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Thesis: Through innovation, wind energy continues to become more and more cost-effective, so much so that it’s becoming very comparable with fossil fuels, all without the climate downsides. Countries are continuing to transition away from fossil fuels to wind energy. Why? Are they justified?

Credit Treehugger

Wind Energy

In our search for the optimal energy source (or sources) for humanity’s future, we’ve chatted about solar and nuclear, and now we’re discussing wind energy. Essentially, our goal is to answer the question: “Is wind energy going to be part of our future solution?”

To begin, let’s give some helpful general education to people (so no worries if you haven’t delved into the depths of wind energy before – I haven’t either).

What is wind energy?

Wind power or wind energy is a form of renewable energy based on harnessing the power of the wind to generate electricity. Hopefully you’ve seen a modern wind turbine, but if not, here’s a diagram.

Credit Wikimedia Commons

Wind blowing above the ground hits the angled blades attached to the top of a wind turbine tower, pushing them (causing them to rotate). This rotating motion spins a generator (or rotor) in the nacelle (the top) of the turbine. This generator produces electricity which is distributed down the tower of the turbine through cables and transferred into the power grid.

A typical 2.8 MW utility-scale wind turbine could produce enough electricity to power 100,000 homes.

What are the different types of wind energy?

There are a couple of different types of wind energy: distributed wind energy, land-based wind energy, and offshore wind energy.

Credit American Solar Energy Society

Distributed wind energy:

Distributed wind energy (sometimes called “onsite wind energy”) refers to smaller-scale wind turbines installed to serve on-site energy demand. These distributed wind turbines can generate on-site electricity for a variety of sources (homes, schools, businesses, farms, etc.). These distributed wind energy projects also can provide electricity for homes and other structures traditionally considered “off-grid.”

Although distributed wind energy is characterized by how the energy is applied (on-site), these turbines are generally smaller in size, typically around 20 megawatts (or smaller).

Credit Today’s Homeowner

Land-based wind energy:

Land-based wind energy projects are utility-scale, highly efficient wind turbines that generate electricity at a power-plant scale. These projects are generally run by utility companies that generate power and then distribute that to users who are connected to the electrical grid. These projects use large, land-based turbines.

Because of their size and the scale of the installations, utility-scale wind turbines require environmental, utility, governmental, and public coordination. In addition, in most countries they are regulated in their location, distance from nearby infrastructure, and other aspects.

Credit California Energy Commission

Offshore wind energy:

Offshore wind energy is the newest application for wind energy, referring to utility-scale wind energy projects in bodies of water. Generally located in water depths of less than 60 meters, these offshore wind turbines can be fixed directly to the bottom of the ocean, known as “fixed-bottom”.

For water depths greater than 60 meters, floating turbines are required. These are tethered to the seafloor with long lines attached to anchors (similar to a boat in a harbor). Research continues to investigate what way is best to place these turbines in the ocean (and potentially expand the range to large lakes).

Because they are more remote, these offshore wind turbines can be taller than land-based turbines, meaning they could harness more energy–which is sent to the shore via underwater cables.

Credit ScienceDirect

History of Wind Energy

Okay, now that we’ve learned a little bit more about the technology and the types of wind energy, where did it come from?

Well, people have been using wind energy for thousands of years. In the beginning (we’re talking thousands of years ago), people used wind to propel boats along rivers. By around 200 B.C., simple wind-powered water pumps were used in China as well as windmills (with woven reed blades) were grinding grain across the Middle East.

Wind energy’s popularity grew throughout the years (primarily for food production). Fast forward many centuries, and we see early American colonists using windmills to grind grain, pump water, and cut wood. As early as the late 1800s and early 1900s, we started to see small wind-electric generators (wind turbines) were also widely used.

The number of wind pumps and wind turbines declined as rural electrification programs in the 1930s extended power lines to most farms and ranches across the world. The oil shortages of the 1970s prompted changes in the energy environment of the world (increasing development of alternative energy sources). The United States government began to support the research and development of large-scale wind turbines. In the 1980s, thousands of wind turbines began to be installed in California.

