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United States

Costs of widespread wind minimal

Despite the assumption that clean energy costs significantly more money, a recent report has found that the average cost per residential customer of installing 3050 MW of wind power over a decade in Texas -- 5% of the state's generating capacity -- would increase electricity bills by $0.75 monthly, or $9 yearly. The report, authored by respected wind researchers, reveals several conclusions about the cost of wind energy today in the United States.

Deploying a broad base of wind power in Texas would cost the average homeowner no more than the equivalent of a cheap cup of coffee monthly-and certainly less than a trendy cappuccino or latte. The average cost per residential customer of installing 3050 MW of wind power over a decade-5% of the state's generating capacity-would increase electricity bills by $0.75 monthly, or $9 yearly, according to a recent report by respected wind researchers on the cost of wind energy today.

Indeed, despite the assumption that clean energy costs significantly more money-even though it costs less environmentally-the report found that adding 10,000 MW of wind to the US energy mix over ten years would lead to appreciable economic gains, such as $7 billion in direct economic activity, much of it domestically. The research report, "Expanding Wind Power; Can Americans Afford it?" is authored by Jamie Chapman of OEM Development Corp and Steven Wiese of Planergy Inc and published by the Renewable Energy Policy Project.

Furthermore, that amount of new wind over the next ten years would annually create $863 million in revenue from electricity sales, $89 million in operation and maintenance, and $17 million in land-use easements. The new capacity would mean that wind makes up 0.7% of US electricity consumption and 1.3% of the generating mix. Other benefits not accounted for in the analysis include increased local government taxes, benefits from mitigating regulatory and fuel-price risks, and deferring the addition of conventional capacity. If the wind capacity is distributed, money might be saved by deferring line extensions, reconductoring or voltage support.

These benefits are logged before considering wind's contribution to reducing: greenhouse gases, nuclear risks or land and water degradation from mining. The authors assume the costs are spread equally among all customers, for example through a systems benefits charge. Transmission costs are also not calculated, although the authors say these would probably be offset by other assumptions, for example that the average price of residential electricity is 2.5 time higher than the wholesale price. In the case study of Texas, however, the authors do assume a change in transmission costs-a 15% increase. They caution that the figure is specific to Texas.

Methodology

The analysis, which grew out of research by Chapman for the Electric Power Research Institute, was conducted in three steps. The model calculates the land use and wind resource requirements of wind capacity, comparing these to available land and documented wind resources; it then calculates the cost of installing and maintaining the turbines; thirdly it calculates annual production and sales revenue. Permitting costs are not included.

This level of new wind power would achieve economies of scale in manufacturing the machines, which the model assumes starts off more slowly, at 100 MW in the first year, and then climb to 2000 MW by 2006. Wind turbines of 750 kW with a rotor diameter and hub height of 50 m each are assumed. By 2006, the cost of installing wind capacity will be down to $600 per kW. An annual capacity factor of 28% for the new turbines is assumed, and an availability of 98%. And wholesale prices of wind are assumed to stay steady at $0.04/kWh. The authors note areas of future study such as the costs of generation from other fuels; transmission costs for specific windy sites; the precise changes in price because of electricity usage and average costs of energy; and a better distinction between cost and price for suppliers.

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