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Wind Power–Some Basic Facts

August 12, 2017

By Paul Homewood

 

 

We see many glowing articles about wind power, and renewable lobbyists, such as Renewable UK, are often given undue space in the media to peddle mistruths.

This article is designed to lay out some of the basic facts. It will naturally concentrate mainly on the UK, but I believe it will have relevance elsewhere too.

Renewable lobbyists like to emphasise how “clean” wind power is, and how many tonnes of CO2 are saved.

Others will argue that wind farms are a long way from being environmentally friendly, and arguably save little CO2 anyway.

I am not going to get into these debates, as they are subjective, and therefore not relevant to an objective analysis.

 

Capacity and Outputs

So, first to some basic facts.

Last year in the UK, according to government statistics, wind power generated 37.4 TWh, 11% of the UK’s total electricity.

Of this, onshore produced 21.0 TWh, and offshore 16.4 TWh.

Wind power capacity was 16.2GW at the end of 2016, and average utilisation was 28%.

To put these figures into perspective, the CCGT plant at Pembroke, built in 2012, is rated at 2000 MW, and is capable of producing about 15 TWh a year. In other words, two Pembrokes could replace most of the wind power capacity in the UK.

 

 

Subsidies

There are basically three subsidy mechanisms for wind power in Britain:

  • Feed in Tariffs – designed for small scale operations
  • Renewables Obligation (RO)– this has been the main form of subsidy so far. The scheme places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources, or effectively pay for certificates instead.

The scheme is now closed to all new generating capacity

  • Contracts for Difference (CfDs) – These are awarded to renewable projects via an auction process. Successful applicants receive a guaranteed Strike Price for the period of the contract (usually 15 years). This guaranteed price is inflation linked each year.

Whilst the renewable operator directly receives the market price for electricity produced, the government guarantees to top it up to the Strike Price. If the market price is greater, the reverse happens.

CfDs are only available to renewable projects, although a similar structure is agreed for Hinkley Point.

In terms of numbers, ROCs are valued at about £46/MWh, roughly the same as the current wholesale price of electricity.

Different types of renewable generators receive different allowances. For instance, while onshore wind farms have been receiving 1 ROC per MWh, offshore wind ones receive 2 ROC.

Put simply, an onshore wind farm will expect to earn double the wholesale price, and an offshore will triple it.

CfD prices so far agreed for offshore wind range from £123.47 to 161.71/MWh, making them an even dearer option than ROCs.

According to the Office for Budget Responsibility (OBR), the cost of subsidising renewable power this year will amount to £6.0bn. Of this, the Committee on Climate Change estimate that £3.1bn will go to wind farms.

By 2021, subsidies for wind will have increased to £7.1bn, as capacity grows. This equates to £265 per household.

The renewable industry loves to publish surveys showing how much the public like wind power. I suspect their results would be very different if the public were told just how much they are having to pay for it!

 

 

Preferential Access to Markets

As well as the actual subsidies paid out, wind farms receive another huge commercial advantage by being given what amounts to preferential access to the electricity market.

Put simply, they are pretty much guaranteed being able to sell all the power they produce, and, in the case of CfDs, at a guaranteed price as well. Anyone running a business will tell you that just how much this would be worth to them.

This preferential access works in two ways:

1) The RO system places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.

2) As wind farms only receive ROCs or the CfD guaranteed price if they actually supply power, they can afford to sell electricity at rock bottom prices, effectively undercutting other suppliers.

The CfD mechanism is particularly damaging to market forces in this respect. In theory, there is nothing to stop a wind farm selling at a penny per MWh, as it knows it will still get the guaranteed price anyway.

There is no way that conventional producers can compete at this level.

Without this ability to sell all of the power they produce, it is doubtful whether wind farms would be economically viable, even with subsidies.

 

 

Constraint Payments

If all of this was not bad enough, wind farms even get paid when they don’t produce, as Dr John Constable describes:

There are currently about 750 wind farms north of the border, with roughly 3,000 wind turbines. Their total generating capacity amounts to 5,700 MW. The actual amount produced varies according to the weather. But at its maximum, that wind capacity is more than the 5.5 GW peak demand on the Scottish grid.

What this means, of course, is that the output from Scottish wind turbines is often more than the Scottish system can absorb. That requires the surplus energy to be exported to England and Wales. But that isn’t as easy as it sounds.

