Cheaper than new fossil plant, new costs study

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Wind energy could soon be the cheapest option for electricity generation in Germany. By the year 2005, the cost of electricity from new conventional power stations will be greater than the premium price of DEM 0.17/kWh currently paid for wind under the Electricity Feed Law (EFL). So states a new study, "Electricity generation costs of new conventional power stations," by the Rheinisch Westfälisches Institute für Wirtschaftsforschung.

Commissioned by the German mechanical engineering association, the influential Verband Deutscher Maschinen-und Anlagenbau, the study contends that within three years, new conventional power will be costing about DEM 0.1510/kWh. From this level in 2000, calculated as a weighted average for base, middle and peak load generation, the cost will rise steadily to DEM 0.188/kWh in 2005 and DEM 0.214 in 2010. Also behind the study is the association of wind station operators, the Wirtschaftsverband Windkraftwerke (WVW).

The German wind lobby has long fought a bitter battle against utility claims that wind power was uneconomic compared with power from conventional plant. The new study has provided the first data to back arguments that when compared with power from a newly built conventional plant, wind is not expensive.

The EFL rate is today calculated at 90% of the end consumer price for electricity, a price level widely predicted to fall over the next few years as a consequence of power sector liberalisation. It seems not unreasonable to presume that the rate for wind and the cost of conventional power plant generation will soon converge.

The WVW comments that the most effective use of wind energy is to integrate into the power system for meeting peak loads, along with other peak generators like pumped storage hydro stations and gas turbines. When the wind is blowing, wind generation can ideally be dispatched as an alternative to, or for the regeneration of, pumped storage reserves or to reduce the use of peak load gas turbines, the WVW argues.

This generation model has parallels with that of the several German utilities (such as Preussenelektra and HEW) which are tapping into Scandinavian hydro power at times of peak supply as a cheaper alternative to using their own gas or diesel powered peak load generating plant. "In this case, the economic value of wind energy should not be measured alongside the average electricity generation costs of conventional power stations, but according to the contribution it can make to providing peak load power while at the same time displacing the construction of conventional peak load generation plant," the WVW points out.

It further argues that such use of wind energy would increase its value on a power system to well above the DEM 0.17/kWh paid today, even before taking its environmental benefits into account.

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