In the comments section of a recent article we wrote on Federal approval for the construction of 130 wind turbines off Cape Cod, Jerry Graf wrote a particularly analytical and we felt worthy reply, so good in fact that we invited Jerry to expand on his thoughts and write a guest piece for us. This he has kindly done and the following, published in two parts today, is his analysis not just of the Cape Wind Project but wind power in general in North America.
As a follow-up to the previous information presented about the Cape Wind turbine project, it is necessary to point out that opposition to Cape Wind and wind turbine projects in general is not simply a matter of NIMBY arguments. Review of quite a few wind turbine projects in my home state of Ohio and elsewhere leads to the conclusion that few, if any, are economically viable and most are actually massive wastes of money which will raise the cost of electricity. Further, diversion of resources to subsidize wind power ventures will inadvertently (or perhaps advertently) exclude other efforts which could be more effective at improving our overall energy strategy. The residents of Massachusetts and the US in general need to be wary of government subsidized projects for wind power generation, and need to ask questions regarding the details before giving their support.
Given the average annual wind speeds available in most locations and the relative inefficiency of wind turbines to transform wind into useful electrical power; most government subsidized wind projects can never be expected to return the money invested in them, and will actually raise the cost of electricity. The Cape Wind Project, for example, is supposed to produce three-quarters of the 230 MW power demand of the Cape and islands, which means a real average output of 172.5 MW. This is about 41% of the rated 420 MW capacity, which seems a bit of an overestimate since most other wind facilities operate around 33% or less, but let’s accept the 172.5 MW figure. Applying a generous assumption of 85% up-time means the turbines will operate 7446 hours per year; giving us 172.5 MW x 7446 hours = 1284 GWh/year. This number is actually more-or-less confirmed (within 10%) on the Cape Wind website itself, which currently offers an updating display indicating that 11,478,274 MWh of energy could have been produced since wind monitoring commenced. This seems like an impressive number until you divide it by the 8 years of monitoring, and you get 1435 GWh/year. Considering the annual average wholesale value of electricity in Massachusetts is about $50/MWh per the DOE EIA, the annual energy generated by Cape Wind will be worth about $60 or 70 million per year; and subtracting annual operating and maintenance costs may leave about $40 or 50 million per year of this revenue. Again, this sounds impressive, until it is compared to the $2 billion that the project is expected to cost. Even if a generous inflation rate is applied to the cost of electricity, the cash flow will not pay back this investment in the 20-25 year life of the wind turbines; UNLESS SOMEONE DELIBERATELY RAISES THE COST WE PAY FOR ELECTRICITY. Unfortunately, this is already happening because a New England based utility company, National Grid, has already agreed to pay $207/MWh (4 times the current wholesale price) beginning in 2013 for half the power produced by Cape Wind. National Grid is doing this to comply with a state law forcing them to purchase a certain amount of power from “renewable energy sources, and the deal is considered critical to attract investors to the $2 billion project.