Bishop Hill Gordon Hughes on the economics of wind power
Aug 6, 2012 Economics Energy: wind GWPF Gordon Hughes has authored a submission to the House of Commons Energy and Climate Change Committee on behalf of GWPF. The subject is wind power. It makes for horrifying reading.
Meeting the UK Government’s target for renewable generation in 2020 will require total wind capacity of 36 GW backed up by 21 GW of open cycle gas plants plus large complementary investments in transmission capacity. Allowing for the shorter life of wind turbines, the investment outlay for this Wind scenario will be about £124 bilion. The same electricity demand could be met from 21.5 GW of combined cycle gas plants with a capital cost of £13 billion.
Or what about this?
Under the most favourable assumptions for wind power, the Wind scenario will reduce emissions of CO2 relative to the Gas scenario by 21 million metric tons in 2020 - 2.6% of the 1990 baseline at an average cost of about £415 per metric ton at 2009 prices. The average cost is far higher than the average price under the EU’s Emissions Trading Scheme or the floor carbon prices that have been proposed by the Department of Energy and Climate Change. If this is typical of the cost of reducing carbon emissions to meet the UK’s 2020 target, then the total cost of meeting the target would be £120 billion in 2020, or about 6.8% of GDP.
I don't think that anyone expects the committee to even bat an eyelid, let alone pay any attention.
Reader Comments (40)
Mr. Hughes must assume there is some uncommitted surplus generating power in the UK grid. The expected capacity factor for on shore turbines is about 30%. Also, there is a strong correlation across the British Isles for wind. No wind in one place usually means no wind anywhere.
This would imply a backup requirement of 36 GW, not 21 GW. The gas-powered plants would run 70% of the time. So, it more correct to say that you are installing a gas-powered system with occasional supplements by wind.
American experience shows that installation of a national system of gas-turbines has a major impact on carbon dioxide emissions if they replace coal-fired plants. Shale fracking has so reduced natural gas prices in the US that utilities are actually switching from coal to gas. Perhaps your government should encourage fracking. Shale gas is everywhere.
bob
Our governments reaction to shale is as ridiculous as the rest of its climate and energy policy:
£9.4 million per member of the Green Party.
Gordon Hughes' figures for the true cost of wind are terrifying. But as Bob Sykes has noted, Hughes is being too conservative. The National Grid report a couple of years ago concluded that as the proportion of wind capacity increases, so does the % backup required also. So for example, 10GW of wind would only need say 50% or 5GW backup, because other plant could help take the strain, but 20GW wind would need about 15GW backup, and 36GW would need about 30GW...
Of course, the danger about pointing out to our idiot politicians the real economic cost of wind is that they will just bring forward the plans for rolling blackouts as required. But who would invest in UK plc when we can't even keep the lights on?
Its funny how the precautionary principle doesnt apply to energy security isnt it?
One would think that because the majority of European gas is "controlled" by a non-friendly State (Russia) that we should be doing everything possible to protect our energy supplies JUST IN CASE Russia decides to turn our gas off (like they have done to the Ukraine).
Mailman
Hughes is being conservative. The average capacity factor of UK turbines is quoted at 26% but by 2020 the NGC reckons it'll have to disconnect an average of 11% in high winds per array. Do the analysis of the power spectrum and that'll lose ~30% of that 26% so the CF falls to 18%.
Those who are imposing these dramatically high power costs on us whilst increasing CO2 emissions can be considered to be working against the interests of the UK. In past times this was the definition of being a traitor. perhaps we need to emphasise this point to the politicians.
As some of you may know, there was a post in May about the legal ruling (draft) I had obtained at the United Nations Economic Commission for Europe (UNECE) Aarhus Convention Compliance Committee, in relation to the EU renewable energy programme in the 27 Member States having by-passed democratic accountability. To be quite honest, it is simply astounding the legal failures, which have occurred in the implementation of this renewable energy programme. For those of you who may be interested in more of these details, they are now available on the Irish 'skeptics' site:
http://www.turn180.ie/?p=609
There is also a nice article from the Scotsman, which has been posted on the UNECE site:
http://aarhusclearinghouse.unece.org/news/1000416/
The finalised UNECE ruling should be published in the next few days. At this stage there is little point in talking about the various means in which this programme is a complete abuse of proper financial, economic and environmental principles. It is time to take it into the legal forum where it belongs.
