Thursday, February 4, 2010

Where is Dalton Sending Your Money?

After my previous arguments concerning the cost of nuclear power versus how much Dalton McGuinty is promising to pay the Korean consortium per kWh, I decided to do a little bit of my own analysis on how much wind power costs per kWh and came to a relatively surprising result which leads to some very disturbing questions.

It is estimated by wind energy proponents that, per MW of installed capacity, the cost for constructing and installing a wind turbine is $1-2 million per MW. Lets assume the upper limit and calculate the cost per kWh for a 50 MW turbine.

Expenses

Like nuclear power plants, most of the cost is built into the initial construction. A 50 MW wind turbine costs roughly $100 million to build and install. Assume the life expectancy of the turbine is about 20 years. That means that the cost is about $5 million / year. Lets add an additional $2.5 million / year for maintenance, repairs and other costs.

Electricity Produced


Just as before, the calculation for the number of kWh is straightforward. Assuming a capacity factor of 30% then the wind turbine will generate 153 million kWh each year.

Total Costs

Using these numbers, the costs are $0.049 / kWh. Which is, a lot lower than the $0.135 / kWh that the Ontario government promised the Koreans for their electricity.

Either one of two things must have happened in order to account for this massive discrepancy. Either the cost of wind power is much higher than wind advocates are letting on, or the Ontario government has been duped into paying the Koreans over twice what the electricity should be worth. Which do you think is more likely?

4 comments:

Powell lucas said...

Look, McDopey signed on to this because the Japanese promised him that they would employ at least 10 Canadians. They pointed out that this lack of Canadian input would be balanced by the fact that McDopey could create a whole new monitoring bureaucracy with thousands of employees. The idiot can then claim he is creating jobs.

Eric said...

Powell: The agreement was with a Korean consortium.

My question is why he agreed to pay almost three times what wind power advocates say is a reasonable price for electricity from wind power. And then claims that it is a 'deal'. Either it is not a deal and we'll fork over billions to overseas companies, or the wind advocates are wrong.

Thucydides said...

I wonder if part of the cost is for natural gas powered generators to take up the slack whenever the wind is not blowing. for every Kw of wind energy you plan to put on the grid, you must install a Kw of thermal generation capability to cover any sudden shortfalls (sorry, nuclear reactors cannot react quickly to variable or fluctuating loads, only thermal energy stations powered by coal or natural gas have the technology, reliability and scale to do the job).

IF we are paying for two sets of generators that can only be used part time, then amortization and thus costs becomes far more expensive.

Eric said...

Thucydides:

Yes, I've pointed this out before too. But the amount being paid to the Korean consortium is only for the wind power portion.

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