Energy Technologies

Utilities looking for more electricity to meet the needs of customers must make difficult decisions about which energy-producing medium to build or purchase.  In addition to the aforementioned wind, coal and hydroelectricity other viable options exist such as natural gas, oil, photovoltaic, geothermal, tidal, biomass and more.

After twenty years of natural gas as the most popular choice for new power projects, in 2000 utilities and developers began to choose coal as the fuel for their power plants again due to the price of natural gas doubling and the recent advances in clean coal technology’s ability to meet federal pollution standards.  Due to the low price of coal, the energy sector uses coal as the baseline price to compare with all other energy technologies.  Experts estimate the price of coal power at 3.5 to 4 cents/kWh.  

As for wind power, Class 6 wind sites can sell electricity at 4cents/kWh or lower with favorable financial terms and without the PTC .  Even at these cost competitive prices, developers sometimes do not see wind power as competitive for a few reasons.  First, due to turbines produced for California’ wind projects in the 1980’s by hastened wind turbine startups, an impression of low quality and a lack of reliability sticks in the minds of develops.  The risk of the using wind turbines is still perceived as much higher compared to other technologies like natural gas, which are perceived as reliable.

Also, developers can only set up wind turbines in specific geographic areas with the right amount of wind, supporting transmission lines and a sparse population.  An area with the right wind may not have enough transmission lines to send the power to consumers.  Utilities lay the larger transmission lines to the cities to provide energy to their customers, but most urban inhabitants would not like 100-meter high turbines spinning around the city’s horizons.

As mentioned earlier, the penalties placed on wind power producers due to the intermittency of wind power supply decreases the cost-competitiveness of wind versus other technologies.  Since utilities must keep up with consumer demand for electricity, they need to be able to rely on incoming electricity from power producing plants and projects.  Wind turbine projects supply electricity only when the wind is blowing moderately, not at too high or low a speed, and cannot provide consistent electricity to the utility.  Thus, the wind turbine projects the wind turbine projects are penalized and their costs increase.

In addition, the government does not provide as much funding and subsidies for wind power as they do for other technologies like coal.  In fact, the federal government budgets over twice as much money to support clean coal as wind power.  One example of indirect financial support for coal, the U.S. government has spent $35 billion on the black-lung disease program since 1973.  Although the legislature did not originally calculate these expenses into the subsidies portioned out to support coal, nevertheless the costs are a result of the U.S.’s large dependence on coal. 

Some other indirect costs of using coal as a power source include air pollution, global warming and acid deposition.  Human capital costs of respiratory and cardiovascular disease, asthma and death can be added into the cost of coal as well.  With all these costs added into the equation, Stanford’s Mark Z. Jacobson and Gilbert M. Masters from the Department of Civil Environmental Engineering estimate that the price of coal power actually stands at around 5.5 to 8.3 cents/kWh.  Using a holistic point of view that accepts all the costs of coal, the 3-4 cents/kWh for wind power begin to look extremely cost competitive.

Another encouraging push to add in the indirect costs has begun to spring up within the international community.  Organizations like World Bank push for governments and corporations to go beyond using just financial cost-benefit analyses by including environmental and societal costs as well.  This can be seen through the World Bank’s World Development Report 1992.  The report states, “Measuring the welfare costs of these environmental impacts is essential for assessing human progress and for effective policy making.”

Although many consumers, governments, agencies and businesses place some value on the costs of environmental and social degradation into their decision making process, by and large, many governments and the businesses still look primarily at the direct monetary costs.  This makes wind power not appear as competitive versus the other technologies even though wind power has very few negative externality costs.