Cost of Development for Energy

Cost of development, also called overnight capital cost, is the cost of building the infrastructure and development for different energies. For nuclear energy, nuclear reactors must be built. For natural gas and coal, burning generators must be built. For renewable energy, wind and solar farms need to be built. These costs are not universal, though, and can depend on location and management. Under bad management or inopportune locations, costs can be higher than normal. Under perfect conditions, costs can be lower than normal. Furthermore, what is exactly the “normal” cost of development is difficult to determine precisely since there are so many factors that can go into this cost. To determine costs of development, recent projects for wind and nuclear will be examined as well as data from the U.S. Energy Information Administration for all sources.

In 2016, the first nuclear reactor in 20 years was built in the United States. The reactor, Watts Bar Unit 2, is overseen by the Tennessee Valley Authority and took 44 years to be constructed. However, there was a long hiatus of no construction for 22 of the 44 years. The reactor cost as total of $4.7 billion, and will add 1,150 megawatts of electrical capacity to Southern Tennessee. For every dollar spent on capital in this project, about 0.0002446 kilowatt hours are added in capacity. According to the U.S. Energy Information administration, the overnight capital cost of a dual unit nuclear plant is $5,530 per kilowatt. The fixed operation and maintenance cost is $93.28 per kilowatt-year. Nuclear energy has the most expensive capital and development costs out of the examined energy sources.

In Colorado, Xcel Energy is constructing its first wind energy farm, the Rush Creek Wind Farm. The wind farm is located east of Denver, and is estimated to be finished October of 2018. The wind farm will cost a total of $1.1 billion and will add 600 megawatts of electrical capacity to Colorado. For every dollar spent on capital in this project, 0.000545 kilowatt hours are added in capacity. According to the U.S. Energy Information Administration, the overnight capital cost of an onshore wind farm is $2,213 per kilowatt. The fixed operation and maintenance cost is $39.55 per kilowatt-year.

Coal and natural gas have multiple types of generators that can be used. For coal we will examine a single unit advanced pulverized coal generator and a single unit advanced pulverized coal generator with carbon capture and storage. For natural gas, I will examine a conventional combined cycle generator and an advanced combined cycle generator with carbon capture and storage. How these generators specifically operate is unimportant to this analysis, and only their costs will be looked at.

For a single unit advanced pulverized coal generator, the overnight capital cost $3,246 per kilowatt. The fixed operation and maintenance cost for a single unit advanced PC is $37.80 per kilowatt-year. For the same kind of generator with carbon capture and storage, the overnight capital cost is $5,227 per kilowatt. The fixed operation and maintenance cost is $80.53 per kilowatt-year.

For a natural gas conventional combined cycle generator, the overnight capital cost is $917 per kilowatt. The fixed operation and maintenance cost is $13.17 per kilowatt-year. For an advanced carbon cycle generator with carbon capture and storage, the overnight capital cost is $2,095 per kilowatt. The fixed operation and maintenance cost is $31.79 per kilowatt-year. Natural gas has the lowest capital and development costs out of the examined energy sources.

Lastly, for a photovoltaic, solar array, generator, the overnight capital cost is $4,183 per kilowatt. The fixed operation and maintenance cost is $27.75 per kilowatt-year. With these numbers, it can be seen that nuclear energy has an extremely high overnight capital cost, and a high, though comparable, fixed operation and maintenance cost.

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Current Energy Production and Consumption in Colorado

Colorado is a leader in the United States for energy production. The state ranks 7th in total energy production with 3,042 trillion BTUs produced in 2014. Of this energy production, a large majority of this production comes from oil, which the state produced 9,200 thousand barrels in November of 2016, and natural gas, which the state produced a total of 1,704,836 million cubic feet of in 2015. There is no nuclear energy produced in Colorado.

For total electricity generation, Colorado ranks 27th with 4,332 thousand megawatt-hours generated in November of 2016. By source, the large majority of this electricity is produced by coal at over 2,500 thousand megawatt hours generated in November of 2016, meaning coal provides Colorado with over half of its electricity production. This is followed by nonhydroelectric renewables, which produced 985 megawatt hours, and natural gas fired generation, which produced 722 megawatt hours.

Colorado’s electricity prices rank 25th highest in the country at an average retail price of $0.1216 per kilowatt-hour.

