Costing Cape Wind: Was Teddy Right for the Wrong Reasons?
Yesterday, Interior Secretary Ken Salazar gave the green light for the Cape Wind wind farm project off Cape Cod. In a May 16, 2006 article in the Boston Herald, then-Sen. Ted Kennedy, whose family famously owns a "compound" overlooking the site of the future wind farm, denounced the project as a "special interest giveaway."
At his press conference yesterday Salazar said, "I don't know the cost of the project, but I know it will be subsidized, but not sure by how much." In fact, Cape Wind Associates, the developer of the project is treating the cost estimates as a trade secret. The 130 wind turbines each have a maximum capacity of 3.6 megawatts, which sums to a total maximum capacity of 468 megawatt for the project. However, the wind doesn't always blow, so a generous estimate of a 40 percent capacity factor suggests that Cape Wind's generating capacity would average of about 184 megawatts.*
Cost estimates for the Cape Wind project run from $1 to $2 billion. Let's assume the lower capital cost estimate and compare it to the capital costs for other types of electric power generation. Using cost estimates from the Electric Power Research Institute, I roughly calculated last year that building a 1,000 megawatt combined-cycle gas turbine power plant would cost about $1 billion, and a modern 1,000 megawatt coal-fired plant would cost about $2.8 billion. Now let's assume that they run at 90 percent capacity.
Crunching through the numbers, it appears that Cape Wind's capital costs are roughly 5 times greater than those of a comparable natural gas plant, and nearly double that of a modern coal-fired facility. Speaking of "giveaways," the sting of Cape Wind's high capital costs will be offset by federal subsidies amounting to $300 to $600 million.
Instead of trying to calculate the wholesale costs of Cape Wind's electricity, let me just cite the findings of the project's Final Environmental Impact Statement:
The proposed site at Horseshoe Shoal [Cape Wind's site] has the lowest estimated cost of energy, equal to $0.122/KWhr, or $122/MWhr, while none of the sites appear to be profitable at today's electricity prices. The average locational marginal price for southeast Massachusetts reported by ISO New England, Inc. for the real time market, was $65.97/MWhr over the two year period from February 2005 through January 2007. For January 2007, the average price was $58.77/MWhr.
As I somewhat gleefully noted earlier, renewable energy development is exacerbating the contradictions in the environmentalist movement between its naturalist and its energy factions.
*Fixed my confusion over megawatts and megawatt hours in accordance with H&R commenter llamas' astute observations.