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Offshore wind getting cheaper?

A recent news story in the UK claims that offshore wind power has halved in price from a few years ago:

offshore wind news story

"Energy from offshore wind in the UK will be cheaper than electricity from new nuclear power for the first time.

The cost of subsidies for new offshore wind farms has halved since the last 2015 auction for clean energy projects

Two firms said they were willing to build offshore wind farms for a guaranteed price of £57.50 per megawatt hour for 2022-23."

I've linked to the BBC's article on the story written by Roger Harrabin, but virtually all the UK news media has reported the story in the same non-sceptical way as Harrabin.

Harrabin seems to be a bit confused, he's comparing an intermittently available electricity source (wind) with a continuously available one (nuclear), and giving the impression that the sources are completely interchangeable. There is already a continuously available form of renewable energy that is quite heavily used in the UK (thanks to the Lib Dems), the burning of wood pellets, and I suspect that is actually cheaper than new nuclear (burning wood is technically classified as low carbon, but it is of course taking massive liberties with the whole idea of something being low carbon).

The lone sceptical voice in the UK news media is GWPF, who have investigated whether offshore wind is getting cheaper (which the journalists should have been doing), and found no evidence:

GWPF reaction

"Forget The Spin: Offshore Wind Costs Are Not Falling

Spin put on the government’s recently announced strike prices to three large offshore wind farms has misled many into thinking that the costs of offshore wind are falling.

However, no actual capital cost figures have been provided for the three windfarms (Hornsea, Moray East, or Triton Knoll), and the strike prices are a poor guide to underlying costs.

In fact, empirical CAPEX data collated for the first time in a new statistical study published today by GWPF shows that the capital costs for offshore wind remain high. Moreover, as the wind industry moves into deeper water, costs are actually rising offsetting any reduction in costs due to technical progress.

The study’s authors conclude that wind farm companies are probably willing to offer economically non-viable CfD prices because they regard the CfD contract as low cost, no penalty “option” for future development. At the same time, they are securing a market position and inhibiting competition, with actual wind farm construction conditional on obtaining more generous terms in the future.

Should the market price rise above the contracted price, because of rising fossil fuel costs or a further rise in the UK’s carbon tax, companies would simply cancel the CfD contract and go with the higher price. However, if there is no significant probability of that elevated market price, these sites are very unlikely to be built."

I think this idea, very widely held by anybody who is Green-leaning, that products get cheaper with the passage of time, is based on the somewhat misleading experience provided by domestic electronic consumer goods. In electronic engineering, everything does seem to get cheaper, for example a 333MHz Pentium II PC in 1998 cost $2K and ran 5.5 times quicker than the world's first supercomputer, the $10 million Cray-1 of 1974.

But in other fields of engineering, like mechanical engineering and civil engineering, cost escalation is regarded as absolutely normal. Nothing ever seems to get cheaper with time. To give an example of this, consider this figure:

cost escalation figure

The figure compares four mechanical engineering products in the USA, two types of warship, a Ford F-150 pick-up truck and a Beachcraft Bonanza light aircraft showing the inflation-adjusted price in the first decade of the 21st Century. The figure comes from a document which is trying to argue that the cost escalation for building warships is unacceptable, and they should try to reduce it to the more modest levels of cost escalation that are seen in the car industry and commercial aircraft industry.

If the offshore wind industry is so good at controlling and even reducing its costs, somebody should be asking them to start manufacturing defence equipment. There is also a specific cost escalation which would affect the offshore wind industry, in that it is more expensive to build an offshore wind turbine the deeper its surrounding water is. I would imagine that the shallower water sites would be snapped up first, and the industry then has to move into progressively deeper (on average) water sites, putting the industry's costs up.

Re: Offshore wind getting cheaper?

Like GWPF, I think the claim that UK offshore wind has genuinely halved in price is dubious, and it is likely that these low-priced windfarm projects will never actually go ahead (quite a few UK windfarm projects, onshore and offshore, have been cancelled over the years for various reasons, and cancellation is not unusual).

