Thank you for your article on Energy Isles’ North Yell wind farm proposal (Proposal to build large wind farm in north Yell; SN, 29/11/2017).
The pros and cons of industrial wind farms have been well aired for years however recent developments at national government level appear to be being ignored.
Ofgem’s rejection of the NGSLL-Aggreko 60MW grid cable removed one impediment to the proposed 600MW cable however huge obstacles remain, in particular, UK government concern at the soaring cost of “decarbonisation” and resulting fuel poverty.
The Cost of Energy Review 2017 by Cambridge utilities expert Professor Dieter Helm addresses the government’s conflicting aims of achieving UK emissions targets while simultaneously enjoying the cheapest energy in Europe.
Its author, Cambridge utilities expert Professor Dieter Helm condemns “spectacularly bad” past decision-making and states, “much more decarbonisation could have been had for less”. To date, effort has mistakenly focused on electricity incurring greater cost than if the whole economy had been targeted. Wind, sun and tides may be free but harvesting their energy is expensive, roughly double the cost of conventional energy.
There are hidden costs, too. Essential backup supplies to cover intermittency (e.g. lack of wind) and network extensions to connect remote generation to demand centres add invisibly to UK consumers’ bills via “balancing mechanism” and “use of system” charges, while renewables providers lack any incentive to minimise those massive costs.
Professor Helm proposes a radical, new principle: “Those who cause system costs should bear them.”
If his recommendations are adopted, Contracts for Difference (CfD) auctions will be replaced by “Equivalent Firm Power” (EFP) auctions, in which providers will be responsible for covering their own intermittency.
Similar principles will apply to network extensions thus renewable energy suppliers would be responsible for their own grid connection and intermittency costs, threatening viability.
The promised participation in future CfD auctions is thus in doubt. EFP auctions may replace them entailing profit-razing extra costs.
However, even if the 2019 CfD auctions continue unchanged, offshore wind strike prices have fallen to £57.50/MWh, half the so-called “island strike price” (£115/MWh), and the system is falling into disrepute.
Expert analysis has shown that while offshore wind strike prices have fallen, actual costs have not and the winning projects are unlikely ever to be built unless the market price rises, in which case, contract holders can abrogate their contracts and sell to the market. Meanwhile, they block competing technologies and other, bona fide bidders. (Offshore Wind Strike Prices: Behind the Headlines: Hughes et al)
Thus would-be suppliers will be faced with bidding even lower and not building, or losing out completely. Alternatively, the government may halt the charade by applying harsh penalties for non-delivery but if the system is to change, why not move directly to EFP auctions? In which case suppliers will pay for their own intermittency cover and grid connection.
If a fair CfD auction proceeds and Shetland suppliers win, they still need the grid interconnector, which SCT Investment Committee chairman Drew Ratter stated would cost “only £1.017 billion” – for which they will depend solely on London Tories’ largesse.
Shetland still needs an energy solution for its future needs. The Ofgem decision provides a time window (2025) for consideration of alternatives and I suggest a flexible solution is called for.
A low cost, stand-alone solution, adaptable for backing up large-scale, intermittent renewables if/when they materialise, is needed. A range of gas-fired and small-scale renewables initiatives, including an extendable power station, would provide such a solution.
Basic input costs for gas (UK NBP market) of around 1.5p/kWh (heating) and 3.5p/kWh (electricity) versus around 6p/kWh (oil/district heating) and 9p-15p/kWh (wind) sound compelling and would address cost, emissions and backup concerns.