Wednesday, July 16, 2008

Wind Power: What's T. Boone's Stake?

I heard a commercial on the radio a couple days ago. Oilman T. Boone Pickens has a Trillion dollar proposal to build wind farms. That’s trillion with a “T”

Building wind facilities in the corridor that stretches from the Texas panhandle to North Dakota could produce 20% of the electricity for the United States at a cost of $1 trillion. It would take another $200 billion to build the capacity to transmit that energy to cities and towns. -pickens plan


What does T. Boone get out of this? And how much of his own money is he willing to put where is mouth is? Interestingly enough, 2 - 10 Billion dollars.

T. Boone Pickens made his fortune in oil. But now the Dallas oilman and famed former corporate raider is betting $2 billion that he can have the same success with a new source of energy - wind. Pickens’ Mesa Power LLP …(May 15th, 2008)… unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm.
…Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy, the overall project is expected to cost $10 billion and be completed in 2014.


4,000,000,000 watts of energy at a cost of $10,000,000,000 figures out to $2.50/Watt* of energy.

I don’t know about you, but currently, I buy my electric power at closer to $0.13/ kilo watt hour. Or $.00013/watt. So, at a little over nineteen thousand times the cost (and I don’t believe that figure includes the cost of transmission infrastructure to deliver the power where it is needed) how cost effective could it be?

So, it's expensive, but will it work? E.ON Netz GmbH, the largest grid operator in Germany, reports in its Wind Report 2005, that:

"Wind energy cannot replace conventional power stations to any significant extent...The more wind power capacity [on] the grid, the lower the percentage of traditional generation it can replace."


Say what?? Factor in that the wind doesn’t blow 24/7, you don’t have batteries powerful enough to store that much power for when the wind goes off line, you need to have conventional power generation to pick up the slack. How much? Again, according to E.ON Netz’s 2005 Report:

In 2004, Germany was once again the global world leader in the production of wind power. At the end of 2004, wind energy plants with an installed capacity of 16,400MW supplied the German electricity grids. The greatest proportion of this capacity, 7,050MW, was connected in the E.ON control area. E.ON Netz, the transmission system operator of the E.ON Group, consequently makes a key contribution towards the technically and commercial optimum integration of wind power into the electricity supply systems.

Wind energy is only able to replace traditional power stations to a limited extent. Their dependence on the prevailing wind conditions means that wind power has a limited
load factor even when technically available. It is not possible to guarantee its use for the continual cover of electricity consumption. Consequently, traditional power stations with capacities equal to 90% of the installed wind power capacity must be permanently online in order to guarantee power supply at all times.
(Pdf available for download)

So, one of the global leaders in wind power says you have to keep” traditional power stations with capacities equal to 90% of the installed wind power capacity must be permanently online in order to "guarantee power supply at all times".
At what cost??? And how much pollution does this really remove, if you have to keep 90% of your convention capacity online to guarantee power at all times?

At $2.50 a watt, I suspect massive government subsidies either directly or through tax breaks to make this turkey fly. The fact that T. Boone Pickens is willing to venture 2-10 Billion dollars, makes me wonder just what kind of tax breaks and subsidies sit behind the curtain of Oilman T. Boone Pickens’ windy plan?

Correction: What I should have said was $2.50 to deliver the first watt of electricity. After that, what the true cost over the lifetime will be, will be largely dictated by how much the wind blows, how hard the wind blows, how much down time for weather and maintenance and maintenance costs.

Cross Posted at Say Anything

3 comments:

  1. Your math is mistaken because it isn't incorporating a time factor. A watt is current multiplied by voltage at an instant in time. That's why your electric bill is expressed in kilowatt-hours; you have to include a time factor before you can assess a quantity of power consumed. When you run a load of 1000W for one hour, you get billed $0.10 (or whatever) for the privilege. If you are only using 500W during an hour's time, you get billed $0.05. And so forth. The same thing applies on the generation side.

    Wind farms are typically designed and built on the (reasonable) assumption that the equipment can run for 25 years before requiring replacement or major service. Assuming the windfarm owner can sell bulk power to the nearest transmission utility at $0.03/kW-h, the maximum amount of revenue that 4000MW of installed capacity can generate in the expected liftime is about $26.3Bn, or more than 2.5x the proposed $10Bn investment.

    The windfarm would have to be averaging well below half of its peak capacity over that lifetime before the final costs including ongoing operating expenses would endanger the investment, which is unlikely in the Texas to North Dakota corridor -- the area has good wind patterns and is already a hotbed of investment totalling into the billions of dollars for major wind developers including FPLE, Babcock & Brown, Vestas, and a number of smaller players.

    Pickens may or may not be off his rocker in general, but his business instincts here are working just fine. You CAN run a wind farm quite profitably as long as you pick a site with good wind patterns.

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  2. You're right! WHat I should have said was $2.50 to deliver the first watt of electricity. After that, what the true cost over the lifetime will be, will be largely dictated by how much the wind blows, how hard the wind blows, how much down time for weather and maintenance and maintenance costs.

    BTW, I'd question your "run for 25 years before requiring replacement". That seems like a pretty rosy scenario for anything that has moving parts!

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  3. "BTW, I'd question your "run for 25 years before requiring replacement". Yeah, how well do these wind farm turbines stand up to tornado alley, anyway? Having lived through an F4/F5 tornado in Xenia ohio in 1974, I give them one full tornado season max. Furthermore, when someone shows me a wind powered car or hospital, only then will I take this crap seriously.

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