The wind farms are distributed across Scotland, sometimes in very remote regions, so there is a real problem in getting their energy down to the English border – let alone getting it across. For some years now, Scotland’s total export capacity has been only 3.5 GW, well under the peak output of the wind farm fleet.

So, reinforcements and new links are being introduced. These range from the hugely controversial, and to many environmentally unacceptable, £820 million Beauly-Denny upgrade, to the massive Western Link, a subsea connector from Hunterston to Deeside that is set to come online this year at a cost of more than £1 billion – and will entail a standing charge on energy bills across Britain of about £100 million a year for 35 years.

Yet in spite of the cost, these upgrades cannot completely address the problem: there is still more wind power in Scotland than can be reasonably and affordably absorbed into the system, or exported to its neighbours, partly because the wind fleet keeps growing.

But a careless government and a lucrative subsidy system doesn’t explain the full flourishing of Scotland’s wind industry. Bizarre as it may seem, the fact that the Scottish grid cannot physically absorb all this wind power is also an attraction – because subsidised wind farms can actually earn more per unit generated when that unit is thrown away than when it is sold to consumers. In other words, they really do get paid more for not making sausages than they do when selling normally.

The explanation is simple. A wind farm receives roughly half of its income from the wholesale price and half from subsidy, the infamous Renewables Obligation Certificate (ROC). When the grid is either at or close to capacity, National Grid stops the wind farm from generating, in order to prevent damage to the overhead wires and, at worst, a major system disruption.

When this happens, the wind farm will keep its wholesale income – which is fair enough, since it was contracted in to the system. But it loses its ROCs, because those are only issued for electricity actually sold to consumers.

What happens then, however, is that the wind farm will ask for compensation for the lost ROCs.  The euphemism for “being paid for not producing sausages” is “constraint payment”. And often – and this is the crucial point – they will ask for more compensation than they are losing in income.

For National Grid, this is just a pass-through cost, so they don’t care much about it – they simply increase the amount they’re charging consumers. But for consumers, it’s a truly terrible deal. Since 2010, we’ve paid £328m to wind farms not to generate – mostly to onshore Scottish wind farms, though England’s offshore farms have also started to get into the act. Last year, the total was £82m. This year, it’s already reached £50m.

https://capx.co/the-scottish-wind-power-racket/

 

 

Intermittency

It goes without saying that wind power is extremely intermittent.

To cater for periods when there is little or no wind power, the government has contracted for standby capacity, via the Capacity Market mechanism.

Currently contracts are arranged for up to 2020/21. For that year, the auction price ended at £22.50/KW of capacity, meaning a total cost for that year of £1.2bn. As with the subsidies, this cost is passed on to electricity users.

As more renewable capacity is added in future years, this cost will only rise.

More problematically, nearly all of the current standby capacity contracted consists of existing generation, including coal and nuclear. As these begin to shut down, they will need to be replaced by new generation, which will certainly require a much higher price in order to be viable.

We are all familiar with the variability of wind power from one week to the next.

image

http://www.gridwatch.templar.co.uk/

 

 

But it can also vary considerably on a day to day, and even hour to hour.

image

https://www.bmreports.com/bmrs/?q=eds/main

 

 

This creates big problems for the grid, which mainly has to resort to bringing on readily dispatchable power, normally from gas generators.

Again, as wind power capacity is ramped up, this problem will feature more and more.

One further issue is that of inertia. Without going into technical detail, system inertia, as provided by conventional plants, such as coal, gas and hydro, is vital for the grid to cope with constant changes in demand and supply.

Currently the grid can cope with the small amounts of wind power on the system, but as more wind capacity is added the problem of inertia will become greater.

(There is an excellent explanation of system inertia here.)

 

 

Transmission

As referred to by Dr Constable, in the section above, the rapid growth of wind power has required considerable expenditure on upgrading/building transmission lines.

This has proved particularly expensive and controversial in Scotland, where large amounts of wind capacity have been built in remote, mountainous areas.

It is difficult to get figures from the National Grid or government as to just how much this is costing. Some estimates have put the cost as high as £40 billion eventually.

What is certain though is the enormous environmental effect that these lines are having on the countryside.

 

 

Costs

There are frequent claims from the wind industry that they will soon be cost competitive against conventional sources.

Whether they are right or not, however, totally misses the point because they are not comparing like with like. Wind cannot supply reliable, dispatchable power, and therefore is intrinsically worth less.