Beginning in the 1990s, the United States government established financial incentives and requirements to use renewable energy sources (mainly in response to environmental concerns). This, combined with continued innovation and development in policy, design, and infrastructure has enabled wind to become as popular as it currently is.

Credit Smithsonian Magazine

Wind Energy Use Cases

Unlike it seems, operating a wind power plant is much more complex than simply erecting wind turbines in a windy area. Wind power plant owners must carefully plan where to position wind turbines and must consider how fast and how often the wind blows at the site.

For distributed wind energy systems, good candidates for wind power have annual average wind speeds of at least 9 miles per hour (4 meters a second - m/s) or more. For utility-scale wind energy systems (land-based or offshore), good candidates have an annual average wind speed of 13 miles per hour (6 meters a second - m/s) or more.

Following intuition (and probably what you’ve seen before), favorable sites for wind energy plants are the tops of hills, open plains, open water (near the shoreline), and canyons. In addition, wind speeds generally increase as you get further above the earth’s surface. Large wind turbines can be placed on towers that range from 500+ feet above the ground.

It’s not that simple. Wind speeds differ hourly and seasonally. This decreases the amount of places where wind energy could be placed.

Credit United States Energy Information Association

Here’s a cool graph I found showing where the wind is located across the United States. As you can see, utility-scale wind energy is best located in the middle of the country.

As of 2022, the United States had over 70,000 wind turbines, totaling over 146 GW of capacity, which generated over 430 terra-watt hours of electricity (around 10% of the total US energy production).

But, it’s not just the United States that is producing and utilizing wind energy, it’s the entire world.

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Credit Our World In Data

Many nations use wind energy as a future energy resource. To put it into perspective, 6 nations (Denmark, Lithuania, Ireland, Uruguay, Portugal, Luxembourg) currently have over 25% of their nation’s energy produced using wind power. That’s crazy.

29 countries produce over 10% of their nation’s energy using wind power. That’s about 15% of the world that produces 10%+ of their energy from wind power.

Let’s put this into more perspective. In 2022, the world produced around 28,600 terra-watt hours of energy. Of that, wind energy contributed around 2,100 terra-watt hours or around 7.3% of the total world’s energy production.

Wind energy growth is projected to increase significantly in the coming years. The United States Department of Energy expects United States energy to grow from 146 GW capacity (where it’s at today) to 404 GW capacity in 2050.

Credit NREL

Wind Economics

Wind energy has a couple of different costs associated with it. Initially, wind turbines have a manufacturing cost associated with producing the turbine itself. Then, the turbine has to be transported and installed. From there, over the life of the turbine, operating and maintenance costs are required to keep the turbine functioning and able to produce revenue.

I’ll detail the cost breakdown below:

Credit General Electric

Manufacturing Costs

The components making up wind turbines are difficult and expensive to produce. For instance, the blades and rotor cost anywhere from $500k - $1M+ for utility-scale wind turbines. Blades are estimated to make up approximately 20% of the total cost of the turbine. This cost goes towards the glass fiber/carbon fiber filament used to produce and sculpt the blades.

The nacelle houses the generator, gearbox, and speed brakes. This is where the electricity is generated. These components are estimated to make up around 50% of the turbine’s manufacturing costs.

The tower mechanism accounts for the remaining 35% of a wind turbine. Taller towers cost more to manufacture (more labor and more material) but pay off as they are able to capture higher wind speeds.

Combined, this leads the manufacturing costs to be the following:

For distribution wind energy projects, wind turbines are estimated to cost around $3k - $8k per kilowatt. Most houses are estimated to use around 5-15 kilowatts per day, meaning they’re between $15k - $120k per house.

For utility-scale projects, wind turbines cost approximately $1 - $2.5 million per megawatt. Most land-based wind turbines produce around 2 MW, so the installed cost is estimated at around $3 - $5M. Standard offshore wind turbines can produce up to 8 MW, so the installed cost is estimated at around $8 - $20M.

