Offshore Wind Sells Power at €44/MWh

Subtitle:  Wind Industry Will Fly from here on. 

The lowest price, so far, for offshore wind sales may just be the €44/ MWh that was announced this week.  The project, offshore Dunkirk, France, will be 600 MW and employ wind turbines with 12-13 MW capacity each.  Those are the largest at this point in time.   
see link to article describing the project. 

In US currency, that is approximately 5 cents per kWh delivered.   As stated before on SLB, wind has won. 

Future projects will most likely, almost assuredly, use the largest wind turbines available since the economics are overwhelmingly favorable.  They cost less to install per MW, and have better output via higher capacity factors.  Also, there are fewer of the larger turbines, so maintenance costs are lower.  

This is beyond the turning point the industry has long sought:  sales price of 10 cents per kWh.  

From here on, the investments will be heavy into offshore wind.   The prospects for onshore wind are more limited, since a large hurdle is transporting blades to the installation site.  The very large turbine blades for 12 MW wind turbines simply cannot pass under the various bridges.  Of course, the open ocean has no such restrictions.  

It's a good day for the renewable energy industry.  

Sandia National Lab, 50 MW offshore wind turbine concept
Blades are downwind of tower, blades flex in very high winds
to allow continued operation. 

Update: 6-23-19;  The offshore wind turbines are especially attractive in Europe, where the grid operators typically reduce natural gas-fired power plants as the wind power increases.  That is a savings of very expensive LNG that is vaporized to provide fuel to the power plants.  With LNG selling at $8 to $10 per million Btu, the electric customers should (and perhaps will) see a reduction in electric bills. 

The future is very bright for offshore wind in many areas of the world.  Northern Europe, US East Coast, US West Coast, and the East Coast of Asia are all developing wind projects offshore.   

Floating Spar mooring system, artist's concept
for Hywind, Scotland offshore wind farm
credit: Statoil ASA Environmental Statement

The largest turbines are not yet here, as SLB reported earlier, Sandia National Labs has a design for a 50 MW wind turbine, with flexible blades that bend with the strongest winds.   see link to SLB article, and see link to Sandia publication on the Segmented Ultralight Morphing Rotor.  (see photo at right)

The economics of such a wind turbine will be very attractive.   However, there are engineering issues to resolve with a large weight balanced at the top of a long and slender tower.   I suspect the answer will be, at least in part, a tower that is designed to sway in the wind, like a palm tree.

Another very good possibility is to employ the floating spar mooring technology as the Hywind project in Scotland uses.   The floating spars also sway in the strongest winds.  See this link for the SLB article on the Hywind floating spar wind farm.   -- end update

Roger E. Sowell, Esq.

Houston, Texas

copyright (c) 2019 by Roger Sowell - all rights reserved

Topics and general links:

Nuclear Power Plants.......here

Climate Change................here  and here

Fresh Water......................here

Engineering......................here  and here

Free Speech.................... here

Renewable Energy...........here  

Wind Energy Subsidy in Perspective

Subtitle:  Wind Subsidy is Less Than One-Tenth of One Percent

Data from EIA for 2015

The subsidy for wind-turbine projects in the US is somewhat controversial, and has been the topic of a few articles on SLB.  This article takes the actual data for wind-turbine electricity and total electricity in the US in 2015 and puts the subsidy in perspective. 

The usual claim from the anti-wind pundits is that the US spends billions every year to subsidize an industry that is on life-support, and should be cut off from all subsidies.  

The reality is as shown in the pie-chart at the right, the average retail electricity price in the US in 2015 was 12 cents per kWh, and the wind subsidy made up 0.09 cents of that.   In percentage terms, wind subsidy is only 0.75 percent of the electric bill.   That is less than one part in one hundred; it is more like one part in 140.  

