Sunday, September 14, 2008

The British Wind Scam

Richard North of EU Referendum, and Patrick Sawyer and Christopher Booker of The Sunday Telegraph have this weekend been taking 2 by 4s after British windmills over the issue of subsidies. This amounted to piling on after the BBC's Simon Cox socked it to the Windmills earlier this month.

Together they supply a devistating critique of the wind industry, and the corrupt motives that lie behind T. Boone Pickens' energy plan.

Simon Cox reported on the BBC about the problems of the Danish wind model:

Denmark is the poster boy for wind power - 20% of the electricity it generates comes from wind, it claims. Horns Rev can provide enough power for 150,000 homes. On the day I visited it would be lucky to power a village,

Cox interviewed energy expert Hugh Sharman, who described Denmark's export of wind generated electricity:
"Every time the wind is high, the exports are high. Every time the wind is low, of course there are few exports".
Sherman stated that Denmark only uses 9% of the the electricity it generates. Cox demonstrates that the only way the Danish system works is the ability of Denmark to export electricity to Scandinavia and Germany, and import it back. cox observed that the UK does not have the import-export option. Of course UK "environmentalists", like Nick Rowe of the Friends of the Earth, support the use of fossil fuels as wind back up. But Dieter Helm, professor of energy policy at Oxford University, thinks this is
"about the worst possible thing that one could conceive of given what's going on in Russia and given our dependence on Russian gas supplies".
Cox notes that the wind plus natural gas back up scheme
could also prove costly. The energy company, E.On recently estimated back-up power could cost up to £10bn per year across all the energy suppliers. That would add £400 to the average annual household energy bill.

Patrick Sawyer's Telegraph article is dependent on information from the Renewable Energy Foundation , a UK energy think tank, that is not afraid the lay out the facts about renewable energy. Sawyer notea:
Critics insist that wind energy is too inefficient to replace the creaking network of fossil fuel power stations. Even with modern turbines, wind farms are unable to operate at full capacity because of the unreliable nature of Britain's wind.
The industry admits that for up to 30 per cent of the time, turbines are idle because wind speeds are either too low to turn the blades, or too high, risking damage to the machines.
Sawyer extensively relies on a REF report by John Constable and Robert Barfoot, which bitterly criticized wind subsidies in the UK. Sawyer observes
In 2006-07 more than £217 million was paid to energy firms under the subsidy scheme, known as the Renewables Obligation. Under the scheme, energy companies must obtain a proportion of their power from renewable sources, 6.7 per cent at present rising to 15 per cent by 2015. Those that fail to meet these targets pay a fine that is then shared between all the companies that have obtained energy from "green" sources. For every megawatt of green energy they sell, a company receives about £50 at present.

The Renewable Energy Foundation says that consumers ultimately end up funding the subsidies because energy firms that pay fines pass the costs on to customers.
Sawyer further states:
Critics have estimated that by 2020 the cost of the Renewables Obligation could rise to more than £3 billion.
Booker is on the warpath against wind. Like me, Booker was not always a wind opponent. "Six years ago", Booker stated,
when I first seriously looked at what they actually contribute to our energy needs and our environment, I had a profound shock. It was clear that the craze for wind energy had become one of the greatest self-deceptions of our time.

Far from being “free”, wind is one of the most expensive ways of generating electricity yet devised. Without an almost 100 per cent subsidy, unwittingly paid by all of us through our electricity bills, no one would dream of building giant wind turbines in Britain, because their cost is not remotely competitive.

Turbines are hopelessly ineffectual. The amount of electricity they deliver is derisory. The total power generated by all the 2,300 turbines so far built in Britain — covering hundreds of square miles of countryside and sea — averages just over 600 megawatts in a year, less than that contributed by a single medium-size conventional power station.

Most serious of all, however, is the fact that wind energy is hopelessly unreliable, for the simple reason that wind speeds are not only constantly changing but wholly unpredictable. One minute a turbine may be whizzing round, generating at full capacity; the next the wind drops and the turbine is contributing only a fraction of its capacity or nothing at all.

Booker's findings track closely with my own. Thus while I disagree with many of Booker's views including his skepticism about climate change, I think he is correct about wind.

