Whitehall has just published the latest version of its estimates of the cost of generating electricity from different sources. The last edition, in 2020, was a source of considerable entertainment because of the absurd claims it made about the costs of offshore wind power, a key factor in determining the cost of Net Zero.
Notably, the authors claimed that by 2025 a megawatt of offshore wind capacity would only cost £1.5 million, around half of what recent windfarms have cost. I had a lot of fun pointing out that Dogger Bank A, due to be commissioned in 2025, had already spent £1.1 million per megawatt by the end of last year, and it hadn’t even finished putting in the foundations!
I like to think that my ridicule of the efforts of the DESNZ bureaucrats has had an effect, because in the new edition, the capital cost has mysteriously doubled(!), returning to a more credible figure of £3 million per megawatt.
However, remarkably, the overall offshore wind cost estimates is actually slightly lower than in the previous version. This is shown in Figure 1, alongside the earlier estimates, and (optimistic) estimates based on actual data for operational windfarms. The implausibility of the official figures is undeniable.
So, given the doubling of the capital costs between the two most recent estimates, how have our friends in Whitehall managed to achieve an overall cost reduction?
The main way appears to have been to increase the projected output for windfarms, from 51% of capacity last time round, to 61% this year. The authors cite increasing turbine size as an explanation, and indeed the turbine size cited is 14 MW, as compared to 12 MW last time round..
However, it’s hard to be polite about this figure.
It’s important to recognise that 61% is supposed to represent a lifetime average, and windfarms’ output declines steadily as they get older. If we take an absurdly optimistic estimate of that decline, of 1% per year, it would mean that the first year output would need to be 70%.
Figure 2 shows the latter figure against the actual performance of recent windfarms by commission date.
Figure 3 shows the same figures by turbine size. There is a strong suggestion that there are declining returns from ever larger turbines, and the DESNZ estimate again looks rather ridiculous.
It’s no different when you look at the operating cost figures. DESNZ’s figure of £56,000 lifetime average for windfarms commissioning in 2025 is completely preposterous. The main driver of operating costs seems to be water depth; larger turbines has, at best, a minimal impact. Recent windfarms in deep water start at well over £100,000/MW/year (Figure 4)
And operating costs rise steadily as the turbines age. I would expect the lifetime average for Dogger Bank A to be closer to £200,000/MW/year than to £50,000.
When it comes to offshore wind costs, Whitehall is lurching from one ludicrous evidence-free claim to another in a desperate attempt to maintain the pretense that it can be delivered at low cost. In reality, they have no choice but to lie, because cheap renewable energy is central to government’s claims that Net Zero is affordable. And as if to confirm that we are dealing with disinformation, the appearance of the new estimates comes against a background of increasingly shrill demands from the wind industry for further subsidy – it’s a tipping point, they say. But how can this be if their costs really are as low as DESNZ claims?
A few days ago, Philip Hammond called for politicians to come clean about the costs of Net Zero. He was right to do so, and the first step along that road will be for ministers and civil servants to come clean about the cost of renewable energy. Nobody believes their fairy tales any longer.
Finally, I recommend my own paper on the subject for the truth about offshore wind costs.