## Archive for the ‘**renewable energy economics**’ Category

## The real costs of wind (and solar) power (and nuclear, too).

I was involved in a blog-based discussion recently where somebody told me this:

But it will take at least 10 years to build a 1GW [nuclear] plant and cost 3-4b dollars.

In this same time frame, you could be installing 1GW of wind power a year, 10GW in the same time frame, for a cost of around 2-3M /MW 66% of the cost, ten times the amount in the same time frame.

Personally, I think that’s rubbish.

The largest wind farm in Australia is the Wattle Point wind farm in South Australia. It took about one year to build, between June 2004 and June 2005.

It cost 180 million dollars, and has a total nameplate capacity of 91 MW. But we’ve got to remember the capacity factor – I don’t know exactly what it is for this wind farm, but I assume it to be somewhere around 20%.

So, the “real” average power output capacity of the wind farm is 18.2 MW – a capital cost of $9.9 Million per MW.

So, to build 1 GW of real energy output capacity might be expected to cost 9.9 billion dollars – maybe a bit less if we can see some economy of scale – and take 55 years – maybe less than that, since you can build more of them at once if you need to.

Of course, a single typical modern nuclear power reactor can easily deliver 1 GW of “real” average power output – say, from an AP1000 with 1117 MWe nameplate capacity and 90% capacity factor, that’s over 1 GWe of average capacity – and capacity factors well over 90% are certainly achievable.

One wind farm just doesn’t compare to one nuclear plant – you’ve got to appreciate the actual amount of energy output being generated.

The actual construction time for a modern nuclear power reactor – say, a Westinghouse AP1000 – is three years. Three years, that’s all. Plus some number of years of approvals, planning and red tape.

Now, I’m not saying we shouldn’t have regulation and oversight of nuclear power – of course we should – but with these figures of 10 years that get waved around, how many of those years are going to be essentially political bickering, greenpeace rubbish and other nonsense that could easily be done away with?

In the Australia-specific context, how many years did it take ARPANSA to approve and licence the OPAL (research) reactor at Lucas Heights? I don’t recall exactly, but it wasn’t 10 years.

Yes, it might cost, say, $2 Billion – quite a bit of money. But the electricity has got to come from somewhere – and where ever it comes from, it costs money to install that capacity. (That’s a high-ish estimate, but let’s make a conservatively high estimate for Australia’s first nuclear power reactor, in Australian dollars) That’s certainly a lot less than the $10 billion (perhaps somewhat less) real-world capital price tag for 1 GW of wind capacity!

There was significant interest and excitement in Australia earlier this year after plans were announced to build what will be the largest solar photovoltaic power station in the world, using advanced concentrating heliostatic photovoltaic solar collectors.

The proposed solar generation facility would cost $420 million, and have a nameplate capacity of 154 MW, with a 20% capacity factor – generating 270 GWh annually. It will take about four years to construct – from 2009 to 2013.

I discussed this solar energy project and how much it will cost for the amount of energy generated in an earlier blog post – but I thought I’d briefly repeat those figures here for the sake of comparison.

So, if we scale that cost up, to the equivalent of a gigawatt of actual average power output capacity, that’s a cost of 13.6 billion dollars to generate the same amount of energy, (assuming no economy of scale comes into it, I admit – we’re talking about quick, imperfect analyses here)

Additionally, assuming you can’t scale up the rate of construction, it could be expected to take 130 years to construct that much solar capacity!

So, to summarise these estimates:

Solar: Probably around 10 billion dollars or more, and perhaps 100 years or more. (For 1 GWe of real, reliable output.)

Nuclear: Perhaps around 2 billion dollars, and perhaps around 4 years.

Wind: 10 billion dollars, possibly a bit less, and 40-50 years.

I deliberately base these estimates on technologies and designs that are around and are ready to be rolled out today – not on technologies or designs that are especially immature.

Comparing apples to oranges is fine – as long as you’re comparing a gigawatt-year of apples to a gigawatt-year of oranges. This is what I think many people out there overlook when getting really optimistic about the costs of these “clean, renewable” energy projects.

Let’s say that 1 kW of solar PV nameplate capacity installed on your roof costs about $12,000. The figures that I’ve seen quoted around are typically $13,000-$12,000 for a 1 kW on-roof PV array installation.

(These are Australian-centric quoted costs, in Australian dollars, by the way).

With the rebate of $8/W for installed PV capacity (capped at $8000) offered by the government to encourage decentralised household generation, that’s $8000 offset from the cost of the 1 kW system.

With this incentive included, that’s $4000 you need to pay for such a system.

Now, based on realistic capacity factors for such a PV system, 1 kW of nameplate power capacity will generate about 5.1 kWh energy in total per day – The PV installation industry expresses this overall capacity/availability factor as “peak sun hours per day” for any given location. The 5.1 kWh is the actual figure quoted for Sydney, Australia.

Household electricity consumption in Australia is 7 MWh annually in Australia, according to EnergyAustralia. That’s 19 kWh per day.

A 1 kW solar PV installation is just not enough to completely offset your electricity bill and start making money off it.

The typical electricity cost to the domestic customer is about 14 c per kWh. It has been proposed, however, that the government could see the price paid for electricity sold into the grid from these decentralised household installations fixed at an elevated price of 44c/kWh

At a feed-in rate of 44c per kWh, that’s $820 dollars per year offset from your electricity bill – so, the solar PV installation takes just under 5 years to pay off. If you’re selling the electricity at the same rate that the domestic customer buys it at, 14c per kWh, it’s over 15 years.

However, suppose you want to consider the case of installing enough capacity to completely satisfy your household electricity needs, so that you can be making money of it all together.

(This all assumes that you’re an “average household”, presumably with several family members in the household, and “average” levels of electricity efficiency)

You’re going to need a system with 4 kW of nameplate capacity.

How much will that cost – well, we might assume that it can be done for cheaper than $48,000 – I don’t know, really, so I’ll just guesstimate $45,000. (Some economy-of-scale is to be expected, but I am not an economist, and it’s not an area which I’m familiar with in any real detail.)

Less the $8000 rebate, and that’s $37,000.

Now, you’re generating 20.4 kWh per day, and and consuming 19 kWh, with 1.4 kWh sold back into the grid at 44 c per kWh.

In this scenario, no overall electrcity purchasing is required – so overall, it’s a revenue source.

That’s $225 per year from selling the electricity, plus $971.5 saved from not having to buy the electricity that you use.

$37,000 / $1196.5 gives you a payback time of 31 years. In all likelihood, that will exceed the working lifetime of the photovoltaics.

With the government rebate of $8/kW capped at $8000, going over that amount gets a whole lot more expensive rather quickly.