But, the US electricity market is huge, so the tiny subsidy actually does amount to approximately $4 billion in 2015.  That comes in the form of a tax credit on the federal tax bill for each of the qualifying wind-turbine owners.   Note that, if the business made no profit, there is no tax credit.  For a profitable enterprise like Berkshire Hathaway, Warren Buffet's company, the tax credits work quite well.  But, if a wind-turbine energy company breaks even or has a loss, they obtain no value from the tax credit.  Therefore, the maximum the government "paid out" would be the $4 billion.  In reality, it was likely less.  Also, tax credits are not a payment from the government to the company, they simply reduce the federal tax bill, so the government receives slightly less in tax revenues. 

Now for the numbers, with almost all data obtained from the US Energy Information Agency, the EIA.  Total wind-energy produced for 2015 was 190,127 GWh. Approximately 90 percent of that was obtained by wind-turbines that are 10 year old or newer.  Those wind-turbines, installed in the previous 10 years, receive the federal tax credit of 23 $/MWh.  On consistent basis, the wind energy was 190,127,000 MWh.   Total tax credits then is $3.9 billion (23 x 190,127,000 x 0.9 divided by 1 billion)

The total US electricity production in 2015 was 4 million GWH (4.087 million to be precise).  The average residential electricity price was 12 cents per kWh.   

However, the situation is far less dire than that shown above.  If everyone's electric bill increased by 0.75 percent, and the bill was $100 per month, the increase would be only 75 cents per month.   But, the money does not flow that way.   The consumer's tax bill does not increase to pay the wind subsidy.  

The federal government borrows money at the margins to pay for spending programs.  Much of the government revenue is from taxes, both personal and corporate, but another substantial part is from issuing debt instruments, or borrowing.  The wind subsidy of only $4 billion per year is borrowed from investors that purchase treasury bonds and other government notes.  The government pays only the interest on those bonds and notes, presently 2 percent per year.   Therefore, the true cost to the government for the wind subsidy is only 2 percent of $4 billion, or approximately $80 million.    In practical terms, the wind subsidy is almost nothing in a federal budget of $3.8 trillion.  

Roger E. Sowell, Esq.
Marina del Rey, California

copyrignt © 2016 by Roger Sowell, all rights reserved

The Truth About Nuclear Power - Part Two

Subtitle: Preposterous Power Pricing if Nuclear Power Proponents Prevail

This is number two in a series of articles on the truth about nuclear power.  A link will be provided to each article as it is published.  

Abstract  

Comanche Peak Nuclear Power Plant, Texas
file photo from NRC

Nuclear power proponents assert that nuclear fission power is the only way forward, for various reasons.  They fear a rise in fossil fuel prices, shortages of fossil fuels, unstoppable global warming from burning fossil fuels, poisoning the atmosphere with fossil fuel combustion products such as sulfur oxides, nitrogen oxides, fine ash and soot, radioactive particles in coal soot, and mercury from burning coal, among other issues.  Their solution, then, is to ban all fossil fuel power plants and install instead nuclear fission power plants.  This article explores the logical result of an electricity grid powered exclusively by nuclear fission power plants as currently designed and constructed.   The end result is power prices that are many times higher than today, for example, residential price will be 5 times what it is today, while industrial power price will be more than 8 times what it is today.   The impact on all aspects of society from such power prices will be economic ruin.  

A modern electric utility grid.  

A utility grid must, by law, have installed capacity in excess of the highest expected demand.  Typically, the excess capacity amounts to a few percent, perhaps 5 percent.   A grid must also, by law, provide power that is safe and reliable.  Finally, a grid must provide power at a reasonable price to the customers.  The reasonable price allows the regulated utility to obtain a modest return on capital that was spent to build the assets that provide the power.  Typically, a utility has three primary asset groups: generation, transmission, and distribution.   A utility also typically has three primary customer groups: residential, commercial, and industrial.   In some states, a fourth requirement is included, that is, to provide power that achieves certain environmental goals.  California has all four requirements: safe, reliable, reasonable cost, and environmental goals. 

