The Economic Case for Domestic Wind Turbines
by James Lea, 11 June 2005
with a First Update, 28 April 2006
and a list of Frequently Asked Questions added, 6 September 2006
This article explores the economic feasibility of domestic wind power. The author was intrigued by the national debate over the viability of domestic wind power and decided to perform a worked costing to compare it with electricity purchased from the national grid. The results are surprising - domestic wind power can be as cheap as conventional non-renewable energy, even before any additional environmental benefits are considered.
Why domestic wind power?
Following the re-election of the UK Labour government in 2005, a new debate has started - should we restart our nuclear power programme? At the same time, the government is pushing ahead with a large renewable energy programme, consisting mainly of wind farms in a bid to meet and exceed its Kyoto commitments. Such mega projects on both fronts are meeting with fierce opposition from people who live near the proposed nuclear and wind sites.
I believe these large scale projects are the wrong way of going about meeting our energy needs. We should be sourcing energy locally. By generating power at or near our homes and offices, we can:
For distributed power generation to become a reality, it needs to be economically viable when compared to traditional power sources. In the UK, wind power is one of the best sources of renewable energy to meet this need.
Comparing electricity prices
The cost of electricity in the UK is typically measured in pence per kilowatt hour, abbreviated as p/kWh. For domestic wind energy to compete on purely economic grounds we must compare the cost of domestic versus grid electricity.
This calculation will make some assumptions about the type of wind generator an individual might install at home. The cost of the turbine and installation will be priced using manufacturer's Recommended Retail Price data. Dividing the total system cost by the total number of kilowatt hours of electricity generated will yield a cost per kilowatt hour. We can then compare this figure with electricity purchased from the grid to see which is cheaper.
We'll make these assumptions:
1 The Proven WT2500 wind turbine is made by a Scottish company and is built for British weather conditions. It belongs to the 'heavy metal' school of wind turbines because it is solidly built, and while initially more expensive than its American or European equivalents, will have lower lifetime costs. It's also very tough and able to withstand extreme weather conditions, an important consideration as worsening climate change brings more severe and variable weather.
2 If the government were serious about combatting climate change, they would remove VAT from all green products, regardless of whether they were installed as part of a new home, or retrofitted to an existing home.
Lifetime electricity production
The average wind speed in the UK is approximately 6m/s (www.bwea.com/noabl//index.html).
According to Proven (www.provenenergy.co.uk), the manufacturers of the WT2500 2.5kW turbine, (original page was www.almac.co.uk/proven/FILES/G%20SS%20002%20rev%203.pdf, but now see www.almac.co.uk/proven/FILES/G%20SS%20001%20rev%204.pdf in which a broader range of outputs is cited) in this wind speed it will produce on average:
Over 20 years this turbine will produce 20 years * 4282 kWHr / year = 85440 kWHr.
System components and total cost
The following costs are taken from Proven's price list (www.almac.co.uk/proven/pricelist.htm) and include the turbine, charge controller system and masts.
The electricity generated will be fed into a battery bank. The size of the battery bank will vary depending on individual requirements. For this calculation I have taken an approximate figure. The cost of an inverter to convert battery to mains power is excluded for two reasons - some systems do not require an inverter, and secondly, if fitted, an inverter would be shared with other components in a multiple-input renewable energy system (i.e. shared with photovoltaic and hydro) making costs hard to assign. In any case an inverter will not make a significant difference to the unit energy cost.
Combining these two figures, the total system cost is £7185.
Cost of wind turbine electricity
Over twenty years this system will produce 85640kWHr of electricity at a cost of £7185.
The cost per kilowatt hour is therefore = £7185 / 85640 kWHr = £0.084 / kWHr = 8.4p/kWHr.
Cost of grid electricity
Our domestic electricity bill in Spring 2005 charged the following:
Comparison of grid versus domestic wind turbine
This comparison is extraordinary. A good quality well-specified domestic wind turbine produces cheaper electricity (8.4p/kWHr) over its 20 year lifetime than grid-purchased energy (9p/kWHr)! Already, at today's artificially low energy prices (subsidised by our current fossil-fuel bonanza - see Peak Oil talk), home wind power is more viable than grid energy, even without considering all the other benefits such as:
The case is compelling - domestic wind turbines in the UK can produce, at an individual household level, cheaper electricity than coal, oil, gas and nuclear power stations. They reduce our greenhouse gas emissions and cost less.
