They’re cocking this up nicely then, aren’t they?

The UK’s offshore wind sector could power a £17.5bn investment inthe UK economy over the next four years after faster than expected cost-cutting slashed subsidies for the technology by half.

The Government’s latest auction for support contracts, released on Monday, shows that offshore wind costs have halved in recent years to under £58 for every megawatt-hour of electricity produced, even lower than the estimates given by experts in the run-up to the results.

So, it’s cheaper than it was.

The Government estimates that the capacity delivered in this auction will cost consumers, who support the contracts via their energy bills, up to £528m a year less than it would have in the absence of competition.

Note that’s the reduction in he extra cost, not a calculation of the extra cost itself. What we’re interested in is that extra cost of course.

The success of offshore wind has raised uncomfortable questions over the value of nuclear power generation, which will cost consumers far more.

EDF Energy defended its plans to build the Hinkley Point C new nuclear power plant at a cost of £92.50/MWh to consumers, saying ahead of the auction result that its next project is likely to show falling costs too.

I wouldn’t want to defend Hinkley Point but are these exactly the same costs? Do, for example, those offshore costs include the connection to the grid costs?

A recent report from Renewable UK found that 48pc of the expenditure in planning, building and running our offshore projects is going to UK companies, within a breath of its long-term target to source 50pc of its work in Britain by 2020. The economic benefit is five percentage points higher than in 2015 when 43pc of spending was in UK plc.

And that’s bollocks of course. 100% of the subsidy is being sucked out of UK households. Only 48% of the spending will go toward them (all spending in GDP does eventually reach households). The economic benefit is negative therefore….

What a morass of bad economic thought….before we even get to, well, what would be the cost of the same power from gas plants?

6 comments on “They’re cocking this up nicely then, aren’t they?

  1. Don’t know but, based on latest data I could find for average power input costs to the grid, well below £40/MWH as the average was just below £40 and that average includes nuclear and some wind

  2. IIRC, the price for gas plants (constant run, not fast up/down spin) is in the range of £24–£32/MWh.

    So, offshore wind is, at the new reduced price, still twice as expensive and utterly unreliable. Good job…

    DK

  3. Why would we want the same intermittent power from gas turbines that we get from windmills?

    What we want to know is how much it costs to get useful, stable power from each source. The gas turbine doesn’t need the post generation storage. Therefore we should compare the cost of the gas generator to the cost of the windmill, and an appropriately sized battery.

  4. @ LY
    1. In order to balance the erratic supply from windmills
    2. But that’s because we’re honest.
    3. Yes
    4. The technology does not yet exist for an appropriate-sized battery except in the form of a pumped-storage hydro-electric scheme and we do not, in the UK, have the geological resources with which to build enough of these. So over 90% of our windmills need to be matched with a gas-fired generator to provide back-up when the windmill isn’t generating.

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