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Cedar Point Wind Farm – Colorado

November 17, 2013
Cedar Point Wind Farm near Limon, CO

Cedar Point Wind Farm near Limon, CO

Earlier this week, in commentary under an article on a different site, I was informed that my assertions implying wind and solar technologies were ineffective alternative energy sources were “not true”.  I was asked to search for information regarding “Xcel wind & solar”, and informed that Xcel’s projects were providing energy with competitive Power Purchase Agreements (PPAs) as low as $60MWh.  No additional details regarding any specific projects were provided.

Following up on this, I performed some research regarding Xcel Energy wind projects. I found a specific Xcel wind turbine sample project to analyze, the Cedar Point Wind Farm near Limon, Colorado, east of Denver.  I chose this project for two reasons:
1. I was able to locate the specific project details necessary.
2. It is in the Colorado and therefore should benefit from some of the best wind resources available in the USA (best case scenario).

My Cedar Point Turbine Analysis-1  is linked here.

Employing a realistic analysis using the real average annual wholesale cost of electricity ($50/MWh) and accounting for inflation and O&M costs, a reasonable expectation is that the wind farm can pay back the initial $535,000,000 investment in 20 years; just about at the end of life for the turbines. This is obviously NOT an acceptable business case, but it is about the best performance of a wind turbine project that I have seen (due to the mountain wind speeds).

The question is, “Why would Xcel (and the other energy companies involved) invest $535,000,000 in something that would take 20 years to pay off the initial capital cost, and that would be at end-of-life at about the same time it finally does pay off?”

The answer is in the government grants and subsidies: 

  • I could not find specifics regarding the PPA (other than one does exist), but we can take the initial information that they are selling for $60/MWh.
  • The federal government is providing a Production Tax Credit of $22/MWh.  Also referenced in the Denver Post.
  • A federal stimulus grant for $145,596,213 was provided, to offset the construction costs.
  • Colorado “renewable” energy mandates provided an incentive in driving this project.
  • Adding the PPA and the PTC and the grant; and assuming a 20-year lifetime production of 16,943 GWh; the US federal government and the State of Colorado are providing direct subsidies in excess of $40/MWh to this project.

Taking all this corporate welfare into account, the payback for Xcel (and the other energy companies involved) is actually more like 8 years; at which time they start raking in the cash for the next 12 years until the wind turbines reach end-of-life. This is a pretty good deal, for everyone except the taxpayers and rate-payers.

Once again, other than the damage to the economy of the waste itself, the real problem with mandating and subsidizing non-viable energy technology projects is that this distracts us and diverts resources from other efforts to improve our energy production strategy.  There is no doubt that we in the USA need to alter our energy strategy.  The question of how we will change it, however, needs to be determined by scientific evaluation of fact and logical analysis of performance and economics; not by emotion, political considerations, and “feel good” methodologies.

see also:  http://www.masterresource.org/2013/11/colorado-cedar-point-wind-cronyism/

 

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3 Comments
  1. Nice article, although I could not follow the link to your analysis. However, just clicking on the link to the related article made me laugh – “How much is your roof worth with solar panels? – Profit from your roof space: find local deals on solar in your area, eliminate your power bill, and join the solar revolution.” Exactly the kind of thing, I am describing in my “Falling into the honey trap” article. They don’t give a damn about us, and sure not about any revolution. I know, all revolutions need to be paid for somehow, but none comes with such a corrupted conviction.

    • Thanks for reading and commenting. I’m sorry you had trouble with the link. There was a brief period yesterday when I was in there editing; maybe you were trying to get in at that time. It appears to be working correctly now, please try again.
      Jerry

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