Contents
Introduction
Characteristics of Wind Power – Efficiency, Environmental Impact, Affordability, and Scalability
Concluding Remarks
Bitesize Edition
We’ve seen a volatile energy market in Europe over the last few years. The energy decoupling from Russia after the Ukraine invasion and the sabotage of the Nord Stream Pipelines brought severe volatility to natural gas prices. Europe sourced over 40% of its gas from Russia. The energy markets are in the midst of shifting.
In the Clean Energy Transition, renewable energy sources, such as wind, are hailed as the future of energy. As technology advances, innovation is improving efficiencies. It's clear that these methods are cleaner for the environment in terms of the production of greenhouse gases, but impacts on wildlife are part of the story here. Finally, as costs have risen over previous years, do renewable energy production methods have a contributing factor in this rise? Even though the technology has dramatically improved and that’s driven costs of electricity down on a levelized cost of electricity basis, there are other costs to consider, such as storage and transmission costs. Improvements are required in both areas to reduce overall costs seen by consumers in their bills.
However, as long-term readers know, we love to paint as true a picture as possible with as little bias as possible. Alone, wind power and other renewables would lead to rising energy bills, brownouts, and blackouts. They are a huge part of a cleaner future, but they’re not the entire solution. Diving into the characteristics of wind power can help us see why.
Introduction
If we’re going to explore renewable energy, we need a deep dive into the key characteristics of each energy production method. Today, I’m going to start with wind.
Characteristics of Wind Power
Efficiency – Wind turbines can have from 20%-50% efficiency at converting wind into energy. The differences depend on size, and the capabilities of the turbine to convert wind into energy at lower speeds. No wind turbine will ever have an efficiency of greater than 59.3%. This is because of Betz’s Law, which details the maximum power that can be extracted from the wind, regardless of turbine design. Air flows through a certain area and slows when it loses energy from a turbine. As a result, the airflow distributes over a wider area. Its geometric mathematics limits any turbine to 59.3% efficiency. There are recent academic papers that state Betz doesn’t take potential energy into account so theoretically, the energy output of a turbine could be higher than 59.3%. Horizontal axis wind turbines (HAWT) remain limited in efficiency by Betz’s Law. Still, for vertical axis wind turbines (VAWT), we can achieve greater efficiency if the turbine is rotating at a sufficient speed.
Environmental Impact – Wind turbines don’t produce greenhouse gases or any other pollutants, hence why it is one of the most common renewable energy sources. Wind turbines can be seen as having a negative visual impact on the environment and when constructing, impacts on wildlife need to be assessed. I’ll later explore offshore wind turbines, which shift the impacts from land-based wildlife to ocean wildlife. Also, wind turbines don’t require water as many energy production methods do for cooling, or through steam to drive a turbine. Finally, as with the installation of any energy production method, it requires materials that will have been obtained through methods such as mining that have an environmental impact. That’s why it's of vital importance to consider the entire process of renewable energy methods, from planning, manufacturing, construction, installation, and operation, and then during any maintenance.
Affordability – As discussed in a recent note on Substack, the cost of wind power on a levelized cost of electricity basis has dropped over a period of decades, largely driven by the improvement of turbine efficiency and improved lifespans. Economies of scale and advancements in technology have also contributed to the smoothness of the process from planning to operation. Government policies, such as the Inflation Reduction Act, and the Loans Office at the Department of Energy have also included favourable policies and funding for renewable energy projects, of which wind will be included. Wind is also a naturally occurring resource, so no fuel costs have to be considered. Finally, wind turbines will also create jobs throughout the process from planning to operation and then maintenance during the life of the turbine.
However, with wind turbines often existing in rural areas, transmission costs need to be included. Also, as we’ll discuss soon, the intermittency of the wind can ensure storage costs rise to supply electricity during periods when the wind isn’t blowing. This is why it is of vital importance that nations don’t rely too heavily on one energy production source. If you close down your non-intermittent energy production methods, such as nuclear, you’re essentially giving away your control. The weather is a chaotic system. That’s why your weather reporters sometimes struggle to predict tomorrow’s weather, and why it's even more difficult to predict further out. A small error initially contributes to a larger error in the forecast the further out the forecast goes.
The biggest issue is when these high costs find their way through to the electricity bills of consumers. This is another reason why the trend of self-sufficiency will rise in geopolitics. Those with the means to protect themselves with a diverse energy sector will be best equipped to avoid transferring higher prices to consumers. We saw in 2022 that rising electricity prices led to price caps here in the UK. The trend is now of falling electricity prices, but they remain elevated when compared to before the energy decoupling from Russia and the sabotage of Nord Stream. It remains to be seen if the trend continues. Supply, demand, and weather are key issues to consider.
