Electricity Blowing on the Wind

Econintersect:  A dependable source for a significant portion of the electrical power needs of the U.S. is literally blowing on the wind.  The use of wind turbines to produce much more than the 4% of electricity that they do today is something that proponents say is doable.

The use of wind turbines is also blowing on the wind figuratively.  Many interest groups are contesting the idea, some of them on the basis of local interests and others with broader ecological or economic concerns.  Environmental concerns include safety for birds, air and water navigation hazards, damage to marine life including productive fisheries and scenic “pollution.”

One wind project that has received a lot of press over the years is the off-shore Nantucket project proposed by Cape Wind Associates.  On the drawing board for eleven years, the project is still not under construction as hurdle after hurdle has slowed progress to a final construction decision.   The project proposes to place 130 wind turbines in federally controlled water along a 25 square mile area five miles off-shore in Nantucket Sound.  With heights up to 440 feet the turbines would be clearly visible from Nantucket Island and Martha’s Vineyard, as well as from most of the Cape Cod southern shoreline from Woods Hole through Hyannis Port almost to Chatham at the southeastern knee of the Cape.

An article in The Wall Street Journal in August reviewed the current status of the project.

According to The Wall Street Journal the total cost of the project is $2 billion and will produce as much as 468 megawatts of electricity.  It would be transported onshore in buried cables.

The Wall Street Journal says the electricty produced would be costly:

The wind power’s cost is as much as twice that of conventional power, but because it would be a small portion of the overall energy pool, consumers would see at most a 2.2% increase to their monthly bills, according to estimates in a 2010 report by Massachusetts regulators.

A calculation by Econintersect produces the following results:

At 50% of the 468 mega watt capacity, the facility would produce electricity at a cost of 9.8 cents per kwh, amortizing the cost over ten years.  Assuming cost of capital at 4%, the cost is increased to 12 cents per kwh for the first ten years.  If distribution costs are about 20% of the final bill (UK estimate),  maintenance and repair are about 5% per year and utility profit margin is 10% (Econintersect estimate), the delivery cost to a Massachusetts customer would be about 15-16 cents per kwh.  According to the BLS, the current average cost of electricity in eastern Massachusets and southern New Hampshire is currently 15 cents per kwh.

One implication is that the estimate quoted from The Wall Street Journal assumes that the wind farm would have an average production of 25% of capacity instead of the 50% used in the Econintersect calculation.

The proposed wind farm appears to be cost competitive with current power for the region.  The production costs for the wind farm are less variable than sources that use fuels which can rise and fall in commodity market value.  If the cost of fossil fuels is relentlessly higher then the cost of fixed expense production will gain advantage over time.

An article this week by NBC claimed that 144,000 wind turbines could produce all the electricity needed for the U.S. East Coast.  This article said turbines would stand 270 feet tall (Nantucket Sound would be up to 440 feet) and would produce 5 megawatts each (Nantucket Sound project says “as much as 384 megawatts” which is 3.6 megawatts each for 130 turbines).

Econintersect has looked at the scale of the estimate implied by the NBC headline.  The article by the Stanford University group (published in Wind Energy) reported on by NBC suggests the study found that 144,000 wind tubines could satisfy peak excess demands for the East Coast, not the total power.  The Nantucket Sound project has been estimated to be able to supply 3.5% of the electrical consumption of the state of Massachusetts.

A simple calculation produces 3,700 as the number of wind turbines capable of supplying all of the electrical power for the state.  At 25% of capacity as average production then almost 14,900 turbines are required for Massachusetts alone.  The number of turbines for the entire East Coast is only 9.7 times the number for the state of Massachusetts alone.  The population of the entire East Coast is almost 18 times that of Massachusetts.  Only if the wind farms are able to operate at 50% of capacity (or 36% if the 5 megawatts per turbine estimated by the Stanford group is used) would the headline at NBC be accurate.

But all this discussion of vast off-shore wind farms remains energy on the wind of the figurative variety.  There are still vigorous opposition activities presenting court and regulatory challenges to the most advanced project, the Cape Wind facility in Nantucket Sound.

Click on picture for larger image.

John Lounsbury

Sources:

• Cape Wind Associates (Web Site, 16 September 2012)

• Offshore wind farm clears one federal hurdle (Associated Press, NBC News, 01 January 2009)

• Cape Cod Wind Farm Tiptoes Ahead (Jennifer Levitz, The Wall Street Journal, 10 August 2012)

• Average Energy Prices in Boston-Brockport-Nashua June 2012 (Bureau of Labor Statistics)

• Power East Coast via wind?  Doable with 144,000 offshore turbines, study says (Miquel Llanos, NBC News, 15 September 2012)

• US East Coast offshore wind energy resources and their relationship to peak-time electricity demand (Michael Dvorak et al, Stanford University, Wind Energy, 2012)