No, Wind Capacity Factors Are Not 50 Percent in Minnesota, And That’s Very Important
Renewable energy advocates in Minnesota often claim that capacity factors for wind, the percentage of electricity generated by a power plant compared to its theoretical output, are sky high in Minnesota, exceeding the 50 percent threshold.
Data from the Lawrence Berkeley National Labs show this claim is completely false. As you can see on the map below, there is not a single wind facility in Minnesota that operates above a 50 percent capacity factor.
The results don’t get much better as we lower our standards, either. The U.S. Energy Information Administration shows the state-wide capacity factor for wind was only 35.9 percent in 2017, but for our study, Doubling Down on Failure, we assumed new wind operations would have a 44 percent capacity factor. It appears that even this assumption may have been too generous.
As you can see below, only four Minnesota wind projects, totaling 491 MW of installed capacity, attained a 44 percent capacity factor, or higher, in 2017.
This means only 13 percent of all the installed wind capacity in Minnesota operated at this level of efficiency. The wind facility with the highest capacity factor was the Pleasant Valley Wind Farm, which operated at a 47.5 percent capacity factor in 2017.
It’s not just that renewable energy boosters are wrong about the performance of wind in Minnesota, it’s that this error has major implications for the cost of wind energy in our state.
I recently wrote about how declining output from Minnesota’s third-largest wind farm was causing the levelized cost of energy (LCOE) of electricity generated by that facility to increase. Low capacity factors increase electricity costs because the up-front costs of building the wind turbine are spread out over fewer units of electricity produced. It helps to think of LCOE estimates as the per-mile cost of driving your car. The more miles you travel, the less each individual miles costs because the cost of purchasing your car is spread over more miles.
Now, let’s look at how wind power costs are influenced by capacity factors at a theoretical wind farm, let’s call it the Sky-High Wind Farm. The table below shows how declining capacity factors increase the cost of generating electricity at this facility. All assumptions used in this LCOE calculation are from the 2019 Assumptions for the Annual Energy Outlook published by the U.S. Energy Information Administration, mortgaged over a 20-year lifespan.
As you can clearly see, the capacity factor of a wind facility has profound impacts on the cost of electricity generated by the plant. Reducing the capacity factor of the Sky-High Wind Farm by 8 percent, from 52 percent to 44 percent, increases the cost of electricity by 18 percent because reductions in generation result in exponential increases in the cost of electricity.
Furthermore, it is important to note that the only variable I’ve changed is the capacity factor, and this exercise underscores the point that small changes in capacity factor have huge effects on costs.
Turns out the only thing that is Sky-High about wind energy in Minnesota is the price tag.