The government know how expensive it is.
In Oct 2011 Chris Huhne (former energy and climate change minster) said
"With over £200 billion worth of energy infrastructure needed by the end of the decade, this is our golden chance to deliver a greener future."
http://www.decc.gov.uk/en/content/cms/news/ch_speech_ruk/ch_speech_ruk.aspx
and I heard Greg Barker quote the same figure in a speech in June 2012 in Oxford. He noted that the number was 'eye-watering' but seemed to think that 'the City' would provide most of it.
"The City", or those of "The City" who would "invest" in "green" energy are no more than egregious rent seekers who will be after the subsidies. The only interest they have in whether or not their investments will be profitable will be in othe legal structures that guarantee their RPI returns into the distant future. These people are shameless vultures preying on the uneductaed stupidity of the British political class of all the major parties.
http://www.telegraph.co.uk/earth/earthnews/9453986/Clegg-confirms-Coalition-rift-over-green-policies.html
I thought the Nick Clegg would make his final stand over Wind Farm Subsidies and signal the end of the coalition.But it seem House of Lords Reforms and Boundry Changes has beaten him to it.
On a political point why would any politician want a second elected house in Westminster that would both be in competition with each other. If it aint broke dont fix it.
What professional MP wants to jeapodise their retirement.
You only get rid of the Status Quo (Not the band) when it stops working.
Dont mind Wind Turbines if they re cheap and they work .They do neither.
Any CO2 reduction gets shunted back to the fossil burning stations.
I wonder what the emissions reduction of the Wind scenario relative to the Gas scenario would be, if the Gas scenario consisted of just combined cycle gas turbines instead of wind mills + open cycle units...
oh wait, never mind, I was studying my reading comprehension book while posting, sorry...
"Fred the Shred" was stripped of his knighthood after the disastrous results of his policies became evident. What punishment would be suitable for our current crop of politicians after they have bankrupted the country in the pursuit of their green dreams?
I didn't notice any figures on the cost of fuel in the report. Maybe I missed it, but anyway here are some quick sums.
Using the £7.40 per GJ quoted:
We know that 1KWh = 3.6MJ, so 1KWh will cost £0.0266 at 100% efficiency, or £0.044 at an optimistic 60%. Sounds in the right ballpark. So 1GWh will cost £44,000.
The report talks about 94TWh from wind by 2020, so if we use gas to generate that power instead of wind, the cost will be:
94 * 1000 * 44,000 = £4,136,000,000
So unless I messed up the calculation, there is an annual fuel cost of £4bn using gas instead of wind; £100bn over 25 years. Those are quite big numbers.
Shale gas promoters might claim that the cost will of course be lower, but that seems like wishful thinking to me.
Bitbucket: you are apparently claiming that wind power is free. It's not because ~82% of wind energy will by 2020 be produced by standby CCGTs and OCGTs.
Recent empirical data from Ireland show the fall of efficiency of the standby plant causes CO2 emissions therefore fuel consumption of the combined wind and standby system to be higher than without the windmills. Add in the CO2 cost of the windmills and the break even point in a combined coals and CCGT system is 2-3% [Colorado/Texas data].
The only saving of CO2 emissions from windmills is the substitution of methane for coal. Otherwise it's a dead loss.
The report has made the MSM:
http://www.express.co.uk/posts/view/338051/Energy-bills-to-rocket-by-300
Also BBC R4 this morning on the Express headlines, without argument or comment from environmental reporters, gobsmacked!
Added to the recent John Hills report about UK fuel poverty and related deaths, the highest in the world for this northern climate, and the revelation that green taxes are having a regressive effect impacting mostly on the poor. This new report is outrageous and not merely of academic interest. Politicians should be lobbied relentlessly on this by the public it effects.
Lord Beaverbrook: the key element of the Express report is Professor Ian Fells who states '“Wind energy is the most expensive way of generating renewable electricity.... “It will also cost jobs. We are already seeing some industrial firms packing up and moving abroad. The increasing price of energy is going to be the next big political problem.”
