8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 1/6

Wind Is Not Power At All (Part III – Capacity Value) — MasterResource

This three-part series assesses utility-scale wind’s ability to provide reliable power, a necessary qualification for its use in electricity systems. After Part

I’s introduction, Part II dealt with power density, where wind fails to meet today’s standards. This final part will look at the extension to power density,

that is, capacity (power) value, which takes into account wind’s randomness and intermittency of supply. Again wind fails to qualify as industrial

energy.

Electricity capacity is measured in power terms, for example MW. In

this connection it is important to note the importance of the

distinction that must be made between capacity factor, capacity 

credit and capacity value. Compared to capacity value, capacity credit

and capacity factor are of small importance. Jon Boone has long

called attention to this as follows:

“Modern society exists on a foundation built upon productivity that

comes from reliable, controllable, interdependent high-powered

machine systems. All conventional units that provide electricity must

pass rigorous tests of reliability and performance; they must produce

their rated capacities, or a desired fraction, as expected whenever

asked–or be removed from the grid. Some are like refrigerators,

doing heavy-duty long-term work; others are like our toasters or

irons, not working all the time but responsive when called upon to do

so. This ability to perform as expected on demand is known as a

machine’s capacity value. Conventional power generators have a

capacity value of 99.999%. Using them for 97% of our electricity, the

country achieves high reliability and security at affordable cost. Wind

provides no capacity value and can pass no test for reliability; one

can never be sure how much energy it will produce for any future

time. Generating units that don’t provide capacity value cannot be

reasonably compared with those that do.

This is a practical way to think about this concept: You don’t drive

 your car all the time, with the result that its capacity factor—the

percentage of your car’s potential that you actually use–is probably 

8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 2/6

15-20%, if that. But when you do wish to drive it, the car works

 virtually all of the time, getting you from pillar to post in line with

 your own schedule. This is its capacity value. Ditto with your chain

saw–or television, or any modern appliance we all take for granted

 because it works when we want it to work. Appliances that don’t do

this are quickly discarded, although this wasn’t the case for much of 

our history (look at the early days of television or radio or even the

automobile). Only in the last hundred years or so have we in the West

come to rely on machines with this standard. In fact, it’s the basis of 

our modernity and it underlies contemporary systems of economic

growth and wealth creation.”

In other words, for electrical energy to be useful, we must be able to

switch it on and off at the level needed and rely on it being available

during the period of use. To accomplish this, capacity (in this context

capacity and power are interchangeable terms) must be reliably 

available on a continuous basis. This is as opposed to wind “activity”

as described in Part I, which is available only randomly and in

continuously varying amounts over time.

Statistical expectations of this are not meaningful. This cannot be

over-emphasized, as electricity is a vital resource for many of our

activities and continued well-being. Further, unlike most resources,

electricity cannot be stored, and in most applications, in its absence,

substitution of some non-electrical power source is not feasible.

For utility-scale wind plants to have value, they must

provide renewable  power, not just renewable energy. This means wind capacity must be reliably available on demand and throughout

the period of use, and it is not. This is why it was separated from

conventional generation sources in Table 1 of my USAEE article, and

is characterized as having no capacity value. Even at the

disadvantageous increased costs shown, it cannot be compared to the

have high capacity value conventional generation sources as

inclusion in the same table implies.

8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 3/6

In summary, reliable capacity is the means by which useful electrical

energy is provided. In its absence, the availability of energy,

regardless of the reliability of the energy source, is of very little, if 

any, value.

 Wind proponents acknowledge wind’s capacity inadequacies and

make the seductive argument, based on the erroneous assumption

that it is “clean” or “green”, that it must be used if, as and when it

 becomes available. As such, they maintain that wind makes an energy 

contribution that is, in itself, useful. But it is not and does not bear

close examination in any analysis of the claimed benefits of fossil fuel

or CO2 emissionsreductions, costs, and job creation.

 An analogy might provide a further insight on capacity value.

Medical Care Analogy 

 A good analogy for an electricity system is medical (not health) care.

In both systems the delivered service cannot be stored, or, in general

 be replaced with some other resource. In both cases, the consequenceof insufficient capacity is curtailment of services. In the electricity 

sector, “The lights go out”, and in medical care, treatment is delayed,

perhaps too late to deal properly with the medical problem, or, in the

 worst case, save the patient.

