America's first big offshore wind farm sets record low price
reneweconomy.com.au
reneweconomy.com.au
As PG himself has pointed out, behind every significant news article is a submarine pushing public opinion[0]
You don't have to predict any prices to predict the costs of a specific facility.
> In addition, cost per kWh amortizes the cost of construction where money is spent today for benefits to accrue in the future. How you determine this discount rate has a massive impact on the supposed value of the facility.
Sure, but it's easy to take the construction cost and run your preferred discounting math on it.
> behind every significant news article is a submarine
This ain't a submarine, it's clearly promoting the specific installation...
Yeah, if the whole thing could move we'd call it a sailing ship.
This is because the majority of “material” factors within the project can be known with a reasonable degree of certainty today. Expectations of costs over the course of the project can in theory be protected via contract (I.e. land rights over decades, service agreements from manufacturers of the turbines) or are “fixed” and are “costs incurred today” and can be amortized over a given a period of time. Additionally, insurance and warranties on the equipment move the risks off to others to further help generating certainty which can be extrapolated to a reasonable “expected rate of returns/expected cash flows” - I.e. What, given all of what they’d know - the price of selling electricity over a given period of time is needed to pay back on the project. Apparently this developer determined that they can sell their electricity for 7.5Cents(USD)/kWh over a period for 20 years and still make a reasonable profit.
(Note: I also don’t agree that there isn’t an agenda/narrative with such an article & title. Just that if developers couldn’t predict such costs, they wouldn’t guarantee the low price in the first place).
The subsidies in the UK are dropping to these levels.. And for some European projects there are zero subsidy (though these are contracted in a different way so not exactly comparable).
Of the stories you read in traditional media that aren't about politics, crimes, or disasters, more than half probably come from PR firms.
https://www.bloomberg.com/news/articles/2017-12-01/cape-wind...
I get what you're saying but ... two aristocrat families? Not strange at all.
Would it not make more sense to include the federal tax credits since they would be at the cost of the tax payer?
Not collecting taxes on something that might otherwise be taxed is not the same as someone taking your money via taxes and using it to pay for something. What does it cost you if the government doesn't tax your local church?
Debt increases -> interest payments increase -> interest is paid at public expense from the general pool of taxpayers.
I know this sort of causal relationship isn't immediately obvious but it is there as it squeezes services for everyone else if you don't raise taxes to cover the difference.
Or so we are told, every time taxes are cut for the wealthy.
https://www.google.com/amp/s/www.washingtonpost.com/amphtml/...
Kansas showed how well it works in practice.
And even if you believe neither of those things:
https://www.npr.org/2017/03/01/517975766/while-trump-touts-s...
52% own any stock, so you are still effectively stealing from the other 48%
It is called a tax expenditure. Aka an expense or an outlay.
Making up an absurd position that requires redefining financial terms is a poor strategy.
Appying your logic, collecting $0 in taxes from everyone does not create any debt because you can simply reduce expenses to $0.
Please apply your position to your own life ($0 in income and $0 in expenses) and let me know if your position is a real one. I suspect the lack of shelter and food will convince you otherwise.
Perfect is the enemy of good enough.
But I will say one thing for subsidy is it allows startups to enter a high tech space and take them as a funding source, ideally in proportion to how well the tech works.
Cap and trade can work out similarly (like Tesla selling their credits) to fund the R&D.
But the point is you want to do more than just tax the externality, if you can subsidize R&D by startups which fundamentally shifts the curve rather than just trying to move along it.
If we subsidise the burrito by $2, then the burrito will cost $2 and the taco will cost $3. I have $4 so I can buy either of them. They are about the same price (with the burrito being just a little cheaper). However since I'm used to buying tacos, there's a good chance that I won't switch.
If I leave the burrito at $4 and tax the taco an extra $2, then the burrito will cost $4 and the taco will cost $5. I don't have $5 so I'm forced to buy a burrito.
