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Page added on March 6, 2012

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Wind energy cheaper than coal

Alternative Energy

the two most recent contracts approved by the Commission for new wind farm capacity have levelized costs of $61-$64 per MWh. This is significantly lower than the levelized costs of the first wind power contracts.

Wind energy cheaper than coal

We often run “Fact check” articles on this blog when fossil-fuel-funded “experts” exaggerate the cost of electricity generated with wind power (for a particularly bald-faced recent example, see Fact check: American Enterprise Institute epic FAIL on study of wind power costs, Feb. 29), but perhaps this one should be titled “Reality check.”

Reality: the Michigan Public Service Commission (PSC) recently issued a report that finds that electricity generated from renewable energy sources, at an average cost of $91 per megawatt-hour (9.1 cents/kilowatt-hour), is almost one-third cheaper than the cost of electricity from a new coal-fired power plant ($133 per MWh, or 13.3 cents/kWh).

Further, the report notes, “The actual cost of renewable energy contracts submitted to the Commission to date shows a downward pricing trend. This was the case as of the filing of this report in February of 2011 and continues to be the case, as the two most recent contracts approved by the Commission for new wind farm capacity have levelized costs of $61-$64 per MWh. This is significantly lower than the levelized costs of the first wind turbines contracts submitted in 2009.” (emphasis added)

The report is one in a series required annually from the Commission to the state legislature, reporting on the impact of the state’s Renewable Energy Standard (RES), which requires utilities to obtain 10 percent of the electricity they provide from renewable energy sources by 2015.

Other highlights from the report:

– While utilities are allowed to charge customers extra for renewable energy, customers are also seeing savings due to wind power. Said the Commission, “While … surcharges have an impact on electric rates, there are also economic benefits attributable to an increase in renewable energy generation sources and improved energy efficiency. As noted in previous sections, the cost of energy generated by renewable sources continues to decline and is cheaper than new coal-fired generation. Throughout the MISO footprint [the area covered by the Midwest Independent System Operator, which manages the electric transmission system in the Upper Midwest], increased growth in wind turbines generation appears to have displaced relatively high cost generation, resulting in lower cost base-load plants more frequently setting the marginal electricity price. The continued growth in Michigan’s wind turbines generation is expected to make a much greater contribution to this displacement in the MISO footprint by the end of 2012 as over 800 MW of new wind generation will be operational in the state.”

– Michigan utilities receive extra credit toward meeting the state’s renewable energy standard for projects built using Michigan equipment and labor, and that incentive appears to be effective: “As noted in last year’s annual report, the Michigan Green Jobs Report 2009 was optimistic about the job creation potential of the renewable energy industry and pointed to the renewable energy standard as a driver for growth in this field … The Commission is confident that Michigan has the potential to become a regional leader in development and manufacturing of renewable energy systems, building on the state’s engineering expertise, modernized machining, and investment in renewable energy in coming years. It appears that the Michigan incentive REC provision in the standard is meeting its intended purpose to encourage developers to maximize the amount of Michigan equipment and labor. (emphasis added)

“Michigan’s renewable energy sector is providing solid financial, social and ecological values for Michigan because of our renewable energy standard. Michigan utilities that are investing in advanced energy such as wind power and solar energy deserve full credit for embracing the future and creating new economic opportunities,” said Rich Vander Veen, president of Mackinaw Power in Lowell, Mich., in a news release issued by the Michigan Energy Innovation Business Council (EIBC), a trade group.. “The PSC report shows a renewable energy standard establishes energy security and makes good economic sense for Michigan businesses and ratepayers. New wind farms are providing solid income to local communities and landowners, and this helps protect family farms for future generations.”

Earlier this month, the EIBC released a study showing Michigan’s advanced energy manufacturing sector – solar power, wind turbines, advanced energy storage and batteries, and biomass – generates $5 billion a year in economic activity and supports 20,500 jobs a year. The study is one of the first of its kind in the nation because it used real-world manufacturing data.

evwind



10 Comments on "Wind energy cheaper than coal"

  1. BillT on Tue, 6th Mar 2012 2:05 pm 

    Another advertisement for suckers … er … investors.

