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« Climate change fast & loose food - Josh 203 | Main | Helding forth on TCR »

Bloomberg's baloney

Last week Bloomberg New Energy Finance had one of those silly "wind cheaper than everything else" articles that appear from time to time.

Unsubsidised renewable energy is now cheaper than electricity from new-build coal- and gas-fired power stations in Australia, according to new analysis from research firm Bloomberg New Energy Finance.

This new ranking of Australia’s energy resources is the product of BNEF’s Sydney analysis team, which comprehensively modelled the cost of generating electricity in Australia from different sources. The study shows that electricity can be supplied from a new wind farm at a cost of AUD 80/MWh (USD 83), compared to AUD 143/MWh from a new coal plant or AUD 116/MWh from a new baseload gas plant, including the cost of emissions under the Gillard government’s carbon pricing scheme. However even without a carbon price (the most efficient way to reduce economy-wide emissions) wind energy is 14% cheaper than new coal and 18% cheaper than new gas.

We now know from bitter experience that claims of this kind are usually feature one of a handful of magic ingredients that give the answer required:

  • use of levelised costs
  • heroic assumptions about gas and coal prices

Climate Spectator - a site that I believe is an upholder of the IPCC consensus - has rather taken the Bloomberg article apart showing that the second bullet is the favoured option:

In terms of wind being cheaper than combined cycle natural gas, the key assumption behind that conclusion is that new gas contract prices will rise from the $4 per GJ that most power plant are paying today, to $12 per GJ for new plant.

Bloomberg's baloney is so bad that even their allies are appalled.

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Reader Comments (37)

Bish: "now now" should be "now know"

Feb 11, 2013 at 9:10 AM | Unregistered CommenterGixxerboy

If wind (and other forrms of renewable energy) are so cheap, we should call for the instant removal of all subsidies. Watch the industry squeal every time there is the vaguest mention of cutting subsidies.

Feb 11, 2013 at 9:28 AM | Registered CommenterPhillip Bratby

I'd expect advice like that from Enron.

Maybe the advisors are looking for the same sort of "vacation".

Feb 11, 2013 at 9:37 AM | Unregistered CommenterBernd Felsche

Why do these articles have to use two sets of units (MWh and GJ) so that a quick mental conversion is needed?

There is also a big assumption made about 'carbon prices', so clearly the impact of intermittent electricity supply from wind hasn't been factored in.

Feb 11, 2013 at 9:37 AM | Registered CommenterPhillip Bratby

Point? Isn't the price of Carbon "fixed" too, until the market takes hols that is, before it plummets?

Feb 11, 2013 at 10:01 AM | Unregistered CommenterAlan the Brit

@Phillip Bratby
Hear Hear.

Feb 11, 2013 at 10:30 AM | Unregistered CommenterSandyS

Blowing hard on the bubble.

Feb 11, 2013 at 10:31 AM | Unregistered Commenterkim

Bloombergers contain 100% bull.

Feb 11, 2013 at 10:53 AM | Registered CommenterPharos

I had a quick post on this last week.

There seems to be a growing trend of hiding assumptions behind paywalls, while making extravagant claims in press releases. Those claims then echo around the internet with no idea about what they pertain to, or how they were arrived at. The trade in factoids is ceaseless.

Feb 11, 2013 at 10:58 AM | Unregistered CommenterBen Pile

Careful Bish, you will have VNgel here any second extolling the revenue loss nature of fracking!!!



Feb 11, 2013 at 11:01 AM | Unregistered CommenterMailman

To state "is now cheaper" based on future costs (realistic or otherwise) is clearly an attempt to obfuscate.

As the BBC has now backed down on Attenborough's African temperatures claim, can Bloomberg be embarrassed into doing the same: perhaps with a "Wind-power is expensive compared to gas and coal" headline? After all, that was the result of their computation before they multiplied by the Green constant.

Feb 11, 2013 at 11:05 AM | Unregistered Commenterssat

To see why the media puts out silly stuff like this, I recommend Brendan O'Neill's article "Investigating the crisis of 21st Century journalism"

Feb 11, 2013 at 11:12 AM | Unregistered CommenterRick Bradford

Bloomberg obviously have not factored in that for every GW of wind energy one GW of OCGT/CCGT backup is required, to supply electricity during periods when there is no wind. This happens quite often in Europe. Or is there continuous 5BFt wind in Australia? Check out Eirgrid to view the relation between gas and wind. Eirgrid have 16% average wind contribution over the year. Paste the link below in your browser, select any month and scroll down to the colorful graphic. It is very illuminating ;-)

Feb 11, 2013 at 11:26 AM | Unregistered CommenterAlbert Stienstra

"In terms of wind being cheaper than combined cycle natural gas, the key assumption behind that conclusion is that new gas contract prices will rise from the $4 per GJ that most power plant are paying today, to $12 per GJ for new plant."

What makes you think that this price increase is an unreasonable assumption?

Note the reference in the article to a possible fourfold increase in the price of natural gas.

