Skip to content

Is Wind Power Really “The Cheapest Form Of Producing Electricity Today”, Mr Gummer?

October 16, 2018

By Paul Homewood

 

 

https://www.thegwpf.com/bbc-finds-lord-deben-guilty-of-misleading-public/ 

As I reported last week, the GWPF partially won its complaint against the BBC, for failing to challenge Lord Deben on the Today programme when he claimed:

“What on earth is the government doing, saying that even where a community wants to have an onshore wind farm, it can’t have it. This is sheer dogma.”

 

Deben, aka Gummer, also stated that onshore wind power is the “cheapest form of producing electricity today”.

The BBC rejected this part of the complaint, which has now been sent up to OFCOM.

 

So, what are the facts about the cost of onshore wind?

 

The vast bulk of onshore wind capacity is eligible under the Renewable Obligation scheme for subsidies. The earlier projects earnt one ROC (Renewable Obligation Certificate) per MWh generated. Schemes commissioned since 2013 are awarded 0.9 ROC per MWh.

One ROC is currently priced at £47.22, so these latter schemes receive a subsidy of £42.50/MWh, on top of the market price, which has been around £45/MWh for the last few years, but has spiked recently to around £60/MWh following increasing global prices for oil and gas.

 

According to govt data, the annual cost of ROC subsidies is now running at £1.3bn for onshore wind.

 

The RO scheme was closed to new entrants in 2016.

There are also a small number of onshore wind projects, which have been awarded contracts under CfD, the successor to RO. These are paid guaranteed and index linked prices for every unit of electricity generated. In all there are fifteen schemes with total capacity of 749 MW, with current prices of between £87.53 and £91.94/MWh.

Most of these schemes have yet to be completed, and won’t start generating till next year. They will all be paid guaranteed strike prices for 15 years.

In short the bulk of onshore wind output is subsidised at a rate of £47/MWh, and even the newest tranche of projects will receive subsidies of at least £30/MWh, at current wholesale prices.

 

On top of this is the cost of providing standby capacity, which has been estimated by Deben’s own Committee on Climate Change at £10/MWh for every unit produced by wind farms.

 

It is also highly relevant that new investment in onshore wind has virtually dried up since subsidies were withdrawn in 2016. This is proof that onshore wind cannot compete at market prices.

The BBC has attempted to justify Deben’s claim by referring to BEIS’ theoretical Levelised Cost Estimates for new projects built in 2020.

 

 

image

According to BEIS, the cost of onshore wind and CCGT are £63 and £66/MWh respectively.

However, the figure for CCGT includes Carbon Costs of £19/MWh. This of course is not a real cost, but simply an arbitrary tax imposed by government. Without it, the real cost would be £47/MWh.

Again, of course, the BBC is conveniently ignoring standby costs, not to mention extra network costs for connecting remote wind farms to the grid.

 

OFFSHORE WIND COSTS

While I’m at it, let’s look at offshore pricing.

 

On average, offshore wind farms are awarded 1.9 ROC per MWh, a subsidy worth £89.70/MWH.

Last year this subsidy cost bill payers £1.8bn.

The RO scheme was closed to new entrants in 2017, with new schemes joining the CfD scheme instead.

There are currently ten projects awarded contracts under CfD, with capacity of 7.5 GW. Some are already up and running, but most are still to be built, with planned dates up to 2024.

CfD prices range from £63.66 to £166.59/MWh, with a weighted average of £116.93/MWh.

Based on a 40% load factor, these CfD schemes will produce 26 TWh a year, at a subsidy of £1.9bn, assuming a market price of £45/MWh.

Even at current market prices of £60/MWh, the annual subsidy will still amount to £1.5bn.

In total then, RO and CfD offshore schemes will be costing bill payers between £3.3bn and £3.7bn a year by 2024, when all of the contracted projects are due to be launched.

Advertisements
35 Comments
    • HotScot permalink
      October 16, 2018 10:41 pm

      Mike

      sorry, your post wasn’t up when I posted.

      • October 17, 2018 9:06 am

        No apology needed. I saw it first on the BBC text service but reckoned The Scotsman would be a better link assuming they had it.

        Comments, as ever, are interesting! The message is getting through to the plebs (some of them). One day, like a nuclear pile we will reach critical mass!

  1. HotScot permalink
    October 16, 2018 8:00 pm

    Well, Scottish power seem to think wind power is the way forward. According to reports on the BBC they are converting to all wind shortly.

    But they will buy power from other organisations when they are becalmed…………..

    That should make for interesting electricity bills for Scottish customers.

    Y’know, I was thinking of retiring back to Scotland over the next 3 or 4 years. I think I’ll venture as far as the English side of the border to avoid the insanity of my Celtic brethren.

    The SNP are bad enough but they seem to be infecting the normally cautious Scottish industry heads now.

    • October 16, 2018 9:21 pm

      Don’t we all pay the same price for electricity in the UK? Is that why the Scots are not too bothered about the cost of their virtue?

