In this week’s charts of the week we examine changes in the cost of generating electricity from wind. Please note to view these charts properly you may need to update Internet Explorer to version 9 or use Firefox or Google Chrome.
Yesterday, The Australian newspaper published an opinion piece from Bjorn Lomborg, author of the book the Skeptical Environmentalist, headlined ‘Ballooning cost is blowing in the wind’. It contained the usual poorly researched claims about wind not reducing emissions that much because of the need for fossil fuel back-up, ignoring a range of high quality studies that have examined this issue in detail. But what caught my eye was his claim that wind power costs have increased over time.
Lawrence Berkeley National Laboratory in the United States maintain a database of 488 wind power projects, with data covering installation costs, power purchase prices, output, operations and maintenance costs, and a range of other important characteristics going back to projects built in 1983. The database is impressive. It covers projects representing 34.6 Gigawatts – which is a lot, equivalent to nearly two thirds of Australia’s entire electricity generation capacity.
What this data reveals is that the installed cost of a wind turbine did increase over the past few years until recently (chart below). But there’s a trap for young players like Bjorn Lomborg who don’t really understand the electricity sector. That’s because it’s not the turbine itself that we’re ultimately after, but rather the electricity that it generates.
Installed cost for US wind power projects
While wind turbines have got more expensive since around 2002, they also happen to have got a lot better at converting wind into electricity, and they have become more reliable and less costly to maintain. Modern wind turbines tend to have longer blades that use a multitude of tricks with advanced materials like kevlar and carbon fibre to get bigger while retaining strength and not getting too much heavier.
Wind turbines have also been placed on higher towers to reach winds that are faster and less turbulent. This caused some inevitable increases in the amount and cost of materials. But at the same time it led to significant improvements in the amount of electricity that could be generated from a given site and wind resource. The chart below illustrates how for a given wind speed (illustrated on the bottom horizontal axis in metres per second) the latest wind turbine designs can achieve much higher levels of output for a given megawatt of generating capacity (referred to as the “capacity factor”).
In the quite low wind speed sites of 6 metres per second (m/s) (class 2), a turbine built in 2002-03 (dark blue line) would only generate about 22 per cent of its rated maximum capacity, whereas the latest generation turbine optimised for low wind speed sites can achieve 37 per cent. At a high wind speed site of 8 metres/second a modern wind turbine will generate a fifth greater electricity than a 2002-03 turbine.
Improvement in output by wind speed class for turbines from 2002-03, 2009-10 and 2012-13
So what does this all mean for Bjorn Lomborg’s headline of ‘ballooning costs’?
In short, he’s wrong.
When we take into account the latest data on wind turbine transactions, which have dropped in price dramatically from the overheated peaks in 2009 and 2010, the cost of generating electricity is between 17 per cent to 31 per cent lower than 2002-03 depending on wind-speed, as illustrated below.
Cost of wind power for 2002-03 vs current technology
Lastly what Bjorn Lomborg also failed to take into account is that during the same time wind turbine prices were increasing, so were conventional fossil fuel plants. The chart below, based on data from ACIL Tasman, indicates that between 2005 and 2009, the cost of constructing a coal-fired power station increased by 36 per cent, a combined cycle gas plant by 29 per cent, and an open cycle gas plant by 41 per cent. And these technologies weren’t improving all that much in converting fossil fuels to electricity.
Construction cost for fossil fuel power plants – 2005 vs 2009
Source: Frontier Economics (2010)