Credit LM Wind Power

Transportation & Installation Costs

Transportation and installation costs increase as the size of the turbine increases (more MW = larger turbine, so we’ll do costs per MW for calculations).

Wind turbines are transported by train, ship, or truck (sometimes multiple methods). Transportation costs include fuel, labor, storage, port fees, tariffs, etc. Blades are the most difficult to transport as they are considered oversized loads (needing special treatment). The cost of transporting a single turbine for a relatively short distance is between $30k - $40k. Longer transportation can cost over $100k per turbine.

Installation costs include a variety of factors, summarized below:

• Crane rentals - $100k - $150k per MW
• Foundation & Site preparation - $250k per turbine
• Road preparation - $100k per mile
• Electrical distribution infrastructure - $40k - $200k

In total, transportation and installation costs are roughly $500k - $1M per MW.

Credit AZoCleantech

Operation & Maintenance Costs

Wind turbines need annual maintenance and upkeep. Wind turbine maintenance includes inspection, cleaning, lubrication, and general turbine repairs.

Turbine inspection (the most common type of maintenance) uses various tools to inspect wind turbine blades, nacelle, tower, and generator. Cleaning involves removing debris and is usually done manually. Lubrication involves applying grease or oil to various parts of the turbine, to prevent wear and tear. Repairs include replacing damaged parts and are generally performed during scheduled maintenance visits.

Also included in this calculation are costs for insurance, land rent, administration, and power (it does take some electricity to run).

Operation & Maintenance (O&M) costs for most wind turbines are estimated at $0.01-$0.02 per kilowatt-hour produced. For context, a 3 MW wind turbine can produce over 6 million kilowatt-hours of electricity per year. So, that puts maintenance at around $60k - $120k per year.

Wind turbines usually last at least 20 years, so over the lifetime of the turbine, maintenance costs can amount to over $1.2 - $2.4M.

Energy Revenue

Unlike other forms of energy, wind turbines can’t produce energy every second of every day. For on-shore projects, wind turbines only produce energy about 30-40% of the time. For offshore projects, wind turbines only produce energy about 65% of the time.

Here’s a little revenue breakdown:

And, as we do around here, let’s do some bad math.

Considering the average production capacity of 2.5 MW for a land-based wind energy project producing around $153k in revenue per year with a cost of $60k (let’s say) for maintenance, leaving us with around $90k in net profit per year. Over 20 years that’s around $1.8M. For a 2.5 MW wind turbine, the costs are around $4M - $8M (and this doesn’t even factor in the time-value of money). So, how are these projects able to be profitable?

Well, that’s where it gets complicated. Over time, the costs of producing wind power have dramatically decreased. This has helped make it more economically viable.

Credit Vertogen Ltd

The alternative to wind energy currently is fossil fuels. While fossil fuels may be cheaper on a nominal basis, what we don’t pay for in dollars, we pay for with the environment. Wind lacks these negative externalities, making it a better source of energy from a societal standpoint.

Yet, with all of this going for them, wind farms still struggle to turn a profit. However, public pressure has promoted wind energy in the government, prompting very lucrative subsidies to incentivize investment.

Wind Costs in Comparison

As I’ve stated below, especially when it comes to energy sources, these projects are only valuable in relation to their substitutes. So, where does wind energy fit in this matrix?

Credit Medium

As you can see, the cost of wind energy over time has significantly decreased, making it directly comparable with solar and, on an LCOE basis, is a far lower cost than fossil fuels (or nuclear energy for that matter).

A couple of things to note from here:

1. Offshore wind energy is still quite expensive. As offshore wind is a relatively new application of wind technology, the innovations necessary to make it cost-effective and more efficient haven’t totally caught up yet. In addition, as these wind turbines aren’t located in anyone’s “property” as you would see with land-based wind energy, the politics of implementing a project are much more convoluted.