      • HotScot permalink
        October 16, 2018 10:44 pm

        climanrecon

        It’s a question of predatory profits, not consumer concern. It’s also about political insanity and socialist government policy which, by definition, is insane.

      • It doesn't add up... permalink
        October 18, 2018 12:17 am

        There are regional variations. However, the Scots actually have a deal that means they pay a lot less than they should, because the rest of us are paying the lions’ share of the cost of the interconnectors with England and Wales (and in due course, Norway etc.) that will keep the lights on in Scotland when the wind isn’t blowing, and allow them to dump wind while being subsidised on their exports to Norway.

    • MrGrimNasty permalink
      October 17, 2018 10:10 am

      BBC says “Scottish Power will become the first major UK energy company to generate all its electricity from wind power instead of coal and gas, after selling its final gas and hydro stations to Drax.”

      Shame that the BBC doesn’t explain that at times they won’t be able to generate anything then!

      The reason that Scotland/Scottish Power can do this is the same way that some states in Australia can just about get away with it most of the time.

      They are entirely reliant on (parasitic would be a better word) interconnected grids with little or no renewables in order to keep the grid up and to have a market for their power.

      As soon as the other grids they are connected to reach critical levels of renewables, reality will bite.

      • Phoenix44 permalink
        October 17, 2018 11:15 am

        Not sure they are parasitic. Vulnerable perhaps? I would be very happy to own the only non-renewable plant, and set my own price when these companies come asking for power!

      • Gerry, England permalink
        October 17, 2018 1:41 pm

        The trouble is, Phoenix44, that you are not able to set your own price as the market is government controlled. And when the price you get is too low, and the amount of time you are allowed to generate power is too short, then the sensible option is to close down completely. If you haven’t blown up your generation plant, at some point the government will have to give you taxpayers cash to offset the effect of the taxpayer cash given to the windmills.

  2. Jack Broughton permalink
    October 16, 2018 8:29 pm

    The real madness of this LCE cost-model is that unreliable plant is rewarded and reliable plant penalised. The CEGB used to charge heavily for non-reliability for good reason, the spinning reserve must be increased to allow for this. Thus, the real cost of wind generation must allow for the damaging and expensive stand-by costs it incurs. The £10 / MWh would require very reliable generation from the wind / solar sources, which does no occur, and is very dependent upon the unreliable component of wind generation.

    This cost would certainly not cover the periods when the wind does not blow in winter when all stand-by would be CCGT, or even better, coal-based.

    This penalty cost could be covered by using wind turbines without curtailment payments which would have to operate with a margin for variability (some self-curtailment). However, with the guaranteed payments used, is more likely to be met by a combination of OCGTs and CCGTs operating in a very inefficient and mechanically-damaging stand-by mode.

  3. John F. Hultquist permalink
    October 16, 2018 9:00 pm

    Thanks Paul.

    Mathematically challenged.
    Are they not?

    • Gerry, England permalink
      October 17, 2018 1:42 pm

      And mentally challenged…

  4. October 16, 2018 9:18 pm

    Scrap all the subsidies if wind power is ‘cheap’. They can’t be needed any more.

    • Martin permalink
      October 18, 2018 5:38 pm

      I’m killing myself laughing!

  5. October 16, 2018 10:46 pm

    The cost of solar electricity has dropped by 80% since 2010.

    That really does sound “too good to be true” and it is Goldman Sachs telling it – via a promoted Tweet – what weird marketing algorithm decided I might be worth spending money targeting …. ?

  6. October 16, 2018 11:33 pm

    Once again oldbrew is spot on. I wonder how bloody Gummer squares that circle ? It’s the cheapest, so it needs the largest subsidy ? Eh ? And what could the Beeb and the likes of Harrabin come up with ? They must be reading this, so let’s ask them for a response !

    • John F. Hultquist permalink
      October 17, 2018 4:22 am

      squares that circle

      An interesting phrase. Way back in the middle of the last century this was discussed in a high school math class. I wonder if such is done now. Background:
      https://en.wikipedia.org/wiki/Squaring_the_circle

      The two other classical problems of antiquity were doubling the cube and trisecting the angle. Links are in the wiki pages.

      • October 17, 2018 9:02 am

        Thanks for that JFH. Fascinating. Never knew it went back to the Babylonians & Egyptians ! Always thunk it was an ancient Greek conundrum. But whatever its provenance, it still means that old Gumshoe is creeked paddleless. Probably one of the creeks in the upper reaches of the Deben.

  7. October 17, 2018 1:08 am

    Produce means make: at 47, Sell is at 66.

  8. markl permalink
    October 17, 2018 3:57 am

    So when does the child tell the energy commissar that wind is neither cheap nor reliable?

  9. Grumpy Joe permalink
    October 17, 2018 8:16 am

    Paul,

    You need to check out BBC Radio 5 Live Breakfast from yesterday (16/10) at approximately 09.54. Keith Anderson, from Scottish Power claimed that onshore wind and renewables are now cheaper than gas and that recent and imminent price rises are due to higher gas prices. He claims that migrating to onshore wind power will bring our bills down! No challenge from the BBC interviewer.