Current Power Pricing

Average power prices, per customer group, in December 2013 per EIA were:

11.7 (residential), 
10.0 (commercial), and 
  6.6  (industrial) cents per kWh per the EIA website.

http://www.eia.gov/electricity/data/eia826/xls/sales_revenue.xls

All-Nuclear Grid Power Pricing

The levelized cost of power from a new, two-reactor nuclear fission power plant in the US is 30 cents per kWh, per Craig A. Severance’s 2009 paper, "Business Risks and Costs of New Nuclear Power."   Severance’s costs were published before the Nuclear Regulatory Commission, NRC, added its requirement that all new nuclear power plants must be designed to withstand the impact from a large commercial aircraft.  The areas that must remain in operation during and after such an impact include the reactor, cooling systems, and fuel storage area.   The new NRC requirement will increase the levelized cost to 33 cents per kWh.   

Severance's paper may be found at:

http://energyeconomyonline.com/uploads/Business_Risks_and_Costs_of_New_Nuclear_Power_Reprint_-_Jan_2__2009_Craig_A._Severance.pdf

Severance’s costs were also based on running the nuclear power plants as baseload, at approximately 85 percent of nameplate capacity.  On an all-nuclear grid, however, the power plants must cycle up and down to meet the changing load.  There will be substantial capital investment to enable a nuclear power plant to change output quickly and follow the load.  One way to achieve load-following ability is to let the reactor and steam generator run at full capacity, but bypass some of the steam around the turbine to be cooled and condensed in the condenser.  However, a larger condenser, cooling pumps, and cooling tower must be built to achieve this.  Also, steam bypass lines, control valves, and a control system must be installed.    An additional 4 cents per kWh is added to the 33 cents previously computed to account for load-following ability, for a total of 37 cents per kWh.  

Next, generating plants on a grid do not run at 85 percent of capacity on average.  The average rate for power plants on a grid is approximately 60 percent.   Therefore, the 37 cents must be adjusted by multiplying by 85/60, yielding 52.4 cents per kWh.  

The final cost of electricity for the all-nuclear grid is then found by replacing the current cost of generation, approximately 5 cents per kWh, with 52.4 cents, then adding back in the costs of transmission and distribution.  

For each category of customer, the result is:

Residential  All-Nuclear price:  11.7 – 5 + 52.4 = 59.1 cents per kWh
Commercial All-Nuclear price:  10.0 – 5 + 52.4 = 57.4 cents per kWh
Industrial   All-Nuclear  price:    6.6  – 5 + 52.4 = 54.0 cents per kWh.

The ratio of prices for an all-nuclear grid compared to today is then:

Residential   59.1 / 11.7 = 5.1
Commercial  57.4 / 10.0 = 5.7
Industrial      54.0 / 6.6  =  8.2

Implications

The implications for such power price increases are staggering.  Consider a typical residential customer in the summer, with an electric bill of $180 for July (EIA data on monthly power).  The all-nuclear grid would increase his bill by a factor of 5, to $900 per month.   The poor, elderly and others on fixed incomes, and those who just barely manage from month to month would find such a power bill impossible to pay.   It gets worse.  

Commercial customers would find their bill increased by a factor of 5.7, and to remain in business, must increase their prices for goods and services sold.  This, in turn, increases the retail prices for everyone who is a consumer.   It gets worse. 

Industrial customers would find their bill increased by a factor of 8.2, and they must also increase their sales prices for their products.  Yet another layer of price increases will occur at the distributor and retail level.  The final customer would find prices even higher, with their paycheck seeming smaller by comparison.  

It is simply wrong to increase electric power prices that force low-income or fixed-income groups to choose between paying the electric bill and buying food, or paying the rent, or obtaining medical care.   An all-nuclear grid would force those groups to do exactly that.  

In addition, an all-nuclear grid would make the state, or even the entire nation, significantly less competitive in a world market.  Jobs would therefore be lost to competition overseas.  

