Wind power is expensive

Tim Worstall:

Now it does have to be said, this information comes from something of a biased source, the Global Warming Policy Foundation in London. I know several of the people in it, share many views with those people, but there, you’ve had fair warning. And their report out today really does seem to show that, for the UK at least, wind power is simply too expensive to be worth using. The full report is here.

4. Meeting the UK Government’s target for renewable generation in 2020
will require total wind capacity of 36 GW backed up by 13 GW of open
cycle gas plants plus large complementary investments in transmission
capacity – the Wind Scenario. The same electricity demand could be
met from 21.5 GW of combined cycle gas plants with a capital cost of
£13 billion – the Gas Scenario. Allowing for the shorter life of wind turbines,
the comparative investment outlays would be about £120 billion for the
Wind Scenario and a mere £13 for the Gas Scenario.

Fair enough, but we all know that. Gas has a much lower capital cost but you do in fact have to go and buy the gas: meaning that you’ve got much higher running costs (or consumables costs if you prefer). However, they answer that:

5. Wind farms have relatively high operating and maintenance costs
but they require no fuel. Overall, the net saving in fuel, operating and
maintenance costs for the Wind Scenario relative to the Gas Scenario
is less than £500 million per year, a very poor return on an additional
investment of over £105 billion.

Yes, that is a very low return. To a reasonable approximation it’s half a percent return, 0.5%. And that really isn’t good enough when even the Government’s cost of funding is around 3.9% at present. So wind power just does not make sense on any financial grounds at all. But perhaps it does make sense on environmental grounds?

7. Under the most favourable assumptions for wind power, the Wind
Scenario will reduce emissions of CO2 relative to the Gas Scenario by 23
million metric tons in 2020 – 2.8% of the 1990 baseline – at an average cost
of £270 per metric ton at 2009 prices. The average cost is far higher than
the average price under the EU’s Emissions Trading Scheme or the floor
carbon prices that have been proposed by the Department of Energy
and Climate Change (DECC).

Ah, no, it doesn’t even meet that test, of being expensive but still worth it for environmental reasons....

... 

There is more.

Gas obviously gives you more bang for the buck and the equipment is likely to last longer.  In the US we have an abundant supply of natural gas to work with and the UK may also, if they can overcome their fear of fracking.  The Poles are already testing to exploit their shale gas.  It does not make much sense not to do so.