2. If the current economics continue to hold true, wind energy could provide a valuable source of energy for our future. That statement has a bunch of assumptions baked into it, so let’s dive a little deeper. This assumes that governments continue to maintain the same level (or increase the level) of wind subsidies, making them economically feasible. If this doesn’t occur, wind energy becomes much more expensive.

Granted, the thought behind most subsidies is to incentivize behavior as well as incentivize innovation. Even though wind turbine users are receiving subsidies, they’re still incentivized to lower their costs (or increase their efficiency) through innovation as that allows them to make more money.

Also baked into this statement is the assumption that the current benefits and problems with wind energy remain the same (or the ratio of benefits to problems increases) over time. This assumption is a little more feasible as these technologies are relatively established, meaning that any innovations going to be adopted at this point would have to greatly increase the benefit (or greatly decrease the problems) in order to be mass-adopted.

Speaking of pros and cons:

Credit Caltech Science Exchange

Pros of Wind Energy

Pro #1: Wind Turbines are getting taller and larger

Wind energy turbines are getting taller and larger. This means that they take up around the same amount of ground area, but as they are taller they can capture higher wind speeds, and as they are larger they can capture more wind. Granted, there are some additional manufacturing costs with this, but the revenue generated would be quite a bit greater than the costs associated.

The reason for this is economies of scale, where you increase the size, the underlying technologies, and land scales easily (with no additional costs). This allows you to spread out the costs so the average cost per revenue is actually lower.

Pro #2: Wind energy is a clean and renewable energy source

Not only is wind energy an abundant and inexhaustible resource, but it also provides electricity without burning any fuel or polluting the air. The United States Department of Energy cites that wind energy currently helps avoid 336 million tons of CO2 emissions annually. That’s equivalent to the emissions from 73 million cars (which is huge). In addition, as wind energy is run on wind (which is free), there aren’t any input costs associated with producing energy (unlike fossil fuel).

Credit Fast Company

Pro #3: New innovations in blade technology

New innovations in blade technology help wind turbines generate more power and address other issues, such as material use, recyclability, or noise. Innovations specific to wind turbine blades are happening constantly, signaling a good trajectory for the industry.

Pro #4: Wind farms can pose alternative uses

As wind turbines are so far above the ground (and continuing to increase in height over time), the ground under them can be used for alternative purposes. Many times we see these landscapes used for agricultural purposes (similar to how you would see power lines through a farmer’s field.

This allows wind farm owners to decrease their costs dramatically as they’re able to lease out rights to the land to others while still creating the same amount of revenue. Or, it works the other way.

For example, energy suppliers can build their wind turbines on pre-existing farmland and pay the farmers to build on their property in the form of contracts or leases. This provides revenue for farmers that doesn’t disrupt their farm’s production.

Pro #5: Reduces dependence on fossil fuels

As wind energy isn’t reliant on outside factors, once in place it is able to generate vast amounts of energy, independent of what's happening in the rest of the world. Especially as the world becomes more volatile, countries continue to seek energy solutions that provide more energy security (even if they may come at a higher cost).

For that reason (and many more), wind energy has received investment from nations across the globe.

Credit Texas Monthly

Pro #6: Wind turbines can be easily recycled

Around 95% of modern wind turbines are materials that are recyclable. Their outer shell, shaft, gearing, electrical, etc. are typically made from steel, copper, aluminum, other metals, or recyclable plastics. Turbine blades are made of fiberglass which isn’t recyclable, but can be easily repurposed. Granted, there is the opportunity for recycling these blades, but companies haven’t caught up with the supply (maybe the economics don’t work out yet).

Credit Process Industry Forum

Cons of Wind Energy

Con #1: Ideal wind sites are often in remote locations

Because wind favors high places, open places, and canyons, installation can be a challenge. Many times the infrastructure to service these areas hasn’t been built out, so electricity distribution from wind farms to areas of demand becomes more difficult. Upgrading our transmission network to connect areas with abundant wind resources to population centers could significantly reduce overall wind energy costs, but this requires significant public investment (it isn’t cheap or fast to build infrastructure).