The question then arises as to the acceptable level of curtailment. In

the electricity sector, existing operating standards are that this is

effectively zero. This has been achieved by planning to have sufficient

capacity available at all times. Where this has failed in practice, the

result is brown-outs or black-outs. The presence of sufficient, reliable

generation capacity is the insurance against lengthy or frequent

curtailment, which as a society we cannot withstand. It is vital to our

general societal needs, including the operation of business, industry,

government, and institutions. Medical care is also a societal need, but

is delivered at the individual level, and there appears not to be the

same level of planning standards (zero curtailment). The underlying

8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 4/6

issue in both cases is the price (in terms of rates, or premiums, and

subsidization) that users are willing to pay to avoid curtailment of 

services. In both systems the level of planning, management and

funding provides the resulting competent capacity.

In summary, in the electricity sector we are very risk-averse, and

place a high value on reliable power. This excludes wind as a viable

source of electricity. As discussed, wind can provide some level of 

energy averaged over long periods, but this does not meet the

requirements of customers, which is reliable electricity supply as

needed, just as the medical care customer requires necessary services

at the time of injury or illness, not on average over some relatively 

long period of time.

Now consider the portion of the analogy relating to the unreliable

nature of wind power within the medical care example. This would be

represented, for example by secondary medical resources rushing in

unneeded and causing the primary resource treating the medical

problem to step aside, after spending some time describing the

medical problem and treatment being conducted, which introducesprocess “friction”. The displaced medical resource cannot be used for

other purposes, because it must be available to step in again when the

capricious resource suddenly changes in intensity or effectiveness or

fails, which it does frequently. Again a hand-over would have to take

place, adding to process “friction”. Now add government mandates

for increased levels of this secondary medical resource for which

premium rates are paid. Does this result in a better medical care

system, and what is the impact on costs?

The degree to which reliable medical care capacity is available

determines its value to our society. The availability of capricious,

interrupting medical resources does not provide value at all. The

same is true for wind power in electricity systems.

 Yet another way to view this is a very general look at how pricing is

set in electricity markets.

8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 5/6

Electricity Markets

There are two components for pricing electricity in wholesale

electricity markets: capacity and energy payments. Capacity 

considerations and payments, for which reliable capacity is a

requirement, are a form of insurance against curtailment as

described by McMullough.[1]

Capacity payment is intended to provide financial support for the

fixed costs of a project, development costs, and the equity return on

the project sponsor’s investment. An important underlying proviso

is that electricity can be reliably produced at agreed-upon

levels. Energy payment is intended to cover the variable operating

costs, such as fuel and variable operating and maintenance expenses,

and is based on the electricity delivered.[2]

Clearing prices in the spot, or real-time balancing, market vary but

tend to reflect variable operating costs and here wind has a major

cost advantage over other market participants, for example gas

turbine plants, for which operating costs include gas consumption. As

the clearing price is paid to all successful bidders below it, which

tends to be at the level of gas plants, wind plants can obtain energy 

prices that also contribute to fixed costs. Separately, they may even

 be able to receive their full power purchase agreement prices, which

can be at a substantial premium above the clearing price.

So, wind plant developers attempt to appear to be electricity market

players by focusing on (and publically emphasizing their contribution

to) the only aspect available to them, the energy component. As a

result, wind project owners will likely chose to participate only in the

spot electricity market, in part because of their greater inability to

ensure delivery in the larger day-ahead market, in which failure to

deliver incurs penalties, except in cases where, unlike other market

participants, wind non-delivery is not penalized.

Because of wind’s unreliability, even in the spot market they would

8/8/2019 Wind is Not Power 3

http://slidepdf.com/reader/full/wind-is-not-power-3 6/6

Follow us on Twitter »

not be a player without mandated acceptance of their production by 

electricity system operators, on an “if, as and when” available basis.

Here are some final insights into the doubtful value of wind-

generated electricity:

In Germany there are times when customers are paid to

take unneeded wind production. Note the questionable comment

that this lowers rates to customers. For more information on this

see a comprehensive analysis here.

In the UK wind plants are paid to shut down when wind

electricity surges cannot be managed. Note the debatablecomment from a wind industry spokesperson that likens this to

other generation plants output being reduced for balancing

purposes.

The major conclusion is clear: Only reliable energy sources can

make any valuable contribution to electricity supply. This requires

reliable capacity or power capability. Without any capacity value,

and with extremely low capacity density as described in Part II,wind generated electricity fails to meet the essential requirement of 

electricity system user needs and should not be included in the

electricity generation portfolio for the foreseeable future.

[1] McCullough, Robert (1998). “Can Utility Markets Work Without

Capacity Prices?” Public Utilities Fortnightly.

http://www.mresearch.com/pdfs/275.pdf McCullough is also the

source of the medical analogy.

[2] Hoffman, Scott L. (2008). The Law and Business of International

Project Finance. Third Edition. Cambridge University Press. Section

19.07