Committee On Climate Change Admit Wind Power Is Dearer Than CCGT
By Paul Homewood
You may remember claims a few weeks ago from Renewable UK, the lobby group for renewable energy, that onshore wind is now the cheapest form of new generation in Britain.
As I showed in this post at the time, the claims were simply bunkum. The cost of onshore wind in reality is currently around twice the price of CCGT.
It seems that John Gummer’s Committee on Climate Change agrees with me!
When the CCC published their Technical Report for the Fifth Carbon Budget last November, they also released the supporting data in Excel files. Figure 2.3 of the Chapter 2 – Power includes the following:
Figure 2.3 Expected costs of generation by technology (2020, 2025, 2030)
The above are the expected costs for new plant commissioned in 2020, but based on 2014 prices.
Even under the “High Tech and Gas price” scenario, the cost of CCGT is only £73/MWh, excl carbon costs. If we assume a central scenario, which is far more realistic, the cost falls to £55.50/MWh.
By contrast, the central scenario for onshore wind is £84.50, which is in line with current CfD contracts. New/better technology MAY reduce wind power to £67/MWh by 2020, but that is not the case at the moment.
If we fast forward to 2030, we find that little has changed.
Central cases give costs of £57.50 and £81.50/MWh for CCGT and onshore wind respectively:
As I pointed out before, the trick employed by Renewable UK and other proponents is to add a carbon price onto the cost of CCGT. In order for onshore wind to appear competitive, a “Target Consistent” carbon price of £78/tonne needs to be charged by 2030, adding approximately £59/MWh to the price of gas generation, effectively doubling the cost. (The current market price for carbon is £18/tonne).
Even then, wind power costs do not allow for the cost of providing standby capacity, which the CCC estimate at £10/MWh.
It is worth looking in more detail at the gas price assumptions, which underpin the above numbers. Below is the chart from Figure 1.6, of Chapter 1 – Overview. Again, bear in mind these are at 2014 prices.
The central scenario for 2015 was assumed to be 45 pence per therm. According to Catalyst Energy Solutions, who provide industry data, annual prices for gas are running at around 40 pence.
All three scenarios predict that prices during the 2020s will rise above current levels.
Nobody knows what the future holds, but, as I mentioned earlier, the central scenario does not appear to be unreasonable. But even under the high price option, CCGT still remains competitive with wind, not to mention solar and other low carbon alternatives.