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Unlike carbon-based power, Mr. Kava said, wind supply prices do not fluctuate, enabling Google to plan better. Can someone explain this? It seems like wind ene

• deleted 10y ago
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• pramsey 10y ago
  From a long-term point of view, the cost of the wind energy is just the depreciation of the turbines plus the maintenance costs on the farm. Those two dollar inputs will create a fairly predictable number of kilowatt hours output. The problem of getting those kwh when you want/need them is one of selling into the grid when you have them and buying out when you need them, but I guess from the point of view of Google, they are calculating: we will consume X kwh, so we need to build X khw, and wind provides a very predictable source of those kwh. Macro vs micro.
  • knz 10y ago
    > From a long-term point of view, the cost of the wind energy is just the depreciation of the turbines plus the maintenance costs on the farm. A minor detail, but don't forget the cost of transmission. My understanding is that the US has massive wind energy potential (http://www.nrel.gov/gis/images/30m_US_Wind.jpg http://www.nrel.gov/gis/images/30m_US_Wind.jpg and http://www.nrel.gov/gis/images/80m_wind/USwind300dpe4-11.jpg http://www.nrel.gov/gis/images/80m_wind/USwind300dpe4-11.jpg) but it's not necessarily near the most densly populated regions. Building and maintaining these transmission corridors is not an insubstantial cost.
• mwytock 10y ago
  Theyre writing long term contracts for power production which provide a fixed price for the resource developers and by consequence provide them with a fixed cost. Typically, these types of contracts, providing price certainty, are required to build develop new renewable assets.
  • sailfast 10y ago
    This. Price doesn't fluctuate for the purposes of this article because they've bought a minimum amount of electricity for a fixed price over time. (not because price of wind power never fluctuates) Similar pegged pricing can be achieved if you trade futures to hedge your price but typically this is only achievable year to year and difficult to do with electricity as it can come from so many different sources and hedging against them all may be difficult. Perhaps there's a megawatt future out there? EDIT: Yup - regionally-based electricity price hedge. Cool! http://www.cmegroup.com/trading/energy/#electricity http://www.cmegroup.com/trading/energy/#electricity
  • tedsanders 10y ago
    This is the correct answer. Price hedging is a typical feature of corporate PPAs (power purchase agreements). The aim is to reduce risk for both parties. All the other answers here are speculating without knowing how corporate energy procurement works.
• m3ta 10y ago
  It seems the author is using the phrase "do not fluctuate" to explain wind supply prices in the same way most people think, or assume, the value of the dollar does not fluctuate. Everything fluctuates, but some things are less prone to wild fluctuation, by quite a large margin.
  • wmeredith 10y ago
    I think that statement makes sense in the context of the fossil fuel markets.
• gleglegle 10y ago
  Once you spend the capital on wind turbine hardware and infrastructure, the price of your energy generation is fairly constant. Price on energy supply from fossil fuels always depends on the fluctuating price of those fuels, which introduces uncertainties to future costs of energy.
  • tomp 10y ago
    Price = where supply and demand cross. If there's no wind, supply goes down, so with constant demand prices will go up! That's disregarding second-order effects (e.g. other providers marking up their prices to make bigger profits, or the wind-power provider increasing its prices in the future to make up for the lost income and provide a nice return on investment).
    • coldpie 10y ago
      You can predict the supply of wind, as an average over a long enough period of time, much more easily than you can predict the supply of oil.
      • edblarney 10y ago
        "You can predict the supply of wind, as an average over a long enough period of time, much more easily than you can predict the supply of oil." Over the long haul, yes, but in real-time - no. And electricity prices to fluctuate a lot over days, weeks etc.. But indicating that 'price stability' is a point for green is not really fair, when it's almost always going to be considerably more expensive. Knowing that something is going to be 'consistent, and consistently more expensive', I don't think is a good argument for green. There are other, better arguments.
        • papercrane 10y ago
          > Over the long haul, yes, but in real-time - no. And electricity prices to fluctuate a lot over days, weeks etc.. You'd deal with this the same way you deal with it in every other commodity market, futures contracts.
• eli_gottlieb 10y ago
  Weather fluctuates, but climate is relatively stable. As long as you have some kind of storage and base-load supply, you can plan yearly wind-power usage based more around climate than weather, at least to my understanding.
• mbloom1915 10y ago
  this has much more to do with the locked in rate utilities/the state demands when Distributed Generation (like wind and solar) are feeding into the grid. 'wind energy prices' is vague - not sure if it is getting at the relatively low fluctuating cost of standing up a turbine, OR the flat rate wind suppliers are paid for generation (like google)
• CmdrSprinkles 10y ago
  As others have mentioned, it is a narrow definition. The idea is that the only fluctuations occur due to uncontrollable factors (weather) which, in all fairness, do impact carbon-based power too (to varying degrees). So a war in the middle east or a trade embargo won't impact the price per kwhr. Whereas a tornado would impact both wind and oil (even if just by slowing down the deliveries). I would argue that wind (and solar (not so much hydro)) are much more susceptible to weather impact, but with sufficiently large capacitors/batteries that can be minimized.