Today’s stat of the day: A levelized cost of electricity (LCOE) evaluation by Lawrence Berkeley National Laboratory (LBNL) researchers reveals that wind is now at $33 to $65 per megawatt-hour and falling.
Learning curve theory, said LBNL researcher Mark Bolinger, predicts that wind price should have dropped 20 percent to 30 percent as installed capacity doubled twice between 2002 and 2008. But turbine cost, which is 50 percent to 60 percent of LCOE and 60 percent to 70 percent of project cost, doubled.
To understand, Bolinger and fellow LBNL researcher Ryan Wiser studied the four endogenous factors (labor costs, warranty provisions, profitability, turbine design/scaling) and three exogenous factors (raw materials prices, energy prices, foreign exchange rates) that determine turbine price.
It is a detailed study. A turbine’s main raw materials, it reports, are steel (66 percent to 81 percent), iron/cast iron (9 percent to 13 percent), copper (1 percent to 2 percent), and aluminum (0 percent to 1 percent).
The reason for the learning curve theory contradiction, they found, is that “the largest single impact -- from scaling -- brings LCOE benefits.” Large-scale turbines allow wind projects to perform better. Bigger, better wind turbines have significantly better capacity factors. The standard for turbines has moved up from 1.0 megawatts to between 1.6 and 3.5 megawatts, and taller towers and longer blades allow them to produce electricity from slower winds.
Wiser’s analysis also showed wind capital costs were lowest from 2002 to 2003, rose slowly to a peak in the 2009-to-2010 period, and have fallen since, promising lower project costs in the 2012-2013 period.
Due to the capacity factor/capital cost interdependency, and to falling turbine costs, falling operations and maintenance (O&M) costs, an increased turbine supply, and lower cost financing, Wiser said, “the delivered levelized cost of wind energy has declined substantially in recent years [... and] is now at an all-time low across all wind speeds.”
The opening up of low-wind-speed areas (alleviating some transmission and siting barriers), according to Wiser, produces a 5 percent to 26 percent LCOE reduction.
“Assumed improvements in O&M costs, financing rates, and availability lead to substantial additional estimated LCOE reductions,” Wiser found, "of 24 percent to 39 percent.”
“Two countervailing factors may intervene to raise LCOE,” Wiser concluded -- more “lower wind speed sites as a result of severe transmission/siting limitations” or the “loss of federal PTC/ITC/Treasury Grant” incentives.
Tags: aluminum, barriers, blade, capacity factor, capital costs, cast iron, copper, electricity, endogenous factors, energy prices, exogenous factors, financing, foreign exchange rates, incentives, installed capacity