Bloomberg’s Renewable Fantasyland
By Paul Homewood
Further to my last post.
Liebreich, having described why the push to renewables in the EU has fallen flat on its face, then goes on to say:
The tragedy of all this is that Europe lost its renewable energy mojo just as costs were plummeting to the point where green power is fully competitive without subsidies in more and more parts of the world. If solar power can be built for 5.85 U.S. cents per kilowatt-hour in Dubai, or $4.8 cents per kWh in Peru, or 6.4 cents per kWh in India, why not in Italy, Spain, Portugal, Greece or Croatia? If wind power can be delivered for 3 U.S. cents per kWh in Morocco and 4 cents per kWh in the US, why not in France, Spain, Portugal, or, heaven forbid, the U.K.? When British commentators and politicians refer to renewable energy as “ludicrously expensive”, they clearly don’t realize how foolish they sound to anyone acquainted with cost data from around the world; and they have failed to grasp that one of the reasons why costs are higher in the U.K. is because of the policy uncertainty they have themselves helped to create.
He fails to explain why, if costs of wind/solar are so low, they need any subsidies at all.
But let’s look more closely at his claimed costings, which I always take with a large pinch of salt. They certainly don’t stack up against what the US EIA is saying.
According to them, the cost of onshore wind is $73.60/MWh, and solar $125.30. Note also that they are based on unrealistically high capacity factors of 36% and 25%. DECC’s figures for the UK are 26% and 11%.
Whether the cost of solar actually is 5.85 cents in Dubai, I really don’t know. But solar panels in the desert are hardly comparable to those in northern Europe.
So how do renewable costs compare to conventional in the UK?
Let’s start by looking at the outcome of the first CfD auction last year:
Remember that these are only the successful bidders – rejected bids would be higher still. Three out of the four solar bids obtained a guaranteed strike price of £79.23/MWh, far above the supposed Dubai costs.
Furthermore, these are at 2012 prices. The CfD register conveniently shows us the current price standing at £83.22/MWh, which will be index linked for the next fifteen years.
This is pretty consistent with the Committee on Climate Change’s assumptions in their Fifth Carbon Budget Report:
On top of this is the intermittency factor, which the CCC estimates will cost £10/MWh:
With wholesale market prices close to £35/MWh, solar is clearly a non starter, but what about wind?
Again, claims of “3 cents/KWh” appear well wide of the mark, with the EIA suggesting $73.60/MWh for onshore, even based on unrealistically high capacity factors.
Going back to the CfD auction shown above, successful bids were between £79.23 and £82.50/MWh, or up to £86.66/MWh at today’s prices.
And the CCC are forecasting between £67 and £102/MWh for 2020.
And again we have that £10/MWh to add on for intermittency.
It is not difficult to see why renewables are seen in the UK as ludicrously expensive.
It is a sad state of affairs when a supposed expert from Bloomberg has such difficulty with simple facts.
If costs really are as Mr Leibreich suggests, then let wind and solar operators bring their installations to the UK, and operate without subsidies, and on the basis that they will have to compete on the open market to sell their output with no guarantee that they will be able to sell it all.
Somehow, I don’t think we’ll be buried in the rush!