Wind is already the most affordable type of energy and can save us a fortune in future. We all know this as a result of the inexperienced power foyer retains telling us so. However it’s laborious to sq. with the phrases of Tom Glover, chair of power firm RWE’s UK arm, final week.
No extra offshore wind farms might be constructed, he stated, until the Authorities hikes the assured long-term costs provided to their operators by as a lot as 70 per cent.
The power “market” is just not actually a lot of a market in any respect, not in terms of inexperienced power. The Authorities underwrites wind and photo voltaic via “contracts for distinction” – guaranteeing operators a minimal “strike value”, rising with inflation, for each megawatt-hour of electrical energy they generate over 15 years.
The difficulty is that wind farm builders will not settle for the strike costs provided. Final time the Authorities held an public sale for the suitable to construct offshore wind farms, in September, it obtained not a single bid.
The utmost strike value the Authorities provided was £44 per MWh. In keeping with RWE it gained’t obtain any bids till that is raised to between £65 and £75.
How come, when the price of wind power is meant to be falling yr on yr? True, the associated fee did fall sharply up till 2019. However this then went into reverse because of larger commodity costs and rates of interest. With renewable power, many of the prices come upfront – which makes it significantly reliant on low-cost debt.
However that is solely half the story. If we’re going to have a grid primarily based on intermittent renewables, it’s no use wanting simply at the price of technology. We have now so as to add on the price of power storage, or another type of back-up – or else construct so many wind and photo voltaic farms that we now have simply sufficient energy on the worst of instances, and a super-abundance of it at different instances.
All are prone to be horrendously costly. Storing power in lithium batteries, for instance, can value round six instances as a lot as producing it within the first place. Utilizing fuel as back-up – as we do now – means we now have fuel energy stations sitting idle for some durations, pushing up the unit value of technology when they’re wanted.
As for super-abundance, we’d find yourself with lots of idle wind generators and photo voltaic panels as a substitute. They might solely get constructed if their house owners have been bribed with big compensation for being unable to provide all their energy to the grid.
Wind farms already do obtain such “constraint funds”, which inevitably find yourself on our payments. In 2022, power shoppers – unknowingly typically – needed to pay £215 million to wind farm house owners to show off their generators. This can be a invoice that’s certainly solely going to rise as increasingly wind farms – and much too few power storage services – are linked to the grid.
Bear in mind how, final summer season, the renewables foyer was attempting to inform us that wind power was “9 instances cheaper” than fuel? It was a blatantly false comparability between long-term strike costs for wind and “day forward” costs for fuel – ie the inflated costs we now have to pay the house owners of fuel energy stations to show them on for a number of hours at quick discover when wind and photo voltaic are briefly provide. We’re paying greater than we have to for fuel energy as a result of we’re utilizing it to steadiness renewables.
So, no, don’t be fooled by the PR. RWE has let the cat out of the bag. Renewables by no means have been significantly low-cost – and they’re prone to get much more costly.
