The Telegraph reported at the weekend that 101 Conservative MPs had written to David Cameron urging a re-think on policy towards onshore wind farms since, to summarise their apparent argument, they were inefficient and intermittent (and hence unreliable); they also urged changes to proposed planning legislation to help “locals” defeat proposed windfarms. http://www.telegraph.co.uk/comment/telegraph-view/9063203/These-Tory-MPs-are-in-tune-with-the-country.html

While the Telegraph did not publish the full letter, making it hard to judge, the MPs do appear to have repeated a number of common false assumptions.

Are onshore wind farms inefficient and expensive?

The “inefficient” jibe relates to what is understood by cost, since they receive revenue support but we could (per their argument) build coal or gas-fired power stations without such support and hence lower costs. That, however, misunderstands the lifecycle of a power plant which is typically a 20 year to 50 year investment: understanding the costs to UK plc and the domestic bill payer means therefore understanding their total costs, capital and operational, during the whole of that time.

For onshore wind (and much other low carbon generation) the costs are front-loaded, weighted towards the initial capital costs – once you have constructed and commissioned the turbines your ongoing costs are modest, you do not have to pay for the wind. By contrast operating, for instance a gas-fired power station will require much more management during its lifetime and a continuing supply of two inputs – gas and “carbon credits”. How much will they cost the bill payers?

In truth, no one knows the future price of gas (or coal) as there is a liquid global market for the supply and the price will be established by factors outside the UK’s control – something noteworthy, as an aside, from an energy security point of view: we are no longer self-sufficient in these commodities and import most or our national supply, relying on them therefore means accepting that the UK is no longer master of its future electricity costs with unknown and indeed unknowable future consequences for our economy.

The cost of “carbon credits” is similarly difficult to assess but relates much more directly to public policy and political initiatives to combat climate change. For generations fossil fuels were burned, and CO2 emitted, with no understanding of the long term costs and risks of this CO2 pollution. We now do understand them (to an extent) and have a raft of policies in place designed to lower the pace at which we are polluting by transitioning to a low carbon economy.

The transition element of this is illustrated by the fact that the cost of carbon is currently low but will rise in the future as some of the policies “bite”. In turn such CO2 emitting plants are eventually inconsistent with our CO2 targets and will need to be replaced with fossil fuel stations equipped with “carbon capture and storage (CCS)”, i.e. the CO2 from combustion is prevented from reaching the atmosphere at all using a technology which is still in the “proving” stage of commercialisation.

The result when analysing the lifetime costs (known as levelised costs in the industry jargon) of the different electricity generation sources available to the UK is that without any climate change policies, or cost of pollution, you would indeed likely build gas fired stations, but once these policies are taken into account the lowest cost route to achieving our electricity requirements becomes a much finer judgement – onshore wind, nuclear and gas fired stations with CCS on most common assumptions look quite comparable in cost terms, all only marginally more expensive than new gas fired stations without CCS currently and all likely medium term to be cheaper than such unabated gas stations (for details see for instance chart 1.10 of http://www.theccc.org.uk/reports/renewable-energy-review).

From this you can draw, in my view, two safe conclusions:

1. Viewed over the lifetime of the station any current “savings” by not building onshore wind farms will likely be offset by higher costs later in the lifetime of the power stations (with additional risks that these upwards costs could run away since they are not in our national control);
2. You can challenge the validity of our climate change policies (a separate debate/issue which is I suspect the real target of many of the MPs, again wrongly) but once they are adopted,onshore wind farms look like a particularly cost effective source of generation without some of the technical challenges of nuclear and, even more so, CCS.

The risk is, however, that if you have energy policy uncertainty, anyone investing will obviously wish to minimise their committed costs and push as much expenditure into the future as possible, when the policy uncertainty will hopefully be resolved. That means that if you are unsure about energy policy you are unlikely to risk the high up-front capital costs of low carbon generation and instead opt for fossil fuel stations, even if they end up more expensive in the long run as well as environmentally damaging.

So if the cost / efficiency argument does not hold – on a level playing field, with pollution costed, and a stable policy environment, investment would migrate to low carbon options, the next argument is often put as: ”since you do not know when the wind will blow, wind farms are unreliable”.

Intermittency in context

Increasingly the above statement is not true, forecasting wind is possible with reasonable accuracy within a shortish timeframe. The risks to the electricity grid are further mitigated by having wind farms located in geographically diverse areas of the UK; the movement of a weather system may prove difficult to anticipate with full accuracy but the uncertainty could affect different wind farms in different locations in opposite ways, lowering the net effect.

The feted “reliability” of fossil fuel generation also bears some scrutiny. Electricity has two annoying features with profound cost implications: it is a “must have” item, when you get home you expect the light to go on when you flip the switch and nothing else will really do, and it is difficult to store in bulk economically.