No objective professional engineer who has seen the real data supports the windmill plan. It's the final part of 30 years of manoeuvring by the banks, reinsurance companies and the Mafia to wrest control of energy from being a State Utility to an oligopoly for private profit.
The most fascinating part of this is the use of international Marxism as political and technical cover. This report shows that the NZ temperature data fiddling started in the 1980s with an ex CRU alumnus: http://joannenova.com.au/2012/08/dont-mention-the-peer-review-new-zealands-niwa-bury-the-australian-review/
The Daily Mail is running with this now:
Energy bills to soar by more than £300 a year because of obsession with wind power, report claims
Not the sort of headline that Cameron will want to see before the forthcoming by-election in Corby.
Pat Swords - thanks for all your efforts. Very interesting.
"Fred the Shred" was stripped of his knighthood after the disastrous results of his policies became evident. What punishment would be suitable for our current crop of politicians after they have bankrupted the country in the pursuit of their green dream
They get appointed to the House of Lords.
After yesterday will Nick Clegg eventually still accept his peerage ? He wouldnt get in if he had to be elected.
Spartacus: "you are apparently claiming that wind power is free.
Not at all. I was just pointing out that wind has no fuel cost whereas gas clearly does. The quote from the report at the top
is misleading because it does not include the gas costs. The cost ratio 124:13 looks stupid and clearly gas is more sensible. But 124:113 (if we are talking about 25 years) is not so shocking. The quote was of course designed to wind up the troops against wind, so objectivity was not wanted.Hi BB: should I take it that you accept the correctness of my analysis that the wind option at ~10 times capital cost will also use more fossil fuel for the given output?
So, please tell me, which is the better of the two options?
BitBucket -
Surely you should discount future fuel costs relative to (immediate) construction costs in such comparisons. For example, at a 5% annual discount rate, the £4 billion per year for 25 years comes to a NPV of about £56B rather than £100B. I agree that the comparative advantage is nowhere near 10X, yet it is still substantial.
While I can't vouch for the calculations, Table I in the report claims a ~2X ratio in system costs. Not ~10X (124:13) to be sure, but equally well not ~1X (124:113).
I also suspect that the useful lifetime of a gas plant exceeds that of windfarms and should be factored in; perhaps it is included in Table I.
Spartacus, I think comparing total cost is more useful just capital costs. Then the 10x factor disappears and one can consider the issue without the emotion. I've seen the suggestion like yours that windmills generate more CO2 than fossil power, but they are unconvincing. Yes, if you use a coal power station as a backup generator, then you might get that result. But that is not sensible when there are alternatives (pumped storage etc). There are studies that claim to show no CO2 savings and there are others that show this to be untrue. It is difficult for laymen (like me) to steer a way through them.
HaroldW, yes you are right that the capital cost surely has to be serviced over time. On the other hand it is not all up front. The quote from the report at the top says "Allowing for the shorter life of wind turbines, the investment outlay for this Wind scenario will be about £124 billion", which implies that the capital cost is spread out to some unspecified extent. And of course the £4bn annual fuel cost is nominal as we don't know where the gas price will go. If the gas price halves then gas is a clear winner; if it doubles then it is not so clever. Anyone who is certain where that price will go stands to make a fortune playing the gas futures markets.
Have you factored in the capital cost of pump storage?
Dinorwig took 12 years to build, 1 million tonnes of concrete, 12 million tones of rock blasted and moved.
We need ~30 more to make the windmills save any CO2 [assume 5% compared with no windmills which is what the Danes get by dumping half their wind energy to hydro].
What is the CO2 cost of that construction?
What is the CO2 cost of the ~10 nuclear power stations needed to pump the pump storage [the wind surges are absorbed by quickly shutting off the penstocks]?
BitBucket. I love your throw away "pumped storage etc." Are you by any chance a Coalition politician with the responsibility for keeping the lights on in the near future, or even an opposition politician who may end up with the same responsibility?
If you are, you lot won't be forgiven when the lights start going out and the computer systems turn off.
Ok I'll bite on the pump storage Bit Bucket. You're 'aving a laugh, aren't you? What's your recommendation then? All occupants of tower blocks keep their baths fall at all times, to release the water at times of need?
