My Times column asks if offshore wind is too
expensive:
Here’s a short quiz. Question One: which source of
energy is allowed to charge the highest price for its electricity?
Question Two: which source of energy is expected to receive the
greatest capital expenditure over the next seven years? The answer
to both questions is offshore wind.
Offshore wind farms are the elephant in the energy debate.
Today, the energy department estimates that electricity prices are
17 per cent higher as the result of green policies and that this
will rise to 33 per cent by 2020 or 44 per cent if gas prices fall,
as many expect. Offshore wind is the single biggest contributor to
that rise. Of the £15 billion a year that the Renewable Energy
Foundation thinks consumers are going to be paying in total green
imposts by 2020, the bulk will go to support offshore wind.
Britain is a proud leader in offshore wind. “The UK has more
offshore wind installed than the rest of the world combined and we
have ambitious plans for the future,” says Ed Davey, the Energy
Secretary. I wonder why that is. Could it be that other countries
have looked at the technology and decided that it’s far too costly?
George Osborne says he does not want Britain out ahead on green
energy. He should take a long hard look at why we are so far out
ahead on this extravagant folly.
Currently we get under 3 per cent of our electricity from
offshore wind, or less than 0.5 per cent of our total energy. If Mr
Davey’s ambitions are realised and 20 per cent of our electricity
comes from offshore wind in 2020, then we will need 20 gigawatts of
capacity because wind turbines, even at sea, operate at less than
40 per cent of capacity. That’s about six times what we have today
and the cost of building it would be greater than the investment in
nuclear energy over the period.
On the face of it, sticking wind turbines in the sea sounds like
a great wheeze. There’s no need to tangle with turbulent parish
councils worried about their views, or to bribe landowners with
annual payments. The wind blows a little more reliably and
strongly. But the engineering problems have proved daunting. Three
years ago the cement grouting began to dissolve on more than half
of all Europe’s offshore turbines, leading the turbines to move on
their foundations. This necessitated hefty repairs and redesign.
The urgency of meeting political targets was partly to blame.
“There is an alarming asymmetry between construction risks and the
number of players who can manage these risks effectively,” says one
insider.
As a result, costs have not fallen as expected. The Government
had set a target of cutting the price it offered to pay for
offshore wind power to “only” double the wholesale price, but it
quietly abandoned that ambition this summer when it announced that
the “strike price” for offshore wind would drop only a little.
Connecting cables and transformers, dealing with corrosion, losing
days to seasickness, stopping pile-driving during the season when
it might upset porpoises — these have all proved more challenging
than expected and have added to the costs and delays. Many in the
industry think that the lifespan of a turbine in the North Sea is
going to be a lot shorter than the hoped-for 25 years. One study by
Gordon Hughes of Edinburgh University found that the operating
efficiency of Danish offshore wind farms dropped from 39 per cent
to 15 per cent after ten years. Certainly, Britain’s oldest
offshore wind farm — off Blyth in Northumberland — has spent a good
part of its first 12 years out of action.
It is also becoming clear that monstrous turbines are not as
environmentally clean as had been imagined. Last week the £3
billion Navitus Bay wind farm, off Dorset and highly visible from
the Isle of Wight, revealed that it needed 22 miles of cabling to
be dug into the New Forest. Sea birds are at risk too. Pink-footed
geese are apparently avoiding wind farms on migration, while
songbirds are thought to be at risk of becoming confused by
flashing blades while crossing the North Sea. The British Trust for
Ornithology concluded that 2,603 adult and 1,056 immature gannets
will be killed each year by existing and consented wind farms
around the British coast. Since gannet populations are currently
growing, this may not matter much, but it is a far greater toll
than taken by any other industry.
And then there is the risk of an oil tanker hitting a turbine,
or hitting another ship because of having been squeezed into a
narrow shipping lane past a wind farm. As Lord Greenway (an Elder
Brother of Trinity House) put it in the House of Lords this year,
the risk of collision is increased by more than 400 per cent at
some choke points and “if you place an object in the sea, either a
fixed structure or a floating one, sooner or later a ship is bound
to hit it”. Of course, none of these objections is fatal in itself
— all economic activity entails some risks. They are however a
reminder that this very expensive form of electricity is not
“clean”.
Yet even the high price on offer — £155 per megawatt-hour
compared with £90 for nuclear and below £50 for the typical
wholesale price — may be too low to lure the investment needed if
the target of 20 gigawatts of offshore power is to be met by 2020.
With coal being phased out, gas restricted and onshore wind, wave,
wood and water of limited capability, and even with a hugely
ambitious nuclear programme, we will need some £45 billion invested
in offshore wind by 2020, and another £54 billion by 2030, if the
lights are to be kept on. That is considerably more than in any
other energy technology, even nuclear.
Such sums are surely now unrealistic in a time when energy
prices are a political hot potato. If you are sitting in the
boardroom of an energy company worried about the reputational
damage of putting up prices today, you must be getting cold feet
about the future cost of offshore wind. Or, as a spokesman for SSE
said last week: “Although we are continuing to develop offshore
wind projects, it’s now also becoming increasingly hard to see how
a final decision on investment in new offshore wind capacity could
be made before the 2015 election.”
The defenders of renewable energy used to argue that fossil fuel
prices would rise inexorably as supplies ran out, thus making even
expensive offshore wind look like a bargain. Some still do — Lord
Stern made this argument to the BBC last week. But most now realise
that the superabundance of shale gas and oil has postponed peak oil
once again and is already driving down coal, gas and oil prices in
the United States, with other parts of the world likely to follow
suit. There is very little chance now of offshore wind undercutting
coal or gas fired power in coming decades.
In short, Ed Miliband’s politicising of energy prices may have
killed the industry he most cherishes. Soon the energy debate will
no longer be about whether offshore wind farms should or should not
be built, but about how we are to fill the gap caused by the
inevitable failure of the offshore wind industry to meet the
capacity targets expected of it. And that’s a difficult question,
given that the obvious answer — shale gas — has just effectively
been made less feasible by a new environmental rule passed by the
European Parliament.