Capital costs for wind to drop below biomass and LFG, government predicts
WASHINGTON, DC, US, June 1, 2005 (Refocus Weekly)
Capital costs for wind will be US$1,049 per kW in 2025, but could drop to $975 under a scenario of high adoption of renewables energies in the United States.
By comparison, overnight capital costs for hydroelectric facilities will be
$1,220 per kW within two decades, while biomass will be $1,326, $1,332 for
landfill gas (LFG), $1,983 for solar thermal, $2,063 for geothermal and $2,614
per kW for solar PV, according to the assumptions of the National Energy
Modeling System used to generate the projections in the latest Annual Energy
Outlook of the Department of Energy. Overnight capital cost excludes interest
charges but includes a contingency allowance.
The assumptions provide a reference estimate of the cost for the seven renewable
energy technologies, as well as estimates under scenarios for both high and low
adoption of renewables. The data are provided for 2005 and 2010, as well as
2025, with costs in constant 2003 dollars per kW.
The current capital cost for wind is assumed to be $1,059 per kW, which will
drop to $1,055 in five years before declining to $1,049 by 2025. Solar PV is
assumed to cost $3,793 now and will drop to $3,593 by 2010 and $2,614 by 2025,
but it could drop to $2,584 under a high-renewables scenario and $3,589 per kW
under a low-renewables scenario.
The reference baseline for economic growth assumes annual growth of 3.1% with
world oil prices falling to $25 per barrel by 2010 and rising to $30.31 in 2025.
Low economic growth assumptions increase by 2.5% over the period while high
economic growth is 3.6% per annum.
The low-renewables scenario assumes new generating technologies do not improve
while the high-renewables scenario assumes that levelized costs for non-hydro
green power technologies declines by 10% by 2025 from reference case values.
Geothermal and hydroelectric costs are specific for each site, and biomass
plants share significant components with similar coal-fired plants but biomass
fuel handling components do not assume cost declines beyond 2004.
“Capital costs for all electric generation technologies, including renewable
technologies, are assumed to decline as a function of growth in installed
capacity for each technology,” the report explains. Capital costs are affected
by several factors, such as the cost to exploit geothermal, hydro and wind
resources, and the Renewable Fuels Module examines central-station,
grid-connected generation technologies, and contains natural resource supply
estimates representing the regional opportunities for renewable energy
development.
Capacity factors for solar vary by time of day and season, with solar thermal in
California assumed to have an annual capacity factor of 40% compared with 24.6%
for solar PV. “Because solar technologies are more expensive than other
utility grid-connected technologies, early penetration will be driven by broader
economic decisions such as the desire to become familiar with a new technology
or environmental considerations.”
“Solar resources are well in excess of conceivable demand for new capacity;
therefore, energy supplies are considered unlimited within regions,” it
explains, although the limits to windy land area means that wind is considered a
finite resource. Capital costs for wind are assumed to increase in response to
declining natural resource quality (terrain slope, roughness, accessibility,
wind turbulence, etc) and “increasing cost of upgrading existing local and
network distribution and transmission lines to accommodate growing quantities of
intermittent wind power.”
Capacity factors assume an increase to a national average of 44% in the best
wind class resulting from taller towers, more reliable equipment and advanced
technologies, and decline as better wind resources are depleted. For geothermal
electric, capacity factors range from 80% to 95%.
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