Hidden costs on the path to net zero emissions. Wind farm investors should bear added price of tapping a variable power source. The CCC suggests a vast expansion of offshore wind capacity from 8 gigawatts now to a thumping 75GW by 2050. As for the rest, there’s some mention of biomass (basically, wood chips) and gas, so long as the stations are fitted with carbon capture and storage – a technology that has yet to be proved at commercial scale. Past subsidy-funded deployment has driven down costs. These recently hit new lows, with two schemes demanding just £57.50 per megawatt hour for output coming on stream in 2022-3. That’s slightly below the current electricity wholesale price. While Britain may be blessed by nature as a good place to site wind farms, nature also dictates the output of those farms is variable. And that imposes charges that the wider system has to bear. These include the cost of switching off turbines when the wind is blowing too hard and calling up back-up power when it’s not blowing hard enough. Then there are the additional grid and transmission costs of running electricity along power lines from dispersed generation sites far from sources of demand. These expenses are presently passed on to all customers, rather than borne by the investors. The costs may be relatively trivial when renewables are a small proportion of capacity. But they increase quickly as it goes up. According to a 2019 study by OECD-Nuclear Energy Agency, system costs rise from $7/MWh at 10 per cent penetration to $17.50 at 30 per cent and $30 at 50 per cent. Above that, the study suggests they can rise as high as $50 (£38)/MWh. A British study from 2017 by the UK Energy Research Centre appears to produce lower numbers at those lower penetration levels it measures, although direct comparisons between the two studies are not easy. (UKERC does not look at scenarios above 50 per cent.)
FT 12th May 2019 read more »