September 23, 2010

Adding Up the Turbines

Justin Katz

An article about a small-scale windfarm to be completed by spring 2012 offers some numbers and thereby invites readers to do the math:

Three, 360-foot tall turbines — the largest in the state — will be built at the Narragansett Bay Commission's Fields Point Wastewater Treatment Facility. The team for the $12-million project includes Gilbane Building Co., Atlantic Design Engineers, Glynn Electric, Barnhart Crane & Rigging, Earth Systems Global Inc. and Terracon.

The commission estimates that at that height, the turbines will generate 1,500 kilowatts and supply 55 to 60 percent of the current power demand at its facility. The electricity is valued at more than $500,000 per year and will offset 3,000 tons a year of carbon dioxide that would have been released from fossil fuel.

So let's assume that the project keeps to its budget and that the turbines generate the predicted amount of energy with the forecast value. Let's also leave out all costs associated with operating and maintaining the mini-farm. It will take 24 years for these turbines to pay for themselves, which brings us right about the time that they'll have to be replaced refurbished, for additional years of service required to cover the cost. (Again, that's the cost beyond operation and maintenance and with all of the friendly assumptions, as described above.)

Now, we can argue about the need to "go green," and I'll take the position that the environmental benefits of these programs are not worth the cost. But it remains disingenuous to speak of such projects as money-saving.

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Portsmouth recently had their pocketbook shocked when the warranty company from CANADA went out of business. There goes another 33K per year of "free" electricity out the window. But don't fret, the "green" schemers will show up with their hands out, new company name and more promises of hot air in no time.

Save a mountaintop, build a windmill, freeze in dark.

Posted by: dave at September 23, 2010 10:12 AM

Ummm, if you actually read some of those links you'd have found this...

Wind turbines have a life expectancy of between 20 and 25 years, according to Wind Turbines UK. Turbines can be refurbished to extend the lifespan by an additional 15 years.

Not to mention that you assume the complete cost of the project to be attributable to the turbines themselves versus to site modifications like foundations or wiring, etc. that I'm assuming would not be associated with the turbine itself.

Easy to verify that to be the case. I'm finding costs of "$1.2 million to $2.6 million" for commercial scale turbines.

Nice try, though.

Posted by: Russ at September 23, 2010 1:06 PM

Oops, correction. Those costs were "per MW of nameplate capacity installed" so the numbers in this case would be on the order of $1.8 million to $3.9 million per (still shy of the $12 million replacement cost you claim).

Posted by: Russ at September 23, 2010 1:09 PM

Aha! Scratch that (my apologies - eating lunch and typing)... the 1.5 MW number was for all 3 so the replacement costs look to be more like half the original number, not double.

Posted by: Russ at September 23, 2010 1:12 PM

The initial installation is $12 million. Refurbishment is less, otherwise it is uneconomic. Initial installation includes:

site prep - often a major expense
electric interconnect - ditto

as well as the acquisition of the actual hardware.

You are comparing apples and bongos.

Posted by: chuckR at September 23, 2010 1:15 PM

Oh, 1.5MW (probably just intermittent peak) @ $12million for the turbine (20-25 years life, maybe 40 with refurbishment)


1400MW (reliable baseline) nuke (life of 50 years) @ $2.6billion (WashPost, 2005) or $11billion (that smart engineering blog Salon, 2008).

Even with Salon's suspect number, wind has a lesser lifespan and is about parity in cost per megawatt. And of course it can't reliably provide power on demand, only opportunity power when the wind blows. Unless you want to bump the cost considerably for pumped or other storage.

Not mentioned in the article is whether these turbines are subsidized or not.

Posted by: chuckR at September 23, 2010 1:34 PM

What I wouldn't give to have RI host a major nuclear power plant. Not some rickety-old beast, but one of the new super-safe designs (the likes of which we don't have anywhere in America).

If we built one, we could be a net energy exporter, producing electricity at $0.04/kWh and selling to our neighbors for $0.14/kWh. It would actually solve a huge number of economic issues here:

1. It would create a huge number of mid-term jobs during construction.
2. It would bring a massive number of upper-middle class technical jobs.
3. It would create massive revenue, making the whole state richer.
4. We'd be able to offer at-cost energy to people and businesses here as an incentive instead of tax credits.
5. We would retain our pride in being a low-pollution/low-carbon state.
6. Cheap energy is the lifeblood of high-tech industry, like bio-sciences, data centers, medicine, manufacturing, etc.
7. The new reactor designs allow for easy creation of raw hydrogen, so if hydrogen becomes a commodity in the future, we'll already be staged to be a producer. They also produce -much- less waste byproduct.

People complain about how we don't 'make anything' anymore. We could make cheap Megawatts.

Too bad we'll never go for it.

Posted by: mangeek at September 23, 2010 4:55 PM


I've modified the post a little for accuracy, but for the record, at no point did I claim a $12 million replacement cost. Your smarmy corrections don't change my opinion that assertions of saving money are disingenuous.

Posted by: Justin Katz at September 23, 2010 5:45 PM

At a normal weighted average cost of capital of 12%, $500K of cost savings per annum for 25 years has a present value of $3.9 million. Against the $12 million project cost, this is a negative net present value of -$8.1 million.

Reduce the cost of capital to 10% and the NPV is still -$7.5 million.

Without either a huge increase in electric rates or massive taxpayer-funded political subsidies, this project is not economically viable.

Posted by: BobN at September 23, 2010 7:22 PM

I'm with Mangeek, let's explore nuclear power.

Posted by: Warrington Faust at September 23, 2010 10:40 PM

Yikes! Not the sacred cow of abortion funding.

Posted by: Monique at September 24, 2010 8:04 AM

Oops. Sorry, wrong thread.

Posted by: Monique at September 24, 2010 8:10 AM

Smarmy? Truth hurts, eh? Hey, you're welcome to do the math however you like.

Posted by: Russ at September 24, 2010 8:59 AM
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