My own theory about the halving of the price (when I first heard about this claim in the middle of September) is that it will be connected with some wind energy promotion campaign, and is probably timed to influence the Conservative party conference which starts on October 1st.

After a bit of Googling, I've noticed that Greenpeace is involved in the running of a poster campaign at Westminster tube station, launched by the BBC's Doctor Who actor Peter Capaldi, which is making heavy use of the 50% cost reduction claim:

wind energy promotion campaign

"Today a huge coalition of companies and civil society organisations including Greenpeace, WWF and the Marine Conservation Society launched a new campaign by taking over Westminster tube station with posters on their walls and ticket gates with the message that electricity from offshore wind is half the price it was just two years ago.

Launching the campaign in Westminster tube station, where ministers and MPs will be walking past striking images of offshore wind farms, Peter Capaldi (Dr Who, The Thick of It, Local Hero) said:

“Great Britain is the world leader in a technology which can generate huge amounts of energy without using any fuel. It’s safe, secure, zero-carbon and economical. In fact it’s halved in price in just two years. That’s 50% off. It’s a great deal. And it may just save the planet. The future of energy in the UK is offshore wind power.”"

The 'huge coalition' seems to consist of Dong Energy, General Electric, Scottish Power Renewables, SSE, Vattenfall, Greenpeace, Marine Conservation Society and WWF.

Re: Offshore wind getting cheaper?

GWPF has put out a press release today about the offshore wind promotion campaign at Westminster tube station that I described in my previous post. They are lodging a formal complaint with the UK's Advertising Standards Authority about the campaign.

GWPF lodge complaint

A few extracts from the press release:

"The Global Warming Policy Forum (GWPF) has lodged a formal complaint with the Advertising Standards Authority (ASA) concerning the current poster campaign for offshore wind at Westminster tube station."

"The campaign posters claim that “The price paid for electricity from offshore wind farms has fallen by 50% over the last five years.”

This is untrue. In most cases the prices paid for electricity from the UK’s offshore wind fleet have not fallen at all, and though there were small cuts to subsidies for new offshore projects built from 2015 on, this amounted to a reduction of around 5%.

The GWPF’s complaint shows that the campaign is playing fast and loose with the facts. The ads are deliberately misleading MPs and the wider public into thinking that existing wind farms have been cutting their prices. In fact, the allegedly lower prices are only related to auction bids in so-called Contracts for Difference which apply to tentative future wind projects that will not start generating until 2021/2022 and may in fact never be built — or never generate at these low prices."

"Dr Peiser, the director of the GWPF, said:

“The claims in the Westminster offshore wind campaign are some of the most blatant distortions of the truth that I have seen in pro-wind advertising. The most that can be said is that the industry hopes it may be able to cut its costs and prices by 2022. I hope so too, but it is highly unlikely.”

Dr Peiser added:

“This campaign is deliberately aimed at MPs, peers and other decision makers. The wind industry and green campaigners owe them a public apology. This is a shameful piece of spin.”"

I noticed in the Greenpeace article that I linked to in my previous post that Peter Capaldi (the celebrity brought in by Big Green to launch the promotion campaign) was talking about the halving of electricity prices from offshore wind as though that situation was happening right now, rather than possibly occurring to some extent in five years time, but I assumed that the tube station posters might be more carefully worded.

I speculated that the timing of the campaign might be to try to influence the recent Conservative party conference, but I haven't seen any indications that it has been successful. Theresa May announced at the recent Conservative party conference that the government intends to go ahead with the energy price cap idea mentioned in the 2017 Conservative manifesto, and that is probably not good news for Big Green, as the high energy prices are coming partly from implementing Green energy policies.

Re: Offshore wind getting cheaper? .... the big lie.....

What we should ask is not whether or not these claims are genuine but why they are being made if, as is the case, they are not.

