Renewable Energy Foundation

Update : 10 December, 2014.  DECC has now released the energy price impacts.

On the eve of the deadline expiry, DECC yesterday responded to REF’s Freedom of Information request for the ‘estimated impacts of energy and climate policies on energy prices’; data inexplicably omitted from their study titled Estimated Impacts of Energy and Climate Policies on Energy Prices and Bills (2014). Their response can be read here.

The price impacts (p/kWh) of Government’s green policies have been published in all previous issues of this key document, and indeed are explicitly referred to in its title.

Price impacts are extremely important because they permit analysts and members of the public to assess the raw impact of policies, before the claimed offsetting impacts of energy efficiency, for example, are taken into account. This allows the reader to form a view of the plausibility of the offsetting effects and also to estimate impacts on particular users rather than on the ‘average’ users upon which DECC’s study focuses. This latter point is very important for business consumers, because businesses vary so much, with the ‘average’ business being almost meaningless.
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Attachments:

DECC Response to FoI Request Nov 2014

On the 6th of November the Department of Energy and Climate Change (DECC) published the third and much delayed edition of its Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills.

REF has previously criticised the methodology used in the previous two issues of Estimated Impacts (2011 and 2013), particularly the tendency to focus on modelled average bills not price effects and so conceal important variations in effects on different types of domestic households. DECC also made use of unreasonably optimistic assumptions with regard to the effects of energy efficiency measures. For further details see our study Shortfall, Rebound, Backfire (2012), and subsequent correspondence with DECC and the UK Statistics Authority.

The latest, 2014, release of Estimated Impacts continues to suffer from many of the faults identified by REF in previous editions, and is rendered still more unsatisfactory because the tables showing the electricity and gas price impacts (£/MWh), rather than modelled average bill effects, have been deliberately withheld, even though they appeared in the three previous editions.

On the 7th of November the wind farm developer and green electricity supplier Ecotricity placed a double page spread advertisement in the Guardian newspaper. This advertisement claimed that wind power played a significant part in securing supplies on the 19th of October, when four nuclear power stations were already offline and the system came under further pressure in the evening because of a fire at Didcot B power station, a Combined Cycle Gas Turbine (CCGT) power station.

Specifically, Ecotricity wrote that:

“No one noticed that around nine million homes worth of electricity had electricity had simply ‘disappeared’ after four nuclear power stations had shut down and Didcot went up in flames. No one noticed because Britain’s windmills carried on turning, powering almost 25% of our country. It was a historic event that went almost unnoticed; one revolution after another quietly secured our energy needs. The lights didn’t go out. We have wind energy to thank for that.”

These claims are repeated on the Ecotricity web site: “Nothing Happened”.

In yesterday’s Sunday Telegraph (23.11.14) Christopher Booker’s column discussed the Guardian advertisement, and called its accuracy into question: “Revealed: the Guardian Wind farm advert that tried to pull the wool over our eyes”

Summary & Conclusions

1. A letter from the Secretary of State for Energy and Climate Change, the Rt Hon Ed Davey, MP, to Mary Creagh MP, reveals that DECC calculates that sufficient onshore wind has been developed (i.e. consented and likely to be built) to meet the upper level of government expectations for this technology, 13 GW (about 6,500 turbines), confirming an earlier study by REF

2. Consequently, the 6.4 GW of onshore wind currently in the planning system (approximately 3,000 turbines) are surplus to requirements. The presence of this needless 6.4 GW of onshore wind in the planning system is causing undue cost to local authorities and widespread planning blight to affected communities, to say nothing of misdirected capital and development effort in the energy industry.

3. In our judgment Mr Davey should cool the sector down with a statement to the effect that the onshore wind target is now met, that DECC does not support onshore wind applications currently in the planning system, and that effort should be focused on other areas.

