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Why wind power is cutting costs

by Jerome a Paris Fri Sep 9th, 2011 at 07:49:30 AM EST

Amongst all the macro-economic and geo-political gloom, here's a tidbit of good news, coming from Australia but confirming in a detailed what we've already known:

Why wind is cutting energy costs

The most common critique of wind energy, and renewables in general, in the mainstream media and anywhere the issue is discussed is that it is expensive.

The problem is, this is only half true. Or at least, it only tells half the story. While the levelised cost of energy from wind farms is higher than that of baseload coal and gas, the deployment of wind energy here and overseas is having a surprising impact on energy market prices: it is causing them to fall.

And itís not the only myth that a new analysis of the South Australian market has busted: wind is succeeding in displacing coal, it is also having a dramatic impact on the stateís energy emissions, and it doesnít need anywhere near as much back-up generation as some like to claim.

Additionally, the study notes that wind displaces coal rather than gas, and that as wind increased its penetration, the need for gas peakers actually declined (in the comments to the article, the author further notes that imports from the neighboring state also declined).

In other words, the "subsidy" given to wind producers is paid by coal producers in the form of lower production and lower prices for their production, and part of it goes directly to consumers. Which is exactly as it should be - reducing a noxious activity while having widespread benefits. But it's also no surprise that the incumbents, and in particular the coal players, hate wind.


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Why wind is cutting energy costs | Climate Spectator

But don't wind farms need massive amounts of back-up power from expensive and comparatively heavy-emitting open cycle gas turbine (OCGT) plants, also known as peakers?

Not in the case of SA. Windlab says 200MW of OCGT has been added to the state's grid over the last five years, compared to 763MW of wind, but much of that new peaking capacity is designed to cope with rising peak demand - driven by the increased use of air conditioners - which has risen by 370MW, or 23 per cent, over that period.

And here's another surprising statistic: the amount of electricity produced from peaking plants has actually fallen in the past five years, from 501GWh to 325GWh, despite the increased capacity and the rising peak demand. Not only has wind reduced imports of brown-coal generation from Victoria, it has also, counter-intuitively, reduced the need for peaking plants for much of the year - although not, it should be noted, at times of the highest peaks caused by extreme heat waves, when wind has mostly absented itself.

Wind has not needed anything near like-for-like backup, as some of the more absurd analyses from the anti-wind brigade pretend. Indeed, some of the peaking plants last year were used less than 1 per cent of the time - little changed from before wind's arrival.

Emphasis mine.

by afew (afew(a in a circle)eurotrib_dot_com) on Fri Sep 9th, 2011 at 08:17:43 AM EST

Eolien offshore: le recours de la FED évoque la concurrence

La Fédération environnement durable (FED) a déposé un recours gracieux pour attaquer l'appel d'offre* portant sur des installations éoliennes de production d'électricité en mer en France métropolitaine (éolien offshore). D'autres organismes, les pêcheurs du Tréport, les riverains, plusieurs associations de riverains (Noirmoutier, La Baule, Saint Brieuc, Arromanches - Association Port Winston Churchill, Veulettes-Fécamp, Le Tréport) ainsi que le maire du Tréport se sont associé à ce recours.

Il a été déposé le 5 septembre auprès des ministres de l'Ecologie et de l'Economie avec copie au ministre de la Pêche. Les juristes de la FED "ont décelé un certain nombre d'irrégularités" dans ce cahier des charges.

Le recours, précise la FED, ne concerne pas la seule "pollution visuelle". S'il s'agit effectivement d'un "élément d'opposition au projet, elle est très loin d'être la seule cause des opposants aux éoliennes". D'autres motifs sont invoqués: la pollution marine et la mise en concurrence. "Notre recours pose la question du délai de 6 mois, imparti pour répondre à l'appel d'offres, indique Hervé Texier. On voit bien que 6 mois, pour des sociétés qui ne sont pas au fait de l'éolien marin, c'est trop court. Il leur sera impossible de déposer un dossier sérieux. Ca s'adresse à des grands groupes et ça pose un problème de concurrence".