Criticism 

No doubt, there will be those who find fault with the above analysis.  It will be improbable or impossible, they might say, for nuclear power plants to ever produce 100 percent of the power on a grid in the US.  They may be right, too.  There are, for example, many hydroelectric generating plants and it is unlikely that they will be eliminated any time soon.  

They might also argue that there are also some forms of renewable energy already on the grid and those will likely increase in output, not decrease.   That may be true, but the intermittent forms, solar and wind, require some backup system to produce power when the sun is not shining and the wind is not blowing.  To the extent that intermittent renewables are on the grid, the nuclear power price must increase because the capital costs to build nuclear plants must be captured by a smaller quantity of electricity generated by the nuclear plants.   If, for example, the entire US followed the example of California and requires 33 percent of all power sold to be from renewables, one can easily compute the impact on power prices.  Note that, in California, some renewable energy is fairly constant, those being geothermal, small hydroelectric, and gas from biological sources.  Not all states will have resources to produce geothermal and small hydroelectric power, though.  

Therefore, if wind and solar are the renewable energy sources, and 33 percent is the production from them, the nuclear plants must reduce their ouput from the 60 percent used above, to approximately 30 percent.  That, in effect, doubles the prices computed above for each customer category: 112, 110, and 106 cents per kWh for residential, commercial, and industrial.  

Conclusion

These facts, alone, are sufficient to justify never building another nuclear power plant in the US.   An all-nuclear grid would increase electric prices by 5 to 8 times current prices.  If substantial renewables are included in the generation mix, prices would increase by 10 to 16 times.   Economic ruin would result for any state, or the entire nation, if such a policy were adopted. 

The Truth About Nuclear Power series may be found at the following links:

Part One -- Nuclear Power Plants Cannot Compete 
Part Two -- this article
Part Three -- Nuclear Plants Cost Far Too Much to Construct
Part Four --  Nuclear Plants Use Far More Fresh Water
Part Five --  Cannot Simply Turn Off a Nuclear Power Plant

Part Six –  Nuclear Plants are Huge to Reduce Costs

Part Seven -- All Nuclear Grid Will Sell Less Power

Part Eight – No Benefits from Smaller Modular Nuclear Plants

Part Nine -- Nuclear Plants Require Long Construction Schedules

Part Ten -- Nuclear Plants Require Costly Upgrades After 20 to 30 Years

Part Eleven - Following France in Nuclear Is Not The Way To Go

Part Twelve - Nuclear Plants Cannot Provide Cheap Power on Small Islands

Part Thirteen - Nuclear Plants Are Heavily Subsidized
Part Fourteen - A Few More Reasons Nuclear Cannot Compete
Part Fifteen - Nuclear Safety Compromised by Bending the Rules
Part Sixteen - Near Misses on Meltdowns Occur Every 3 Weeks
Part Seventeen - Storing Spent Fuel is Hazardous for Short or Long Term
Part Eighteen - Reprocessing Spent Fuel Is Not Safe
Part Nineteen - Nuclear Radiation Injures People and Other Living Things
Part Twenty - Chernobyl Meltdown and Explosion
Part Twenty One - Three Mile Island Unit 2 Meltdown 1979
Part Twenty Two - Fukushima The Disaster That Could Not Happen
Part Twenty Three - San Onofre Shutdown Saga
Part Twenty Four - St. Lucie Ominous Tube Wear

Part Twenty Five - Price-Anderson Act Protects Nuclear Plants Too Much

Part Twenty Six - Evacuation Plans Required at Nuclear Plants

Part Twenty Seven - Power From Nuclear Fusion
Part Twenty Eight - Thorium MSR No Better Than Uranium Process
Part Twenty Nine - High Temperature Gas Reactor Still A Dream
Part Thirty - Conclusion

Roger E. Sowell, Esq.
Marina del Rey, California