This is the second of a pair of posts to try to set out for Robert Colville, of the Centre for Policy Studies, why wind power is such a catastrophic error. The first can be seen here.
In your tweets over the weekend, you pointed at some cost figures published by Our World in Data (OWiD), but ultimately sourced from Lazard’s annual report on the levelised cost of generation. The graph apparently shows a dramatic fall in the costs of various forms of renewable energy. However, with the best will in the world, the numbers it shows are, well, junk.
Why do I say this so confidently? Lazard are very vague about what their figures represent, and indeed all sorts of details that you might expect to find on their report are missing. Like the names of the authors, or even which of Lazard’s offices was responsible for publishing it. It is not clear whether the figures shown are supposed to represent the USA, or a global average, or something else entirely. That said, discussion of US taxes suggests it’s supposed to be the figures for the US, so I will proceed on that basis.
The USA has only one operational offshore windfarm, called Block Island, which is found a few miles off the coast of Rhode Island. At 30 megawatts, it’s a tiddler by UK standards, but its build cost of £225 million ($290 m), or £7.5m/MW is spectacularly expensive. Despite this, the Lazard report says (p. 17) that offshore windfarms should have a construction cost of £1.7-2.7m/MW ($2.350 – $3.55m/MW). So their cost estimates are around a third that of America’s only offshore windfarm!
This does rather undercut the report’s credibility.
And the Lazard figure doesn’t look anything like the equivalent figures for UK offshore windfarms either. The UK is important in this field, because it has half of the global offshore wind fleet, as well as completely transparent cost data, in the form of Companies House audited accounts. This data shows that the typical capital cost is now around £3.5m/MW, so up to twice the figure suggested by Lazards.
The build costs of an offshore windfarm are typically 60-70% of the lifetime costs, so the analysis above has essentially exploded the idea that Lazard’s figures are even close to being trustworthy. But if you should harbour any lingering doubts, suffice it to say that their estimates of operating costs are less than half of what audited accounts reveal that recent UK offshore windfarms are spending.
I end with a graph of the development of the costs of UK renewables over recent years, calculated from data derived from audited accounts and official metered generation. Remember that the long-term average cost of gas-fired power stations is around £50/MWh (the current, much higher cost is, of course, irrelevant to decisions about the long-term future of the electricity system). This is why I say that renewables are a catastrophic mistake.