Monday 30 July 2012

Will Ireland's wind energy export plan work?

Ireland’s long-term plan is to reduce its dependence on imported gas for producing energy. As wind speeds in Ireland are among the best in Europe, it has built about 2,000 MW (end of June 2012) of wind turbines during the past 10 years to supply energy to the Irish grid which uses gas turbine plants to balance the wind energy. Very little of this energy is exported to the UK.

The Project: This is about to change, because Greenwire, a wind turbine project investor/developer, has made a proposal to locate 3,000 MW of wind turbines, say 1,000 @ 3 MW/each, arranged in ten 300 MW clusters of 100 wind turbines each, in the Irish Midlands by the end of 2018. All of the wind energy would be exported to the UK. 

Greenwire estimated the useful service life of the proposed system at 25 years. Greenwire stated the proposed system would be entirely independent of the Irish grid.

The wind turbines would be tied together with underground cables to connect to two 2,500 MW HVDC cables under the Irish Sea to two points in Wales, to enable the UK to import 3,000 MW x 8,760 hr/yr x overall capacity factor (after losses) 0.30 = 7,884,000 MWh/yr of variable, intermittent wind energy. The wind energy balancing would be performed in the UK. The grid in Wales would need to be modified to accept up to 2,500 MW at either connection in the event of an HVDC cable outage.

The UK wind energy balancing would be mostly with gas turbines in inefficient part-load-ramping mode, as in Ireland, the Netherlands, etc., and would have a similar CO2 emission reduction effectiveness, i.e., about a 1 : 0.7 ratio, as in Ireland; 10% annual wind energy would reduce the grid CO2 emission intensity, gram/kWh, by about 7%.
http://greenwire.ie/greenwire-project/#1
http://theenergycollective.com/willem-post/89476/wind-energy-co2-emissions-are-overstated 

Project Cost: Greenwire claims an estimated total project cost of 8 billion euros
Wind turbine installed capital cost = 3,000 MW x 1,800,000 euro/MW = 5.4 billion euros
Other installation costs = 2.6 billion euros

Export Revenues: Greenwire claims Ireland would have export revenues of 1.2 billion euro/yr, which are, in fact, the gross revenues to Greenwire and partners.
Energy sales price = (1,200,000,000 euro/yr)/(7,884,000,000 kWh/yr) = 0.152 euro/kWh 
Note: The current annual average UK grid price is about 0.06 euro/kWh.

Job Creation: Greenwire claims up to 3,000 permanent project and "ancillary" jobs.

O&M for 3,000 MW of wind turbines, etc., requires about 10 - 15 workers/100 MW.
It appears, the proposed system is not a significant PERMANENT job creator.

RE buildouts increase jobs in RE sectors and suppliers to these sectors, but decrease more jobs in other sectors, for a NET JOB LOSS. 

RE buidouts divert resources (funds, materials, labor, etc.) to inefficient ways of producing energy, which increases electric rates and the prices of goods and services and lowers job creation, thereby LOWERING living standards, instead of to more efficient production of goods and services and increased energy efficiency, which decreases the prices of energy and goods and services and increases job creation, thereby RAISING living standards; per Economics 101.
http://theenergycollective.com/willem-post/71771/energy-efficiency-first-renewables-later 

Project Payments to Locals, i.e., Bribes: Greenwire claims annual payments of about 50 million euro/yr to: 

- local landowners, mostly farmers who receive several thousand euros/MW to put up with the adverse health, noise and visual impacts of wind turbines near their residences and animals. 

- local authorities in the Irish Midlands to defray the costs of additional government operations and enlargements.

With a setback of 1 - 2 km to minimize health, noise and visual impacts, significant areas of the Midlands will become undesirable/uninhabitable within and near these clusters. 
http://theenergycollective.com/willem-post/84293/wind-turbine-noise-and-air-pressure-pulses

The 50 million euro/yr appears to be the trade off (bribe?) for further blighting the Irish landscape, and spreading adverse health, noise and visual impacts on people and on bird wildlife. 
 
Irish Wind Energy vs UK Offshore Energy: Greenwire claims UK consumer savings of 9 billion euros compared to sourcing the same quantity of energy offshore, or 25-year savings/25-yr production = 9,000,000,000 euro/197,100,000,000 MWh = 0.0457 euro cent/kWh.
 
For the Greenwire claim to be true, the offshore energy cost would need to be = 0.152 + 0.0457 = 0.1977 euro/kWh, in line with other estimates. See website.    
http://theenergycollective.com/willem-post/47519/base-power-alternatives-replace-base-loaded-coal-plants

An Eight Billion Euro Tax Shelter: The financing will be primarily by Greenwire’s wealthy partners, many of them in the US, who use LLC-type entities created by financial sector firms on Wall Street and in London to enable wealthy individuals and others to take tax credits and depreciation write-offs  to reduce taxable incomes; by special provision, almost the entire project can be written off in 5 years; so-called “5-year accelerated depreciation”. 
http://www.telegraph.co.uk/earth/energy/windpower/9336027/Subsidies-for-onshore-wind-farms-to-be-axed-by-2020.html

All others, i.e., the other 99% of households and smaller businesses, will bear the brunt of the health, noise and visual impacts and the energy generating inefficiencies. See below.

