“Clean Energy Economy in Three Charts” U.S. DOE Misleads Again

“Cost, even if it were accurately calculated, is much different than true ‘value’, especially in the case of the intermittent, unreliable electricity from wind. This elementary fact cannot be unknown to energy specialists at the U.S. Department of Energy, or their political leaders. The fact that DOE issued such misleading material is sad. The fact that it is done at taxpayer expense is despicable.”

The U.S. Department of Energy (DOE) has, once again, issued a misleading document attempting to justify the massive tax dollars, subsidizes, and tax breaks that are being spend on renewable energy. The December 6, 2013, release is titled “The Clean Energy Economy in Three Charts.”

Unfortunately, this release will mislead gullible reporters and news outlets (it was reposted at Breaking Energy). Expect it to appear elsewhere. I hope others will take the time to challenge this blatant taxpayer-funded propaganda when they come across it.

Wind Energy Section

There is too much false and misleading information in the DOE release to correct with a single comment so I will deal only with the section on “wind energy.” In their attempt to defend wind energy, the authors picked two highly misleading statistical measures that have long been so recognized by serious observers of energy markets:

1. Levelized cost tells virtually nothing about either the true cost or the true value of a kilowatt-hour (kWh) of electricity from wind (something even EIA admits) for the following reasons:

a. Capital cost is the only factor used in the calculation that is likely to be known. All the other key factors – i.e., useful life of the wind turbine, the kWh of electricity that will be produced during the useful life and O&M costs during the useful life are unknown. Anyone calculating levelized cost of a kWh of electricity from wind is making an assumption or guess about these factors because turbines now being built have not been in operation long enough to produce valid, reliable data. Still another unknown factor, cost of decommissioning a “wind farm” probably is not even included in most LCOE calculations.

b. The true value of a kWh of electricity from wind is much less than the true value of a kWh of electricity from a reliable, dispatchable generating unit. Wind turbines generate electricity only when wind speeds are adequate and within the right range. They start producing with wind speeds around 6 MPH, reach rated capacity around 32 MPH, and shut down to avoid equipment damage around 55 MPH.

Because the electricity output is dependent on availability and speed of wind, the output is inherently intermittent, volatile, largely unpredictable and unreliable. Critically important is the fact that most electricity produced by wind turbines tends to be at night in colder and shoulder months, not on hot weekday afternoons in July and August when electricity demand and the value of a kWh is high. Attempting to evaluate the levelized cost of a kWh of electricity from wind without simultaneously considering the true value the kWh displays inherent bias.

c. Calculations of “Levelized cost” of a kWh of electricity from wind typically do not include all of the costs that should be counted. For example, such calculations often do not count the cost of reliable, dispatchable electric generating units that must always be kept immediately available by grid managers to keep electric grids in balance; i.e., to compensate for the intermittent, volatile, unreliable output from wind turbines. In addition to the added grid management burden, the units providing the “backup” or “balancing” role must, inherently, be kept running at less than their full capacity and peak efficiency, or they must be in “spinning reserve” mode. Costs attributable to wind are being incurred by these reliable units for fuel and O&M cost, including the cost of wear and tear as units are ramped up and down.

d. Levelized cost of electricity (LCOE) from wind also understates true cost because it does not take into account the higher unit costs of transmitting electricity from wind. These higher costs occur because (a) cause wind turbines are often located remote from where electricity is needed thus using more transmission capacity, (b) greater distances generally increase “line losses” (i.e., not all the electricity that is generated actually reaches customers), and (c)  transmission capacity is used inefficiently by electricity from wind primarily because of the intermittence and variability of the output from wind turbines.

2. Wind generating capacity, the other statistic displayed in DOE’s graph on wind, is a grossly misleading statistic — as any knowledgeable person in DOE must know. Generating “capacity” (which is measured in gigawatts – GW, megawatts – MW, or kilowatts – kW), tells only the amount of electricity that could be produced if the generating unit (in this case, a wind turbine) could produce if it were producing at full capacity.

However, the required amount of wind is quite seldom available to power wind turbines at their full capacity (i.e. wind speed of about 32 MPH). This is basic and crucial and deserves special attention.

Intermittency 101

Wind turbine capacity has no electricity value when its “fuel” – i.e. wind – isn’t available. What is more important is the amount of electricity that is actually produced (measured in gigawatt-hours – GWh, megawatt-hours – MWh, or kilowatt-hours – kWh) and, as explained above, when that electricity is produced.

One general measure of electricity production from any generating unit is “capacity factor.” Capacity factor is measured by dividing the actual metered production (in kWh or MWh) of electricity by the rated capacity of the unit (in kW or MW) times the number of hours in the period being measured (often done on a yearly basis). Specifically, a 1.5 MW (1,500 kW) wind turbine that produced 4,336,200 kWh of electricity during a year can be said to have a “capacity factor” of 33%. That is 4,336,200 divided by 1,500 kW rated capacity times 8760 hours per year, or 4,336,200/1,500 x 8,760).

Quite understandably, capacity factors for wind turbines vary widely from one location (and height) to another, depending on wind conditions. The average capacity factor for all wind turbines in the U.S. in 2012 was probably around 30% (the data are available from EIA).

“Capacity factor” numbers for wind turbines can be interesting but they tell little because of the problems discussed earlier; i.e., the intermittence, volatility and unreliability of the output; the fact that most production occurs when least needed; and the requirement that reliable generation must always be kept available to compensate for the inherent weaknesses in electricity from wind.

Conclusion

Cost, even if it were accurately calculated, is much different than true “value,” especially in the case of the intermittent, unreliable electricity from wind. This elementary fact cannot be unknown to the analysts and their superiors at the U.S. Department of Energy.

The fact that DOE issued such misleading material is sad. The fact that it is done at taxpayer expense is despicable.