Compared to other energy production methods, wind turbines don’t have volatile fuel input costs to contend with, and have a lifespan of 20-25 years. It's difficult to predict how often wind turbines fail, with this academic paper for offshore turbines having a range of below 1 failure per year to others predicting over 10 failures per year for an individual turbine. As mentioned, transmission costs and storage costs to get power to where it's needed and to store any that needs to be saved for when the wind isn’t blowing are two of the biggest issues with wind power. If we transition to a smart grid that can control this, this will be costly, both financially and in a time sense. Also, the storage to back intermittent renewable energy sources currently isn’t sufficient as we covered in my pieces on lithium and alternative battery solutions.
For great examples of the high transmission and storage costs, check out this brilliant piece from The Simple Side:
Also, this quote from the paper below:
Quote From https://link.springer.com/article/10.1007/s43979-023-00054-8
A 1.1MW/1.078MWh LiFePO4 battery was considered for arbitrage, and after around 1.5 years the storage system reached the break-even point and generated a positive NPV (net present value) [22]. In Ontario, Canada, a 1MW/1MWh storage system was simulated through 2015 for generating profits through energy arbitrage [23]. A gross revenue of $21,686 was generated, and ancillary service by this energy storage can add $155,798 revenue per MW per year. The research suggested that energy storage technologies need to evolve for lower cost, and other ancillary service and energy policies should also implemented to make energy storage more economically feasible [23].
Finally, a breakdown of how renewable energy costs were tied to gas costs in the UK and why this contributed to rising bills:
https://bionic.co.uk/blog/noticed-energy-prices-have-fallen-over-past-few-months/
Scalability – Since wind isn’t a finite resource, in theory, wind power can be utilized everywhere. However, there are regions of the planet where it is better equipped. If certain nations weren’t committing energy suicide by relying too heavily on a few energy production methods, they would consider employing a wide range of methods that suit their environment. Wind can be a part of a diverse energy production system in every country, but if it isn’t windy, don’t make wind your primary method.
As technology has improved, wind turbines are larger, more efficient, and can produce energy at lower rotation speeds. The fact that wind can be placed offshore is useful for nations with ocean access and contributes to the increased scalability of wind power. The ocean also usually sees stronger and more consistent winds. As a developing technology, more wind turbines of greater size will allow benefits from economies of scale. This has the potential to reduce the overall cost per unit of electricity generated.
Concluding Remarks
In the past, I’ve taken deep dives exploring the characteristics of Geothermal, Hydrogen, Nuclear Fusion, Nuclear Fission, and Synthetic Fuels. You can find these pieces below and compare for yourself how these different energy production and energy storage methods compare.
Geothermal: https://geopoliticsreport.substack.com/p/the-future-of-energy-more-hot-rocks
Hydrogen: https://geopoliticsreport.substack.com/p/the-future-of-energy-the-characteristics
Nuclear Fusion: https://geopoliticsreport.substack.com/p/the-future-of-energy-cheap-abundant
Nuclear Fission: https://geopoliticsreport.substack.com/p/the-present-energy-part-4-nuclear
Fossil Fuels: https://geopoliticsreport.substack.com/p/the-present-energy-part-4-nuclear
Synthetic Fuels: https://geopoliticsreport.substack.com/p/the-future-of-energy-more-synthetic
Next week, I’ll explore the reliability, flexibility, and durability of wind energy.
Thanks for reading! If you want more then subscribe on Substack for these posts directly to your email inbox. I research history, geopolitics, and financial markets to understand the world and the people around us. If any of my work helps you be more prepared and ease your mind, that’s great. If you like what you read please share with others.
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Sources:
https://www.epa.gov/sites/default/files/2019-08/documents/wind_turbines_fact_sheet_p100il8k.pdf
https://link.springer.com/article/10.1007/s43979-023-00054-8
https://weatherguardwind.com/how-much-does-wind-turbine-cost-worth-it/
https://iopscience.iop.org/article/10.1088/1742-6596/2626/1/012025/pdf
https://www.energy.gov/eere/wind/advantages-and-challenges-wind-energy
https://bionic.co.uk/blog/noticed-energy-prices-have-fallen-over-past-few-months/
Insightful post as always Dylan. You're right. Relying on one source of energy may be foolish. Don't put all your eggs in one basket. Looks like diversification works here too.
You had mentioned about nuclear power plants. I assume that's an indirect reference to Germany. Seems like an overkill on their part when solar and wind energy utilisation are still in their nascent stages.
Loved this overview Dylan - I knew little of the intricacies of wind power until I read your piece! Completely understand the issues with unreliability, poor efficiency and transmission costs (which I assume would be even higher for offshore plants, even though the wind is probably more constant).
Are you planning to do a breakdown of Solar too in the future?