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 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 high capacity value conventional generation sources as inclusion in the same table implies.
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 emissions reductions, 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 consequence of 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 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 introduces process “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.
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.
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.
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 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:
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.
 McCullough, Robert (1998). “Can Utility Markets Work Without Capacity Prices?” Public Utilities Fortnightly. http://www.mresearch.com/pdfs/275.pdfMcCullough is also the source of the medical analogy.