Those features mean that the electricity grid always needs some back up in case of the failure of a generating set, whether that be a wind farm or fossil fuel station. Typically this has meant that about 112.5% of the anticipated demand is being generated at any time, with the extra 12.5% being a “security margin” in case of unexpected outage at a generating plant. While the failure of a turbine will need backup, so will the failure of a fossil fuel plant (for example, the apocryphal dropping a spanner in the plant), albeit such plants are typically larger than onshore wind farms; as a result the backup will be needed less commonly but present a much greater challenge when it is requiring greater standby capacity.

Managing this “security margin” on the system with all the differing generating technologies and characteristics is therefore not a new challenge, but one that is well understood and requires some new elements to manage the additional challenges of wind power. In short, particularly at the current and anticipated deployment levels, intermittency is not a “deal stopper” although it highlights the importance of a generation “mix” – you would not want all wind on the system, just as you should not want all gas on the system (and then encounter for instance import security problems and no backup). Electricity generation policy always has been one where you do not put all your “eggs in one basket” and wind can be managed in the mix just as other technologies.

Longer term we can hope to “solve” intermittency in one of two ways:

• Finding a storage technology which is cost effective and capable of mass deployment, and there are some promising technologies in development. This will allow intermittent generation to become “firm” and also make better use of the electricity generated by fossil fuel and nuclear stations at times of low demand (such as the night) when it is difficult to close the station just to fire up gain the next day – some of the so-called “reliable” generation currently reliably at the wrong time of day to be helpful.
• Demand shifting – encouraging people to use less electricity when the system is tight, but more overnight/at times of low demand; smart metering and related grid management technologies open the possibility of taking concepts such as “economy 7” to a much more developed and sophisticated level, allowing bill payers to lower costs by managing when in the day they use electricity

The “China” argument

Once the cost and intermittency arguments are removed, opponents of wind power often fall back on a third – “we are a small emitter as a proportion of global emissions and anyway China is putting up a coal fired station each week, so what is the point?” or something along these lines.

It is true that we emit, as a country, a small proportion of the total global emissions, but we also account for a small proportion of the total global population. Per capita, we emit a grossly disproportionate share of global CO2 pollution and are responsible for an even greater proportion of historical emissions still in the atmosphere; we therefore have an obligation to act. At present we are doing less than others, not more – only one other EU country has a lower proportion of renewable energy in its mix and even China is doing more than us with a higher proportion of its electricity generation coming from hydroelectric and renewable sources than the UK.

What should we be demanding of David Cameron?

With onshore wind cheaper than most other forms of renewables and with fewer associated technology risks than many other forms of low carbon electricity generation, we need more onshore wind farms and now would be a particularly good time to build them.

The costs, as referred to above, are heavily weighted to the initial capital cost and hence also the financing costs over the lifetime of the project as you pay down associated debt. Those financing costs are influenced by long term interest rates, something which are now at multi-generational lows in the UK due to the extraordinary financial conditions. From a construction perspective there is also spare capacity in the economy meaning that build costs can be constrained.

So, at a time when the economy needs a kick start, we have a known medium term need for lots of additional wind farms and a really great opportunity to build them now at comparatively low cost, locking in the favourable financing environment for a generation while boosting the economy. Great – so why are we not building at a much accelerated rate?

The planning issue raised by the MPs is part of the answer – while there is national need for lots of wind farms, individual “host” communities may see very limited benefit while suffering all the visual impact. There are two obvious ways to reconcile this:

1. Force: Ed Miliband, now opposition leader but once the Minister in charge of the Department of Energy and Climate Change, wrote in the Western Morning News while in office that the South West would have “no option” but to host more wind farms and that it should be “socially unacceptable” to object to them (http://www.thisisdevon.co.uk/WINDFARMS-OPTION/story-11440358-detail/story.html) . A similar tack was also recently floated gently by the Climate Change Committee as a long term possibility given how useful and cost effective onshore wind is at meeting our future needs.
2. Persuasion: With proper community engagement and a real financial stake, much of the community opposition could be turned into outright support. Instead of a battle between developer and “locals”, local communities could take ownership of their energy needs and deliver a solution that works for their community in economic, energy and environmental terms; As they deliver their local solution, they will help solve the national challenge.

Specific tariffs, planning dispensations and organisational support are required to help communities engage and deliver solutions themselves, and this is what MPs should be demanding urgently.

Wind farms are hugely valuable nationally and there is an opportunity now in particular to capitalise on that – making it happen does not require different terms of engagement in a battle with “locals”, it needs local communities to supplant the national developers at leading progression in the schemes. If the wind farms clearly benefit South West communities, the pressure on MPs will suddenly converge with the national policy imperatives. With local ownership and local benefits, wind farms can deliver a solution to national problems.