Could the Grantham Institute please learn some economics?

It\’s all really terribly fascinating. Onshore wind is nearly as cheap as natural gas right now and it will only get better over time!

Two huge economic failures.

1) They assume that wind will just keep on getting more efficient. But gas will just stay at current levels of efficiency. Yup, really. Windmill blades will get ever better, gas turbine blades won\’t. I can prove anything with this sort of assumption.

2) They really do say that onshore wind is now largely competitive with natural gas generation. And that it really really will be in only a few years.

However, the one suggestion they do not make is that we should stop all subsidies now and then, as and if, it really really is cheaper we go build the damn things then.

Which is very much an economic error. For none at all of the things which are making onshore wind cheaper have anything at all to do with installation in the UK. It\’s expanding world base that does and as any economist wil happily tell you such improvements in technology are a public good. If someone else is paying for them then you get to enjoy them for free.

Well, you still have to pay for the turbine but that the 2018 one is actually cost efficient but the 2012 one isn\’t is something you get for free off everyone else\’s subsidies.

And, sadly, that they do not say this means that I don\’t think that even they believe their statement about onshore wind being competitive.

4 thoughts on “Could the Grantham Institute please learn some economics?”

  1. “We have a better technology. So give us more public subsidy.” Something a bit dodgy about this reasoning but I can’t quite put my finger on it…

  2. Argument 1 is about 50% meritorious in that turbines aren’t going to get much more efficient. Sure, there’s some way to go until you’ve got the best thermodynamically-achievable energy extraction but there are engineering limits long before you get there. But that also applies to wind turbines. Which cancels out the meritorious part of the argument.

    The one thing you could do to make gas turbines more “efficient” is to use the waste heat. at least in district heating systems. Something that is done a lot in continental Europe, but only in 2 or 3 places in the sceptre’d isle.

  3. Their numbers are highly inconsistent with those in the BP Survey of World Energy, which implies that their cost per unit for onshore wind is flattered.
    Their argument seems to be based on two assumptions – that onshore wind will get more efficient and that the gas price will double. They seem to ignore transmission losses between the windfarm and the end-user. They claim that back-up only needs to be 20-32% of wind-power capacity without sayiong whether that means minimum capacity utilisation is 68% or maximum capacity utilistation is 32%. They ignore the very visible breakdown of windmills. They assume it costs peanuts to build and operate a new pumped storage system of a valley-full of giant flywheels. They ignore the CCHP systems which Jams V advocates and for which the government provides subsidies….
    This is not an academic paper – it is propaganda.

  4. “This is not an academic paper – it is propaganda.”

    Of the two ends of the spectrum here implied, to which is Worstall’s blog closer?

    Tim adds: My blog?

    Merely my scream.

    My work elsewhere? Now we’re talking……

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