Will energy bills rise £300 by 2020 because of wind power, as the Express claims?

  • 08 Aug 2012, 09:00
  • Robin Webster

" Energy bills to rocket by £300", announced the front page of Tuesday's Daily Express, suggesting the government's "obsession with wind power" would push consumer electricity bills up by £300 by 2020.

Both the  Daily Mail and the  Mirror have repeated the figure. The articles are based on a submission to the Energy and Climate Change Committee written by part time professor of economics at Edinburgh University and former World Bank advisor  Professor Gordon Hughes, for the climate skeptic thinktank the  Global Warming Policy Foundation (GWPF).

The GWPF issued a press release for the submission on Monday - it appears to be largely based on a  previous report Hughes wrote for the GWPF. The report, entitled 'Why is wind power so expensive?' was covered  in the Daily Mail earlier this year. 

£300 on bills?

The Express headline comes from Professor Hughes's estimate that: "the average household electricity bill" will rise from:

"£528 per year at 2010 prices to a range from £730 to £840 in 2020"

…a projected rise of up to about £300, in a scenario where UK onshore wind power grows to 12 gigawatts (GW) and offshore to 24GW. This rate of growth in wind is slightly higher than current government predictions.

Professor Hughes's calculations differ markedly from more mainstream estimates, like those from the Committee on Climate Change (CCC), which has calculated that if the government fulfills its current plans for increasing renewable capacity and energy efficiency it will add £110 to household electricity bills in 2020. In oral evidence to the the ECC Committee, the chair of the CCC, David Kennedy, said that about £50 of that rise is due to support for wind power - one sixth of Professor Hughes' estimation of £300.

But in his submission, Hughes criticises such "official" predictions for being "subjective", and states it is "impossible to determine whether the claims are reliable".

In his calculations, the figures for cost are based on comparing "additional system costs" for wind with a "Gas" scenario where the same amount of demand is met by gas power only. But his assessment is itself subjective and difficult to assess - the numbers for additional system costs are referenced in the text only to "Author's calculations", and as far as we can tell, these haven't been published.

£124 billion vs £13 billion

Based on Hughes's submission, the Express also states that the government's green crusade "blunder" will cost £124 billion, adding: "the same electricity would be provided by modern combined gas cycle plant for £13 billion - nearly 10 times cheaper".

The Express has taken these figures from Hughes's submission - kind of. But it has misread them, and confused the capital costs the submission talks about - the cost of building energy infrastructure - with the total cost of supplying electricity.

The Express might be forgiven for doing so, as it's not really stressed that the costs Hughes is comparing are only the costs of building infrastructure, and don't include the fuel costs associated with gas power - i.e. the cost of the gas you need to burn to produce electricity.

The press release, for example, reads:

"The necessary investment for this Wind scenario would amount to about £124 billion. The same electricity demand could be met from 21.5 GW of combined cycle gas plants with a capital cost of £13 billion - the latter option is cheaper by an order of magnitude."

Given the comparison the submission is making, it seems quite important to note the suggested figure of £13 billion doesn't include the cost of the fuel required to produce the electricity, particularly as the future costs of gas are likely to continue to fluctuate.

One has to turn to Hughes's earlier report for a clear statement about this: "of course, the higher capital and non-fuel operating costs for the renewable scenario ... may be offset by a reduction in fuel costs..." Hughes suggests that in his scenario, this doesn't make as much of a difference "as might be expected", for a variety of different reasons.

"A dissentient"

Hughes gave oral evidence to the ECC Committee last month in the company of the chair of the CCC David Kennedy, Dr Robert Gross from Imperial College and Professor Samuel Fankhauser from LSE. In the session Hughes played, in his own words, the "role of dissentient", with the other three experts reflecting the views of their institutions, that wind power is in Kennedy's words an "attractive option in the sense that it is a cost-effective, low-carbon technology".

In discussing the assumptions behind Hughes' work, Dr Gross criticised aspects of Professor Hughes' suggested future scenarios for the electricity system which leads to the headline figures as "hypothetical instances where we do things that are just, frankly, plainly daft". In responding to Hughes' argument that they were just using different assumptions he added "I am not referring to my own modelling; I am referring to colleagues in electrical engineering at Imperial College, and I am referring to a vast international literature that has looked at this."

Imperial College's  submission to ECC on the costs of wind power, for example, cited a wide range of research and gave significantly lower estimates for the impacts on cost of maintaining 'backup' capacity of wind power.

Professor Hughes' document is one of eighty-seven different written submissions to the Energy and Climate Change Committee's investigation, which we may look over in more detail. It is, notably, the only one to make front page of a national newspaper.

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