Thursday, March 30, 2006

Let's Do It!!!

Wind power is making a dramatic change in the United States. In 2005 2,431 Megawatts were added to our Electrical capacity at a cost of over $3 billion. The cost per megawatt is probably close to $1.25 to 1.3 Million. For a standard 5-Megawatt windmill the cost would be about $6.5 Million.

One megawatt will provide 251 homes the power they need. A five-megawatt windmill will provide over 1,200 homes the power they need. The windmill capacity added in 2005 alone will provide power to 2.3 million homes. The $5 billion ethanol tax credit paid to subsidize ethanol in one year would buy enough windmills to produce power for over 3.8 million homes a year. In ten years nearly half of all our homes could be powered using windmills.

What do we get for this size of investment? How does it compare to Ethanol? After a bit of math we find that 5 Megawatts is equivalent to 1,790,292 gallons of Ethanol a year. At the current price of $2.489 per gallon of unleaded gas and the fact Ethanol has just 70% of the energy content, we are looking at an energy value of $3,580,584. Because it consumes more energy to convert the Biomass to ethanol than it contains, the cost is somewhat higher than $3.5 million. Now add in the cost of a distillation plant, maintenance and labor and it is easy to see that wind power after just two years pays for itself when compared to Ethanol.

Wind energy has great benefits:

It replaces fossil fuels and the price fluctuations we have seen over the past two years.

It can provide a steady income to farmers. Every farm has some portion that is not producing an economically viable product. Placing a windmill in these locations can provide income and royalties to the farmer.

It is renewable, clean and cost competitive now.

Fuel Levelized costs (cents/kWh) (1996)

Wind (with PTC) ......... . ...3.3-5.3
Gas ...................................3.9-4.4
Wind (without PTC) .. .....4.0-6.0
Coal ..................................4.8-5.5
Hydro ...............................5.1-11.3
Biomass ............................5.8-11.6
Nuclear............................ 11.1-14.5

Further cost reductions can be achieved as wind power gains acceptance. Lenders charge a premium to finance wind farms because the view them as novel. This will change. In addition larger wind farms cost less to operate due to economy of scale.

How does wind work

Where are the best locations

What are the economics of wind power

Comparative Costs of Wind and Other Energy Sources

Comparative Air Emissions of Wind and Other Fuels

4 Comments:

At 11:24 AM, Blogger Andrew Kaduk said...

William, I'm interested in your comments here:

Ethanol is portable, a windmill is stationary. Ethanol will fit in a car, a windmill will not.

Although I find the windmills to be a SPLENDID way to produce electricity for home/office/industry, we still need to address the BIGGEST problem which is WHAT CAN WE FIND TO RUN CARS THAT IS NOT DEPENDENT ON TRADE WITH UNSCRUPULOUS GOVERNMENTS.

 
At 6:21 PM, Blogger William Larsen said...

Andrew, excellent question! We use domestically produced coal, nuclear and hydro. First we need to look at what uses oil. I think it is imperative to reduce oil consumption first. Trains use oil and a great deal. We could target the railroads first. We then look at the automobile. How far do you travel in a day? If you are like most people, you travel less than 50 miles in any given day. An electric car may not go real fast and may not have great range, but in a city, I think an electric car would be the ideal place where speeds are slow, acceleration should be fairly slow and constant (Washington and Jefferson streets) and where the person does not travel a great distance. Recharge at night and you are ready to go in the morning.

In New York City I read there were not many people who owned cars. When they needed a car they rented one. There is a company I read about that basically owns a few cars relative to the number of people who have a service contract. You reserve a car when you want it. If you only need the car once in a while for a long distance trip and you own it outright, you have unused capacity that you are paying for. What this company does is pull the resources together so the cars are utilized by all as much as possible. You and you pay for what you use. This saves you money on insurance and capital expense.

How many homes are still heated using oil? We target those homes for conversion to electric first. This reduces imports immediately.

The transformation to wind power/electricity is a long-term commitment spanning decades. The easiest would be homes burning oil which there a lot of. These furnaces need replaced most likely within 20 to 25 years. I do not have any numbers, but off the top of my head, I would imagine heating oil is 5% of oil consumption. If we import 60% of our oil, we could reduce imports by 8.3%.

So the game plan would be:
Determine where the oil is used (cars, trains, heating oil, etc)
Determine the useful life span of items using oil and create a time table/plan to transform oil-using equipment to electricity when their useful life is up.
Target those items that do not require localized large energy demands over long distances first.

Keep in mind you will only be able to install just so much wind power each year. What you want to do is utilize current infrastructure’s useful life left before replacing it. This will reduce capital outlays. The best method would be to upgrade or replace, to install electrically powered equipment when there useful life has ended.

Keep in mind that if we build an infrastructure that continues burning a fuel, we will find it ever more difficult to use truly renewable resources because we will want to utilize that capital expense.

 
At 7:36 PM, Blogger Robert Rapier said...

William,

I agree with your sentiments on wind. The most effective criticism I have seen is that the wind doesn’t blow all the time, and the speed is inconsistent. This is why we need to fund research into energy storage systems when excess wind is available. For example, excess wind could be used to compress air, or to pump water uphill. That potential energy could then be utilized when the wind speed is down, or not blowing at all.

Regarding the subsidies, I did a calculation last year comparing the ethanol subsidy to the wind subsidy. For a million BTUs of net energy created, you pay about $5.00 for wind and over $30 for ethanol.

RR

 
At 11:54 PM, Blogger William Larsen said...

Robert, I would prefer all subsidies be eliminated. We need the energy source to stand on its own and not be influenced by government. Ethanol gets I think 51 cents a gallon credit for what reason? As you very well know, but others may not, the distillation process is about as good as it is going to get. Farming yields have leveled off. There is not much room for improvement. Wind power has made huge strides. They have utilized the cube root function of wind speed and power output (a small increase in wind speed increases power output by a much larger percentage). They have increased the diameter of the blades, which captures more wind and requires the unit to stand higher where wind speeds are greater.

I do not see storing the excess power from wind power during low demand as a difficult problem to over come. Compressed air, pumping water back up behind a dam. In many ways this is how California and Oregon utilized their power plants. California needed far more power during the day than they could utilize. Oregon had hydro, which they drained rapidly during the day to provide power to California. At night California had excess capacity that allowed Oregon hydro to stop, allowing the water level to rise for the next day.

 

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