August 25, 2007
Long Island Ocean Wind Project Cancelled Due To High Cost

A plan to build 40 wind towers a few miles offshore of Long Island New York has been cancelled due to spiralling cost estimates.

According to LIPA, the study by Pace Global Energy Services, a consulting firm, found that the premium for wind-generated power from the Jones Beach project, over a 20-year period, would translate to about $2.50 per month to the typical residential consumer bill, or a total $66 million per year for all of LIPA. PACE arrived at the figure by comparing the cost of electricity produced in a combined-cycle natural gas power plant on Long Island, which is about $137 per megawatt hour, and a megawatt hour of power produced by the wind farm, which it said "could be $291."

Some locals opposed the project on esthetic grounds. But Long Island Power Authority Chairman Kevin Law says his decision was purely based on costs.

Costs for new electric generation plants of all types have been escalating sharply due to rising raw materials costs. Also, increased demand for wind power has been engineered by tax and regulatory changes and the resulting increase in demand has outstripped capacity of the wind tower makers to respond. Hence they've raised prices. Wind should become cheaper in a few years once makers have time to expand capacity.

Since nuclear, wind, and coal plants are all getting hit by higher costs due to higher steel prices I'd really like to know how long steel prices will remain high. Does anyone know how much the steel industry is increasing capacity and how soon we can expect to see a drop in steel prices?

I also wonder at the $137 per megawatt hour for the natural gas plant. That's a rather expensive 13.7 cents per kwh. What price of natural gas is that based on? What will happen to the price of natural gas once oil production peaks? My guess is the natural gas electric will end up costing more than they expect.

The cost of this project has almost quadrupled.

The original estimate for the windmills was about $200 million. The price increased to $356 million when FPL Energy of Florida won the bid for the project in 2003. Then last year, rising costs nearly doubled the estimate to $700 million.

Deep ocean offshore wind has been touted by some as a potential source of more reliable wind power. But even this Long Island project which was only a few miles offshore turned out to be too expensive. So I'm skeptical about the economic feasibility of deep offshore wind projects. Though ,aterials advances could some day make deep water wind towers more economically feasible.

Share |      Randall Parker, 2007 August 25 08:03 PM  Energy Wind


Comments
K said at August 25, 2007 9:14 PM:

I doubt the cost of steel is the problem. Granted demand is up for the generators, etc. But they certainly weren't going to blame themselves.

It looks like the project was simply out of control. The utility didn't know if it was going to cost $400m, $700m, or what. The estimates were probably never that good for putting high tower platforms out at sea. And who knows when courts or regulators will intervene and change policies or decide birds might be killed.

Julie said at August 25, 2007 10:47 PM:

I should think the logical place for offshore wind towers is atop offshore oil rigs -- half the job is already done.

Brian Wang said at August 27, 2007 9:44 AM:

total oil rig count is about 3200
http://www.bakerhughes.com/investor/rig/pdf/Worldwide_7-07.pdf

The total offshore rig count is about 270.

A large wind generator is almost as big as an oil rig
See the pictures at the middle of this article at this link
http://advancednano.blogspot.com/2007/07/constructing-lot-of-nuclear-power.html

We need to put up 1,500 3MW wind generators to equal a single 1 GW nuclear power plant.

when people talk about 330GW of wind power in the Atlantic.
http://www.renewableenergyaccess.com/rea/news/story?id=47355

The scientists' estimate of the full-resource, average wind power output of 330 gigawatts over the Middle Atlantic Bight is based on the installation of 166,720 wind turbines, each generating up to 5 megawatts of power. The wind turbines would be located at varying distances from shore, out to 100 meters of water depth, over an ocean area spanning more than 50,000 square miles, from Cape Cod to Cape Hatteras.

So converting all of the oil rigs is less than 0.1% of the job for 330GW which would provide less then 10% of the electrical power needs of the United States. So 0.01% of the job for the US which is only 25% of the total world electrical power needs.

Nick said at August 29, 2007 2:15 PM:

" 330GW which would provide less then 10% of the electrical power needs of the United States"

No. This is average power output, and the average for the whole US is 450GW, so this would be 73% of the needs of the US.

OTOH, it does look like oil rig mounting doesn't contribute a whole lot.

