Wednesday, September 26, 2012

Economics of Gas vs Wind Power

It is often argued that wind power has one main failing, namely that it isn't available all of the time.

Because of this, it is argued, all wind power has to have backup capacity sitting in the background.

Now, there is a good deal of truth to this. Wind power spread over a geographical areas the size of the UK is significantly correlated and either backup generation or access to the European electricity grid is required to cope with this variability.

Against this we need to set the reality that their are many GW of medium scale diesel generating units used by utilities right across the country. In the UK only a portion of these can be called upon to be used by the grid, in France--with it's greater portion of inflexible nuclear generation--these units are required to be grid connected.

More to the point, we still have many GW of coal power generation in use. Even as we speak 19GW of coal power is in use.  These unit's must surely but put out of regular use but retained for the highest energy demand cold periods. If they are used for 2 weeks per year the carbon input would be negligible but the security of supply provided would be valuable.

Finally, i find it fascinating just how cheap gas power stations are. Recently 2GW of generating capacity was built for only £1Bn. If the numbers in this recent news story are correct wind power projects cost about £6000 per peak kW installed compared to £500 per peak kW  in the aforementioned gas power plant. In reality the situation is even worse as on an average annual basis wind power only provides around 40% of its maximum power.

Usually this is taken to mean that wind power is uneconomic and gas is cheap. In fact what is actually show by these numbers is that the economics are decided by capital costs and running costs, respectively. Onshore wind is likely to be cheaper than gas in overall terms in just a few years.

A comparison with energy efficient LED's is illuminating (no pun intended). LED's cost perhaps £6 each compared to regular halogen light bulbs which might cost £50 each. However, if you use the LED's 9hrs a day throughout the year--such as in a restaurant or shop--the energy savings will more than repay your capital expenditure. After that year you will be reaping a dividend of long term energy savings. Now, the same type of economics are at play with with and gas.

Finally, the costs of buying a light bulb and an LED is pretty much the same as just buying the LED: £6 vs £6.50. The same is true for building wind or wind and gas plants. The advantages of using wind are to be had when the wind is blowing (over 80% of the time at the average site) and when wind isn't blowing the gas technology can be plugged back in. The increased capital cost for backup gas is negligible.

Further Reading:

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At 5:29 AM, Blogger OK said...

i think if we can manage wind energy to produce power than we can save our gas energy for future. i think gas will not decrease day by day. we can store gas. but we can not store wind. so i think if we have both energy available, we should use wind energy at first.


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