Of course the problem is that in the second scenario everything costs more and the government is pocketing the tax. So while it's arguably going to be more effective at switching people to burritos (because a subset of people will no longer be able to afford tacos), it's easy to market against: "The government is destroying the economy by putting tacos out of reach of the everyday person. Food will be 33% more expensive because of this tax that is designed to funnel money into government coffers. There are 2 million taco makers who will lose their jobs because of this terrible tax. Vote for us and we will return the choice back to consumers."
A subsidy is easier to introduce.
Another factor to consider is that the subsidy must be paid for by somebody, so you end up needing to raise the money through taxes anyway. This means that ultimately you are raising net taxes on everything that's not subsidized.
With all that being said, you're completely right that subsidies are an easier sell. They have an enormous advantage: you can seperate the spending / mechanism of action (which people love) from the taxes that pay for it (which people hate). Taxes on bad things inherently tie the two together, which makes the marketing harder.
Additionally, the benefits of subsidies are concentrated while the costs are diffuse, which makes it easier to build a strong voting block in favour of subsidies.
Subsidizing various things instead of taxing fossil fuels is a classic example of looking for your keys under the streetlight. A simple, obvious solution that you know is wrong is not a good one.
But the comment also misses one of the main points of subsidies: they aren't simply to offset some externality, they are used to provide efficiently leveraged market availability to products that are at the beginning of an industrial learning curve which will reduce costs over the longer run.
They let us get the tech out of the local minima that it would otherwise be stuck in to move further out on the learning curve so that long-term savings can be had.
https://www.theguardian.com/environment/climate-consensus-97...
> not only supply costs but also (most importantly) environmental costs like global warming and deaths from air pollution and taxes applied to consumer goods in general.
In other words, that $5 trillion is the indirect cost, not in addition to the indirect cost.
Typically nuclear power operators have capped liability (e.g Price-Anderson in the US), or are simply assumed to be bankrupt in the event of a major incident, and taxpayers would need to pay the cleanup. This liability cap, and hence cap on insurance costs, is a subsidy.
So in short, it’s very hard to disconnect energy prices from various taxes and subsidies.
And Fukushima $150b. So for a large incident the tax payers would carry the cost.
It's amazing how many opponents of the US have economies that are dependent on Oil.
It would make sense if the US currently controlled all the oil fields in Iraq and Kuwait, but we don't.
Over supply due to countries dumping their reserves to balance their budgets are keeping prices low. This makes investments in more expensive ways to produce oil less attractive. Eventually cheap reserves will run out. So cheap oil is a double edged sword.
That's why wind projects like typically have investors behind them that used to dabble in oil. Just makes more sense to that than to invest in exploiting oil reserves that may never deliver enough ROI to be worth the trouble.
Markets like stability, doesn't much matter to the market if that stability comes from an authoritarian or a liberal democracy or something in-between so the claim that US military actions were some sort of stealthy, planned effort to subsidize the price of oil doesn't make sense to me.
The instability and the associated price increases in the oil market could be interpreted as a subsidy to other parts of the energy market by making it easier for them to compete against oil. Most businesses are pretty happy when something causes their competitor's production costs or selling price to increase.
Wind/Solar is thus filling the exact same base load niche of cheap power.
Wind tends to wreck havoc on base load operations because it often produces a lot of power at night. Since wind is cheap the solution is to retire coal fired plants.
I don't think that's true -- load peaks in the evening, while solar peaks in the early afternoon.
This issue (as pertains to the mismatch between solar/wind production and grid demand) has a name: https://en.wikipedia.org/wiki/Duck_curve
Which means the duck curve is mostly a non issue over any large land mass. Alt least relative to coal / nuclear base load power plants.
So, generall sending power 1,000 miles west requires up to but not nessisarily 1,000 miles of power lines.
1.6X1000 or $1.6 billion
$1.6b/3000W is $0.53/W capital cost.
That doesn't seem crazy.
ridiculous
If drilling wasn't cost effective at the current price per barrel, they wouldn't do it, it's that simple. Perhaps you're underestimating how much a drilling rig can extract.