Booker scores against the fundamental dishonesty of the wind Lobby:
The best-kept secret of the wind industry, however, which continues to fool both politicians and the media, is its trick of referring only to the contribution of windmills in terms of their “installed capacity”, as if that is what they will actually deliver. They talk about a “16 megawatt” wind farm “powering x thousand homes” as if that is the contribution it will make to our electricity needs. Yet in reality, thanks to the intermittency of the wind, a turbine will on average produce through the year only a quarter of its capacity.

The success of this deception means that politicians almost invariably exaggerate the potential benefits of wind power by a factor of four. And of course the other great trick is to conceal the fact that all this must be paid for by that huge hidden subsidy.

The real danger of the “great wind scam” is that it takes the eyes of politicians off the real energy crisis fast approaching us, so that we are not building the proper power stations we need to keep our lights on. That is why it will one day be looked back on as having been one of the most incomprehensible blunders of our age.
Richard North comments:
The main problem is that the generosity of the subsidy scheme is diverting cash from investment in longer-term schemes such as nuclear, and also driving generators to invest in increasingly expensive gas, this being the most suitable back-up for wind.
North quotes Constable and Barfoot:
"The market for renewable energy is an artificial one created and maintained by government legislation. The question is whether this consumer-derived money is well spent. It is worth noting that the excessive subsidy offered to onshore wind development has drawn developers even to sites where the wind resource is very weak and the environmental impact severe."
North describes how British wind is a tremendous scam on the pun;ic:
As an example of the way the rip-off works, pictured above left is one of the existing subsidy wind farms – 23 x 400 KW turbines at Ovenden Moor, on the bleak flanks of the Pennines just outside Halifax. Built in 1993 at the cost of £10 million with the aid of an EU grant of £1.3 million (approx), last year the installation earned for its owners, E.on, a cool £1,004,850 in Renewables Obligation Certificate (ROC) subsidy, recovered by a surcharge on electricity bills.

This is an installation rated at 9.2 MW, theoretically capable of producing 80,592 MWh but, with a load factor of only 27.71 percent, it actually produced 22,330 MWh. At today's inflated wholesale price of £85.58 MWh for electricity, that output would earn £1.9 million in sales, potentially earning the installation just short of £3 million a year when the ROC subsidy is added. For an investment of less than £9 million, this is an extremely attractive rate of return and it is thus easy to see why generators are piling into wind.
And you wonder why T. Boone Pickens loves wind so much.


DV8 2XL said...

First how anyone could think that wind is a reliable source of energy in a region that is subjected to weather systems like Ike, or the occasional tornado is beyond me. Here I am thinking of Texas, more than the U.K., of course.

Europe's infatuation with wind is even less understandable, because as the author points out, this puts them in a state of dependency on the Russians, who have shown that they have no issue with using the gas-valve as a diplomatic tool.

The short-sightedness in both these cases is breathtaking. It seem that environmentalists have fallen into the trap of backing solutions they find aesthetically appealing without considering the broader implications. The venality of the developers here, is nothing new; any time an artificial market is created by government fiat, there are going to be those who will exploit it. This shouldn't be a surprise.

donb said...

Two things:
1. The Picken's plan: Seems to me that the possible success is "knowable". I assume that the characteristics of the wind through the mid-section of the United States are fairly well known. If they are, then it should be possible to know the reliability of the power the plan might be able to deliver, given a certain placement of wind turbines and the transmission lines to support them. Also from this the costs could be derived. I am waiting to see such an analysis (though I am not holding my breath).

2. Let me propose the "true relative value" of wind power:

"True relative value" =
Integral[(instantaneous power delivery)×(spot price of power - average price of power)]dt
total energy delivered×average price of power
capital costs+operating costs, during time period.

This should be run over a full year. The formula should show positive relative value if the wind turbine can deliver power on (say) a hot summer afternoon, but would show negative relative value for power delivered (say) at 2 AM Sunday morning in spring.

I propose using this same metric on various generation sources to compare them.

(Yeah, I know I am saying "price of power" when I really mean "price of electrical energy". I am just sticking to the common usage).

Charles Barton said...