The US EIA recognizes this fact, and recommends using what is known as Levelized Avoided Cost of Energy (LACE) for comparing different technologies. They explain:

The US Energy Information Administration has recommended that levelized costs of non-dispatchable sources such as wind or solar may be better compared to the avoided energy cost rather than to the LCOE of dispatchable sources such as fossil fuels or geothermal. This is because introduction of fluctuating power sources may or may not avoid capital and maintenance costs of backup dispatchable sources. Levelized Avoided Cost of Energy (LACE) is the avoided costs from other sources divided by the annual yearly output of the non-dispatchable source. However, the avoided cost is much harder to calculate accurately.

https://en.wikipedia.org/wiki/Cost_of_electricity_by_source#Avoided_cost

Put simply, the total cost of a renewable source, such as wind power, must be compared with the marginal cost of the dispatchable source, say gas. The latter would be essentially fuel plus a few other variable costs.

Latest government figures suggest that the marginal cost of CCGT would be about £40/MWh. The most optimistic costings that I have seen for onshore wind are over £70/MWh.

 

 

Fossil Fuel Subsidies

Whenever subsidies for wind power are mentioned, somebody from the renewable lobby usually pops up to claim that fossil fuels are also subsidised.

Many countries provide consumer subsidies for energy, purely because affordable energy is important for their people. Because most energy is derived from fossil fuels, this is then interpreted as “subsidy for fossil fuels”.

This of course is nonsense. The subsidies I have discussed are producer subsidies, ie payments are made to wind power producers.

While such subsidies may be paid to fossil fuel industries in other countries, I have always taken the view that is their decision, and we have no right to tell them what and what not to do.

As far as the UK is concerned, oil and gas companies, or power companies using fossil fuels, receive no subsidies, to the best of my knowledge.

On the contrary, over the years the UK Government has received tens of billions of pounds in revenue from oil and gas production, over and above ordinary corporation tax which all companies pay.

image_thumb2

https://www.gov.uk/government/statistics/government-revenues-from-uk-oil-and-gas-production—2

 

 

Global Wind Output

I have concentrated on the UK, but let me finish with a couple of statistics for worldwide wind power, from the BP Energy Review.

  • At 959 TWh, wind power accounted for 3.9% of world electricity generation last year.
  • In terms of overall energy consumption, the share of wind was 1.6%.

Every year we hear how wind power is going up by leaps and bounds. It is wise though to bear in mind just what a low base it is starting from.

 

 

 

SOURCES

1) Electricity statistics

https://www.gov.uk/government/collections/electricity-statistics

https://www.gov.uk/government/statistics/energy-trends-section-6-renewables

2) Office for Budget Responsibility projections of subsidies

https://notalotofpeopleknowthat.wordpress.com/2017/03/11/environmental-levies-to-cost-57-in-next-five-years/

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32 Comments
  1. Patsy Lacey permalink
    August 12, 2017 11:42 am

    This was published in the Daily Telegraph today.
    http://www.telegraph.co.uk/business/2017/08/11/fossil-fuel-subsidies-relic-past/

    • Bitter&twisted permalink
      August 12, 2017 12:18 pm

      Again the “fossil fuel/climate change/more extreme weather” lie is mindlessly repeated.
      When will these lazy, stupid journalists actually start do their job properly?

      • Sheri permalink
        August 12, 2017 12:39 pm

        They think they are. They are “making a difference”. That’s their job. Not reporting news accurately, but “making a difference”.

      • mikewaite permalink
        August 12, 2017 2:08 pm

        To be fair to telegraph journalists they are not the villains of the piece on this (one) occasion. That award must go the the author , Maurice Tulloch , the “big cheese ” in International Insurance at Aviva and the commissioning and copy editors who allowed such claims to be published with no reference to quantitative corroborating evidence.
        You wonder sometimes how it is that so little intelligence or integrity is required these days to ascend to the heights in some professions.

    • Robert Jones permalink
      August 13, 2017 8:16 am

      Worryingly, Mr Tulloch doesn’t appear to know that the UK Government does not subsidise the country’s fossil fuels. He writes ‘in the UK, health costs arising from fossil fuel driven air pollution are almost five times higher than the subsidies paid’. Someone’s database is wrong?

  2. August 12, 2017 11:49 am

    Succinct and useful summary of the issues. Thank you. I saved this.

