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The true, tragic cost of British wind power

You could save the planet for a fraction of the price

By Andrew Orlowski, 7 Mar 2012

Analysis Two studies published this week calculate the astounding cost of Britain's go-it-alone obsession with using wind turbines to generate so much of the electricity the nation needs.

Both studies make remarkably generous concessions that favour wind technology; the true cost, critics could argue, will be higher in each set of calculations. One study reckons that the UK can still meet its carbon dioxide emissions targets and save £140bn – but only if it dumps today's inefficient hippie technology. The other puts the potential saving at £120bn – pointing out that the same amount of electricity could be generated using open cycle gas plants at one-tenth the cost of using wind turbines.

"There is nothing inherently good or bad about investing in renewable energy and green technology," writes economist Professor Gordon Hughes – formerly of the World Bank and now at the University of Edinburgh. "The problem is that the government has decided to back a technology that isn't ready for prime time, thus distorting the market."

Hughes' study – Why is Wind power so expensive? An economic analysis – is published by the Global Warming Policy Foundation today, and simply looks at the costs. The other study, by technical consulting group AF-Mercados, specifically looks at how to reduce CO2 in the cheapest manner – by incurring the least collateral economic damage. It's called Powerful Targets: Exploring the relative cost of meeting decarbonisation and renewables targets in the British power sector. KPMG originally commissioned the study, but then got cold feet. Both come to similar conclusions: wind is astronomically expensive compared to other sources of energy – and consumers and businesses must pay a high price for the privilege of subsidising such an inefficient technology. Let's look at Mercados' study first.

Save the planet – blow up a wind-turbine

The UK can meet EU targets set for 2020, and its own target for 2050, much more cheaply than by building out wind turbines and solar panels. If the UK abandons its radical, go-it-alone CO2 targets completely – an increasing possibility since the world is refusing to follow suit – this would save £320bn in fuel costs.

In one scenario modelled by AF-Mercados, with no emissions targets, UK electricity will cost 5.8p/kWh between 2012 and 2050: a total cost of £780bn. Using renewables, the unit price rises to 8.4p/kWh, or £1.1 trillion in all. A more prudent mix of gas and nuclear would still allow the UK to meet the CO2 targets, with a unit price of 7.2p/kWh, or £960bn.

Hardcore climate change campaigners including Mark Lynas and George Monbiot have recognised the reality of the costs of renewables, and have lent their support to nuclear power in recent months.

Supporters of today's Gaia-friendly options may have a hard time critiquing the study, which is actually biased towards renewables in two important ways.

Firstly, the study uses DECC's estimates of future gas prices, which are higher than many energy experts predict. Why? Well, the shale gas factor is not accounted for: yet the UK has abundant deposits of unconventional gas, which are sure to depress the price. (Exploiting this resource means we would no longer be dependent on volatile and expensive gas imports).

Secondly, as the authors note:

We haven't included the costs of short term balancing or of reinforcing the grid to accommodate new generation. Only the immediate cost of connecting the new generation to the network of ensuring enough generation capacity to securely meet peak demand is considered. Adding wider reinforcement costs would be expected to be relatively higher for renewables because the resource tends to be further from demand centres and the overall capacity build is higher" [our emphasis].

In other words, they've let the wind lobby off very generously. As too, on closer inspection, does Professor Hughes in his study.

Wind: Just not ready for prime-time

Hughes calculates that the national and EU policies favouring wind will incur an additional cost to citizens of £120bn for the turbines, and the backups they require, to meet carbon dioxide emissions targets, when the same electricity could be generated for just £13bn if the UK used open cycle gas plants instead.

Meeting the 2020 renewable target using wind will require 36GW worth of wind backed up by 13GW of the rather more reliable gas. "Overall, the net saving in fuel, operating and maintenance costs for the wind scenario relative to the gas scenario is less than £500m per year, a very poor return on an additional investment of over £105bn," concludes Hughes.

Wind turbines may even increase the UK's CO2 emissions – depending on when the wind blows.

Hughes adds: "The response has been to rig the market to (in effect) guarantee the return on investment in immature technologies which are not economic at any reasonable price on CO2 emissions or if their impact on landscapes and the environment was properly internalised."

Hughes draws on capacity factor evidence from California and New York, but stresses that these numbers are widely accepted in the energy industry. Over two years in New York State, the peak-time capacity factor of wind was just 18 per cent.

"The only way of ensuring the reliability of electricity supplies," he writes, "will be a huge expansion of combined and open cycle gas plants."

It's either that or power cuts.

As with the AF Group's study, the assumptions are kind, to say the least, to wind. Hughes assumes a load factor of 33 per cent for offshore wind, which has the effect of reducing the number of turbines needed to meet the targets – which, in turn, lowers the infrastructure costs of hooking the turbines up to the grid. This is lower than most countries use. Hughes also notes that, even making these allowances, the 'gas alone' still comes in at a tenth of the investment cost required.

One of the problems, Hughes notes in a footnote, is that the UK's civil servants are fanatically optimistic about wind power, to the extent that their calculations are far more bullish than any one else's.

"For example, DECC uses load factors of 38-45 per cent for offshore wind... This is far above the average load factors for offshore wind anywhere in the world and reflects endemic over-optimism about the prospects for renewable technologies," he writes.

Symbolic logic

Indeed the response to AF Group's report on Monday is one of the most unprofessional and irrational a publically employed PR can ever have delivered.

“If this sort of short-sighted analysis informed our policies we’d not meet our carbon emission targets and keep the lights on, and the consumer would certainly be worse off," shrieked a DECC spokeswoman to Solar Power Portal, an industry-sponsored 'news' website.

It's a sign that DECC employees are not just hampered by technical ignorance – most have History, or English, or PPE degrees – they have an irrational, almost religious attachment to wind turbines. It's as if wind is favoured because of its symbolic and very visible presence. "Look at our land, Gaia, and show us mercy".

It may occasionally be worth reminding Department of Energy employees who they ultimately serve – including the poor, upon whom the cost of inefficient technology disproportionately falls.

If you're serious about CO2, Hughes suggests, a carbon tax would be much more efficient preferable than these clod-footed market interventions.

"By relying upon a carbon tax, the whole nonsense of carbon budgets, etc, with overlapping and inefficient measures for each sector, could be swept away," he states. ®

Related links

Powerful Targets - AF-MERCADOS UK [PDF]
Why Is Wind Power So Expensive? An economic analysis - Professor Gordon Hughes/GPWF [PDF]

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