Economists and energy


The Grantham Institute at the London Schol of Economics, has recently circulated a paper on onshore wind energy to all MPs. It is written by three economists. I have annotated the Summary Page enclosed by three inverted commas.   With this modification it reads a follows:

This policy brief aims to inform the debate about the role of onshore wind in the UK‚¬Å¡¬"¢s future energy mix. The paper investigates to what extent onshore wind can contribute to future electricity generation, whether there are technological constraints, what the economic costs are, and what the environmental impacts might be.

"""" The examination of techhological constraints on any form of energy generation is inevitably one demanding knowledge of the physical sciences and engineering involved. The Grantham Institute authors‚¬Å¡¬"¢ background and academic studies have not been in these essential areas."""

The policy brief does not provide new empirical estimates ‚¬Å¡¬" there are many such numbers already published. We contribute to the debate by identifying the most credible estimates available and drawing some robust policy lessons from that information. The first such lesson concerns the unequivocal need to decarbonise the UK‚¬Å¡¬"¢s electricity sector. Under the Climate Change Act (2008) and the subsequent carbon budgets, the UK is committed to cutting its annual greenhouse gas emissions by half by 2025, compared with 1990 levels. This is not achievable without a power sector that is virtually carbon-free by the middle to late 2020s. The Act has strong political support: it was passed near-unanimously by Parliament, as were the first four carbon budgets legislated under it.

"""The need to decarbonise to a great extent the electricity generating industry is based on the need to reduce Greenhouse gasses.   These gasses are at present seen as possibly producing ‚¬Å¡¬Ãƒ..."runaway‚¬Å¡¬ heating of the Earth‚¬Å¡¬"¢s atmosphere, and consequent changes in the global climate.   In scientific circles this is by no means an agreed conclusion, since, among other matters it ignores the significance of water vapour, the greenhouse gas of greatest abundance, and places all significance upon anthropogenic CO2.   There is no profit to be generated by suggesting control of water vapour, but a great deal of profitable business is to be obtained by highlighting CO2 control, having first established scare stories concerning the supposed dangers of climate change havoc.There are however benefits to be derived from an in independence from foreign fuel supplies originating in politically unstable areas, whose cost and abundance are quite outside UK control; and to whom we are therefore hostage""".

Once the implications of the UK‚¬Å¡¬"¢s carbon targets are recognised, the issue of onshore wind becomes a choice between this and other low-carbon energy sources. It is not a choice between onshore wind and fossil fuels. It has been argued that efficient combined cycle gas power plants may be a cheaper way of meeting our 2020 carbon reduction targets. However, it is clear that the further decarbonisation required in the 2020s cannot be achieved by heavily relying on unabated gas power stations. Rational policy-makers need to anticipate this and avoid locking in high-carbon electricity generation. A second robust lesson is that many low-carbon technology combinations are technically feasible. Much has been made of the intermittent nature of wind and other renewables, which cannot produce electricity reliably on demand. However, the cost penalty and grid system challenges of intermittency are often exaggerated. There are several ways of compensating for this variability, such as additional capacity from fossil fuel power plants to meet balancing requirements at peak demand, bulk storage of electricity, greater interconnection, and a more diversified mix of renewable sources, as well as measures to manage demand, like smart grids and improved load management. The main concerns in choosing the best energy technology mix are not network stability, but economic costs and environmental side-effects.

"""The problems of intermittency are emphatically the overwhelming frailty of wind generation.   At present the size of the contribution of wind power is below the level of the essential normal demand.   When however it becomes an essential part of the normal demand, availability of back-up is vital.   At this point back-up is needed on an almost 1:1 basis, a point recognised by a President of EoN.   The statement regarding any exaggeration of the intermittency problem is shown to be totally false simply by examining the isobaric charts of the weather systems crossing northern Europe.   It is not uncommon for the whole of the British Isles, as well as large areas of mainland Europe, to be covered within a single isobar.   There is thus virtually no wind in any of this area, because the driving force is simply absent.   These conditions can last for days, as indeed they have done in the last few years.   The concept of geographical dispersal of wind farms is not merely an illusion, but, as stated by the wind industry lobby, an intentional deception.   Similar dissembling statements are made by the DECC, probably having their origin within the renewables lobby.   The phenomenon is well illustrated by the Met Office Surface Pressure Forecasts for: 1.09.10., 29.12.10., 17.01.11., and 10-13.03.12.

If wind power is large enough to constitute an essential part of the demand by the UK, back-up is absolutely essential.   No amount of ‚¬Å¡¬Ãƒ..."load management‚¬Å¡¬ will provide power that is not being generated.


