Sunday, January 18, 2009

Energy Bailout Showdown: Solar vs. Wind vs. Nuclear


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A hundred billion dollars here and a hundred billion there, and before long you're taking about some real money! The US Congress approved the $700 Billion bailout just a few months ago, and within days they doled out half the money. Now it seems congress has virtually no idea what the banks did with $350 Billion of taxpayer money. To make matters worse, they declared a financial emergency to justify these drastic measures, yet the stock market crashed anyway, leaving working class retirement funds and 401K accounts with half their pre-crash values.

All this made me wonder, "What would be the impact of spending that same $350 Billion on creating a secure, emissions free energy grid?" and "How much clean energy generation would $350 Billion buy?"

To answer these questions I started with a little Internet research. The four primary means of generating emissions free electricity are solar, wind, hydro, and nuclear. I decided to concentrate on those four. First off, experts agree that hydro-electric capacity in the USA is pretty much tapped out, so even if we had the money to spend we could not buy more hydro. Scratch hydro-electric off the list.

Next I researched current examples of each technology to obtain cost estimates. For solar energy I used the Clark County Nevada 18 MW project, the largest solar PV installation in the world, and data from the Energy Information Administration. For wind energy I used two projects; Cape Wind in MA and the London Array in the UK. For nuclear energy I used the proposed two-unit plant that Progress Energy is building in Florida. Here are the published cost estimates:

  • Solar: $117 Million for 18 MW of rated capacity
  • Wind: $1.2 Billion for 420 MW of rated capacity
  • Nuclear: $14 Billion for 2210 MW of rated capacity

Next, I researched the capacity factors for each energy type because as we know, the wind does not blow and the sun does not shine all the time. A MW of "rated capacity" does not equal a MW of true power output. Nuclear plants don't run all the time either and must be shutdown periodically to replace fuel or for maintenance. For wind and solar I used best available estimates because both technologies are improving. For nuclear energy I used actual performance data. Here are the capacity factor results:

  • Solar – 19%: Solar energy suppliers say capacity factors vary depending on location from 12% in the US upper Midwest to 19% in Arizona. I'll assume we use the best location for our investment and capacity factor will be 19%.
  • Wind – 32% : Cape Wind project planners say today's CFs are 28%, but I used 32% because they promise performance will increase over time. I realize this is unproven, but we'll give them the benefit of the doubt.
  • Nuclear – 90%: for the last several years the capacity factor for US nuclear plants have averaged about 90%. While new plants will likely have a "shake down" period with lower capacity factors, it's reasonable to assume over their entire lifetimes the new plants will perform at least as well as existing plants.

Finally, since I'm considering energy produced over the life of our investment, we need to consider how long each power facility will last.

  • Solar – 20 years: I recently attended a Power Engineering workshop in which a representative from the Solar Energy Consortium (TSEC) spoke about the economics of solar installations. According to TSEC, solar panels last 18 to 20 years. For this calculation I'll use 20 years as the life expectancy.
  • Wind – 30 years: According to Alliant Energy, one of the largest wind producers in the USA, wind turbines last for 20 to 30 years. I'll use 30 years for this calculation.
  • Nuclear – 60 years: Today's nuclear plants are licensed for 40 years, and about half have received extensions to allow them to run for 60 years. It is reasonable to assume that new plants will also operate for 60 years.

Now it's time to crunch the numbers. I'll do this step by step. Remember, the goal of this exercise is to determine how much energy we can buy with an initial capital investment of $350 Billion. The final results will be expressed in Gigawatt-hours (thousands of Megawatt hours).

Step one: determine rated output for a $350 Billion investment.

  • Solar: if $117 Million buys 18 MW, then $350 Billion will buy 53,846 MW (rated).
  • Wind: if $1.2 Billion buys 420 MW, then $350 Billion will buy 122,500 MW (rated).
  • Nuclear: if $14 Billion buys 2210 MW, then $350 Billion will buy 55,250 MW (rated)

Step two: determine average power produced considering the predicted capacity factors.

  • Solar: 53,846 X 19% = 10,231 MW (average)
  • Wind: 122,500 X 32% = 39,200 MW (average)
  • Nuclear: 55,250 X 90% = 49,725 MW (average)

Step three: determine power produced over the expected life of the plant (there are 8,766 hours in a year and divide by 1000 to convert from Megawatts to Gigawatts).

  • Solar: (10,231 MW X 8,766 hours/yr X 20 years ) / 1000 = 1,793,699 GW-hours
  • Wind: (39,200 MW X 8,766 hours/yr X 30 years) / 1000 = 10,308,816 GW-hours
  • Nuclear: (49,725 MW X 8,766 hours/yr X 60 years)/1000 = 26,153,361 GW-hours

Results

An investment of $350 Billion in nuclear energy would provide 2.5 times more energy than the same investment in wind energy, and 14.6 times more energy than an investment in solar. Another way of looking at the value of the various investments is this: $350 Billion invested in solar energy will provide the same amount of energy as $23 Billion invested in nuclear energy. Also, as a nation we could choose to invest $350 Billion in wind energy, or we could get the same benefit from just $140 Billion invested in nuclear energy. In these troubled economic times, where should we be investing our finite resources?