Residents of the Fenlands to run their excess water back through joined up hose pipes to Derbyshire now that the hose pipe ban has been lifted? (Nobody will miss Derbyshire.) Scaffolding and pump up paddling pools to be used on the Fens when Derbyshire is entirely flooded.
There goes 'pumped storage'.....What was the 'etc.?'
Fenbeagle.
Love it. No surprise that the government of China, despite it's horrendous democratic deficit, is dominated by engineers. At least they are not so stupid to rely on wishful thinking so far as their power supply is concerned!
It is interesting that people want to concentrate on the costs etc of pumped storage rather than the subject of the thread, namely the supposed 10:1 cost ratio of wind to gas. We have seen that this cost ratio is fictional, so it is no surprise that people are a bit defensive.
Mike, on wishful thinking: basing a country's power supply on a resource, the long term price of which is unknown and unknowable, might also be considered wishful thinking (ie hoping that the price will remain low).
Bit Bucket:
Oh for goodness sake. On 6 February at midday the whole wind array connected to the grid was providing just 45MW, 0.1 per cent of grid requirement, enough to boil 15,000 3 KW electrical kettles. Please descend from your dreamworld and confront reality. Shale gas is a real game changer that our idiot politicians like Yeo are flinching from. The consequences of grid failure in the UK would be catastrophic.
Kind regards
Mike Post
Bit Bucket::
And on second thoughts where do you suggest the pumped storage should be? Are you aware how limited (fenbeagle's brilliant Norfolk Broads proposal excepted) the scope for "pumped storage" is? You must be a politician. Please also explain the etc. Come on. Who are you?
Humble person with 50-year-old engineering degree.
May I respectfully point out that one might more fruitfully present some rational based arguements to the EU itself, for instance the current consultation on Projects of Common Interest, which can be implemented under certain conditions for reasons of “overriding public interest”, i.e they are to be fast tracked and provided with funding arrangements. The ones for the Republic of Ireland are a right old 'holy show' of massively dysfunctional projects, with enormous financial and environmental impacts; I'm sure it is pretty much the same for the UK.
Yet when it comes to the detail in relation to the projects being proposed, the position of DG Energy of the European Commission is that:
•“More detailed technical information is controlled by the individual project promoters and we cannot release it due to commercial confidentiality”.
Yet all they have provided themselves is the name of the project and a single sentence description.
http://ec.europa.eu/energy/infrastructure/consultations/20120620_infrastructure_plan_en.htm
For those of you with financial considerations, the 2008 EU Guidelines on State Aid for Environmental Protection were very clear in relation to the proportionality of aid: “Aid is considered to be proportional only if the same result could not be achieved with less aid. In particular, the aid amount must be limited to the minimum needed to achieve the environmental protection sought”.
Can anybody answer what quantified environmental protection is associated with a ROC and as to how it is proportionate? I can't. However, observations on this factor and similar can be sent in to the current EU Consultation on revising the Guidelines for State Aid for Environmental Protection:
http://ec.europa.eu/competition/consultations/2012_state_aid_environment/index_en.html
Brit Bucket....'The cost of pumped storage'....
Oh blimey yes, I hadn't even considered that I was thinking of the etc. (eg. Having nowhere to put it, and it being of insignificant value even if we did.)....But it would be blooming expensive too, (silly me. I should have mentioned that.)
As against the cost of gas in the USA which has come down to half European prices since they started fracking, and brought down the cost of coal, which has increased in use in Europe as a result (including the UK). Also potentially bringing down the cost of transport for haulage, if it switched to gas. Not forgetting developments in petrol engines from Mazda for instance, which is bringing down the amount of fuel required for transport too, at a time that record finds of Oil are being made all over, as well as gas. And with huge stocks of coal available anyway.
With all this going for carbon you'd think that the usual suspects would get wise to it all, and introduce carbon taxes, wouldn't you?....And a requirement to build giant industrial wind follies, extra overheads, carbon storage, trapped high pressure wind, spy meters, and pumped storage in place of the Lake District.
Not to get too long winded on the subject, here BB, the UK will have to come up with 124 billon pounds BY 2020. That is only 7.5 years. It will take 31 years for a 4 billion pound gas bill to total the same amount. At 5%, you can pretty much pay the gas bill on the interest on 124 billion pounds alone, and still have money left over.
