That’s a lot of money. The wind industry wants you to believe that the cost of wind power is not much more than that of conventional generation, and is coming down. They mutter on about “grid parity”, and the rising prices of fossil fuels.
It’s been clear to me for some time that they’ve failed to account for a number of vital factors, but I didn’t know quite how many vital factors. Now I’ve got hold of a paper by Gordon Hughes, Professor of Economics at Edinburgh University, written for Lord Lawson’s Global Warming Policy Foundation. And it makes stunning — and alarming — reading. It’s called “Why is wind power so expensive?“. And it says that wind costs nine to ten times as much as Combined Cycle gas.
For some time I have been making the point that, because of the need for conventional back-up, wind power involves double the capital investment — once for the wind turbines, and again for the gas (it usually is gas). And I’ve made the additional point that gas run intermittently to complement wind is run less efficiently, and therefore the electricity it produces incurs more emissions, and higher costs, than if you ran it properly.
But in Professor Hughes’ analysis there’s so much more.
First, he points out that wind turbines have a shorter operating life than a gas-fired power plant, so the CapEx has to be amortised over the shorter period. This, he says, increases the annual capital cost by 15%.
Secondly, the more efficient Combined Cycle Gas Turbine system is not suitable for intermittent operation as wind back-up. You have to use the older and much less efficient Open Cycle Gas Turbine system. These OCGT plants can use up to twice as much gas per MWh of electricity — with proportionately increased emissions. This is why a couple of recent studies have shown that wind plus gas back-up produces little or no emissions savings compared to gas alone. As I frequently ask, “Why not just build the gas, and forget the wind?”.
The third point is slightly more esoteric, but nonetheless important. While regular gas plants use “take-or-pay” gas supply contracts which assume a more-or-less steady, base-load-type offtake, those gas plants used as back-up for wind are much more volatile. They are buying at variable prices depending on hour-to-hour demand. Obviously if you’re backing-up wind, your gas demand will be strongly skewed to periods of peak demand, and therefore your gas price will be higher. The total fuel cost in the back-up plant may not be much lower than it would have been run properly, full-time.
The truth is that “sustainable energy” is just not — well — sustainable. Lord Smith, Chairman of the Environment Agency, told the BBC in May that a “‘dash for gas” was likely “because nuclear and renewables won’t be sufficient to keep the lights on”. Dieter Helm, Professor of Energy Policy at Oxford University and advisor to DECC says that UK/EU climate policies have failed, and that shale gas offers a cheap, abundant domestic source of energy.
And before they warn you of the increasing price of fossil fuels, remember that in the USA, shale gas has halved the cost of electricity.