Brian Wang said at August 30, 2007 8:44 AM:

I had done a some quick estimates in my head for the 10% figure. With actual data sources, I have come back
with a more accurate assessment. 13-16% of the electrical power needs of the USA in 2030. (18-20% of electical needs for 2007 USA)

US electrical Generating capacity is about 1GW
http://www.eia.doe.gov/cneaf/electricity/epa/epat2p2.html

electrical power generated from all sources about 4 billion kWH (4 million Mwh)
http://www.eia.doe.gov/cneaf/electricity/epa/epat1p1.html

http://www.awea.org/newsroom/pdf/Fast_Facts.pdf

6,740 megawatts of wind power capacity in the U.S.(as of January 2005)
generated over 17 billion kilowatt-hours annually.

11.6 GW of wind installed at the end of 2006
31 billion Kwh for 2007 projected, 26 billion kwh in 2006.

4.01 GW of wind, generated 9.4 billion kWh of electricity in 2006

So about 2.2-2.5 kwh per year per watt of installed wind

so 330GW, would generate 726 to 825 billion kwh (about what the current 104 nuclear plants generate now)
18-20% of current power needs

http://www.eia.doe.gov/oiaf/aeo/electricity.html

2030 projected energy needs
5,168 billion kilowatthours to 5600 billion kwh.

12.9-16% could come for 330GW of installed wind in 2030.

If we get the McCain Lieberman climate stewardship bill passed (in congressional committee now),
the EIA projects the increased costs for carbon
would double projected renewable power including wind by 2030 and increase nuclear from 787 billion kwh up to 1900 billion kwh.
About 40% of total projected 2030 US electrical needs from nuclear.

Nick said at August 30, 2007 1:13 PM:

Brian,

The 330GW is "average wind power output", so no adjustment is needed for capacity factor, and we're talking about 330/450, or 73% of the needs of the US.

Please note that EIA statistics typically compare end of year capacity with full-year production, thus understating capacity figure, especially in high growth years. I would adjust your 27% figure to about 30%.

Finally, you really, really shouldn't rely on EIA projections. Their historical actual data is decent, but their projections seem to be based on the same method as Federal budget projections, i.e., they assume that almost nothing changes. EIA doesn't see projections as important, and when you talk to them even they will admit the projections aren't worth much. If you think about it, the idea that renewables are going to only double by 2030 is ridiculous...

Nick said at August 30, 2007 2:25 PM:

Brian,

Also please note that the 330GW is just for one part of the country, the Atlantic coast, and is just off-shore: the overall country resource is likely more than 10x as large. This makes clear that wind in the US faces no practical because of a limit to the wind resource.

In fact, lately wind resource statistics have gone through a number of upward revisions, in part because the original wind measurements were typically 10 meters high, not the 50-80M height of actual turbines, where the wind is much stronger and steadier. States that thought they had little wind resource are finding that they have a lot to work with.

Re: the EIA wind statistics: I shouldn't phrase my comments to suggest that the EIA presents incorrect capacity figures. In fact, they don't try to compare the two statistical series directly, or calculate capacity figures, perhaps because they know they don't have consistent data sets.

Randall Parker said at August 30, 2007 6:27 PM:

Brian,

You are off by a few orders of magnitude with your 1 GW figure. From your link the net US generating capacity is 1 million megawatts. I convert that to 1,000 GW or 1 TW.

Nick,

Regards offshore wind: But what is the capital requirement per megawatt or gigawatt of offshore wind? I'd like to see this expressed in tons of steel and concrete per megawatt. How does it compare to 40 tons of steel per megawatt of nuclear plant capacity? Does offshore wind end up being as much or more capital intensive as nuclear?

Nick said at August 31, 2007 8:22 AM:

Randall, I'd expect both on and offshore wind to be more capital-intensive than nuclear, based on an ideal scenario for both. Ideal onshore costs (adjusted for capacity factor) might be $3.7 per watt for wind, and $2.2 per watt for nuclear. The higher capex for wind is largely offset by much lower operating costs (at least a penny per KWH), and I would argue wind is cheaper if you include risks and external costs, including project time & money over-runs, waste disposal (impossible to cost out currently, because no one is doing it....anywhere in the world), Price-Anderson liability limits, and the opportunity cost of forgoing investment in wind & solar, which have export opportunities without the weapons proliferation risks.

I would expect offshore wind to be somewhat more expensive than onshore, with a partial offset for lower output variance & reduced transmission distance - Europe is mainly going to offshore because of limits to onshore wind resources & nimbyism. This assumes current technology - among other things, floating platforms could change this by enabling larger turbines and reducing siting costs.

Randall Parker said at August 31, 2007 1:51 PM:

Nick,

What external costs are generated by slowing down the wind?

Nick said at September 3, 2007 10:47 PM:

I meant external costs for nuclear.

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