You're right about no pricing of global warming externalities, but that has nothing to do with your appeal to incredulity of 'cities on the ocean'. Have you seen the scale of a large offshore wind farm?
There are people that act like renewables are in the "hard" class but coal/oil power isn't. They're wrong.
Seems to be $533 per kilowatt of carrying capacity, which is 53.3 cents per W, as you mentioned.
A kWh (1 hour x 1 kW) usually costs between 5 and 10 cents depending on the market, so, how many hours will the line need to be carrying its full complement of electricity in order to say, increase the cost by (a contrived number) only 1 cent per kWh?
I fully admit I don't know the vagaries of load-shifting and transmission, however...
3000 MW X 30 years X 8766 hr/year = 7.88X10^11 kwhr.
So $1.6B/7.88X10^11kwhr is $0.002/kwh
I think that the max power of the farm is 800 MW, so peak utilization would be about 25%, unless more capacity were to be added in some fashion.
Reality is end up with a network of these lines at various utilization numbers. But, an average of say 60% seems achievable which would put you at around 0.33 cents per kWh over 1000 miles. Now specifics becomes a rather complex geometry problem as the US is mostly above the equator etc, but it does show you can shift power more than 1 hour for under 1 cent per kWh which makes this cheaper than storage.
Not really here nor there, the calculation is just gives one an idea where the decimal point is.
As an extreme example the impact of last year's eclipse on power generation was significant: https://www.vox.com/energy-and-environment/2017/8/9/16089636...
Not suggesting that eclipses are the biggest concern with solar power and base loads but it does illustrate the complexity of matching supply and demand with renewables.
Really though solar provides zero power for 1/2 the day so it needs some form of backup. Wind/Hydro/Storage work, but on top of that you simply want excess cheap solar / wind so a minimal reduction like an eclipse does not present a problem.
But you're not wrong. These articles give false hope.
Average capacity of an offshore farm sits at 40% annually in best case scenarios while a typical LNG plant would be what around 80-90% capacity. So you need to build the same LNG plant locally anyways as a backup and switch it on and off as the wind changes. How is this sensible?
Ok maybe you wouldnt need to build the additional coal/gas plant if USA had a good network to shuffle electricity across states but even with your terrible infrastructure everyone complains about you cant seem to get a basic spending bill passed to fix potholes, so these people think you're going to be building these trans-continental cables to trade electricity? No luck.
I’ve worked on multiple European offshore wind farms and no new gas facilitiy was constructed.... The switching on these things is insane, I think in the UK the nationa grid can switch off an entire +500MW facility in a couple of seconds.
Solar-electric I assume required some sort of scale or manufacturing advances to be competitive. But modern wind turbines seem to have been do-able decades ago.
Was coal just so damn cheap until recently?
- Wind higher up that is stronger and more constant
- Bigger turbines with longer blades that harvest more energy
- Fewer bigger turbines are cheaper to install and maintain than more numerous smaller turbines
Frankly, these things are well into the size of sky scrapers and isn't the sort of thing you just create overnight. Each generation incorporates learnings from the previous generation and gets iteratively bigger.
This Vox article does a better job of explaining things than I ever could:
https://www.vox.com/energy-and-environment/2018/3/8/17084158...
With solar, panel efficiency has gradually improved and economies of scale is driving panel production and operation cost down as well.
Coal prices have been kind of stable since there is plenty to be mined. But since clean alternatives dipped below the coal prices a few years ago, coal has become a lot less attractive. That combined with heavy pollution means that coal plants are slowly being shut down and most plans for building new ones have been shelved. Meanwhile a lot of the remaining coal plants that are still operating are facing likely shut downs over the next decade or so because they won't be able to make a profit as clean alternatives drive prices down as they come online.
The price is the highest the energy will cost, for the lifetime of the contract absent force majure.