Unfortunately, there is an almost perfect inverse relation between the production of Texas wind generated electricity and consumer demand. Thus when you need it the most, wind generated electricity is not available.

donb said...

Yes. I was trying to quantify it.

However I made a mistake. The integral should be:

integral[(instantaneous power delivery)×(spot price of power)]dt

The other terms remain the same.

The result is a figure (positive or negative) in dollars. This is a dollar relative value. To make comparisons with other sources, the dollars should then be divided by energy (say MWHr) to get a normalized value of dollars per MWHr.

The idea is to see how valuable the power delivered by various sources really is. A source that provides power during times of high demand (and thus high spot price) has value above a source that delivers power when the gods of the winds please (unless those gods make the winds blow during times of high demand). A positive figure means that source is more valuable than average, while a negative figures means that source is less valuable than average.

randal.leavitt said...

You know, wind turbines could be used for beneficial purposes. Notice how much the wind speed of a hurricane drops when it hits land. Now consider building a fence of wind turbines along the coast of the USA, facing out onto the Gulf of Mexico. These turbines could be ten times bigger than we are building today. They would be powered by nuclear reactors. We would turn them on when a hurricane approaches, using them to blow back at the hurricane. We would be able to neutralize most hurricanes before any serious damage was done on land. Such a system would pay for itself in less than a year. Or course, when there was no hurricane threat we could let these things twist in the wind and gather a little bit of energy for us. However, that would be a secondary use.

Soylent said...

"Let me propose the "true relative value" of wind power:


integral[(instantaneous power delivery)×(spot price of power)]dt"

Can't do that. Wind power carries with it a liability of going on and off with little control and limited forecastability; the cost or invonvenience caused by this must be accounted for somehow.

Charles Barton said...

No inclusion of opportunity costs in the formula?

David Walters said...

Look, you'all making this far more complicated than you need to. A while ago, here, or maybe on, I proposed a simple ... NOT formula ... but term: "real capacity" [actual MWhrs] vs "apparent capcity" [name place capacity].

I've worked in the power production industry for almost 25 years. As a power plant control room operator, we see two aspects of power on the 'bus', meaning the Grid.

Apparent power is what shows up on your meter...because you are pulling in power based on a difference in potential (voltage). But you rarely actually get that much 'real power' since a small percentage, large on hot high load days, goes into line loss as expressed in VAR flow. The higher the VAR flow, the lower the real power (doing real work) and even though the "apparent power" says the same...just everything, including windings in the motor for your fridge, runs hotter.

So... "apprent capicity" is the mostly useless nameplate capacity (useless for things like wind and solar) and "real capacity" based on actual MWhrs produced.


donb said...

david walters said:
Look, you'all making this far more complicated than you need to.

Yeah, you are right. I like your proposal. However, your method makes gas turbines used for peaking look bad, since they spend quite of bit of time not generating power. However, they are made to run at peak demand when power is most needed, and so have value beyond what a comparison between nameplate capacity and real capacity (actual delivered power) would show. And this works for gas turbines because the capital cost is relatively low (though fuel costs are high).

Let me see if I can make my formula simpler. First, I am going to shift my definition, and try to come up with the "true value added" of the delivered power. This is the "true value" of the power minus expenses:
#1. Figure the dollar value of the power assuming it is all sold at the spot price.
#2. Subtract operating and capital costs.
#3. Divide the result from #2 by the number of MWHr sold to arrive at the true added value of the delivered energy in dollars/MWHr.

What I am point out is that power delivered during peak load times is more valuable than power delivered at other times. So rather than stating that a wind turbine delivered X many MWHr of energy, worth Y dollars USING AN AVERAGE PRICE, stating the value assuming spot pricing will properly weight the value of the delivered energy.

I want to subtract out capital and operating expenses. Otherwise the power from a gas turbine used only for peaking would look really valuable. But when capital and operating expenses (especially fuel) are subtracted out, things don't look so rosy. And I figure that I am giving wind turbines a fair shake too. The operating expenses may be small, but if the capital expenses are large, or if the power is delivered mostly off peak (low spot price), then the method will penalize the wind turbine.

Charles Barton said...

Tying the value of power to spot market prices is headed in the right direction.


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