Con #2: Wind turbines aren’t the most exciting energy producers

Often at odds with local consumers, and for good reason, positioning wind farms near residential spaces is difficult. While wind farms don’t have a direct emissions impact on the local environment, they do produce noise and visually impact the landscape. Some people don’t appreciate this as it does have an effect of ruining the true beauty of nature (however some people - like myself - think they still look really cool and aren’t bothered).

Credit BBC

Con #3: Wind plants can impact local wildlife

Although wind farms rank lower than other energy types of energy in terms of wildlife impact, it still can have an adverse effect on the local wildlife populations. Turbines adversely affect wild animals both direction (through collisions) and indirectly (noise, loss of habitat, reduced survival). Among the most impacted wildlife are birds and bats (and other flying animals).

The deaths of birds and bats are a controversial subject, raising concerns by fish and wildlife conservation groups. Besides these, there is also concern for animals on the ground.

Con #4: Expensive upfront cost

For better or worse, as wind energy is based on wind, wind energy doesn’t have a lot of ongoing costs to produce energy, so the majority of the costs associated with wind energy are upfront (manufacturing and installing the turbine). This can crowd out investors that don’t have the sheer capital required to foot the upfront bill and be paid over the long term.

Con #5: Unreliability

Wind energy can and is intermittent, as it is based on the wind itself. Since the wind can blow at various speeds at various times, it’s hard to predict the amount of energy that can be collected at any given time. This means that those relying on wind power need to have alternative sources of power to make up for the unreliability.

Credit UCS Blog

Con #6: Complicated construction

As wind turbines get larger and larger, constructing them, especially in rural or remote locations can be difficult and significantly impact the local ecosystem. This can be fixed, but the effects, when unmitigated, can severely impact the localities these wind turbines are placed in (especially if there are many of them).

Con #7: Offshore wind isn’t working

The Wall Street Journal recently reported on the vast set of problems assaulting the offshore wind industry. They cited the following:

United States power companies initially raced to get into offshore wind during the initial boom a few years ago. Since then, there has been a significant retreat by these utility companies as supply chains have gotten significantly worse combined with the growing interest rates, leading to project budgets blowing up.

In addition, other problems have persisted. Post pandemic, workers wages have significantly increased while Russia’s invasion of Ukraine sent basic commodity prices skyrocketing. A backlog of wind farm contracts created a shortage of vessels needed to haul turbines from ports to job sites. Ultimately, the costs to produce and run a wind turbine have become so high it isn’t feasible anymore.

Credit eeDesignit.com

Wind is a Great Energy Source

Wind energy has proved to be a great renewable source of energy. Countries have invested in and continue to plan future investments in the development and deployment of wind energy. It provides a good resource for a variety of reasons, summarized below:

• Mitigating climate change: To accomplish recent climate pledges, wind energy has been utilized as a non-carbon-producing energy source in many countries and continues to be utilized as climate goals become more stringent.
• Improve energy security: Locally generated wind electricity reduces dependence on important fossil fuels. Wind energy provides energy autonomy.
• Economic growth: Wind energy investment creates many new jobs in manufacturing, construction, maintenance, transportation, and many other sectors.
• Health benefits: Expanding wind energy production curtails the use of fossil fuels (and the subsequent production of CO2) which drastically improves public health outcomes now, and in the future.
• Rural application: Wind energy can be deployed to rural locations (and even oceans) which makes it a more flexible energy source, able to take advantage of some of society’s urban consolidation.

This combination of environmental, economic, and technical innovation is driving more countries to embrace wind energy as a major pillar of their national renewable energy plans and future commitments.

Is wind the “best” solution?

Currently, wind is a great solution that’s been promoted through subsidies, and through continued innovation and improvement in these economics, wind energy may become a standout energy solution.

Anywho, that’s all for today.

-Drew Jackson