The third lesson concerns the trade-off between economic costs (and, by extension, electricity bills) and environmental impacts. Onshore wind currently supplies 28 per cent of the electricity generated in the UK by renewables (DECC, 2011a). That share is likely to rise, given the abundant wind resources available in the UK, and the technological maturity of onshore wind. A key attraction of onshore wind over other low-carbon forms of electricity generation is cost. In terms of levelised cost ‚¬Å¡¬" an economic measure which takes into account all of the costs of a technology over its lifetime ‚¬Å¡¬" onshore wind is currently the cheapest renewable technology in the UK. It is expected that it could become fully competitive with older conventional sources of energy as early as 2016 (Bloomberg NEF, 2011a). This is an important advantage at a time of heightened sensitivity about the costs of green policies. However, onshore wind raises potential local environmental issues, particularly through the visual impact of turbines. People value natural landscapes and are willing to pay to preserve them. This needs to be factored into the analysis. There are also wildlife effects that should be taken into account, although they are often relatively small and site-specific compared with other anthropogenic impacts.

These environmental impacts make more expensive renewable technologies ‚¬Å¡¬" like offshore wind or solar photovoltaics ‚¬Å¡¬" potentially more attractive. One can think of the extra cost of offshore wind as the premium society is willing to pay to avoid the local environmental cost of onshore wind. The choice between more affordable electricity (which would favour onshore wind) and local environmental protection (which may favour other low-carbon technologies) is ultimately a political one. However, given the economic and environmental trade-offs, technological uncertainty, and the absence of one clearly superior solution, the best approach seems to be a portfolio of different energy technologies to balance the cost to consumers and environmental concerns. Onshore wind has a role in that mix. The final lesson concerns the role of policy in ensuring a rational approach to onshore wind. This policy brief does not review the regulatory environment, but it is clear that adequate policies can make onshore wind less risky and more attractive to investors and local communities alike. There are a number of regulatory measures that can help to encourage onshore wind developments where they make sense and prevent them from happening where they do not. These include: ‚¬Å¡¬¢ A clear price on carbon that underlines the relative merit of wind (and other low-carbon forms of power production) vis-ÃÆ'Æ' -vis hydrocarbon-based fuels. ‚¬Å¡¬¢ A planning system that (i) reduces the costs and uncertainties to project developers, thus making project development more efficient; (ii) factors in local environmental concerns and prevents developments in important environmental areas; and (iii) ensures appropriate benefit-sharing (compensation) in areas where local impacts are acceptable. ‚¬Å¡¬¢ Flanking measures to ensure that the electricity system can cope with intermittent resources, including adequate and sufficiently smart transmission and distribution systems, interconnection to other energy markets, energy storage, load management and flexible demand measures, as well as an appropriate combination of fossil fuel (ultimately linked with carbon capture and storage) and renewable sources to ensure balancing and the ability to meet peak demand.

""" ‚¬Å¡¬Ãƒ..."Other sources‚¬Å¡¬ of renewable energy include solar voltaic, wave, tidal streams, and barrages, and ocean currents.

Solar voltaic arrays are expensive and operate at a variable rate during the day, and not at all at night.   They are feeble generators (average about 20 watts per square metre), and so require huge areas of land, which is thus very restricted for any other use.

Wave machines have not proved a success over very many years.   Again the energy source is feeble and highly variable, and the environment harsh.   Tidal streams are again time variable, though predictable, but continuity of power is not possible.   The French barrage experience does not encourage repetition.   Ocean currents are to slow to favour development.

The wind resource in the UK may be the best in Europe, but it is far from the ‚¬Å¡¬Ãƒ..."abundant‚¬Å¡¬ quoted in the text.   The best car in the street may still be a battered old relic!!

I view the document as presented by the Grantham Institute as resting solely upon selected items on business propaganda, so well presented by the industry‚¬Å¡¬"¢s lobby interests.   It clearly lacks, in my opinion, recognition of the physical constraints which give rise to the need, at every turn for government subsidy.

Our energy industry is, however, outside any direct Government control, so necessary for a cohesive public service""".

Richard Phillips


Richard Phillips

Topics: Energy efficiency & low-carbon
Tags: | carbon capture | carbon reduction | CO2 | decarbonisation | DECC | energy storage | fossil fuels | gas | greenhouse gas emissions | investors | low carbon | met office | offshore | offshore wind | onshore wind | opinion | planning | renewables | smart grid | solar | technology | water | weather | wind energy
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