How much do wind turbines cost?– Home or Farm Scale Wind Turbines—4eh
Wind turbines under 100 kilowatts cost roughly $3,000 to $8,000 per kilowatt of capacity. A 10 kilowatt machine (the size needed to power a large home) might have an installed cost of $50,000-$80,000 (or more). Oftentimes there are tax and other incentives that can dramatically reduce the cost of a wind project.
Commercial Wind Turbines
The costs for a utility scale wind turbine range from about $1.3 million to $2.2 million per MW of nameplate capacity installed. Most of the commercial-scale turbines installed today are 2 MW in size and cost roughly $3-$4 million installed.
Total costs for installing a commercial-scale wind turbine will vary significantly depending on the number of turbines ordered, cost of financing, when the turbine purchase agreement was executed, construction contracts, the location of the project, and other factors. Cost components for wind projects include things other than the turbines, such as wind resource assessment and site analysis expenses; construction expenses; permitting and interconnection studies; utility system upgrades, transformers, protection and metering equipment; insurance; operations, warranty, maintenance, and repair; legal and consultation fees. Other factors that will impact your project economics include taxes and incentives.
As consumers, we pay for electricity twice: once through our monthly electricity bill and a second time through taxes that finance massive subsidies for inefficient wind and other energy producers.
Most cost estimates for wind power disregard the heavy burden of these subsidies on US taxpayers. But if Americans realized the full cost of generating energy from wind power, they would be less willing to foot the bill – because it’s more than most people think.
Over the past 35 years, wind energy – which supplied just 4.4% of US electricity in 2014 – has received US$30 billion in federal subsidies and grants. These subsidies shield people from the uncomfortable truth of just how much wind power actually costs and transfer money from average taxpayers to wealthy wind farm owners, many of which are units of foreign companies.
But at the same time, the subsidies make the US energy infrastructure more tenuous because the artificially cheap electricity prices push more reliable producers – including those needed as backup – out of the market. As we rely more on wind for our power and its inherent unreliability, the risk of blackouts grows. If that happens, the costs will really soar.
Where the subsidies go
Many people may be familiar with Warren Buffet’s claim that federal policies are the only reason to build wind farms in the US, but few realize how many of the companies that benefit most are foreign. The Investigative Reporting Workshop at American University found that, as of 2010, 84% of total clean-energy grants awarded by the federal government went to foreign-owned wind companies.
More generally, the beneficiaries of federal renewable energy policies tend to be large companies, not individual taxpayers or small businesses. The top five recipients of federal grants and tax credits since 2000 are: Iberdrola, NextEra Energy, NRG Energy, Southern Company and Summit Power, all of which have received more than $1 billion in federal benefits.
Iberdrola Renewables alone, a unit of a Spanish utility, has collected $2.2 billion in federal grants and allocated tax credits over the past 15 years. That’s equivalent to about 6.7% of the parent company’s 2014 revenue of $33 billion (in current US dollars).
President Obama’s proposed 2016 budget would permanently extend the biggest federal subsidy for wind power, the Production Tax Credit (PTC), ensuring that large foreign companies continue to reap most of the taxpayer-funded benefits for wind. The PTC is a federal subsidy that pays wind farm owners $23 per megawatt-hour through the first ten years of a turbine’s operation. The credit expired at the end of 2013, but Congress extended it so that all projects under construction by the end of 2014 are eligible.
In all, Congress has enacted 82 policies, overseen by nine different agencies, to support wind power.
As Warren Buffett has said, there wouldn’t be a wind industry without the PTC. UCS, DOE, AWEA.
Tallying the true costs of wind
Depending on which factors are included, estimates for the cost of wind power vary wildly. Lazard claims the cost of wind power ranges from $37 to $81 per megawatt-hour, while Michael Giberson at the Center for Energy Commerce at Texas Tech University suggests it’s closer to $149. Our analysis in an upcoming report explores this wide gap in cost estimates, finding that most studies underestimate the genuine cost of wind because they overlook key factors.
capital costs ranged from $48 to $88 per megawatt-hour, while O&M costs ranged from $9.8 to $21 per megawatt-hour.
Many estimates, however, don’t include costs related to the inherent unreliability of wind power and government subsidies and mandates. Since we can’t ensure the wind always blows, or how strongly, coal and natural gas plants must be kept on as backup to compensate when it’s calm. This is known as baseload cycling, and its cost ranges from $2 to $23 per megawatt-hour.
This also reduces the environmental friendliness of wind power. Because a coal-fired or natural gas power plant must be kept online in case there’s no wind, two plants are running to do the job of one. The amount by which emissions reductions are offset by baseload cycling ranges from 20% to 50%, according to a modeling study by two professors at Carnegie Mellon University.
While the backup plants are necessary to ensure the grid’s reliability, their ability to operate is threatened by wind subsidies. The federal dollars encourage wind farm owners to produce power even when prices are low, flooding the market with cheap electricity. That pushes prices down even further and makes it harder for more reliable producers, such as nuclear plants, that don’t get hefty subsidies to stay in business.
For example, the Kewaunee Nuclear Plant in Wisconsin and the Yankee Nuclear Plant in Vermont both switched off their reactors in 2013. Dominion Energy, which owned both plants, blamed the artificially low prices caused by the PTC as one of the reasons for the shutdown.
Lost in transmission
Another factor often overlooked is the extra cost of transmission. Many of America’s wind-rich areas are remote and the turbines are often planted in open fields, far from major cities. That means new transmission lines must be built to carry electricity to consumers. The cost of building new transmission lines ranges from $15 to $27 per megawatt-hour.
In 2013, Texas completed its Competitive Renewable Energy Zone project, adding over 3,600 miles of transmission lines to remote wind farms, costing state taxpayers $7 billion.
Today’s wind farms are built in areas with prime wind resources. If we continue to subsidize wind power, producers will eventually expand to sub-prime locations that may be even further from population centers.
The final bill comes to…
Finally, federal subsidies and state mandates also add significantly to the cost, even as many estimates claim these incentives actually reduce the cost of wind energy. In fact, they add to it as American taxpayers are forced to foot the bill. According to Giberson, federal and state policies add an average of $23 per megawatt-hour to the cost of wind power.
That includes the impact of state mandates, which end up increasing the cost of electricity on consumer power bills. California is one of the most aggressive in pushing so-called Renewable Portfolio Standards (RPS), requiring the state to consume 33% of its electricity from renewables by 2020. Overall electricity prices in states with RPS are 38% higher than those without, according to the Institute for Energy Research, a non-profit research group that promotes free markets.
The best estimate available for the total cost of wind power is $149 per megawatt-hour, taken from Giberson’s 2013 report.
Strata will explore the true cost of producing electricity from solar, coal, and natural gas. Until those reports are completed, it is difficult to accurately compare the true cost of wind to other technologies, as true cost studies have not yet been completed.
Blowing in the wind
The high costs of federal subsidies and state mandates for wind power have not paid off for the American public. According to the Mercatus Center at George Mason University, wind energy receives a higher percentage of federal subsidies than any other type of energy while generating a very small percentage of the nation’s electricity.
In 2010 the wind energy sector received 42% of total federal subsidies while producing only 2% of the nation’s total electricity. By comparison, coal receives 10% of all subsidies and generates 45% and nuclear is about even at about 20%.
no matter how high the costs. As a result, taxpayers will be stuck paying the cost of subsidies to wealthy wind producers.
source-windindustry, randy simmons, charles kock, lazard, warren buffet, michael giberson, strat, mercatus center, eia,