The true cost of renewable energy

The true cost of renewable energy

After delivering his platitudes on climate change at COP27, Rishi Sunak returns to a more pressing issue: how to keep Britain’s lights on this winter. Last week it was revealed that the government had devised a “reasonable worst-case scenario” in which power outages lasted up to a week. Whether or not these fears turn out to be unfounded, there is a huge and growing hole in the future of Britain’s electricity supply, with little explanation of how it will be filled. The lights may not go out this winter, but there is a reckoning as Britain tries to head towards net zero.

Over the past decade, the National Grid has succeeded in virtually ending coal power in Britain. The proportion of our electricity generated by coal has fallen from 29.5% in 2011 to just 2.1% in 2021. Most coal-fired power has been replaced by wind and solar (from 5 .2% in 2011 to 24.6% in 2021). and by “thermal renewables” – the dirty business of burning wood pellets made from trees in North America – which has grown from 3.6% in 2011 to 12.9% in 2021.

What the electricity industry has failed to do is wean us off gas. We are pretty much where we were ten years ago, with gas accounting for 39.9% of production in 2021, up from 39.8% in 2011. This matters not only because it has exposed consumers to high wholesale gas prices in recent months, but because the government’s path to net zero involves eradicating all fossil fuels and ensuring a carbon-free electricity supply by 2035.

It costs three or four times more to store a unit of electricity than to generate it in the first place

Indeed, the price we pay for gas-fired electricity is even higher than it should be right now because of the way we are currently using it. We use gas power to fill in the gaps when intermittent wind and solar can’t deliver the goods. Over the summer, everyone from Boris Johnson to Extinction Rebellion repeated the figure that wind power costs “nine times” less than gas power. But this is a false comparison. The figure comes from an analysis by pressure group Carbon Brief comparing the long-term, guaranteed and indexed prices paid to renewable energy companies with the “day ahead” prices that must be paid to owners of gas-fired power stations to light them. for a few hours to make up for a lack of supply. It’s like comparing the cost of a rail pass to the price of hailing an Uber at rush hour on the day of a rail strike.

How many times this year have you heard green energy proponents decry that consumers have been ripped off by our failure to switch even faster to renewables? Yet we don’t really have an alternative to gas to fill the gaps of wind and solar. We could try to store renewable energy, but storage, in the form of batteries, for example, or pumped-storage hydroelectric plants or some other emerging technology, is incredibly expensive. It costs about three or four times more to store a unit of electricity than to generate it in the first place.

If we want to get closer to decarbonizing the electricity grid, we will have to invest in energy storage, at enormous cost. Currently we have the capacity to store less than an hour of the nation’s electricity demand, but in winter conditions can be both windless and overcast for days at a time. The network was built to transport electricity produced in coal-fired power plants close to where it was consumed. By contrast, wind and solar farms tend to be spread out in more remote locations, so the grid itself will need to be reconfigured, again at huge cost. We are also going to need a massive increase in overall generation capacity as road vehicles and central heating systems are forced to go electric. A switch to renewable energy will be very far from cheap.

And at the moment we are going in the wrong direction. The overall generation capacity available for the national grid has actually increased from 77.9 GW in 2019 to 76.6 GW in 2021. In addition, wind and solar farms are not operating as expected. Last year alone, available wind power generation capacity increased by 5.3% and solar power by 2.8%. Yet the amount of electricity actually produced by wind, waves and the sun has dropped by 9.3%, largely due to low wind speeds. It’s a problem the wind industry has yet to grasp: there is a long-term downward trend in wind speed in the UK – and indeed most of the world. It’s an aspect of climate change that gets little coverage, perhaps because it conflicts with the lazy and incorrect narrative, perpetuated by the former president of the Environment Agency, among others, that Britain faces more ‘severe’ weather conditions.

Sooner or later, something will have to give. The “Road to Zero Carbon” report published by the National Grid ESO last year provides little comfort. “The concept of baseload is now gone,” he says, comparing the old national grid to a train and the renewable energy-based national grid of the future to a more drivable sports car. In this green future they imagine, demand will be matched to supply via what is called “dynamic containment” – or price spikes, as the rest of us might call it. But how much will electricity providers have to charge to manage demand when wind and solar energy supply frequently collapses to 5% or less of what it can achieve in windy, sunny conditions?

We can only guess, but here’s a hint of the wholesale markets. In September last year, thanks to low wind speeds, electricity suppliers were forced to pay wholesale prices of £2,500 per MWh to persuade gas-fired power stations to enter the market – 50 times the average prices at the time. In July, they briefly had to pay Belgian electricity suppliers £9,724 per MWh to prevent lights from going out in London.

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At present, consumers are not directly exposed to this type of price spike, as they are absorbed by retail electricity providers. But it is expected that in the future, consumers will be charged variable rates for electricity through their smart meters.

So that’s the future we can look to: not a future where the lights necessarily go out, but where we’re forced to pay through the nose if we want to keep them on in adverse weather conditions. The price of green energy is a terrible form of segregation, where the wealthy will have access to light and heat, and those who need it most, the poor, will shiver in the dark.

Ross Clark’s Not Zero: How an Irrational Target Impoverishes You, Helps China (and Won’t Even Save the Planet) will be out next year.

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