  3. quaesoveritas permalink
    August 12, 2017 12:13 pm

    The National Grid is planning for the effect the eclipse of 2026 will have on solar power.
    https://www.thetimes.co.uk/article/2026-solar-eclipse-already-has-energy-chiefs-in-a-spin-z83mgzs35

    • Bitter&twisted permalink
      August 12, 2017 12:21 pm

      They shouldn’t worry- it will probably be cloudy.
      But it is getting surreal when you have to plan for the effect of eclipses on your (useless) power generation methods.

  4. Joe Public permalink
    August 12, 2017 12:29 pm

    “As far as the UK is concerned, oil and gas companies, or power companies using fossil fuels, receive no subsidies, to the best of my knowledge.”

    • Sheri permalink
      August 12, 2017 12:40 pm

      “Scheme” always seems the appropriate name.

    • August 12, 2017 4:52 pm

      Thanks Joe

    • Bitter&twisted permalink
      August 12, 2017 4:54 pm

      Where’s a troll when you need one?
      I’d like Russell or Thefordprefect to spin this fact.

  5. August 12, 2017 12:44 pm

    One again, as has been the case much of the summer, yesterday our winds were around 5 mph (8 kph) until the afternoon, when for less than 2 hours, they were 25 to 30 mph (40 to 48 kph) during a thunderstorm. For 22 of the 24 hours, no electricity was made. Then, suddenly (wind increases to the higher speed in less than 5 minutes), they are at full capacity. I cannot see how such a huge, brief surge of electricity is doing anything but creating havoc in the grid. It’s total insanity.

    • AlecM permalink
      August 12, 2017 8:04 pm

      Agreed……………………

  6. Martyn Farmer permalink
    August 12, 2017 12:46 pm

    Paul, no comment(s) re Al Gore’s interview on BBC Radio 4’s Thursday morning news??
    Am I missing something?
    Martyn

    • August 12, 2017 5:32 pm

      He was also on BBC Breakfast. Slowballs knocked out of the park; it was like watching royalty being interviewed. No mention of the monstrosity to which the film he was flogging was the sequel. I found myself asking the question: “When your other film turned out to be such a crock, why should we pay any attention to this one?”

      But the charming and enthusiastic presenters, of course, could not hear me. Instead they asked what should be done about Trump.

  7. August 12, 2017 1:15 pm

    They are an efficient way to rid us of those pesky birds and bats, however.

  8. August 12, 2017 2:10 pm

    Everything you have said here is true and has been known about for years. I have a copy of Dr John Etherington’s book ‘The Wind farm Scam’ dated 2009, which says it all. And of course many others, such as Christopher Booker, have been saying the same thing for years

    Unfortunately it is impossible to get the facts through the civil service green blob and into the “minds” of Government ministers and decision makers.

    The only way the message will get through is when either the lights start to go out or electricity prices really go through the roof, or both (i.e. we follow South Australia down the path of destruction).

    • August 12, 2017 5:28 pm

      h’mm – well if the beast cannot be slain ’til it is fully grown, perhaps skeptics should be wholeheartedly endorsing wind. Then when the grid breaks, everyone will be wailing “why didn’t anyone foresee the problems with wind?”

      • Gerry, England permalink
        August 13, 2017 2:11 pm

        The phrase ‘told you so’ will be so common in the coming years as we lurch from one government created disaster to the next.

        MPs just have no ability – I was going to go on to say ‘to learn’ but realised I was already correct. The reality tv generation are incapable of understanding much about anything and so end up with the politicians they deserve. For example, people keep voting Diane Abbott into parliament.

  9. Jack Broughton permalink
    August 12, 2017 4:53 pm

    Another great and straightforward assessment of the establishment’s lunacy.

    According to The Engineer the new Dogger Bank scheme will generate 4.8GW and produce about 16 GWh / year at £119/MWh. This amounts to a cost of £ 1.8 b/year paid to Germany / Denmark / Norway: when the same energy could be produced for £ 800m / year from coal or gas. A simple payback of less than 3 years for our pals.

    At the same time the green blob are accelerating the dismantling of our coal fired power stations so that they could not be used again even though we have no new reliable generation other than gas coming on line. Gas is great at the moment but eggs in one basket comes to mind in a historically very volatile energy market.

    • August 12, 2017 5:57 pm

      Let’s see what price UK fracked gas is sold for, if/when it gets started. There are already plans for one or two new gas-fired power stations e.g. Tilbury.