For consumption, Colorado is not as significant compared to other states as they are with production. Colorado ranks at 34th most energy consumed with 276 million BTUs consumed per capita. According to the US census, the Colorado population was roughly 5,349,648 in 2014. In total this puts Colorado consumption at a total of 1.476 quadrillion BTUs.

Breaking this consumption down by source, the most significant sources of consumption are natural gas and coal. In 2014, natural gas accounted for 497.2 trillion BTUs consumed. Coal accounted for 350.5 trillion BTUs consumed. Gasoline for motors, such as cars, trucks, etc., accounted for 250.3 trillion BTUs consumed. All renewables, biomass, hydroelectric, solar, wind, etc., put together account for 131.4 trillion BTUs. Nuclear energy accounts for none of the energy consumed in Colorado. By sector, the most significant sectors of consumption are industrial and transportation, which account for 29% and 28% respectively. Residential accounts for 24%, and commercial accounts for 19%.

What is the Environment Worth?

This is a difficult question that doesn’t have an answer that we could possibly calculate. There are a lot of variables to consider. First off, we would need to define what the “environment” is and what it means to destroy an environment. However, I do not find this question worth delving into in huge depth here so we will define the “environment” with a simple connotative definition of the natural sphere. So in some kind of way, national parks, undeveloped land, and communities of non-human species are all how I define the environment in this context. Also, to destroy the environment means to alter it in any kind of way that would have not been able to have been done without human influence. So constructing a building or any kind of development would be considered destroying the environment. These are not set definitions, and what the “environment” is and isn’t and how you protect it is up for a lot of interpretations. However, in this case I am going with this simple definition of the environment.

Now that we have a definition for what the environment is, we can think about its value with better boundaries. We must keep in mind, though, that there is no blanket value to the environment. A natural desert area is part of the environment, but it is not as valuable as say a natural hot spring to us or to a larger diversity of species. So if we were to say the entire environment conglomerated together was worth 100 trillion dollars (just a made up value), it wouldn’t be right to apply this value equally among square feet. So if there were 10 trillion square feet of natural space conglomerated, you couldn’t simply say that each square foot was worth $10, as some pieces of land would probably be more valuable than others. Like said before a natural hot spring or aquifer is probably more valuable than a piece of desert land.

However, this implies that the environment has a finite value, though to many people I talk with it doesn’t seem they believe this. It seems like many people think the environment has an infinite value. Meaning that all human development is wrong, and that we should always favor environmental protection over development. No matter what, you should not drill oil and any oil drilling is inherently evil.

I hope that the people that hold these beliefs are not reading my blog… or any blogs for that matter. If they were, they would be committing a huge atrocity in their own world view (not mine). They would essentially be sacrificing something of infinite value for something of finite value. They would essentially be making everyone on this Earth immeasurably worse off, as they would be using energy of a finite and calculable value to read my blog. I unfortunately have to admit that my blog is probably incredibly low on the value scale and is most likely not even in the top 75% of most valuable things (if you could even measure what the MOST valuable things are). However, you the reader right now are forfeiting something of unquantifiable value for something that is relatively low value. How dare you!?

How dare you own anything or even develop a smidgeon if you think the environment is of infinite value? There is nothing else on Earth that has infinite value, not even a human life. You might look at that and be shocked, but my reasoning is simple. Imagine that a human life has infinite value and is in danger of some kind. The only way to save this life, for some weird and bizarre reason, is to kill of every bear, fox, and wolf in the world. Is it worth it? Is killing off every bear, fox, and wolf worth saving a single human life. If a human life has infinite value, the answer here is absolutely yes, as a bear, a wolf, or a fox does not have infinite value.

To relate this example back to the environment. If the environment has infinite value and is in danger because of humans, would it be worth it to kill off every human in order to protect this thing of infinite value?

I think it is clear to see here that the environment, just like everything else that has ever existed, does not have infinite value. That means it must have some kind of countable value. However just like the value of a human life, it would be difficult to ever know what this value actually is. We know the value exists, but we cannot put an exact number on it.

Though, I think it would be easier to learn the value of something in the smaller scale. I think you would be able to get a rough estimate of the utility and value of a marshland on a community through certain practices. Even this is impossible though if there is no kind of market price that can be set for these natural spaces.

I will expand on this idea in future blogs, but this is your food for thought. How could you determine the value of a natural space? And how could you determine if development is worth the degradation of an environment?