Saturday, July 4, 2015

Wind Farm Costs In US vs India


July 4, 2015: I have no idea when I posted this story -- I guess it was first written January 31, 2013, based on the date of a linked article -- but I must have put it in draft and forgot all about it. It appears that while spell-checking the blog earlier today, this story was inadvertently posted. I will leave it here, although the data is a couple of years old. Take it for what it's worth: this article and $1.75 will get you a Starbucks in San Pedro, California.

However, since I wrote the article below, I am now aware of the delta between the price of a wind farm being built, and the price a "used" wind farm is sold for. This Indian wind farm below turns out to be so cheap because it's a "used" wind farm.
Original Post

As a rule of thumb, Don uses $2 million / megawatt as the cost to "build" a wind farm. That agrees with other sources. For example, at this source, the range was $1.5 million to $2 million / megawatt for wind farms. At that source, by the way:
Wind-generated electricity has become more economical to produce in the past 10 years, dropping from as much as 30 cents per kilowatt-hour to 4.5 to 7.5 cents, making it more competitive with other energy sources.
The cost to develop and build a wind energy facility is approximately $1.3 million to $1.7 million per megawatt, compared to a cost for gas-fired energy generation of $800,000 per megawatt.
But I digress. Another source:
The costs for a utility scale wind turbine in 2012 range from about $1.3 million to $2.2 million per MW of nameplate capacity installed. This cost has come down dramatically from what it was just a few years ago.
Most of the commercial-scale turbines installed today are 2 MW in size and cost roughly $3-$4 million installed. Wind turbines have significant economies of scale. Smaller farm or residential scale turbines cost less overall, but are more expensive per kilowatt of energy producing capacity. Wind turbines under 100 kilowatts cost roughly $3,000 to $8,000 per kilowatt of capacity. 
So, $2 million / megawatt of wind energy seems to be a good 30-second soundbite.

Don noted this today, a story coming from India:
DLF Ltd. said that it has entered into an agreement to sell a part of its wind power business for 2.82 billion rupees ($53 million) to Bharat Light & Power Pvt. Ltd., as part of its plan to raise money by offloading non-core assets.
DLF, India's biggest real estate company by sales, is selling a 150 megawatt wind power project set up in Kutch in the western state of Gujarat. 
$53 million / 150 MW --> $350K / megawatt, less than 20% what it would in the US.

I assume it has to do with decreased labor costs, lower materiel costs, and the fact that it's a "used" wind farm, not new, probably in need of some deferred maintenance.

But it begs the question of whether the tax credits inflate the value of these wind farms for companies who benefit from the tax credits, perhaps more than from the electricity they sell. But this is well beyond my understanding of the game.

For me, what's important is the 30-second soundbite for the cost of coal-powered facilities and wind turbine farms here in the US.

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