      • Gerry, England permalink
        August 13, 2017 2:14 pm

        There is planning permission for a gas power station in Trafford. But…they have decided not to proceed as yet because the investors don’t believe it is economically viable in the current market. It is one thing having cheap gas from the ground but in a tortured market it is a wholly different thing to use it for generation.

  10. Ian Terry permalink
    August 12, 2017 5:53 pm

    Yes another straightforward and accurate report highlighting the total lamentable ignorance of our politicians who have been for years been sold the story of saving the world by the snake oil salesman of the renewable industry and the preachers and congregation of the Church of Renewable Energy. But as always with our politicians they are all talking but nobody is listening. the energy market has got to be completely torn apart and rebuilt to ensure it is the consumer that gets the best cheapest efficient power 24/7. The renewable energy believers are bringing about the total collapse of this country driving millions into fuel debt and poverty and our manufacturing base into the ground as they cannot compete on a level playing field

  11. markl permalink
    August 12, 2017 6:22 pm

    Cost means nothing when it’s OPM (other people’s money). Those that are paying now don’t realize, or don’t care, that it’s their money. Once the cost of electricity delivered to their home becomes a burden they’ll care but it will be too late. Industry is already vacating…. where will the people go?

  12. CheshireRed permalink
    August 12, 2017 6:55 pm

    If the National Grid are reluctant to provide numbers for transmission costs it’s because they have something to hide, nothing else.

    A fine post Paul, but it can be summed up quite succinctly. ‘Wind energy is a complete racket’.

  13. August 12, 2017 11:30 pm

    Whitelee Windfarm (mentioned in the CapX article). The largest onshore windfarm in the UK (in Scotland).

    -322 MW rated capacity
    -56 MW actually generated (17%)
    -135,90 acres of land used (55km2)
    -Probably close to 165,000 tons of Iron & steel to make the turbines (assuming 542 tons per MW, all of which needed hydrocarbons to make)

    Shotwick Solar Park. The largest solar park in the UK (in Wales).

    -72 MW rated capacity
    -5.2 MW actually generated (7.2%!)
    -250 acres of land used (1km2)
    -Who knows how many dead Chinese workers to mine the materials to make the panels

    Compared to:

    Heysham Nuclear Power Station. The largest Nuclear in the UK (in England).

    -2,400 MW rated capacity
    -2,000 approx actually generated (close to 90%)
    -110 acres of land used (0.4km2)
    -No CO2 emissions in use (assuming you care about that)
    -Safest power source in human history

    —-

    The ones that use the most environmental space, the most materials and cause the most deaths, whilst being the least efficient, the least reliable, and the least plentiful, are apparently the best.

    • August 13, 2017 6:23 am

      You forgot to mention that 3,000,000 trees were cut down to make way for Whitelees, and then massive groundwater pollution ensued.

    • August 13, 2017 9:48 am

      8 Whitelees would have to be built to dribble out the same amount of [intermittent] electricity as the [24/7] electricity delivered by a single 440 MW Rolls-Royce Small Modular Reactor [SMR] – and [including decommissioning] would cost 40% more:
      http://idiocyofrenewables.blogspot.co.uk/2017/02/secrets-revealed-about-uks-biggest.html

      59 Whitelees would have to be built to generate as much [intermittent] electricity as the [24/7] electricity to be delivered by Hinkley Point C. They would cover an area of 4,602 sq km, compared to Hinkley’s 0.89 sq km site. 850,00 cu m of ancient peat bog were dug up and spread to make way for Whitelee, probably releasing more methane-damaging potential than Whitelee will ever pay back in GHG ‘savings’. The environmental degradation, ecosystem destruction and species wipe-out, or even extinction, doesn’t bear thinking about. It’s criminal:
      http://prismsuk.blogspot.co.uk/2017/02/secrets-revealed-about-uks-biggest.html

      • August 13, 2017 6:55 pm

        Good info!

      • Stuart Brown permalink
        August 13, 2017 7:55 pm

        Prism, I would love to know that there is one of these actually built and producing electricity somewhere. Really, seriously. When is the first one going to go live and where?

        You do keep talking as though this was an existing technology to be bought off the shelf.

        I’ve read about the Integral Fast Reactor that PRISM is based on and it sounds like the ideal next step in reactor technology to me, more likely than LFTR, but it ain’t there yet!

  14. August 14, 2017 12:43 am

    Reblogged this on Climate Collections.

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