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Saturday, 21 January 2012

Slowly the Penny Drops

Institute for the Study of Civil Society
6 January 2011
Media Information:
EMBARGO: 00.01 hrs, Monday 9 January 2012

Wind-power: inordinately expensive and ineffective at cutting CO2 emissions

Energy experts warn that unwarranted support for wind-power is 
hindering genuinely cleaner energy

The focus on wind-power, driven by the renewables targets, is preventing Britain 
from effectively reducing CO2 emissions, while crippling energy users with additional
 costs, according to a new Civitas report. The report finds that wind-power is unreliable
 and requires back-up power stations to be available in order to maintain a consistent
 electricity supply to households and businesses. This means that energy users pay twice: 
once for the window-dressing of renewables, and again for the fossil fuels that the energy
 sector continues to rely on. Contrary to the implied message of the Government's approach,
 the analysis shows that wind-power is not a low-cost way of reducing emissions.

Electricity Costs: the folly of wind-power, by economist Ruth Lea, uses
 Government-commissioned estimates of the costs of electricity generation 
in the UK to calculate the most cost-effective technologies. When all costs
 are included, gas-fired power is the most cost-efficient method of generating 
electricity in the short-term, while nuclear power stations become the most
 cost-efficient in the medium-term.

All that wind takes a lot of gas

Wind-power is acknowledged to cost more than traditional fossil fuel power stations
. But estimates from Government-commissioned reports suggest that, when the cost 
of CO2 emissions is included, onshore wind-power becomes one of the more 
cost-effective means of generating electricity. Offshore wind does not however.
 [See p. 12 - p. 23] Unfortunately, these estimates fail to factor in all the costs
 of wind-power. These costs are due to the fact that energy output from wind
 is unpredictable and rarely occurs in areas of most demand:

... wind-power is unreliable and requires conventional back-up generating 
capacity when wind speeds are, for example, very low or rapidly varying... [p. 14]

This means that wind farms need to be supported by conventional capacity 
including gas-fired power stations that can be switched on whenever the 
available wind fails to match demand for electricity. Lea cites research by
 Colin Gibson, former Power Network Director at the National Grid Group, 
who has produced some of the most comprehensive estimates for these 'add-on costs'.

When these add-on costs are included, the resultant levelised generating costs 
(£ per megawatt hour) for the main electricity generating technologies are, for medium-term projects:

  • Nuclear pressurised water reactors (PWR): £67.8 per MWh.
  • Gas-fired combined-cycle gas turbines (CCGT): £96.5 per MWh.
  • Gas CCGT with carbon capture and storage (CCS): £102.6 per MWh.
  • Coal (ASC) with CCS: £111.9 per MWh.
  • Advanced supercritical (ASC) coal-fired power plants: £133.2 per MWh.
  • Onshore wind: £146.3 per MWh (including 'add-on costs' of £60 per MWh).
  • Offshore wind: £179.4 per MWh (including 'add-on costs' of £67 per MWh).

(Note: one megawatt hour can run approximately 1000 desktop computers for 8 hours)

The most cost-effective technologies are nuclear and gas-fired. Onshore, and especially 
offshore, wind technologies are inordinately expensive.

Pumping out more CO2

Besides the prohibitive costs, the report shows that wind-power, backed by
 conventional gas-fired generation, can emit more CO2 than the most efficient gas
 turbines running alone:

In a comprehensive quantitative analysis of CO2 emissions and wind-power,
 Dutch physicist C. le Pair has recently shown that deploying wind turbines on 
"normal windy days" in the Netherlands actually increased fuel (gas) consumption, 
rather than saving it, when compared to electricity generation with modern high-
efficiency gas turbines. Ironically and paradoxically the use of wind farms therefore
 actually increased CO2 emissions, compared with using efficient gas-fired combined 
cycle gas turbines (CCGTs) at full power. [p. 30]

This means that the cost of having wind is not just carried by consumers but by the
 environment as well.

Caught in a cross-wind

The report explains how two competing environmental policies have generated a
 perverse set of priorities. The renewables targets have forced the energy sector to
 focus on more expensive, less reliable power sources, rather than those most likely
 to reduce emissions while keeping costs to the rest of economy competitive:

  • The Climate Change Act 2008 requires that Britain's greenhouse gas (GHG)
  •  emissions be cut by 80 per cent by 2050 compared with the 1990 level and 
  • by 34% by around 2020.
  • The EU's Renewables Directive (2009) commits the UK to sourcing 15% of 
  • final energy consumption (FEC) from renewables by 2020. Renewable energy 
  • sources include wind, hydro and biomass, but not nuclear power. [pp. 4-5]

This means that UK legislation separately specifies an outcome (reduced CO2 emissions)
 and a process, more renewable energy.

The outcome itself is substantial and threatens many Britons' standard of life and 
employment prospects if not achieved efficiently:

... consultants Redpoint Energy point out "…meeting these targets will mean a 
radical change in the way the UK produces and consumes energy over the coming decades." [p. 4]

Unfortunately, the legislated process is ineffective at reaching its supposed outcome.
 The result of forcing unreliable renewables on the energy sector is higher costs to
 consumers as well as more CO2 emissions than are necessary for maintaining the
 electricity grid.

One outcome of this micro-managed approach is that commercial and public sector 
energy users are, paradoxically, charged under the Climate Change Levy for their 
use of electricity generated by nuclear power stations (nuclear plants emit no CO2 
after construction). The CCL is designed to encourage greater use of renewable
 energy sources even though wind-power can result in higher CO2 emissions than
 efficient gas turbines. [pp. 6-7]

The report concludes:

[Wind-power] is expensive and yet it is not effective in cutting CO2 emissions.
 If it were not for the renewables targets set by the Renewables Directive, 
wind-power would not even be entertained as a cost-effective way of generating 
electricity or cutting emissions. The renewables targets should be renegotiated
 with the EU. [p. 30]

For more information contact:

Ruth Lea, Director of the Manufacturing Renewal Project, 07800 608 674

Civitas on 0207 799 6677

Notes for Editors

i. Ruth Lea is Director of the Manufacturing Renewal Project at Civitas
and an economic adviser to the Arbuthnot Banking Group.

ii. Electricity Costs: The folly of wind-power is available to download here.

iii. Civitas is an independent social policy think tank. It has no links to any
 political party and its research programme receives no state funding.