Thursday, 11 April 2013

renewable targets will make solar and offshore wind much cheaper

The Leonardo Energy Institute has published a report arguing that carbon emissions will be reduced much more cheaply with post 2020 mandatory targets for renewable energy rather than relying on a decarbonisation target on its own. This is because short term promotion of natural gas will delay cost reductions in renewable energy technologies leading to a higher cost of emission reduction later on. You can see the report on:

Indeed much of the logic behind this position is fairly obvious. Solar pv prices have tumbled in recent years because of the creation of larger and larger markets around the world. It has been estimated that for every doubling of production of pv cells there will be a 20 per cent costs reduction, and this theory seems to be borne out by the evidence.

Much the same argument can be applied to offshore wind. Indeed, cost reductions will be in the offing for succeeding generations of offshore wind farms even if the cost of wind turbines did not come down at all (which they are likely to anyway). This is because the offshore windfarms being installed in the future include the costs of the infrastructure (foundation, electrical connections) that can be used by turbines that replace existing ones when they wear out. The costs of the infrastructure makes up around 40 per cent of the total 'levelised' cost of the offshore wind projects. See for example, the report by UKERC at:
 There is a good argument that offshore wind developers should be paid extra now so that the infrastructure that is built is built larger than what is needed for the initial turbines so that future 'repowering' can be done with much bigger machines that are likely to be cost-effectively developed in the future.

Of course this discussion also highlights the folly of giving in to EDF's demands for 35 or 40 year contracts since options to repower existing offshore wind installations after the initial premium price contracts of 15 years will squeezed as large volumes of subsidies continue to prop up the proposed Hinkley C and other nuclear developments. Offshore wind is already cheaper than nuclear power since it will not need 35 year contracts and its costs 'underwritten' by the Government. Offshore wind will be clearly be cheaper after the first 15 years simply because opportunities for 'repowering' emerge at much lower prices than the initial wind turbines.

Indeed, when these wind turbines are needed (and when the number of offshore windfarms is expanded still further) the price of the turbines themselves are likely to be much lower than at present. A recent study by the Lawrence Berkely Laboratory in the US has indicated how wind turbines are once again becoming cheaper through improved design and better efficiencies. Spiking steel prices interupted this process for a while, but the underlying downward trend has been regained since 2009. See

Those who argue for the promotion of natural gas ahead of renewable energy are very short-sighted. With nuclear power proving too expensive to build, without renewables a higher and higher proportion of electricity supplies will come from natural gas. The UK clearly needs much greater diversity than this scenario, in the short term never mind the long term, even before the pressing issue of carbon dioxide reduction comes into play. In short there is an urgent case to be made for specific renewable energy targets. We should be supporting the adoption of a post 2020 EU Renewables target as well as binding targets for member states.

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