Nuclear power is more expensive than both onshore AND offshore wind power

Using the Government's own contract prices for nuclear power and wind power we can demonstrate how nuclear power is more expensive than both onshore wind AND offshore wind. Based on a plausible set of assumptions set out below (if anything which gives the benefit of doubt in favour of nuclear power), then we arrive with a set of costings over 45 years of £73 for onshore wind, £78 per MWh for offshore wind and £83 per MWh for nuclear power. This is based on current costs, and of course we know that wind power's costs are declining whilst nuclear power costs seem to be rising.

In November 2013 the Government provisionally agreed a price of £92.50 per MWh to be paid to the operators of Hinkley C over 35 years, underpinned by a £10 billion loan guarantee from the Treasury. Adjusting for inflation since then, this price is now worth around £94 per MWh. By contrast, in February the Government authorised contracts to be issued for onshore windfarms at £80 per MWh and offshore windfarms at £120 per MWh, but for only 15 years and with no loan guarantees. Of course we cannot be certain that these projects will be built for that price, although the wind power projects currently look like more likely bets compared to Hinkley C!

Even on these headline prices, onshore wind already looks cheaper than nuclear, but of course even then we are not comparing like with like, since nuclear receives the premium prices for much longer and is backed by a Treasury loan guarantee. The Government's justification for the distinction in contract lengths between nuclear and renewables is based on a bit of a myth, that nuclear power stations have a lifetime of 60 years and wind power last just 25 years.

 As I discussed in a previous blog, in fact wind turbines can last longer than 25 years and no nuclear power station has lasted as long as 60 years. See http://realfeed-intariffs.blogspot.co.uk/2013/10/wind-power-history-blows-away-ed-daveys.html

 It certainly seems unlikely that this (60 year) figure  can be accepted as an average lifetime for nuclear; 45 years would seem more likely, and currently the longest surviving nuclear power plant is just 46 years old; many have shut down with a lifetime of less than 45 years. The confusion  seems to come from a US regulatory decision to extend safety licenses to 60 yeas - but that does not mean that it will be economically feasible to carry on refurbishing them for this lifetime.

Offshore windfarms may have a headline premium price of £120 per MWh for the first fifteen years, but after then they will operate initially at a much lower wholesale price (say £50 per MWh) and then they can be refurbished at a much lower price than the £120 per MWh initially quoted. If they are refurbished (say after 20 years) the costs may NOT include the foundations, towers and electrical connections since they will already exist.

Using the estimates of cost breakdowns produced by IRENA and RESCO (see references below) the cost of refurbishing the turbines with new nacelles and drivetrains ,may be no more than 50 per cent of the initial installation cost. Hence is reasonable to assume that the offshore windfarms given contracts at £120 per MWh could be refurbished for no more than £60 per MWh. Hence for a 45 year contract, only the first 15 years would be at £120 per MWh, then 5 years at £50 per MWh, a further 15 years at £60 per MWh followed by another 5 years at £50 per MWh and a final 5 years at £60 per MWh (assuming a further refurbishment).

If you average these costs over a 45 year period then you get a cost of around £78 per MWh for offshore wind. Even this price, it should be noted, is higher than the contract recently awarded for a Danish offshore windfarm at £75 per MWh.

This sort of development (that is refurbishment after 20 years) will certainly fit in with offshore windfarms using advanced concrete  foundations which are more likely to assure very long lifespans for the offshore windfarms compared to the metal foundations used that have been more widely used so far. The concrete foundations are suitable for both shallow and greater water depths.

It is suggested that a concrete base would be the chosen design for the Neart na Gaoithe windfarm off the Scottish cost which was given a 15 year contract at £120 per MWh in February this year (2015).

By contrast with nuclear power would expect £94 per MWh for 35 years and then £50 per MWh for a further 10 years you get an average cost over 45 years of around £84 per MWh.

A potential limitation to the 'refurbishment' strategy discussed here for offshore windfarms is that by the time the refurbishment takes place much bigger, more efficient, turbines will be available suggesting that new turbine towers and bases would be preferable. Hence a further strategy that may lead to much the same overall cost destination may also be to preserve the electrical connections (saving 15-20 per cent of costs) but install much bigger turbines that are likely to be available in the future. Fewer of these turbines will be needed. They will be more efficient, increasing output, and the fact that fewer will be needed for a given output will considerably cut down costs that are involved in installing offshore windfarms.

In the case of onshore wind, assuming the  same pattern of contracts as for offshore wind, 15 years at the premium price of £80 per MWh, five years at wholesale price of £50 per MWh and then a further 15 year premium price contract at £80 per MWh, five years at the wholesale price and a final 5 years at the premium. This generates an average of £73 per MWh.

Hence we can see that both onshore wind and offshore wind are cheaper over 45 years even before we take the considerable advantage given to nuclear power by the loan guarantee on offer and also that the prospect of cost reductions is much stronger in the case of wind power than nuclear power. Recently wind power's cost have gone down whilst nuclear power cost appear to be increasing.

There is a discussion of the possibilities for repowering existing offshore wind sites by Wind Power Monthly at http://www.windpowermonthly.com/article/1349270/decommissioning-stay-go.  What seems clear from this discussion is that there needs to be a government strategy, including an appropriate incentive programme to utilise offshore wind sites when the first generation of wind turbines at a particular site become old.

In the case of Germany where renewable energy is installed at lower prices compared to the UK, Hinkley C looks even less commercially attractive by comparison:

Source; http://energytransition.de/2014/12/infographs/

References:

Wind power cost breakdowns from:

http://www.irena.org/documentdownloads/publications/re_technologies_cost_analysis-wind_power.pdf

http://www.resco.org.uk/wind-and-marine-power/

Concrete foundations for offshore windfarms: See  http://www.viciventus.no/getfile.php/Dokumenter/GBF_product_sheet_231111.pdf. Also http://www.4coffshore.com/windfarms/gravity-based-support-structures-aid274.html for some examples of installations.
For technical specifications of Neart na Gaolithe offshore wind proposal see See http://mainstream-downloads.opendebate.co.uk/downloads/NnG-Addendum---Technical-Appendix-1---Design-Parameters.pdf

Nuclear Power plant retirements:

http://instituteforenergyresearch.org/analysis/several-u-s-nuclear-plants-retiring-early-others-at-risk/

http://www.scientificamerican.com/article/nuclear-power-seems-doomed-to-dwindle-in-the-u-s-infographic1/