Environmental Engineering Reference
In-Depth Information
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project management and engineering
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construction insurance
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construction contingency
In 986, a study by the
Pacific Gas & Electric Company
concluded that a wind power
station could be built for $,050/kW, operated at a capacity factor of 27 percent, and main-
tained for $0.0/kWh [Smith 986]. At a
fixed charge rate
of 0 percent, a 30-year life, and
constant dollars (
i.e.
,
no inflation), such a wind power plant could generate electricity for
$0.054/kWh.
By 987, wind turbine installed costs (power station turnkey costs less the
balance-of-
station costs
) had declined to approximately $700 to $900 per kW. Further reductions were
anticipated as wind turbine designs are refined and economies of scale took effect. Although
costs appeared to be stabilizing from 987 to 990, this effect was actually caused by two op-
posing factors: () Wind turbine costs per installed kilowatt decreased by about 30 percent,
and (2) the dollar weakened by approximately 35 percent during the same period.
Current Reference Costs in the United States
As a benchmark for estimating the cost of a wind power station, the DOE recently pub-
lished
reference prices
for component parts of a typical .5-MW machine installed in a 00-
MW wind plant [George and Schweitzer 2008]. These reference costs are listed in Table 4-,
in 2002 dollars. These cost estimates are being used for technology characterization and
for tracking progress in cost-effective technology development. Reference component costs
total to $64/kW for the turbine and $259 for the balance of station. With a market price
adjustment at $08/kW to include the manufacturer's markup or profit margin, the reference
wind power station has an initial cost of $98 per rated kilowatt.
Wind Plant Cost Trends
The costs of commercial wind turbines used in wind power stations have declined dra-
matically since 980, bottoming at $,400/kW and then increasing about $700/kW by 2007,
as shown in Figure 4-33 by the trend in
turnkey system costs
(costs to investors). The installed
cost of wind projects in the United States reached its lowest point in 200. This was the
result of a combination of larger projects, intense competition between developers, turbine
manufacturers offering improved technology, rising fossil energy prices, state level financial
incentives and the scheduled expiration of the PTC.
Many of these cost reduction drivers continued, but two changes caused prices to rise
after 200, for the first time in 20 years. First, the PTC was allowed to lapse or was renewed
late in the year, disrupting project planning. Second, accelerating global demand for wind
turbines and other products caused backlogs in orders for machines and shortages in raw
materials, including steel for towers, copper for wire and generators, and cement for founda-
tions, all of which drove up prices. It is important to note that material supply issues are not
unique to wind projects and are increasing the cost of all new electricity generating systems.
In spite of these increases in installed project costs, the COE
from wind projects was
competitive with other wholesale power costs in all areas of the United States in the years
2000 to 2007. If the COE to the utility is in the range of $0.05/kWh to $0.06/kWh and a
typical
capacity factor
is 0.3, turnkey station costs will have to be limited to approximately
$900 to $,200 per kW, to provide a fair rate of return for the station owners. Because the
balance-of-station costs are approximately $400 per kW, turbines will have to be produced
for less than $800/kW to support COEs in this range.
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