocoal is much cleaner than a pile of mineral coal. Its especially interesting if we have significant balancing hydro capacity so that firing up a thermal plant with biocoal can be used as a temporary baseload power supply.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.
by BruceMcF (agila61 at netscape dot net) on Sat Jan 29th, 2011 at 05:30:08 PM EST
It is exported.. primarily to Norway and Sweden, neither of which have any significant amount of carbon emitting generation capacity at all.  Net ecological  gain: Zero. Net economic cost to Denmark of using nordic hydro to loadbalance our wind capacity? Quite large. Danish wind electricity imports are mostly used to conserve waterhead behind dams in Norway and Sweden - this reserve of power is then exported back to us when wind is low at a much higher price. Which means two things - that the actual percentage of wind in the danish power mix is in fact rather higher than export statistics indicate, and that the price of this electricity, including storage outside our borders, is much higher than we admit.

Note that this does not have any bearing on the question of our emissions- those numbers are not affected by these shenanigans at all, because they are a simple result of the megatonnes of coal we burn.
(and let us not discuss Barsebeck. That was an offence against sanity)
French power exports, which are typically a heck of a lot larger, go to countries that do use coal. Net ecological gain: Large.

by Thomas on Sun Jan 30th, 2011 at 01:28:16 AM EST
You are sort of assuming here that there is hydro capacity to spare in those countries. That may or may not be the case, and if it is not then you need to consider what else would be built to replace the wind imports.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jan 30th, 2011 at 12:15:22 PM EST
[ Parent ]
What imports?
The thing to realise is that Denmark uses Nordpool as a virtual pumped hydro scheme - far and away the largest such in the world - large enough to store many days, possibly even weeks of danish wind output. Sweden and Norway have an enormous amount of hydro power, which is highly dispatchable upon demand -what happens is that high winds in Denmark depresses the nordpool spot price, at which point the hydroelectric dams turn down their turbines as far as is compatible with the health of the rivers they sit on, and water accumulates behind the dams. Sooner or later, the wind speed in Denmark drops (or rises beyond the tolerances of the windmills) price goes back up, and the dams run down the reserve of water they accumulated, selling the power back to Denmark which, due to low winds, is suddenly short of power, and make a tidy profit.
This is a vastly superior solution to what people outside Nordpool do to back up their wind (Ie: Gas) but it is not a good use of this resource - The storage capacity of the scandinavian hydro complex could load balance a nuclear fleet powering a rather nice chunk of northern europe instead of 18 % of danish power supply. At 100% penetration nukes need about a third of their output shifted 12 hours or less.* Wind turbines often need 100% of their output shifted days into the future, so a given amount of storage covers a lot more nuclear capacity than it does wind.

*Or alternatively, a way to dump excess nighttime production. In extremis, resistors will do.

by Thomas on Sun Jan 30th, 2011 at 03:43:31 PM EST
[ Parent ]
This, incidentially, is probably why renault has several billion euros invested in electric automotion RnD - Napkin math indicates that the electricity demand from a total switchover to electric veichles,
- assuming nighttime only charging -
would produce a demandcurve for electricity that is very nearly flat, which would make EDF do the dance of joy nonstop for the next decade.

Granted, this is a fairly challenging assumption, but most (french) people drive a heck of a lot less per day than the range on the cars renault is offering, so as long as the economic incentives are there, most people should refrain from topping up charge while at work or similar sillyness.

by Thomas on Sun Jan 30th, 2011 at 03:59:46 PM EST
[ Parent ]
Those figures are for wind development within a single area. In an EU-wide wind buildup with proper grid integration, you will have several uncorrelated wind zones, reducing the volatility.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jan 30th, 2011 at 04:02:46 PM EST
[ Parent ]
Like storage, continentspanning supergrids have applications beyond windpower, some of which are far more economical, and will therefore take precedence.

Gird europe with a network of HVDC lines capable of doing transmission on the scale you envision, and what you have actually done is unbind powergeneration from location, which means that new generation capacity will be built where the production cost is lowest. This could potentially be quite bad if it turns into a game of regulatory arbitarge with the result that we end up getting our power from coalburners in whatever jurisdiction still lets them pollute as much as they like. It could also be quite positive if it results in the utilization of remote hydro /geothermal, and the buildout of nuclear for the export market in places with sane regulatory regimes and existing expertise.

What will not happen is the exclusive use of such a grid for wind. Now, in fact, some wind will be transmitted on such a grid, simply because such a radical delinking of locality and power consumption would get a lot of windfarms constructed at places with optimal prevaling wind speeds (The economics of wind are all about location!) but it would be very unlikely that the penetration of wind into this supergrid would be very much higher than in the present national grids.

by Thomas on Mon Jan 31st, 2011 at 06:56:41 PM EST
[ Parent ]
We have not yet seen where the long-term wind penetration in national grids ends up, so it seems somewhat premature speculate on whether the penetration in a properly integrated European grid is going to end up above or below the average national grid penetration. An integrated grid with demand-side load-balancing makes it possible for wind penetration to go clear up to 100 %, or near enough as makes no matter.

Of course basing your entire grid on wind is unlikely to be efficient, for the same reason that basing your entire grid on any other single mode of generation is unlikely to be efficient. But since a kWh of wind electricity is still cheaper - including load balancing costs - than a kWh of nuclear electricity under present industrial conditions (the fossil fuels are not even within shouting distance when you internalise their externalities), it is unlikely that nuclear power will crowd out wind to any extent that obviates the economic value of an industrial policy for wind energy.

Which is really all that matters at this point in time.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Tue Feb 1st, 2011 at 10:44:14 PM EST
[ Parent ]
To the extent that nordpool does net imports from Denmark, this is a a bad thing: the carbon intensity of danish electricity production being approximately infinitely higher than that of Sweden. Which is missing 1200 megawatts of clean energy generation due to political pressure from the Danish government. I am not bitter about this at all.  
by Thomas on Sun Jan 30th, 2011 at 03:50:09 PM EST
[ Parent ]


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