The true cost of wind power

There was an article in the Telegraph yesterday about the True cost of Britain’s wind-farm industry. The article highlighted government figures showing that the wind farm industry received £1.2 billion in subsidies last year and employed 12000 people, hence it was costing £100000 per person.

I must admit that I don’t really understand these numbers, so maybe this analysis has merit. It does, however, seem a little simplistic and this clearly is not all the money associated with the wind farm industry. It is simply the subsidy that they get. Presumably, this is mainly to reduce the cost to the consumer, rather than to produce more jobs in the industry. Furthermore, this Guardian article suggests that wind power still gets less in the way of subsidies than fossil fuels. This appears to be the totals, rather than relative amounts, but it still seems reasonable that we really should be doing some kind of comparison, rather than simply saying “look how much money they get”. Providing energy is expensive, so it’s no great surprise that the amounts involved are high.

Anyway, something that I’ve always thought is that it’s important to do a proper comparison of the actual total costs of the different energy generating mechanisms. So a quick search produces a Wikipedia page on the cost of electricity by source. A lot of the information seems to be based on this report. It calculates the Levelized Energy Cost (LEC) for the different energy sources. This is simply the total cost (initial cost, running costs, maintenance) divided by the total amount of energy generated.

The table below is from the report above and indicates the LEC for the different sources. Many seem to have LEC’s of around 100. Offshore wind appears particularly expensive at the moment. It’s also clear that the capacity factor (what fraction of the time the source is able to generate usable energy) is lower for the renewable sources than for the non-renewables.

Levelized Energy Cost for different energy sources.

Levelized Energy Cost for different energy sources.

I don’t really know what to make of the whole subsidy issue, but essentially it seems that the total cost (LEC) of many renewable energy sources compares well with that of non-renewables. It also seems to me that one should also consider where these costs go. Spending a little more on something that is manufactured locally and maintained locally may be preferable to spending a little less on something where much of the cost is importing the fuel (for example). Again, I’m not particularly well-informed about these issues, so if others are more informed (not difficult) I’d be happy to learn more through the comments.

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12 Responses to The true cost of wind power

  1. And in case of renewable energy, I would even argue that it is not fair to look at the costs per Watthour. The reason for the subsidies is to build up a large enough market to get businesses interested, to speed up innovation, improve the future business opportunities and exports and thus to reduce future costs. It is more comparable investing in science. Except that scientists are typically more interested in understanding the fundamentals as in getting the price down.

    Also other energy sources, especially nuclear, were subsidized to get them on the market.

  2. Indeed, I would agree. There also seems to be another subtlety. Presumably a lot of the costs associated with many renewable sources have to be upfront costs (i.e., there’s no fuel, so the running costs are presumably lower than for fossil fuel sources). Hence, if the total cost per Watthour is similar, the distribution of these costs must be different. How you support and incentivise such an industry may then differ depending on the energy source and how the costs are distributed with time.

  3. Wind and solar also produce more local, well-paying jobs.

    Another issue is that costs are rising for fossil fuels, while costs are falling for renewables.

  4. Indeed. I looked at EROIs (Energy Return on Investment) recently and it seems clear that renewables are rising (the big wind turbines are now returning 40 times as much energy as it takes to make them) while fossil fuels are – as you say – dropping.

  5. Martin Lack says:

    This article in the Telegraph is just part of a highly-orchestrated campaign to discredit renewable power generation. As is evidenced by similar campaigns ongoing in numerous places around the World. Nevertheless, on a finite planet with finite resources, it remains highly probable that fossil fuels will become increasingly expensive as demand grows and supply falls, whereas renewable sources will become cheaper as the technology improves and the scale of production increases. Even if anthropogenic climate disruption (ACD) were not happening, this would be a logical basis for deciding to move on from the 19th Century technology that is fossil fuel.

    However, given that ACD is a reality, the fossil fuel companies ought to be investing in renewable energy themselves in order to ensure their long-term survival. Unfortunately, their share prices are over-inflated on the basis of the catastrophically short-sighted assumption that all the Earth’s recoverable fossil fuels will eventually be found and burnt. In the meantime, the only really relevant statistic is that governments all around the World are spending six times more money on fossil fuel subsidies than they are spending on renewable energy investment.

  6. Interesting link, thanks. It certainly seems as though we’re regularly told about the large costs of renewables without also being told that the cost of fossil fuels is at least as big if not bigger. As robertscribbler pointed out above, an additional advantage of renewables is the creation of more local, well-paying jobs.

  7. Martin Lack says:

    With all due respect to Robert, how many jobs is that per hectare? Also, how many are actually local? Most jobs are created wherever the hardware is manufactured or have very large territories (turbines are not like old fashioned lighthouses with a resident engineer). In this context, wind turbines are better than Solar PV because, whereas the turbines are likely to be made somewhere in the UK, solar panels are likely to be made in Germany or China.

  8. Yes, that is a valid point. I had wondered about the whole issue of where they are manufactured and why we don’t put more effort into making sure as much as possible is truly local. I guess, as well, that the manpower associated with renewables is likely to be dominated by manufacture and installation rather than by running them and by maintenance.

  9. acckkii says:

    Reblogged this on acckkii.

  10. Pingback: Another Week of GW News, June 23, 2013 – A Few Things Ill Considered

  11. Chick says:

    The costs of wind and solar are actually understated here. Since these plants do not produce power when the sun doesn’t shine and the wind doesn’t blow, it is necessary to build a conventional plant to back them up. That cost has not been included. These plants are also causing havoc on the grid. Whenever a gust of wind blows or the sun comes out from behind a cloud these plants send a surge into the grid. This creates instability that can actually cause a system outage. A lot of extra money is being spent on grid stabilization and that is also not included in these costs. All of this renewable energy sounds sexy and since it buys a lot of votes, it has been hyped way beyond reality. It is not now nor will it likely ever become economical. In the mean time, the poor are being slammed by rate increases. If all of you believe so much in wind and solar, do your part an pay the real extra cost in your own electric bill.

  12. To be fair, I don’t know enough about the impact of a variable energy source on the grid. I believe that the concerns are overstated, but I don’t have evidence for that, so maybe you have a point. What I will say though is that there is substantial evidence to suggest that rate increase are not a consequence of the costs of renewables, but are due to rises in the cost of natural gas. There is also a recent report suggesting that if the UK government were to focus on renewables now, it would reduce energy by £600 per year by 2020 compared to what they will be if we continue to rely on fossil fuels.

    Given that we will one day run out of fossil fuels (unless I’m mistaken) it seems highly unlikely that renewables will never be economical.

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