4. In the absence of such a statement, which we believe unlikely for political reasons, decision makers in the planning system, from local councillors, to inspectors to the Secretary of State at the Department of Communities and Local Government, Mr Pickles, can be confident that in applications for onshore wind no weight need be given to the project’s contribution towards renewable energy targets.

Attachments:

Ed Davey letter to Mary Creagh MP 3 September 2014

REF is saddened to report the death of Robert Freer, one of our technical advisors, and a keen supporter of our objectives.

Robert Freer was a civil engineer who worked mainly on energy and maritime projects and especially at the interface between research and practice. He was involved in the design and construction of nuclear, hydro-electric, diesel, and gas turbine power stations in this country and overseas (including Dounreay, Winfrith, Kariba and Aswan) and on the development of a prototype wind energy generator and a wave energy device. He was awarded the George Stephenson Medal by the Institution of Civil Engineers in 2002, and organised and led two DTI sponsored OSTEMS visits to a number of European countries and to Japan on dam safety and on energy from waste. Robert also served on a number of committees of the Institution of Civil Engineers on the ICE Council.

Robert’s funeral will take place on the 29th of September at 11am at St George’s Church, Hanover Square.

The Sunday Telegraph recently published an article giving further details of the constraint payments made to wind power, mostly, though not now entirely, in Scotland. The principal point was that the prices charged were still well in excess of lost income, and were arguably an abuse of market power. 

The Department of Energy and Climate (DECC) has responded to the piece and attempts to defend both the wind power industry and its own record in protecting the consumer from over-charging.

DECC’s response contains a number of irrelevant or confused statements suggesting that the Department either does not understand the constraints market or is seeking to mislead the public.

REF's director, John Constable, has just published an article "Thermo-Economics: Energy, Entropy and Wealth" in the journal of the Economics Research Council. This piece attempts to explain the relationship between thermodynamics and the theory of wealth in economics. From this perspective Dr Constable then argues that government attempts to drive an energy transition ahead of the learning curve and against the cost gradient and dangerous and likely to be reduce well-being as well as creating political discontent.

On the 3rd of April the Guardian published a short article on constraint payments to wind power in Scotland ("Gas company special payments dwarf constraint payments to wind farms"). This story was based in part on a story in The Times earlier in the week ("Wind farms are paid £8.7m in one month to stop turbines"), and partly on an interview with REF.

The Guardian does not seem to have fully explained the significance of these extra payments to wind power, or the relation between payments to wind to stop and payments to conventional generators to start generating. REF sent the following letter to the editor, which has not, as far as we can tell, yet been published:

It is now three years since the Renewable Energy Foundation revealed the growing problem of excessive prices charged by wind generators in Scotland to cease generation. However, and in spite of an intervention in February 2014 by the Minister of State for Energy, Michael Fallon, MP, there is no sign that the wind industry is willing to deal with this profiteering through self-regulation.

March 2014 has seen both the largest monthly volume of wind energy (107 GWh) constrained off the GB electricity system, and the largest monthly amount paid for wind farms not to generate (£8.7 million), as can be seen in the following chart, which also shows the steadily increasing trend over time.

In December 2012 REF published Professor Gordon Hughes’ paper The Performance of Wind Farms in the United Kingdom and Denmark.

This seminal paper used advanced but standard statistical techniques to estimate the rates of decline in performance over time. Professor Hughes found that the economic lifetime of wind farms in the UK was very much shorter than currently estimated, at between ten and fifteen years, with those in Denmark faring better but still declining significantly.

The study has attracted a great deal of attention, and its fundamental finding is not now contested. Decline in performance is real and should be taken into account by policy makers and investors since it has significant implications both for the subsidy cost of the current renewable energy targets, and for the levelised cost of wind electricity and thus the rate of return to capital.

The study has been the subject of considerable criticism, particularly with regard to the methods employed, and Professor Hughes has responded and defended his approach (for example here in response to Professor MacKay, Chief Scientific Advisor to the Department of Energy and Climate Change and here in response to remarks by a blogger, Mr Chris Goodall.