Feb 11, 2013 at 11:28 AM | Unregistered CommenterEntropic man

"The carbon price adds further costs to new coal- and gas-fired plant and is forecast to increase substantially over the lifetime of a new facility"

Outrageous assumption that helps "wind to win". It seems they didn't factor in the likelihood that Tony Abbot will win the next election and reduce or kill off the silly Gillard law. I guess it is in the interests of Bloomberg's 200 employees in this division that the gravy train keeps on rolling (with a big sail on the roof for harnessing wind power of course)

Feb 11, 2013 at 12:00 PM | Unregistered CommenterFarleyR

(In)competence of the MSM.

Not to do with AGW, but a lovely article by Richard North this morning.

The UK CANNOT stop or alter the conditions of meat imports because it is an EU competence, however the lovelies in most of the UK main stream media managed to get the quote from our minister wrong. If they do not understand a simple fact like this, how do you ever expect them to cope with a technical report?

in dispair


Feb 11, 2013 at 12:10 PM | Unregistered CommenterPatrick

Excellent rebuttal by Ben Heard

Feb 11, 2013 at 12:24 PM | Unregistered CommenterAlex Heyworth

Probably somewhat off-topic but, idly browsing around (as I do, even when I do have better, far more important things to do), I came upon this site: If you can get past the obvious point that anyone who is not in full agreement with them is a demon “Denier”, it makes you wonder if Monty Python still has a powerful influence with some people – but they do not understand it was all a joke!.

The first post was about the recent New England snow – which, I am led to believe, is not a new thing, however, despite it happening every year “since records began”, we are now being told is all the fault of AGW, for some reason. Reading the comments, you have to wonder whether reality will ever dawn with some people:

astrostevo Says:

February 10, 2013 at 1:28 am
“Climate deniers, of course, will have difficulty processing snow in a warming world.”

I’m no climatologist (& very definitely no Denier!)…

Oh, Lord, grant me patience… and HURRY UP!

but it seems to me that if you have a glass of warm water with an icecube in it, and you put it in the sun, then the icecube will melt and temporarily cool the water. Especially the immediate layer where it icecube was. Then as the glass continues to sit in the sun the water will warm further.

Gone a bit off-message, there – there is no CO2 involved in this analogy. But, then, this could be following the logic of thinking that CO2 (thus humans) influences the Sun, somehow.

Is that a reasonable analogy for what is happening here? The Arctic icesheet being the icecube, the sun being the increaesd energy trapepd by GHG emissions and the glass of water being the northern hemisphere nearby with the melting ice making things cooler being the colder weather pattern…

This used to be known as “Winter”, and people accepted it, and the chaos that usually accompanied it.

… and greater snowfall?

Of course there are a couple of key differences I know – the icecube won’t directly raise the water levels since the water was being displaced by the ice – whereas the Arctic sea ice was holding back glacial ice such as on Greenland which adds an extra layer of complexity and likely sea rise and the Sun won’t keep getting hotter all day and ever more rapidly whereas the escalating feedbacks and extra accumulated GHG emissions building up mean the Earth will.

Log in to Reply

With scientific rigour of numpties like this exposed by their ignoring (or ignorance of, who knows?) spell-checker, or even the more basic rules of English and its puntuation, you know you will never be able to win any arguments with these people, when even the simplest forms of logic disappear out the window. Whatever happens, whether it be Washington under ice or sunbathing on Cost del Churchill, it will still be the fault of human-produced CO2.

Feb 11, 2013 at 12:42 PM | Unregistered CommenterRadical Rodent

Bad wind blows up Bloomberg............. if he will employ children.

Wind power at best is intermittent and sometimes non existent, it has to be backed up or the lights go off - have they factored that in?

Base load, wind can never provide it.

End of 'argument' - pricing the length of a piece of string is simply put, not relevant.

Feb 11, 2013 at 12:43 PM | Unregistered CommenterAthelstan.


Curse you, spell-checker!

Talk about "hoist by your own petard".

Feb 11, 2013 at 12:47 PM | Unregistered CommenterRadical Rodent


"electricity can be supplied from a new wind farm at a cost of .."

But only when the wind is blowing (and at the optimum speed). As you suggest, this doesn't include the cost of providing alternative sources when it isn't, and keeping them running because the sudden loss of output isn't predictable.

The nice thing about conventional power stations is that they are controllable...

Feb 11, 2013 at 12:57 PM | Registered Commenterjamesp

Bloomberg obviously have not factored in that for every GW of wind energy one GW of OCGT/CCGT gas plant is required to supply electricity when there is no wind. Such periods are quite common in Europe and can last several days. Or is there a constant 5 BFt wind in Australia?

For a good view of the relation between gas power plants and windmills check out Eirgrid. They have 16% wind energy contribution average over the year. Paste the link given below in your browser, select any month and scroll down to the multi-coloured graphic. It is very illuminating...

Feb 11, 2013 at 1:36 PM | Unregistered CommenterAlbert Stienstra

Radical Rodent -
As a New England recipient of about two feet of snow, I can assure you that this was a heavy fall but not out of the ordinary. In fact most residents were sharing their remembrances of the "blizzard of '78", which was significantly more severe in its effects. The problem with writers such as the one from whom you quote above, is that the reasoning is all post hoc. If the waters are cold, it's because the increased Arctic ice melt (due to global warming) has made them so. If they are warm, it is, naturally, due to global warming. The problem is that climate processes are so complex that one can point to pretty much any occurrence as having some sort of a relationship to another. Then it's merely a question of putting emphasis on that putative connection and ignoring all others -- and history. Post hoc at its finest.

