https://arstechnica.com/science/2019/08/wind-power-prices-now-lower-than-the-cost-of-natural-gas/
[This is another major economic breakthrough point in the U.S., likely
mirrored elsewhere depending on precisely on how governments are tilting
the playing field. Note, this is increasingly unsubsidized new build
wind power vs. already built and subsidized natural gas. Seems like a
good time to eliminate fossil fuel subsidies for natural gas as the G20
nations committed to over 10 years ago. That would be a real incentive
to leave the natural gas in the ground. This does not include putting a
value on the damage caused by fracking to groundwater, pipeline leaks,
fugitive emissions driving climate change (GWP10 value for natural gas /
methane is 130 - 130 times more potent than carbon dioxide emissions).
Kind of makes you wonder if you want to invest your money in building
major new natural gas fields and pipelines. Presumably wind and solar
with energy storage is going to eat the lunch of natural gas in the next
few years, as it already has for coal and nuclear.
As energy storage prices continue to fall as well, curtailment will
likely become a thing of the past, further increasing the financial
returns from solar and wind generation.
images and links in online article]
Wind power prices now lower than the cost of natural gas
In the US, it's cheaper to build and operate wind farms than buy fossil
fuels.
John Timmer - 8/17/2019, 8:45 AM
This week, the US Department of Energy released a report that looks back
on the state of wind power in the US by running the numbers on 2018. The
analysis shows that wind hardware prices are dropping, even as new
turbine designs are increasing the typical power generated by each
turbine. As a result, recent wind farms have gotten so cheap that you
can build and operate them for less than the expected cost of buying
fuel for an equivalent natural gas plant.
Wind is even cheaper at the moment because of a tax credit given to
renewable energy generation. But that credit is in the process of fading
out, leading to long term uncertainty in a power market where demand is
generally stable or dropping.
A lot of GigaWatts
2018 saw about 7.6 GigaWatts of new wind capacity added to the grid,
accounting for just over 20 percent of the US' capacity additions. This
puts it in third place behind natural gas and solar power. That's less
impressive than it might sound, however, given that things like coal and
nuclear are essentially at a standstill. Because the best winds aren't
evenly distributed in the US, there are areas, like parts of the Great
Plains, where wind installations were more than half of the new power
capacity installed.
Overall, that brings the US' installed capacity up to nearly 100GW. That
leaves only China ahead of the US, although the gap is substantial with
China having more than double the US' installed capacity. It still
leaves wind supplying only 6.5 percent of the US' total electricity in
2018, though, which places it behind a dozen other countries. Four of
them—Denmark, Germany, Ireland, and Portugal—get over 20 percent of
their total electric needs supplied by wind, with Denmark at over 40
percent.
That figure is notable, as having over 30 percent of your power supplied
by an intermittent source is a challenge for many existing grids. But
there are a number of states that have now cleared the 30 percent
threshold: Kansas, Iowa, and Oklahoma, with the two Dakotas not far
behind. The Southwest Power Pool, which serves two of those states plus
wind giant Texas, is currently getting a quarter of its electricity from
wind. (Texas leads the US with 25GW of installed wind capacity.)
So while wind remains a small factor in the total electricity market in
the US, there are parts of the country where it's a major factor in the
generating mix. And, given the prices, those parts are likely to expand.
Plummeting prices
In the US, the prices for wind power had risen up until 2009, when power
purchase agreements for wind-generated electricity peaked at about $70
per MegaWatt-hour. Since then, there's been a very steady decline, and
2018 saw the national average fall below $20/MW-hr for the first time.
Again, there's regional variation with the Great Plains seeing the
lowest prices, in some cases reaching the mid-teens.
That puts wind in an incredibly competitive position. The report uses an
estimate of future natural gas prices that show an extremely gradual
rise of about $10/MW-hr out to 2050. But natural gas—on its own, without
considering the cost of a plant to burn it for electricity—is already
over $20/MW-hr. That means wind sited in the center of the US is already
cheaper than fueling a natural gas plant, and wind sited elsewhere is
roughly equal.
The report notes that photovoltaics have reached prices that are roughly
equivalent to wind, but those got there from a starting point of about
$150/MW-hr in 2009. Thus, unless natural gas prices reverse the expected
trend and get cheaper, wind and solar will remain the cheapest sources
of new electricity in the US.
The levelized cost of electricity, which eliminates the impact of
incentives and subsidies on the final prices, places wind below
$40/MW-hr in 2018. The cheapest form of natural gas generation was
roughly $10 more per MegaWatt-hour. Note that, as recently as 2015, the
US' Energy Information Agency was predicting that wind's levelized cost
in 2020 would be $74/MW-hr.
Built on better tech
Why has wind gotten much cheaper than expected? Part of it is in
improved technology. The report notes that in 2008, there were no
turbines installed in the US with rotors above 100 meters in diameter.
In 2018, 99 percent of them were over 100m, and the average size was
116m. In general, the turbine's generator grew in parallel. The average
capacity for 2018 installs was 2.4MW, which is up five percent from the
year previous.
The area swept by the blades goes up with the square of their length.
Thus, even though blade length and rated generating capacity are going
up in parallel, the actual potential energy input from the blades is
growing much faster. This has the effect of lowering what's called the
specific power of the wind turbine. These lower specific power turbines
work better in areas where the wind isn't as strong or consistent. On
the truly windy days, they'll saturate the ability of the generator to
extract power, while on a more typical day when the winds are lighter or
erratic, they'll get more out of them.
So even though more turbines are being built at sites without the best
wind resources, we're generating more power per turbine. The capacity
factor—the amount of power generated relative to the size of the
generator—for projects built in the previous four years has now hit 42
percent, a figure that would once have required offshore wind. That's
dragged the capacity factor of the entire US wind industry up to over 35
percent for the first time last year.
The economics of these low-wind designs are so good that 23 existing
sites were "repowered," with new, larger rotors replacing older hardware
on existing towers. One thing that may be encouraging this is that older
plants (those a decade old or more) seem to see a small dip in capacity
factor over time. But the reason for this isn't clear at this point, so
it's something that will have to be tracked in the future.
Better grid management also helped the economics of wind. At times,
strong winds can cause wind farms to produce an excess of power relative
to demand, causing a farm's output to be reduced. This process, called
curtailment, remained a small factor, with only two percent of the
potential generation lost this way. Put differently, if the curtailed
electricity had been used, it would have only raised the average
capacity factor by 0.7 percentage points.
Overall, given these economics, it's clear that the economic case for
wind energy will remain solid as the tax credits for the construction of
renewable energy fade out over the next few years. But the vanishing
credits are causing lots of developers to start projects sooner rather
than later, so we may see a bubble in construction for the next couple
of years, followed by a dramatic drop off.
--
Darryl McMahon
Freelance Project Manager (sustainable systems)
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