Is Onshore Wind Really The Cheapest Energy?
In remarks publicized over the last few days, a former civil servant at DECC, now the CEO of the wind industry trade lobby, Renewables UK, Hugh McNeal has said that onshore wind is the cheapest form of new generation in Britain, though he went on to add that it was not economic in England, due to low wind speeds.
The first of these statements is false; the second is correct, though it is an incomplete statement of the facts; onshore wind (and probably offshore wind too) is probably uneconomic anywhere in Britain, or indeed Europe.
McNeal’s claim that onshore wind is the cheapest form of new generation is false because it deliberately concentrates only on the capital cost of the wind turbine, to the exclusion of the cost of transmitting the energy to a consumer. Indeed, when looked at from the consumer’s perspective, the energy from these devices is extremely expensive, in large part because of the system costs caused by the uncontrollably variable generation pattern of wind power, and the location of wind farms, which are usually distant from centres of demand.
In other words wind farms require grid expansion and reinforcement to remove bottlenecks, and conventional plant and or flexible consumer demand capable of short term response to compensate for errors in the wind forecast. Furthermore, and perhaps most importantly, wind power cannot give a high guarantee of contributing to meet peak load, so in order to guarantee security of supply, on a cold windless winter’s evening, for example. Consequently, the conventional fleet must be as large as peak load plus a margin, as it is today. However, that conventional fleet must recover its fixed costs from a much smaller market share, meaning that its unit costs (p/kWh) will be much higher.
All this is bad news for consumers resulting in additional system costs over and above those that apply to all generators, including conventional ones. Colin Gibson, a former Power Networks Director, at National Grid calculated the additional cost of these three elements for onshore wind at about £75/MWh, and about £64/MWh for offshore wind (see his well-known IESIS paper)
It is important to note that onshore wind is proportionately more costly to integrate than offshore wind because onshore wind’s load factor is comparatively low. This means that the system integration costs, many of which are correlated with capacity (MW) not generation (MWh) are divided over a smaller energy output. Onshore wind in Britain has a load factor of 25% to 30%, with most of the higher load factor sites being concentrated in Scotland. Offshore wind load factors are over 30%, with some over 40%.
For both technologies, however, the integration costs are high, and even if capital cost reductions are magically successful, reducing the cost to £0/MW installed onshore and offshore, thus banishing the need for subsidy, their electrical energy would be still more expensive to consumers than that of energy from conventional sources.
Onshore wind in Scotland might well be cheaper than onshore wind in England, thus far Mr McNeal is right, but it would not be cheap electricity; it would be very, very expensive electricity by any standards.