    • Phoenix44 permalink
      October 17, 2018 11:19 am

      Let us find the quote and send it to Mr. Anderson and ask him to therefore agree that subsidies are not necessary and that bills will in fact drop. Let’s see him put it in writing.

      • October 18, 2018 7:59 pm

        The only way bills would go down is if there was often no electricity available when needed due to the wrong weather conditions, so usage dropped. Hardly the glorious future.

  10. Ian permalink
    October 17, 2018 9:22 am

    In a report to Parliament this week on HMG’s “Green GB” initiative and general climate change performance, several MPs, particularly of opposition parties, complained loudly about the government’s failure to move even more quickly to renewables, seeing as they’re now so competitive. They also complained about the “ban” on offshore wind. Ms Perry challenged some of the more extreme claims but, at one point (you could almost hear the fanfare) stated proudly that the UK had been coal-fired-free for a whole three days in July! Wow! She also reeled off the various £millions and £billions the UK is “investing” in green power without the slightest sense of irony. Of course, no real challenges. The impression left with is a house full of useful idiots.

    • Gerry, England permalink
      October 17, 2018 1:44 pm

      A lot of people might take issue with the adjective ‘useful’.

  11. mikewaite permalink
    October 17, 2018 9:24 am

    “The Whore & Gambler, by the State
    Licenc’d, build that Nation’s Fate.
    The Harlot’s cry from Street to Street
    Shall weave Old England’s winding Sheet”
    (Blake).

  12. October 17, 2018 9:27 am

    … or useless idiots.

  13. swan101 permalink
    October 17, 2018 12:21 pm

    Reblogged this on UPPER SONACHAN WIND FARM.

  14. dennisambler permalink
    October 17, 2018 12:32 pm

    Offshore Renewable Energy Catapult is an outfit heavily invoved in the engineering aspects of Offshore Wind. Baroness Brown, formerly Julia King, CCC committee and chairwoman of the Mitigation Sub-Committee, is a non-exec director. https://ore.catapult.org.uk/

    They have lots of tech stuff and interesting links
    https://s3-eu-west-1.amazonaws.com/media.newore.catapult/app/uploads/2018/09/17152615/Subsea-Power-Cable-Trends-Othmane-El-Mountassir-and-Charlotte-Strang-Moran-AP-0018.pdf

    “By the end of 2018, installed offshore wind power capacity will reach a total of 30.2GW, with 22.9GW of generation in Europe and 7.3GW across the rest of the world. The UK remains the global leader in offshore wind, with a total capacity of 6,385MW and an additional capacity of 3.2GW entering operation by 2020. As the industry’s generation capacity continues to grow, so does the need for developing reliable, high-capacity transmission cable technologies.

    Subsea power cable failure is frequently reported as an issue for offshore wind farm operators. Such failures are reported to account for 75-80% of the total cost of offshore wind insurance claims – in comparison, cabling makes up only around 9% of the overall cost of an offshore wind farm.

    The UK’s operational offshore wind farms are using 62 export cables totalling a length of 1,499km and over 1,806km of inter-array cables to transport the 6,385MW of electrical generation.

    A total of 43 array and export cable failures have been reported since 2007. Issues associated with manufacturing and/or installation are reported to be the most common cause of cable failure.

    From 2014 to the end of 2017, recorded cable failures at UK offshore wind projects have led to a cumulative loss of power generation of approximately 1.97 TWh.”

    • Gerry, England permalink
      October 17, 2018 1:46 pm

      Is there a market for an insulated towed underwater cable cutter?

  15. Andrew permalink
    October 17, 2018 12:51 pm

    Grumpy Joe beat me to it- I heard something very similar on, I think, radio 4 a little earlier in the day.
    I’m just switching to Scottish Power because they come out best at the moment- I wonder how they manage that? I’d better check the deal I’m entering into!

    • Gerry, England permalink
      October 17, 2018 1:48 pm

      I am with Outfoxthemarket who claim in headline to be 100% renewable but explain the truth in the small print but I don’t care as they are cheap unlike some who charge a premium for virtue-signalling. Harry Enfield’s ‘I saw you coming’ springs to mind for the virtue-signallers.

      • dennisambler permalink
        October 17, 2018 2:16 pm

        You know you are getting renewable energy when your outlet sockets pulse with a gentle green glow….

      • It doesn't add up... permalink
        October 18, 2018 12:29 am

        I hope your deal lasts. Small companies are usually competitive when underlying commodity prices for gas and coal are falling, because the Big 6 will be locked in to forward hedge purchases at higher prices, and because smaller companies are exempted from having to collect several of the green indulgences that form such a large part of our bills these days. When wholesale prices rise they are often poorly protected, and frequently get into financial difficulty and go bankrupt.

        http://watt-logic.com/2018/09/26/energy-wholesale-prices/

Comments are closed.

%d bloggers like this: