Why is wind power so expensive: An economic analysis, a report from the Global Warming Policy Foundation finds that (from the Summary):
1. Wind power is a capital-intensive means of generating electricity. As such, it competes with electricity generated by nuclear or coal-fired generating plants (with or without carbon capture). However, because wind power is intermittent, the management of electricity systems becomes increasingly difficult if the share of wind power in total system capacity approaches or exceeds the minimum level of demand during the year (base load). It is expensive and inefficient to run large nuclear or coal plants so that their output matches fluctuations in demand. Large investments in wind power are therefore to undermine the economics of investing in nuclear or coal-fired capacity.
2. The problems posed by the intermittency of wind power can, in principle, be addressed by (a) complementary investments in pumped storage, and/or (b) long distance transmission to smooth out wind availability, and/or (c) transferring electricity demand from peak to off-peak periods by time of day pricing and related policies. However, if the economics of such options were genuinely attractive, they would already be adopted on a much larger scale today because similar considerations apply in any system with large amounts of either nuclear or coal generation.
3. In practice, it is typically much cheaper to transport gas and to rely upon open cycle gas turbines to match supply and demand than to adopt any of these options. As a consequence, any large scale investment in wind power will have to be backed up by an equivalent investment in gas-fired open cycle plants. These are quite cheap to build but they operate at relatively low levels of thermal efficiency, so they emit considerably more CO2 per MWh of electricity than combined cycle gas plants.
4. Meeting the UK Government’s target for renewable generation in 2020 will require total wind capacity of 36 GW backed up by 13 GW of open cycle gas plants plus large complementary investments in transmission capacity – the Wind Scenario. The same electricity demand could be
met from 21.5 GW of combined cycle gas plants with a capital cost of £13 billion – the Gas Scenario. Allowing for the shorter life of wind turbines, the comparative investment outlays would be about £120 billion for the Wind Scenario and a mere £13 for the Gas Scenario.
5. Wind farms have relatively high operating and maintenance costs but they require no fuel. Overall, the net saving in fuel, operating and maintenance costs for the Wind Scenario relative to the Gas Scenario is less than £500 million per year, a very poor return on an additional investment of over £105 billion.
6. Indeed, there is a significant risk that annual CO2 emissions could be greater under the Wind Scenario than the Gas Scenario. The actual outcome will depend on how far wind power displaces gas generation used for either (a) base load demand, or (b) the middle of the daily demand curve, or (c) demand during peak hours of the day. Because of its intermittency, wind power combined with gas backup will certainly increase CO2 emissions when it displaces gas for base load demand, but it will reduce CO2 emissions when it displaces gas for peak load demand. The results can go either way for the middle of the demand curve according to the operating assumptions that are made.
7. Under the most favourable assumptions for wind power, the Wind Scenario will reduce emissions of CO2 relative to the Gas Scenario by 23 million metric tons in 2020 - 2.8% of the 1990 baseline – at an average cost of £270 per metric ton at 2009 prices. The average cost is far higher than the average price under the EU’s Emissions Trading Scheme or the floor carbon prices that have been proposed by the Department of Energy and Climate Change (DECC). If this is typical of the cost of reducing carbon emissions to meet the UK’s 2020 target, then the total cost of meeting the target would be £78 billion in 2020, or 4.4% of projected GDP, far higher than the estimates that are usually given.
8. Wind power is an extraordinarily expensive and inefficient way of reducing CO2 emissions when compared with the option of investing in efficient and flexible gas combined cycle plants. Of course, this is not the way in which the case is usually presented. Instead, comparisons are made between wind power and old coal or gas-fired plants. Whatever happens, much of the coal capacity must be scrapped, while older gas plants will operate for fewer hours per year. It is not a matter of old vs new capacity. The correct comparison is between alternative ways of meeting the UK’s future demand for electricity for both base and peak load, allowing for the backup necessary to deal with the intermittency of wind power.