Since I wrote the original article, energy prices have risen tremendously. The growing worldwide shortage of fossil fuel (see The End of Oil Conference) has driven up wholesale energy prices, causing domestic electricity bills to rise as well.
These changes have made the economic case for domestic wind turbines even more compelling. Below is an updated calculation to reflect today's energy bills. I have no doubt that energy prices will continue to rise.
Cost of grid electricity (First Update)
Our domestic electricity bill in Spring 2006 charged the following:
This represents an incredible 28% rise in electricity prices, in one year!
Comparison of grid versus domestic wind turbine (First Update)
The economic case is now even more compelling. Grid electricity costs 11.5p/kWHr, against 8.4p/kWHr for electricity generated by domestic wind power. In other words, electricity generated by domestic wind power costs just three-quarters the cost of grid electricity.
Conclusion (First Update)
Domestic wind turbines are clearly a hot topic, and understandably so in our age of rising energy prices. As electricity becomes ever more expensive, I anticipate more and more people will switch to wind power.
I plan to issue a revised calculation when energy prices have risen further. In the meantime, if you'd like to make more detailed calculations on the payback time for wind power, please read my article on The Economics of Going Off-Grid, where you'll find a spreadsheet to help you carry out the calculation. Finally, as always, please do contact me with your comments or questions.
I've received many questions on this article, reflecting the growing interest in local power generation. Below are some questions I've received via this site's feedback form, and my replies. If the answer to your question isn't below, please contact me and I'll add it to this FAQ.
Q. Very useful article but having looked at Proven's price list and bearing in mind that there are now no Clear Skies grants or Scottish grants for those of us in England the sums unfortunately aren't favourable.
A. Check out the successor to Clear Skies: the Low Carbon Buildings Programme. More details are available from www.est.org.uk/housingbuildings/funding/lowcarbonbuildings/
Time cost of money
Q. You haven't considered the cost of borrowing money to fund the installation. £7000 over twenty years could cost you £3000 in interest. The financial case is therefore less certain and most people would find the pay back period too long.
A. You're quite right about the cost of borrowing. Ideally one could purchase and install the turbine without borrowing money, in which case the loss of income is only that of interest on the sum - clearly having to borrow upfront will incur greater interest charges.
I didn't factor in the cost of borrowing as I wanted to keep the article simple. There are several other variables, such as the cost of battery backup, and whether a grant can be obtained for system installation, which would also need to be factored in, before going ahead.
Have a look at the article The Economics of Going Off-Grid, which includes a spreadsheet tool for calculating time value of money and payback periods.
Energy storage / batteries
Q. Do the battery banks not need replacing periodically?
A. Yes - the replacement interval depends on the quality and capacity of the batteries, how regularly they are recharged, and their patterns of usage. This is a complex area whose costs I cannot accurately quantify, as they depend on the individual circumstances. I recommend you investigate Homepower magazine (www.homepower.com), whose pages regularly discuss battery issues.
Q. Overall argument is straightforward and clear. However, it does not deal with storage issues (when the wind is not blowing) and the associated costs. Is there a website which can give comparative costs that include these other factors?
A. Regarding how electricity is stored, I deliberately kept that side of the article simple because I did not want to obscure the main argument. Furthermore, every renewable energy system is slightly different - some people want a grid-intertie system (in which no batteries are needed), others want to be entirely off-grid (making batteries essential), while others use a hybrid wind/solar system and accept variable power availability (thus considerably reducing the size of battery needed).
I recommend you:
Q. What about the change over unit you would need to fit to the supply for periods of "no wind".
A. A battery charge/discharge control unit would handle all electricity flowing in and out of the battery bank. It is possible that the battery charge controller listed on my cost estimate would perform this function. If not, a separate unit would probably not cost more than a few hundred pounds.
Q. Your article did not accept the need for `mains back up supply` essential for all homes when the wind does not blow!
A. I included a battery bank in the design, and assumed that the battery capacity was sufficient to power the home when the wind was not blowing. However, if the battery bank capacity were insufficient (e.g. a long period of calm weather), and the occupants were not prepared to moderate their energy use, then either a grid-intertie system would be needed (in which the grid acts as a giant battery with effectively unlimited storage capacity), or a larger capacity battery bank would be needed.