Just a few months ago I sat in the audience at a workshop and listened to someone in the solar energy business tell us "…and with 50% government subsidies the return on investment is 18 to 20 years." I could hardly believe my ears! Who do they think pays for those subsidies? I'll also point out solar modules last only 20 years. Even with the taxpayer footing half of the bill, the return on investment happens just as the solar panels wear out!

The story for wind is a little better, but it still does not make sense for large scale investment. We need an energy source that is reliable and steady, not one that is intermittent and unpredictable. The economic barriers are still significant for wind.

By the way, in this analysis I neglected to add the cost of rapid-start power plants that would need to be in place to pick up the load to keep the grid stable when the wind stops blowing. That would add significantly to the cost of wind energy. I did include the cost of used nuclear fuel disposal because those costs were included in the Progress Energy cost estimate.

In summary, I don't believe the average American family is willing to pay 2.5 times to 14 times more for their electricity just to support the wind and solar industries? For the millions of people struggling to keep homes warm and food on the table in these tough economic times that simply would not be a responsible choice for us to make. That does not mean we should stop investing in research and development that may someday make wind and solar energy more cost effective. That is important, but we should not confuse R&D with large scale economically viable energy production.

In the coming months we are going to hear a lot about how the new administration will use our tax dollars to stimulate the economy, improve energy security, and address climate change. I hope you'll keep this analysis in mind when you listen to proponents of the various industries try to make their case.

John Wheeler


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7 comments:

Simon Filiatrault said...

John,

Very good analysis... Thanks for the work.

Since around 87% of the total energy use in our societies is from fossil fuels.

Since all work we do cost energy.

Since burning fossil fuel pollute and has an impact on nature and human life.

We can therefore say that using those billions to build wind power will pollute and consume 2.2x more than nuclear
(26153/10309)*87% by the way, you are very generous in your calculation of wind.

The same calculation on solar give 12.6x more pollution and consumption of fossil fuel than nuclear.

We also need to talk about the fact the fossil fuel reserves are depleting fast. If we build those low density power source that pollute more and consume more fossil fuel, we are going to deplete the reserves before we have the time and resources to build all the nuclear infrastructure needed to support the world growing energy and desalination needs for fresh water.

John Wheeler said...

Simon,

That is a very good point about the rate of fossil fuel consumption while building alternate sources. Since new generation of any kind is capitol intensive, and since capitol is limited, selecting to build wind or solar instead of nuclear will result in more fossil fuels continuing to be burned.

Coal and gas are big winners when the government promotes wind and solar subsidies because neither wind nor solar can reduce consumption of coal or gas in any meaningful way for the foreseeable future.

Thanks for your insightful comments,

John

Adam said...

John,

The podcast is great and very informative.

I'd like to know in more detail where the cost estimates came from. Does the $14 Billion for 2210 MW of rated capacity include the cost of fuel over 60 years as well as operating/personnel costs? Since it's a 2 unit plant at 14 billion, I'm assuming not.

If that is correct, can you tell me why those costs are not relevant?

Thanks,
Adam

John Wheeler said...

Hi Adam,

The purpose of the analysis was to demonstrate the capital cost of new construction. I did not include the projected operating or maintenance costs for any of the three power sources. That is another analysis I have been gathering data for.

The interesting thing is this; nuclear fuel cost is virtually insignificant in the total cost analysis. The dominant non-capital cost for operating nuclear plants is PEOPLE, not fuel. The same may hold true for wind energy, although maintenance and replacement parts may turn out to be higher than the people cost. Also, from my initial data it appears that it will take about the same number of people to operate and maintain 1500MW of wind as it will a 1500MW nuclear plant. That is great for jobs, but it adds to the cost.

On a side note, we know that existing nuclear plants already have the lowest production costs (~1.6 cents per KW).

Stay tuned for the analysis of O&M costs in the future.

Thanks,

John

Anonymous said...

Your solar numbers couldn't get much more off. Most Panels are warrantied for 80% power output at 25 years. Panels easily will push out 35+ years. Just based on how far your numbers are off here, allows me to consider you have no idea what your talking about when it comes to solar. But you saw it on the internet so it must be true. Research first. Nothing personal.

John Wheeler said...

Anon,

There is a lot of misleading and conflicting information on the web regarding the life expectancy of solar PV systems.

My figures are based on several sources including a briefing I attended by the Solar Energy Consortium and utility executives from Con Edison. I trust them because they are either in the business of making solar work, or in the business of evaluating suitability of various generating options.

PV capacity degrades over time. By about the 20 year point the panels will have lost about 20% of their original capacity. Since in the best case PV only operates at about 20% capacity factor, a 20% reduction means they will only be producing at 16% of the original rated capacity. That drop will probably make them non-economic to continue to operate. Also, the inverters (a necessary part of the system) will not last longer than 20 years. The inverters typically have warranties of 10 years or less.

Mark Montgomery said...

Great graph! We talked about your graph and reported your findings on the air on our Radio Show. Small Biz Talk Radio heard on KTKZ 1380 in Sacramento, Ca. We were talking about energy issues in California.