    None of these can exist without the oil/coal heritage built over 200 years. As it corrodes/rusts/wears out/crumbles, so will the ability to build any of the ‘renewable’ energy equipment.

    And then there is the need for equal electric production facilities to produce electric when the wind doesn’t blow. Like natural gas plants. Dream on…

  2. BillT on Tue, 6th Mar 2012 2:08 pm 

    BTW: Do you remember when they were pushing nuclear and promising that “it will be too cheap to meter”? I do. And what happened? It is the same price as all the other sources and has tons of radioactive waste to kill everything for thousands of years AFTER it is spent. It is the most expensive ‘cheap’ energy we ever came up with.

  3. Windmills on Tue, 6th Mar 2012 3:06 pm 

    It’s only cheap when you don’t include the cost of the conventional power plant that must be in place to provide backup power for their intermittency. It reminds me a little of hydrogen: you have to use other sources of energy to make it, so why not just use the primary source of energy instead and skip the middle man?

  4. Arthur on Tue, 6th Mar 2012 4:51 pm 

    @BillT, the Eifeltower was built in 1889 and is still around. Once a wind turbine tower is erected it could last 2 centuries or longer. Their is not enough oil production capacity to keep hundreds of millions of cars running for another decade. But there is enough to erect a large number of towers.

    @Windmills, forget about continuous energy supply for the future. No wind? Too bad for you, go to bed early.

  5. SOS on Tue, 6th Mar 2012 6:45 pm 

    Coal of course is burdened by extreme and costly regulations up and down the entire supply line, many of them political in nature, designed to increase costs resulting in higher coal prices. These artificially higher prices make wind energy competitive. Thats a shame because we are all paying much higher prices for energy than need be.

  6. Kenz300 on Tue, 6th Mar 2012 7:29 pm 

    Quote — ” Reality: the Michigan Public Service Commission (PSC) recently issued a report that finds that electricity generated from renewable energy sources, at an average cost of $91 per megawatt-hour (9.1 cents/kilowatt-hour), is almost one-third cheaper than the cost of electricity from a new coal-fired power plant ($133 per MWh, or 13.3 cents/kWh).”
    ———————

    The price of oil and coal keep rising while the cost of wind and solar have dropped by 50% in the last 5 years and continues to go down.

  7. sunweb on Tue, 6th Mar 2012 10:44 pm 

    Arthur – the Eifeltower doesn’t have high tech electronics inside that need regular maintenance at least twice a year. So we may have the towers around for a long time but not necessarily the electricity from them. At this point not only is there an infrastructure of fossil fuels, mining and the coincident environmental assault to build them but also the same massive infrastructure keeps them running.

  8. SOS on Tue, 6th Mar 2012 11:15 pm 

    Unfortunately the 9.1/KWTHR reflects the huge government subsidies being poured into the industry. The 13.3 cited for coal includes all the unecessary political costs up and down the supply chain including unecessary taxes to the end consumer, all enforced to make coal less attractive and less competitive. Because of these policies we are all paying far more than need be for our energy.

  9. Arthur on Wed, 7th Mar 2012 11:33 am 

    @sunweb – I see no reason why the world should stop producing relatively low-energy intensive electronic hardware any time soon. The first victim of the coming ‘troubles’ is going to be mass transportation, like cars and planes as well as heating, but not electronics. IT is going to be the backbone of the future economy. Like this communication process here on this forum between people from America, Philipines and Holland.

  10. Arthur on Wed, 7th Mar 2012 9:38 pm 

    BTW, I assumed erroneously that windturbine towers are made of steel. Here is a video that shows the construction of the world largest windturbine, the German made E-126 6MW machine, erected in Belgium (12 of them):

    http://www.youtube.com/watch?v=_eiNJt1pixI

    The 130m tower is made of concrete. The turbine generates electricity for 4500 house holds.