4 ms·

Offshore windfarms will be built for a record low price in the UK

57 points by ljf 9y ago

ljf 9y ago
Hugely excited about the price point - though obviously still has the issues of intermittency and dependability - but at this price, even the losses from storage become less of an issue, so I hope it can kick start more wholesale power storage initiatives.
- ZeroGravitas 9y ago
  Part of the drop in price is because the newer turbines are less intermittent and more reliable. Capacity factors have been rising for years as the industry matures. And this is offshore wind, one of the benefits of which is higher capacity than onshore.
ealexhudson 9y ago
This is nothing but good news. Yes, it's not the same type of generation, we can't be 100% wind etc., etc., but the cost of wind & solar is dropping quickly and the two combined regularly contribute 40%+ of our energy needs. I doubt there will be another nuclear agreement after Hinkley C, and we should be thinking more about how we can starting creating storage and/or redesigning the grid to take account of a highly-renewable production system.
- Robotbeat 9y ago
  I don't think people realize how critical nuclear power is to achieving decarbonization in a timely manner. Nuclear enables decarbonization about a decade sooner. Yes, solar and wind are inexpensive when penetration is low. I'm fully in favor of them. And YES, most of the world could fully rely on them if given enough money. You do this by building enough solar power to provide electricity even during cloudy winter days then enough storage to go through the night. BUT: The UK is high latitude. That means that during the cloudy winter, it's just not feasible to build enough PV. And building enough storage for weeks is also not feasible. So you're going to burn gas, and not get to full decarbonization, or you're going to have to pull geothermal power from Iceland or something else very expensive. Going from 0 to 20% of electricity from solar/wind is cheap. 20-50% becomes more expensive. 50 to 70% is really expensive because you have to curtail a lot. Going from 70% renewable to 100% is insanely expensive (think of that last 20-30% as being about 5-10 times as expensive per kWh) because you have to curtail MOST OF THE TIME. But if instead you have nuclear, you can stretch your batteries and demand-response enough that you don't actually have to curtail so much. So in a world where we care about decarbonization, even 20-30% of nuclear is very valuable. I've done the calculation. Hinkley C, even with the cost overruns, is a bargain if you're shooting for full decarbonization. ...but a lot of greens aren't. Many are being disingenuous as they care more about stomping out nuclear than they do about fighting climate change. They don't care much that it means building more gas in the near term. Ask yourself: is throwing away nuclear worth a decade of delay in decarbonization?
  - Robotbeat 9y ago
    Look at it this way. Average solar capacity factor usually about 10% in the UK. Average electricity output is about 38GW. So you already need about 380GW of solar before taking into account variation from cloud days and seasonal variation. Add in cloudy winter days, you need at least 5 times overbuild, so you need to build about 1900GW of solar. Even with low, $2 per watt utility scale solar, you're looking about about $3.5-4 trillion to go full solar not counting batteries for night time. For nuclear, on the other hand, you got a really high capacity factor like 90.9% (in the US recently). So a 3.2GW Hinkley C gets you about 3GW on average. So you need about 13 of them to power the whole of UK on average. Even at $26 billion each, that's only $340 billion, a tenth the cost of 100% solar not counting batteries (nuclear may want batteries for smoothing loads anyway). Even at $1/Watt, solar still not attractive in UK for 100% scenario... But if mixed with some amount of nuclear, then solar does look good again. Note that in countries closer to the equator, you can get like 20-25% capacity factor with solar... You also have less seasonal variation (so need less over-build) and install costs may be lower due to cheaper labor and lower land prices (so, 25/10%, 2.5x overbuild vs 5x overbuild, half the install costs... could be factor of ~10 cheaper in 100% PV install scenario). So I think solar is going to be a huge boon to the "global south" even if they rely on it 100%. But high latitude countries like the UK and Germany would be out of their minds to shut down nuclear.
  - ljf 9y ago
    Totally valid points, I just worry about the long term cost of decommissioning nuclear sites and storing the waste - those numbers aren't in your figures (or the other comment on this thread) . I accept that we are going to need something for the short term though, and nuclear may be the least worst option - just storage and management or spent fuel and other waste gives me the fear...
  - pjc50 9y ago
    > Nuclear enables decarbonization about a decade sooner. How can this be, when the plants take a decade to build and are often delayed? We could build several times as much wind power as Hinkley Point C, for half the cost, in the decade before it's actually built. Actually starting a new nuclear project in the UK could not realistically be online before 2030.
ljf 9y ago
Also cheers to the mod who updated the title - I didn't want to editorialise it myself - though not sure if either the original or new encapsulates what is on offer here: "the “exceptionally low” results of a government auction on Monday for subsidy contracts show two offshore windfarms will be built for £57.50 per MWh, way below even the most extreme predictions. The price is half of what new offshore windfarms were being awarded just two years ago." This is really something considering where the figures came in 5 or 10 years ago, and amazing to compare against the number from 2015: Estimated UK LCE for projects starting in 2015, £/MWh Power generating technology (Lowest 2015 figures in £) Nuclear PWR (Pressurized Water Reactor)(a) 82 Solar Large-scale PV (Photovoltaic) 71 Wind Onshore 47 Offshore 90 Biomass 85 Natural Gas Combined Cycle Gas Turbine 65 CCGT with CCS (Carbon capture and storage) 102 Open-Cycle Gas Turbine 157 Coal Advanced Supercritical Coal with Oxy-comb. CCS 124 IGCC (Integrated Gasification Combined Cycle) with CCS 137 (a) new nuclear power: guaranteed strike price of £92.50/MWh for Hinkley Point C in 2023[49][50]) (from: https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source ) Also love this line towards the end of the article: "The lower the price, the more electricity generating capacity can be built. The government had allocated £240m-a-year for the subsidies but the competitive prices mean it now expects them to hit £176m-a-year at most."
- raverbashing 9y ago
  Great summary. Still, it's not clear where the subsidies are getting paid to those wind farms Are they paying more for generation than the consumer is paying for electricity?
  - kieranmaine 9y ago
    Good summary here on strike prices. It talks about nuclear power, but it applies to wind as well - http://www.bbc.co.uk/news/business-22772441 http://www.bbc.co.uk/news/business-22772441
- olau 9y ago
  Side note: From a Danish point of view, the price level for offshore wind you've been agreeing to in the UK has seemed... very high. Of course, location etc. is different, but still. There was a single offshore wind farm in Denmark in the high price range, where a government that had previously decided man-made warming was a hoax suddenly reversed their direction and decided it needed the farm built quickly, ending up with a single bidder. But in any case this has finally ended. FYI: Not long ago, DONG won a bid on a subsidy-free offshore farm in Germany. IIRC, they have until 2020 to decide whether they're going to build it or not, but they'll have to pay a fee if they don't.

57 points by ljf 9y ago

ljf 9y ago

Hugely excited about the price point - though obviously still has the issues of intermittency and dependability - but at this price, even the losses from storage become less of an issue, so I hope it can kick start more wholesale power storage initiatives.

ZeroGravitas 9y ago
Part of the drop in price is because the newer turbines are less intermittent and more reliable. Capacity factors have been rising for years as the industry matures. And this is offshore wind, one of the benefits of which is higher capacity than onshore.

ealexhudson 9y ago

This is nothing but good news. Yes, it's not the same type of generation, we can't be 100% wind etc., etc., but the cost of wind & solar is dropping quickly and the two combined regularly contribute 40%+ of our energy needs. I doubt there will be another nuclear agreement after Hinkley C, and we should be thinking more about how we can starting creating storage and/or redesigning the grid to take account of a highly-renewable production system.

Robotbeat 9y ago
I don't think people realize how critical nuclear power is to achieving decarbonization in a timely manner. Nuclear enables decarbonization about a decade sooner. Yes, solar and wind are inexpensive when penetration is low. I'm fully in favor of them. And YES, most of the world could fully rely on them if given enough money. You do this by building enough solar power to provide electricity even during cloudy winter days then enough storage to go through the night. BUT: The UK is high latitude. That means that during the cloudy winter, it's just not feasible to build enough PV. And building enough storage for weeks is also not feasible. So you're going to burn gas, and not get to full decarbonization, or you're going to have to pull geothermal power from Iceland or something else very expensive. Going from 0 to 20% of electricity from solar/wind is cheap. 20-50% becomes more expensive. 50 to 70% is really expensive because you have to curtail a lot. Going from 70% renewable to 100% is insanely expensive (think of that last 20-30% as being about 5-10 times as expensive per kWh) because you have to curtail MOST OF THE TIME. But if instead you have nuclear, you can stretch your batteries and demand-response enough that you don't actually have to curtail so much. So in a world where we care about decarbonization, even 20-30% of nuclear is very valuable. I've done the calculation. Hinkley C, even with the cost overruns, is a bargain if you're shooting for full decarbonization. ...but a lot of greens aren't. Many are being disingenuous as they care more about stomping out nuclear than they do about fighting climate change. They don't care much that it means building more gas in the near term. Ask yourself: is throwing away nuclear worth a decade of delay in decarbonization?
- Robotbeat 9y ago
  Look at it this way. Average solar capacity factor usually about 10% in the UK. Average electricity output is about 38GW. So you already need about 380GW of solar before taking into account variation from cloud days and seasonal variation. Add in cloudy winter days, you need at least 5 times overbuild, so you need to build about 1900GW of solar. Even with low, $2 per watt utility scale solar, you're looking about about $3.5-4 trillion to go full solar not counting batteries for night time. For nuclear, on the other hand, you got a really high capacity factor like 90.9% (in the US recently). So a 3.2GW Hinkley C gets you about 3GW on average. So you need about 13 of them to power the whole of UK on average. Even at $26 billion each, that's only $340 billion, a tenth the cost of 100% solar not counting batteries (nuclear may want batteries for smoothing loads anyway). Even at $1/Watt, solar still not attractive in UK for 100% scenario... But if mixed with some amount of nuclear, then solar does look good again. Note that in countries closer to the equator, you can get like 20-25% capacity factor with solar... You also have less seasonal variation (so need less over-build) and install costs may be lower due to cheaper labor and lower land prices (so, 25/10%, 2.5x overbuild vs 5x overbuild, half the install costs... could be factor of ~10 cheaper in 100% PV install scenario). So I think solar is going to be a huge boon to the "global south" even if they rely on it 100%. But high latitude countries like the UK and Germany would be out of their minds to shut down nuclear.
