Some thoughts on the efficiency and economics of Chinese wind power: Reported grid consumption of wind generated power was 100Twh or 100Gkwh. At the end of 201

Some thoughts on the efficiency and economics of Chinese wind power: Reported grid consumption of wind generated power was 100Twh or 100Gkwh. At the end of 2011 installed capacity (grid-connected) was about 47GW, which should have grown to about 60GW by the end of 2012. I will take 50GW as the average producing number, so on average each kW of installed capacity produced about 2000kwh worth of electricity. In other words the average wind mill runs about 2000 hours a year, slightly less than 6 hours a day. Compared to the load factor of a nuclear generator of 90% or better we need 4GW of installed wind power to replace 1GW of base load power (like nuclear). At 5.5c per kwh of electricity (wholesale) the wind industry generated 5.5 billion dollars worth of economic value. Averaged over the assumed 50GW producing capacity that is about 11c per installed Watt. There should be some operating cost so let's say 10c net operating. Assume the equipment depreciates over 30 years then at $1 per W installed you can get about 6.7% return on asset; at $1.5 per W (current US cost) the return is only 3.3%; at $2 per W (2009 US) 1.7%. With 5% financing you can leverage the 6.7% ROA to 8.3% ROE by using 50% debt. There was an extra 20Gkwh of abandoned wind generated electricity (or 20% of what is consumed) due to transmission/consumption limitations. So the potential economics could be better. I used the unsubsidized wholesale power price of 5.5c per kwh as the proxy for the economic value of wind power. It can be argued that wind should be worth less because it is less reliable and tends to be located farther away from population centers. It can also be argued that wind should be worth more because it is clean. In reality wind power probably sells for more due to subsidy. Wind power appears to be marginally to somewhat profitable in China assuming China can achieve lower all-in installation cost than the US, without explicit subsidy (same wholesale price) but with likely policy support (utilities would otherwise prefer more reliable/convenient power sources at the same price). Since US wholesale price is lower and installation cost higher, wind power would require subsidy in the US to be economical unless a much higher load factor than 6 hours per day can be achieved.