I think we are seeing the reason in the most recent unilateral decisions by Mrs May's Government (unilateral: not in any manifesto and, in the present government, with no mandate to do anything much at all whether in a manifesto or not).
Firstly Mrs May decides we will have only electric cars by 2040, then Oxford decides it will allow only electric cars in the city by 2020 and then Mrs May (or her luminous greenie ministers indulged in every whim) have announced we will also no longer have gas for cooking or central heating.

Of course, this all dismisses the concerns that even with fossil fuels for transport and gas for cooking and heating, successive disastrous energy policies have left us facing a very significant energy (electricity) shortfall in the not so distant future. And now these policies add a far from insignificant additional burden of making up for the loss of fossil fuels. And this without all the added costs of converting everyone's homes to all electric and providing car charging points everywhere.
Thus this story is a necessary precursor to announcing a massive new investment in new generating capacity.... from wind farms and whatever other expensive unreliable sources they can think of and trying to head of the consequent alarm by claiming it will cost less than we thought. Even if it will be a Big Lie oft repeated till we stop questioning those who know better.

Doubtless challenging any Government proclamations will soon fall under the new hate laws... and why not? It is already the case that as an EU member we are subject to the EU's law which includes that one shalt not criticise the EU, its officials or its policies ( )

Re: Offshore wind getting cheaper? .... the big lie.....

I think there are a couple of developments that are coming along in the next couple of years which might stem the tide of Greenery in the UK.

The first development is that I think we're likely to exit the EU with no trade deal, and we then revert to trading with the EU on WTO terms like the rest of the world does. In my view, the UK government behaves as though it isn't going to get a trade deal. If you were confident about getting a trade deal with the EU then you would have triggered Article 50 within a few weeks of the Referendum - you would only delay the triggering for 9 months if you were hoping that the EU would somehow soften in its attitude towards you, maybe hoping Juncker would be dismissed. The next thing you'd do if no trade deal was expected would be that you would go for a snap general election after triggering Article 50 - holding the snap election means you don't have to hold the next general election until 2022 instead of 2020, giving you 3 years (instead of 1) for the country to get used to the idea of being out of the EU with no trade deal after leaving in 2019 (only 1 year before the next general election might be a bit short given the extensive platform provided to pro-EU people in the UK broadcasting media). The EU also behaves as though it doesn't want a trade deal, insisting on some absurdly high exit fee being agreed to before allowing trade talks to go ahead.

The advantage of exiting with no trade deal, for the sceptic of Greenery, is that the UK is then decoupled from the Green regulations and the general Green-leaning influence of the EU. With a trade deal, even if somehow the UK managed to extract major concessions from the EU on freedom of movement, I can imagine UK politicians conceding to the EU on the environmental stuff.

The second development is that I think that Boris Johnson could replace Theresa May as leader (and PM) in two or three years time. Boris would be the ideal man to take on Corbyn as he has a good track record in defeating the Loony Left, having managed to keep the Loony Left's Ken Livingstone out of office as mayor of London for eight years. Boris has shown some scepticism towards Greenery in the past, but mainly through his newspaper columns. The last 5 prime ministers that we've had in the UK, starting with John Major, have been Green-leaning, but I suspect that Boris is a bit more sceptical about Greenery than any of those five.

Re: Offshore wind getting cheaper?

An update to the thread - as might be expected, the Advertising Standards Authority (ASA) has agreed with GWPF that the offshore wind advertising campaign conducted by Greenpeace in association with other groups mentioned earlier in the thread was misleading:

advertising campaign was misleading

However it only amounts to a minor scolding, Greenpeace has got away with just giving an assurance to the ASA that it will not use the disputed claim again in any future advertising campaigns.

Only the Daily Mail seems to have publicised the story that the advertising campaign was misleading, so it is possible that any politicians and civil servants who were actually influenced by the campaign over the past few months will not be aware that the campaign was misleading, as Green-leaning people don't tend to read the Daily Mail.

I would argue that the BBC should not employ any actors, like Peter Capaldi and Emma Thompson in this case, who have been associated with misleading advertising campaigns. The BBC has always taken the noble position of avoiding being funded by advertising, so it would be consistent for them not to employ people connected with misleading advertising.