Feb 11, 2013 at 1:45 PM | Registered CommenterHaroldW

Goebbels would be proud of Bloomsberg.
Tell the big lie and keep telling it.....

Feb 11, 2013 at 2:07 PM | Unregistered CommenterDon keiller

Bloomberg describes their New Energy Finance division as being the information leader on "clean energy technologies and carbon markets".

It would be a Gerald Ratner moment if a CEO of Exxon or Shell stood up and said oil was expensive crap which wouldn't even last as long as a sandwich from Marks&Spencers. Why would anybody expect Bloomberg to behave differently when advertising their own products?

Feb 11, 2013 at 2:13 PM | Unregistered Commentermichael hart

Rick Bradford - thanks for the link to Brendan O'Neill's piece. A very perceptive presentation.

Feb 11, 2013 at 3:02 PM | Registered Commenterretireddave

HaroldW (Feb 11, 2013 at 1:45 PM)

A good point, and one which further undermines the position of AGW as being science, as it cannot be falsified; whatever happens, even if it goes against all the forecasts they’ve already made (e.g. Kilimanjaro), it’s all the fault of humans. Here’s another good one for you to ponder:

“Science Is True Whether You Believe It Or Not.”

My own take is: Wrong. Science is the investigation of observable facts. Theory is an attempt to explain an observable phenomenon. Science produces theories. Both science and theories can be wrong. To think otherwise is to remove “science” from its scientific basis into religious ideology.

Dragging this back on-topic, this is almost exactly what Bloomingberk is supporting, trying to twist Feynman’s ideas – in clumsy paraphrasing: guess, observe, explain – out of all recognition, beating any facts that they can find into whatever their guess was at the start, then lauding it as a valid explanatory theory. Though, in Bloomingberk’s case, the “facts” were gained from “modelling”.

p.s. glad no-one has yet mentioned the other faux pas in my previous comment.

p.p.s. actually, Kilimanjaro’s “problem” may well be human-induced, but not through global warming or rising CO2.

Feb 11, 2013 at 4:11 PM | Unregistered CommenterRadical Rodent

The problem for this kind of reasoning comes when the price of gas falls and so does the price of carbon. The latter is headed inexorably towards zero, in Europe at least.

Feb 11, 2013 at 4:38 PM | Unregistered CommenterJustice4Rinka

Go long on candles and coffins.....

Feb 11, 2013 at 5:22 PM | Unregistered CommenterAlecM

Your Grace - now and again (as in this post) you make offhand comments denigrating the use of levelized costs in energy cost calculations and comparisons. I work in the industry (some thermal, but primarily storage hydro) and levelized costing is the standard approach to compare costs over the facility life cycle. Could you elaborate on your objection?
No doubt, some analysts will make (perhaps deliberately) nose-stretching assumptions on equipment life, maintenance intensity, future fuel (or carbon-tax) costs, and so on - and all those assumptions will enter into the levelized cost calculation - but they will enter into whatever analysis is performed, whether it is NPV of energy supply (which is really all levelized cost is), project NPV, etc. The problem is in the ill-founded assumptions, not the analytical approach.



Feb 11, 2013 at 5:48 PM | Unregistered Commenterdcardno


Notable quote of the day.

Feb 11, 2013 at 6:47 PM | Registered CommenterPharos

Apologies for my double posting (11:26 AM and 1:36 PM). I thought my post did not come through for some reason so I sent another one at 1:36 PM). That also was not visible until just now (21:10). There must have been a security mix-up.

But perhaps this one also does not come through immediately ;-)


Feb 11, 2013 at 8:16 PM | Unregistered CommenterAlbert Stienstra

Bloomberg showed his true colors a few weeks ago.I would avoid any of his businesses and websites.

Feb 12, 2013 at 1:12 AM | Unregistered CommenterManfred

PS to my earlier link to Ben Heard's rebuttal: the essence of his argument is that the Bloomberg analysis is comparing the cost of adding incremental amounts of wind power to an already existing system (ie no allowance for backup) with the cost of new base load coal or gas power. The comparison is completely invalid from the start.

Feb 12, 2013 at 1:31 AM | Unregistered CommenterAlex Heyworth

It's certainly a salutory reminder not to take Bloomberg investment advice.

Indeed, it is arguably a breach of the laws concerning investment advice, although I suspect they tried to cover themselves by putting that mealy-mouthed disclaimer about it "not being investment advice" at the end.

Feb 12, 2013 at 6:56 AM | Registered Commenterjohanna

Also Carbon Brief has an article questioning the Bloomberg claim.

Feb 12, 2013 at 1:33 PM | Registered CommenterPaul Matthews

How did Edis manage to "look at the detail behind the headline"? Is the report or a more detailed summary available?

Feb 19, 2013 at 2:34 AM | Unregistered CommenterGeoff

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