- ljf 9y ago
  Totally valid points, I just worry about the long term cost of decommissioning nuclear sites and storing the waste - those numbers aren't in your figures (or the other comment on this thread) . I accept that we are going to need something for the short term though, and nuclear may be the least worst option - just storage and management or spent fuel and other waste gives me the fear...
- pjc50 9y ago
  > Nuclear enables decarbonization about a decade sooner. How can this be, when the plants take a decade to build and are often delayed? We could build several times as much wind power as Hinkley Point C, for half the cost, in the decade before it's actually built. Actually starting a new nuclear project in the UK could not realistically be online before 2030.

ljf 9y ago

Also cheers to the mod who updated the title - I didn't want to editorialise it myself - though not sure if either the original or new encapsulates what is on offer here: "the “exceptionally low” results of a government auction on Monday for subsidy contracts show two offshore windfarms will be built for £57.50 per MWh, way below even the most extreme predictions. The price is half of what new offshore windfarms were being awarded just two years ago." This is really something considering where the figures came in 5 or 10 years ago, and amazing to compare against the number from 2015: Estimated UK LCE for projects starting in 2015, £/MWh Power generating technology (Lowest 2015 figures in £) Nuclear PWR (Pressurized Water Reactor)(a) 82 Solar Large-scale PV (Photovoltaic) 71 Wind Onshore 47 Offshore 90 Biomass 85 Natural Gas Combined Cycle Gas Turbine 65 CCGT with CCS (Carbon capture and storage) 102 Open-Cycle Gas Turbine 157 Coal Advanced Supercritical Coal with Oxy-comb. CCS 124 IGCC (Integrated Gasification Combined Cycle) with CCS 137 (a) new nuclear power: guaranteed strike price of £92.50/MWh for Hinkley Point C in 2023[49][50]) (from: https://en.wikipedia.org/wiki/Cost_of_electricity_by_source https://en.wikipedia.org/wiki/Cost_of_electricity_by_source ) Also love this line towards the end of the article: "The lower the price, the more electricity generating capacity can be built. The government had allocated £240m-a-year for the subsidies but the competitive prices mean it now expects them to hit £176m-a-year at most."

raverbashing 9y ago
Great summary. Still, it's not clear where the subsidies are getting paid to those wind farms Are they paying more for generation than the consumer is paying for electricity?
- kieranmaine 9y ago
  Good summary here on strike prices. It talks about nuclear power, but it applies to wind as well - http://www.bbc.co.uk/news/business-22772441 http://www.bbc.co.uk/news/business-22772441
olau 9y ago
Side note: From a Danish point of view, the price level for offshore wind you've been agreeing to in the UK has seemed... very high. Of course, location etc. is different, but still. There was a single offshore wind farm in Denmark in the high price range, where a government that had previously decided man-made warming was a hoax suddenly reversed their direction and decided it needed the farm built quickly, ending up with a single bidder. But in any case this has finally ended. FYI: Not long ago, DONG won a bid on a subsidy-free offshore farm in Germany. IIRC, they have until 2020 to decide whether they're going to build it or not, but they'll have to pay a fee if they don't.