Fair world electricity prices compared

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Today's price of electricity from any one fuel source is entirely dependent on the structure of national markets and the strength of the various influencing factors. Comparisons of the price of wind in the United States, Germany, Britain and France -- countries representing a wide variety of market infrastructures and stages of maturity -- have to be made using a range of prices for each technology.

Most significant in this comparison is the revelation that wind power in Germany is cheap at the price when energy price estimates for thermal plant are calculated on the same basis. In good wind speeds, wind is about the same price as nuclear and around 10-25% dearer than coal. German coal, however, is heavily subsidised by taxpayers and the real price is markedly higher, by about Euro0.02/kWh. This makes coal fired generation prices roughly equal with those of wind on good wind speed sites.

Using the same electricity price calculations for all sources, wind comes in at around Euro0.15/kWh at wind speeds of 5 m/s, falling to around Euro0.08/kWh at 7 m/s; expected prices in 2000 for German nuclear are about Euro0.07-0.09/kWh and for the fossil fuel sources about Euro0.055, according to international levels of plant and fuel costs, and Euro0.07/kWh, according to the RWI Economics Institute in Essen. The comparison uses the same ten year amortisation period applicable to wind for the nuclear and fossil fuel price calculations.

The actual price paid in Germany for output from wind plant is fixed by government at a premium level of Euro0.085/kWh. Wind turbine operation becomes viable at wind speeds down to around 5.5 m/s due to tax breaks.

France is the only country where nuclear is claimed to be the cheapest generating source. The government uses an 8% discount rate for its price calculations -- considered low for nuclear by other countries -- with depreciation over the life of the plant. On this basis nuclear comes in at Euro0.036/kWh, coal at Euro0.043/kWh and gas at Euro0.042/kWh. The average wind price, from the latest round of the French EOLE wind program, in which contracts run for 15 years and interest rates are decided by the developer based on the returns required from the project by its investors, is slightly dearer at Euro0.05/kWh. If wind prices were based on depreciation over 20 years, the gap would be even smaller.

Wind is at its cheapest in Britain in this four country comparison, with current contract prices under the Non Fossil Fuel Obligation (NFFO) starting at Euro0.033/kWh and rising to Euro0.042/kWh. For the sake of comparison, the NFFO price range for another new technology, electricity from waste, is Euro0.033-Euro0.034/kWh. These plant may not be built for anything up to five years, suggesting the prices are projections for early in the next century. They compare with the government's quoted price for gas of Euro0.032-0.037/kWh.

In America, coal and gas are running neck and neck in the price stakes, according to Department of Energy publications, with prices starting at roughly $0.037/kWh (Euro0.032/kWh), about the same as those in Britain. Wind, according to an analysis by the National Wind Co-ordinating Committee, an NGO grouping of utilities, utility commisions, wind equipment suppliers and others, is about 20% more expensive at around Euro0.038/kWh ($0.045/kWh). Depreciation periods and interest rates are broadly similar in the calculations for all types of US plant.

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