Why would the owner sign? The contract gives certainty. The contract means the owner can now get funding, they have a guaranteed income stream across the life of the contract.
reneweconomy's self-description.
"Australia's best informed and most read web-site focusing on clean energy news and analysis, as well as climate policy."
It's an advocacy organization probably funded by clean energy lobby. There are quite a few of these climate advocacy "news" organizations being spammed on social media along with their supporters in the comment threads.
Seems maybe a little premature to call it successful.
If they cheapen the price by 50% (13 cents/kwh becomes 6.5 cents/kwh), then that's a big thumb on the scale.
Until there's more clarity on this, it's hard for me to take a side.
Why is nuclear not considered an option to fight climate change?
If we had invested the same amount of effort in making Nuclear energy safe as we did in lobbying against it, we would probably have reduced our carbon footprint enormously already. Weirdest/Biggest missed chance for climate change.
Is that a necessarily bad thing? Serious question.
The nuclear waste that we generate is concentrated in the Nuclear Reactors and thus can be tracked and managed (I'm assuming a reasonable amount of competency and lack of natural disasters etc.). We could just store it locked away in concrete containers far from any human population centers.
Perhaps in the future we discover a use for all that waste. Or perhaps space travel becomes cheap enough that we start jettisoning the waste to the Sun, or any other low-cost orbital trajectory.
Right now, the CO2 generate from fossil fuels is just dumped into the environment and we know that is causing climate change and is a clear, immediate and existential threat to humanity.
Is the decision really that hard to make?
No, we can't, because the spent fuel waste continuously generates heat. It has to be actively cooled to stop it from catching fire and emitting all those decay products into the atmosphere.
A lot of commercial spent nuclear fuel is sitting around in such dry casks. They are expected to last 100 years or so; if we haven't figured out a better plan by then we can just shift the spent fuel into fresh dry casks.
My understanding is that renewable energy is curently cheaper than that from new nuclear power stations.
Also if you stop fossil fuel power plants, there are still many other sources of atmospheric CO2 and methane.
>Only a decade ago, [US] nuclear reactors were cash cows. But a combination of low natural gas prices and a boom in solar and wind power has rendered them unable to compete in states with price competition for power. Five of the country’s nuclear plants have shut down in the past decade. Of the remaining 99, at least a dozen more may close in the next.
Also here in the UK the govenment is spending £20 bn to build the Hinkley Point reactor and "The National Audit Office estimates the additional cost to consumers (above the estimated market price of electricity) under the "strike price" will be £50 billion."
As a tax payer I'd rather they'd spent our £70bn on a few windmills.
Sadly, too little research is going into nuclear, largely due to public perception; plants that use thorium or recycle waste have a ton of promise but little public interest. Meanwhile, Germany needs to find out what to do with about a third of their wind turbines in the next few years, as they're about to hit end of life and the parts are difficult or impossible to reuse and recycle.
Not to mention the environmental consequences of solar and wind production, but hey, chromium and cadmium poisoning doesn't sound as scary as a mushroom cloud irradiating half the country.
I'd rather have windmills than an entire town abandoned and a power plant that appears to still be melted down to this day.
are they really noisy? the big windmill farms i see here in Texas just seem awesome and they put a smile on my face as i drive through 'em.
Wind does not kill birds in significant numbers, that is misinformation.
Offshore wind is many miles out to sea, so it hardly matters if they’re big, ugly or noisy. It also reduces the effect on birds from negligible to nonexistent. In practice they are a few dots on the horizon, if we really are not willing to put up with such a minor inconvenience we might as well give up now.
"ugly" - you hate pinwheels???
"noisy" - I've gone right up to the base of farm-based wind turbines and don't remember any terrible noise. And they're never built right next to a house.
"deadly to birds" - nope
Really? I find them beautiful. White, majestic, slowly spinning. When biking, I'll often stop to watch. I'm sorry you feel that way.
> noisy
In this case the noise is irrelevant because they'll be out to sea. I've never been close enough to one to hear it: what do they sound like?