Government Support: The UK government needs to meet its 2020 RE targets, including 28,000 MW of wind turbines, in the face of increasing opposition to onshore wind turbines. Because the wind turbines will be located in Ireland, the government welcomed the proposed project. Element Power, parent of Greenwire, and National Grid UK signed a grid connection agreement to send up to 3,000 MW of power into the UK grid.
http://www.earthtechling.com/2012/07/ireland-prepares-to-feed-uks-wind-power-appetite/

A MUCH LESS COSTLY CO2 EMISSION REDUCTION ALTERNATIVE

A standard-size, 1,000 MW nuclear plant, located in the UK would produce 1,000 MW x 8,760 hr/yr x CF 0.90 =  7,884,000 MWh/yr.

The energy is nearly CO2-free, relatively low-cost, steady, 24/7/365, with nearly 100% “on-demand” capacity value, whereas wind energy is variable and intermittent (zero or minimal about 10-15 % of the hours of a year), and has zero “on demand” capacity value.

The alternative attributes are:

- the same quantity of energy as the wind turbine system
- no expensive transmission systems would be required
- no extra fuel consumption and CO2 emissions due to balancing with fossil plants 
- the capital cost would be about 4 billion euros, 50% of the wind turbine system
- the useful service life would 50-60 years vs 25 years for the wind turbine system 
- it would take about 10 years to build vs 6.5 years for the wind turbine system
- no subsidies would be required

If the cost of O&M, fuel, etc., for the wind energy proposal and the nuclear alternative are assumed about equal, say 0.09 euro/kWh, then the cost of amortizing: 

- 4 billion euro with 60-yr bonds @ 4%/yr for the nuclear alternative would be 4 billion euro/22.62 annuity factor = 176.8 million euro/yr, or 0.0224 euro/kWh, and the cost of energy would be 0.09 + 0.0224 = 0.1124 euro/kWh, in line with US DOE estimates.

- 8 billion euro with 25-yr bonds @ 4%/yr for the wind energy proposal would be 8 billion euro/15.62 annuity factor = 512.2 million euro/yr, or 0.0653 euro/kWh, and the cost of energy would be 0.09 + 0.0653 = 0.1553 euro/kWh, in line with Greenwire estimates. 
Note: This does not include any wind energy integration fees which, if properly accounted for, would be about 0.01 euro/kWh.  

Wind Energy Integration Fees

For a proper evaluation of wind energy cost, the total would have to include not only the LCOE of the wind turbines, but also all or part of the LCOEs of:

- Increased regulating plant operation for grid stability; extra fuel and CO2
- Increased spinning plant operation; extra fuel and CO2
- Increased start/stop operations; extra fuel and CO2
- Increased part-load operation; less efficient, extra fuel and CO2 
- Increased part-load-ramping operation; less efficient, extra fuel and CO2
- Increased wear and tear of equipment of generating units  
- staffing, fueling and operation of most of the existing generating units 
- less than optimum economical scheduling of plants due to wind energy on the grid
- less economical operation of existing plants due to increasing wind energy production
- expanded transmission and distribution systems
- increased grid management systems, staffing and operation 
- increased weather and wind speed forecasting systems, staffing and operation

Rarely are any of these costs identified, quantified and charged to wind turbine owners as wind energy integration fees, i.e., they are getting a free ride.  

The above costs are not yet seperately identified and quantified by grid operators, generator owners and utilities, because heretofore they have been relatively minor. But as wind energy percent increases, they will be come increasingly greater expenses, as experienced by other grids with greater than about 3% annual wind energy.

Grid operators typically add their extra costs to the invoices sent to utilites and generator owners that supply the grid.

Utilities typically add their extra costs to their other costs to justify rate increases. How generator owners will be compensated for the adverse impact of wind energy on the economics of their generators remains an open question.

Legislators, who wear the "RE" label to get votes, and utilities, dependent on rate increases from legislatures, are loathe to investigate, as it would be considered adverse to RE. They usually work together to make these costs “disappear”, i.e., "socializing" them by rolling any RE costs mostly into household rate schedules.

Denmark, an RE role model, has done it for decades and Danish households have the highest electric rates in Europe (about 31.5 euro cent/kWh); Germany’s households have the second highest rates (about 27 euro cent/kWh), France enjoys the lowest (about 12 euro cent/kWh).
 
The lowest-cost wind energy balancing is with hydro energy. Higher cost wind energy balancing is with gas-fired, quick-ramping gas turbines. It is highly unlikely all of the above costs are included in the wind energy integration fees.

Hydro-Quebec, using hydro plants, charges wind turbine owners $5/MWh. 
The Bonneville Power Authority, BPA, using hydro and gas turbine plants, charges $5.7/MWh.
The Netherlands, using gas turbine plants, charges $10/MWh. 

http://www.lawofrenewableenergy.com/2009/07/articles/bpa-issues-decision-on-wind-integration-charge-in-2010-rate-case/ 
http://www.hydroworld.com/index/display/article-display/354308/articles/hydro-review/volume-26/issue-4/departments/the-leading-edge.html

http://theenergycollective.com/willem-post/98061/irelands-wind-energy-export-plan