Dans ses griefs, la FED évoque également l'impact sur les tarifs de l'éolien offshore. "Le coût de l'électricité en mer est 5 fois supérieur à celui de l'électricité produite actuellement par les électriciens. La charge différentielle est financée par un dispositif totalement dérogatoire du droit commun qui fait payer le contribuable et le consommateur pour le fonctionnement d'une activité structurellement déficitaire". Pour la FED, ce dispositif, c'est-à-dire la CSPE, est "en soi inacceptable socialement et économiquement une tromperie".
Le recours ferait également état de "pollutions marines (...) largement sous-évaluées", mais aussi de "risques de sécurité maritime".

Enfin, la FED met en avant des annonces d'emplois "souvent fictives et orientées sur la mise en place d'un dispositif fiscal et réglementaire favorable qui permet des profits faciles et à court terme en laissant à la charge de la collectivité les pertes à venir" tout en stigmatisant l'appel d'offres "conçu pour favoriser l'obscurité de ce dispositif et les intérêts de ses bénéficiaires. Le mensonge des effets d'annonces se démontre facilement: on parle d'un projet de 3.000 MW qu'on compare à deux grosses centrales nucléaires : en fait, les installations n'ayant un rendement que de 25 % (à cause du vent), le projet ne pourra au mieux produire que l'équivalent d'une demi-centrale... et encore de façon aléatoire", estime l'association.

The comments section is quite scathing.

Wind power

by Jerome a Paris (etg@eurotrib.com) on Fri Sep 9th, 2011 at 08:46:35 AM EST
The way they go on about visual pollution from Wind turbines you'd think nuke plants are the freakin' Taj Mahal in their awesomeness.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Fri Sep 9th, 2011 at 09:42:10 AM EST
[ Parent ]
But you have thousands of turbines and only a few nukes. The visual pollution argument is largely irrational but it is not simple to dismiss (the 'it causes house prices to fall' argument is easier to dismiss).

Wind power
by Jerome a Paris (etg@eurotrib.com) on Fri Sep 9th, 2011 at 12:07:19 PM EST
[ Parent ]
I am waiting to see "wind is deflationary" arguments from the fossil fuel industry.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 9th, 2011 at 08:47:23 AM EST
The South Autralian example is another one of many examples of wind dropping electricity prices when it gets added to a marginal pricing system, and starts paring down those extraordinary profits that can come about when different priced fuels are used to make electricity in those pricing systems. But I bet that even if a large compendium of well documented examples was put forth, the Fossil Fuel (and in some case, the owners of nukes) spokespersons would act like Texas Governor Rick Perry when he was asked by a 10 year kid about dinosaurs (an answer would conflict with Bible Belt propaganda, so he stuffed his mouth with food and claimed he could not anwser because he did not want to be rude and talk with his mouth full of food). Ah, that Perry, what a peach! Or perhaps corndog would be a better food analogy....

Anyway, here is a link to a study on the Western New York State electricity market arrangement in 2010. Electricity consumers were saved about $31 million for 2010, in a region of about 1.5 million people. Oh well, better than nothing. Consider adding this to the compendium...
http://wagengineering.blogspot.com/2011/06/merit-order-effect-in-wny_06.html

And then we will have to figure out how to deal with the "sorry, can't answer, mouth full of food" type of dodges. My suggestion is a toilet bowl plunger applied in a forcefull manner to the "stuffed full of food  so he can't talk" mouth of the fact-free PR-type dude or dudette, or whichever category Gov. Goodhair falls into, for starts.

Nb41

by nb41 on Fri Sep 9th, 2011 at 09:32:36 AM EST

Peak Oil, Peak Debt, and the Concentration of Power

Both the energy system and the money system are based on accumulation and the concentration of power. Not only our energy infrastructure, but our dominant yet invisible way of thinking about energy, presupposes a centralized system of distribution based on a highly concentrated energy source. Many alternative energy technologies have made little headway, not because they are technologically unfeasible, but because they don't fit into our present physical, financial, and psychological infrastructure.