In practice, I would augment a wind turbine with a solar photovoltaic array. Most of the time it is either windy or the sun is shining, so a hybrid system would perform better than a purely wind-based system. Power diversity is an important principle. Some people who live off-grid install a backup diesel generator, as this decreases the size of turbine and solar array needed to handle dark still winter days, which makes the system cheaper.
Q. Does the calculation include provision for summer weather when the turbine may not generate sufficient output over periods of time thus necessitating supplementation from the national grid?
A. The calculation includes a 12V battery bank with 700 AHr capacity, which at 50% depth of discharge could (very roughly) supply an energy efficient house for around 16 hours. You would probably need to up-rate the battery bank. However, this is a complex area, and the article focuses on the wind turbine only, not the renewable energy system as a whole, whose costs vary depending on what it has to do. Note though that a grid-intertie system will automatically import electricity from the grid when needed (ie your meter can 'spin' both ways), so if you are fitting this anyway, there will be no extra cost.
Q. Does your calculation include installation costs?
No, because these are difficult to quantify. A hands-off householder may wish to subcontract the entire installation operation, in which case it would cost more, or they may take a more active role, and install the mast, raise the turbine etc. themselves, thus lowering the installation cost.
Costs will also vary depending on the location - sites with good access, and plenty of space to fit the tower will be cheaper than built-up environments, which may require more expensive towers and installation equipment. Your turbine supplier or installer should be able to advise on these factors.
Maintenance and insurance costs
Q. It would be really good to have an idea of the cost of running one of these turbines, what would the planned maintenance costs be over 20 years?
A. Difficult to say - you would need to talk to the turbine manufacturer. As I pointed out in the article, I would expect a heavy 'Proven' wind turbine to last a long time, with fairly low running costs. Some key factors to getting the running costs of a turbine down are:
I have published another article, The Economics of Going Off-Grid, which contains a spreadsheet you can download, which allows you to factor in the cost of maintenance etc., to arrive at a better estimate of the savings.
Q. Are there any maintenance or insurance costs associated with the turbine?
A. A|l turbines need regular preventative maintenance, which if the turbine is installed on a tilt-up mast for easy access (as noted in the article), can often be carried out by the owner - hence I have not included these costs. The article also assumes a turbine lifetime of twenty years, after which time it will be replaced - it may actually go on for longer than that, especially if it has been well looked after.
Insurance is up to you. However, your neighbours will probably hold you liable if your turbine disintegrates in strong wind gusts and sends its blades into their greenhouse! Never underestimate the power of the wind.
There are two key steps to take:
Selling electricity back to the grid
Q. Can the costs be reduced further by selling electricity back to the grid?
A. Yes - grid-intertie is becoming more common, and your power supplier may have an obligation to purchase surplus electricity. With a grid-intertie, no battery bank is needed, so they can be cheaper. Your installer will be able to advise on this.
Q. Is it hard to get planning permission?
A. This largely depends on your local planning authority, and where you plan to site the turbine. Planners are becoming increasingly favourable toward turbines, now that the government has signalled its support for micro-generation. However, you may still have some educating to do regarding noise concerns. Turbines are much quieter than cars, and no-one seems to mind the traffic! Talk to the wind turbine suppliers about noise issues - good manufacturers should be able to quote noise levels at various wind speeds, which will help you persuade the planners.
It is also very important to get the support of your neighbours, as letters of objection to the planning authority can scupper your chances. If they all support your planning application, then unless you are living in a listed building, or a conservation area, you should be able to get planning permission.
Q. I was hoping to set up a business fitting wind turbines to domestic/business properties. I have been surfing the net for information and found your article very helpful. I think the time is perfect for the widespread use of relatively small wind turbines (and therefore companies to fit them). Your economic comparison was very useful, if you have any further info. that may be helpful in my quest and you have the time please send me details.
A. I don't have a specific set of information I can send you, other than the advice to continue browsing my site!
However, one issue to be aware of in this (relatively) new market is the payback time, which in turn is influenced by the wind turbine performance. Turbines fitted in domestic areas may not live up to expectation (perhaps due to turbulence), so must be carefully costed. Grants make a big difference - see the Low Carbon Buildings Programme - so I imagine if you were to set up a business, becoming an accredited installer would help you attract customers.
-- end of FAQ --
Any comments on this article?
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-- (c) James Lea, www.GreenLiving.co.uk, 2005 - 2006 --