RBC: Wind Power – It’s Dust in the Wind

2017274Download Royal Bank of Canada Analysis on Wind Power

If, as some believe, wind replaces baseload then economics of wind should be compared to baseload, which makes wind very expensive. Typical average capacity factor for wind is ~20%-25%, while nominal cost is about $2,000/KW. Equalizing for capacity factors, wind actually costs ~$8,000/KW vs. ~$3,500/KW for super-critical coal and geothermal plants, ~$1,000/KW for CCGTs, and ~$5,000-$8,000/KW for nuclear.

We believe plans for sourcing 20%-30% of electricity from wind is foolish. The reasons why the Danes have 20% of their power source from wind are multiple, but one that sticks out is the fact that they are willing to live with interruptible power. [North] Americans, in general, aren’t: asking an [North] American to turn off their air conditioner in the middle of July or August isn’t going to win anyone votes.

Wind isn’t as clean as it’s portrayed by advocates. Part of the back-up power to wind has to be spinning reserves: power plants that burn fuel (typically natural gas), but are not generating electricity. Spinning reserves would typically account for some 25% of the make-up of the back-up power.

In our view, wind makes for good investments, in our view, but not so good for consumers and grid operators.

1 thought on “RBC: Wind Power – It’s Dust in the Wind

  1. RBC has my new-found respect, unlike TD, which just funded the Suzuki/Pembina Institute study. The truth always comes out eventually and corporations should be smart enought to realize that citizens are keeping track.

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