Not that anyone expected you to mention such a thing until reminded of it.
Oh! And as Fenbeagle has asked, how much will the pumped storage cost?
Not wishing to rub it in BB but right this minute wind is producing just 41MW out of a potential 4686MW.
Sorry for jumping in late & somewhat repetitiously on this - but it's only rarely that a contributor explodes their credibility in such spectacular fashion.
BitBucket's proposal to remodel the whole of the UK along the lines of Snowdonia & the Scottish Highlands has a certain mystic appeal to those of us who enjoy the lonely majesty of the hill country.
I'm sure the engineering problems could be overcome in a few millennia - after all the Pharaoh's managed a few tidy pyramids without as much as a JCB - and I suppose the new GreenWorldSoviet could help by re-instituting universal slave labour in the interests of "saving the planet".
I think deciding where to put all those new mountains might be a bit tricky though.
I would vote for centering some of them on Sefton Park, Harlow New Town and Hampstead with a nice range of unsurmountable alps along the south coast - but I fear this might become controversial.
If the mountains are too much of a problem, I guess we could use some of old Fred Hoyle's carbon nanotube, "space tethers" and just pump it up into space - oh, hang on a minute - once we got past the gravity field we'd have to use energy to suck it back down again - damn!
Well obviously there are still a few details to be worked out - but we've managed to sort out CCS OK so it shouldn't be beyond our technical capability - should it............?
Bruce, yes you are right, as HaroldW said before, the debt must be serviced. But the £124bn seems to me not to be the up-front capital cost as you state, but is more spread out. The original quote at the top makes it clear that the figure allows for the "shorter life of wind turbines" implying that the total is not all up-front. Sadly there is no indication of how the figure was calculated. It is odd too that the period over which the calculation is based is not stated (or I missed it, if it is).
The report clarifies things a bit in Table 1 where the relative costs are estimated, showing the ratio of costs of the various wind options to gas to be around 2:1. So not 10:1 as the quote at the top of this thread implies.
On where to put pumped storage, I have a fantasy idea of huge tanks out at sea. Now that would be a challenge to build!
ps. Don't mistake me for a wind evangelist. I have no axe to grind for wind, I just objected to the misleading nature of the quoted text. My preference is for efficiency, Desertec solar plus fast breeder nuclear.
I don't understand the enthusiasm for wind power - no other country has our obsession with it. My understanding is that modern nuclear reactors are far safer than designs we are currently operating and that tidal stream (not barrage) power could provide 30% of our energy needs. Neither of these things would seem to need the kind of subsidy that wind and solar power are currently receiving for almost no impact on our energy supply.
I am also wondering what the CO2 impact of all the concrete we need for wind power turbines is or the energy input of fabricating photovoltaic solar panels. Has anyone done the sums ?
I vote for tidal stream - predictable power available all year round near where the power is consumed !
On pumped storage - to raise its own temperature just 1 deg C a body of water must fall 420 metres (m x g x h =potential energy) and Specific Heat Capacity of water - 4200J/kg/degC. Even with 100% efficiency, that's a lot of water falling a long way to to boil a kettle.
I really recommend http://www.inference.phy.cam.ac.uk/sustainable/book/tex/sewtha.pdf to anyone who wants to think this through rationally. (I know this is a small minority ;-); passionate argument is more fun isn't it! )
offpiste_man
The windmills are a political statement, to prove EU Marxist domination, a combination of the Easter Island Statues and the Swastika, plus a nice little earner for the carbon offsets. It doesn't matter that the windmills actually increase CO2 missions........
Dinorwig pumped storage has been a cash cow. It repaid the investment cost within 7 years but sadly there are few suitable sites that would overcome the planning hurdles.
The reason why tidal stream is the very high upfront construction cost. No private investor wants to wait 25 years for pay back to commence. The government could dump much of the esoteric investment in wind power, carbon capture etc. and go for large tidal stream investments with a predictable productionr over 24/24 and 365/365 excluding maintenance. I don't know what the CF would be but with the turbines turning on both incoming and outgoing tides it must be of the order of 70%.