There is a causal as well as a metaphorical parallel between the concentration of power in oil and in money. A concentrated power source that can be stored allows social and political power to concentrate in the hands of those who control it. It generates very different social dynamics from an energy source that is universally distributed and constantly renewed. For one thing, the profit potential of the latter is intrinsically less. Once you have sold the geothermal pump or the PV array, the buyer is self-sufficient, unlike the electrical power consumer who has to pay the metered rate in perpetuity. Energy dependency and economic dependency are closely linked.

A similar pattern holds in other fields as well. In medicine, for instance, the universal, endogenous medical knowledge of several centuries ago that employed common weeds as medicine has given way to a system in which both knowledge and pharmaceutical medicines have been purified, abstracted, and concentrated in an exclusive domain. There is little profit potential in dandelion or burdock, nor did the village herbalist or country doctor of yesteryear make much money. We might apply the same analysis to the migration of legal power from informal community-based mechanisms of dispute resolution to the centralized, codified, and therefore in a sense concentrated mechanisms of the law. So also for education, entertainment, and news.

(...)

It is not too difficult to build houses that require almost no external power source for heating and cooling. By using construction materials of large thermal mass, geothermal wells, and passive solar principles, a house could, with sufficient PV (photo voltaic) power, be comfortably independent of the energy grid. Why aren't they being built this way?

One reason is certainly the habits and culture of the building industry, but the main reasons are financial. (1) For starters, future energy savings are generally not fully capitalized in a real estate value appraisal. (2) But even if they were, our interest-based system, with discounting of future cash flows, only motivates the initial investment if it generates savings above the rate of interest. (3) Finally, the existing energy system enjoys a high level of hidden subsidy due to the externalization of its environmental and social costs.

The first point is easy to explain: assuming a 2.5% interest rate, the net present value (NPV) of $1,000 in annual electricity savings is $40,000. Rarely, however, does that modest level of energy efficiency contribute nearly that much to a house's value.

As for the second point, what is more economically rational: to buy a house for $200,000 and pay $2,000 a year for power, or to buy a house for $300,000 and pay $200 a year for power? Assuming your mortgage loan is at 5% interest, it is much more rational to pay $2,000 a year for power, forever and ever. Even if you don't need to borrow, you can earn more than 2% interest on that extra $100,000.

Thirdly, the price of gasoline, oil, electrical power is artificially cheap. The costs of pollution, war, oil spills, nuclear accidents, and so forth are not reflected in the price of a gallon of gasoline or a KWH of electricity. They are offloaded onto society and future generations. For example, because the government will have to pay the costs of any truly catastrophic oil spill or nuclear accident, the companies are operating with free insurance. It is no coincidence that massive risks accompany centralized energy installations. Big Energy comes with big risks, as well as the political power to socialize the costs of those risks. People complain that solar and wind power are only competitive because of subsidies, but conventional energy enjoys far greater subsidies.

These subsidies are not the result of mere political influence. They are built into our money system. Unless and until we have a money system that forces the internalization of costs and eliminates the discounting of future cash flows, Big Energy will always enjoy an advantage. That advantage can be mitigated through moral suasion and various kinds of subsidies, but wouldn't it be better to align the money system with the kind of energy system we would like to see, and indeed the kind of planet we would like to see, so that goodness and profit need not be opposed?

We used to have invented a reasonable countervailing force that allowed us to take externalities into account and take the long view: big government. But there's been a rather big pushback by money interests lately...

Wind power

by Jerome a Paris (etg@eurotrib.com) on Sat Sep 10th, 2011 at 08:29:03 AM EST
by Jerome a Paris (etg@eurotrib.com) on Sat Sep 10th, 2011 at 08:30:58 AM EST


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