The National Audit Office underestimate the cost of offshore wind projects for Britain by 29%.
Hornsea Project One wind farm will see 174 turbines - each taller than the Gherkin - built 75 miles off the coast of Grimsby, spanning an area five times the size of Hull. The 3 phases of the project will build 1200 MW of wind power. Each turbine will be 6.9 GWe. Dong Energy, majority-owned by the Danish state, will build the wind farm and be paid a contract for difference of £140 per megawatt hour (2012 prices). This increases in line with the consumer prices index (CPI). The wind farm will be finished until 2019, and operational by 2020. The contract for difference lasts 15 years. This contract was awarded in 2014, without competition, by former energy secretary Ed Davey in 2014. Since then we've seen competitive offshore wind contracts awards can be as low as £115/MWh
Historically, offshore capacity utilization around Britain has been 33%. These turbines are taller. We should be generous and assume they will harvest wind at a rate of about 35%. That makes the effective capacity of this installation about 420 MWe.
With a wholesale market price of, say £45/MWh, and guaranteed price of £147.1/MWh, we now calculate the subsidy. (147.1 - 45) × 1200 × 0.35 × 24 × 365¼ = £376 million/year. Over a 15 year life that makes a £5,639 billion taxpayer subsidy. For the wholesale price of British electricity. £35/MWh is the minimum, £55/MWh a maximum, and £45/MWh an average.
|CPI||strike price (£/MWh)|
DECC did their calculations with 2013-14 prices which they think are £144/MWh. I'm not seeing that. Looks more like £145/MWh. Redoing my calculation as (145 - 45) × 1200 × 0.35 × 24 × 365¼ = £368 million/year. £5.523 billion over 15 years. The National Audit Office, NAO, numbers add up to £4.2 billion over 15 years. I calculate the cost at 31.5% more than the NAO.
The table compares my prices with DECC's prices. In the table below I assume DECC 2013/14 strike prices (as shown in the table). My calculations show offshore wind projects to be 29% more expensive than DECC/NAO numbers. DECC/NAO offshore wind total = £11.7 bn; Mine = £15.11 bn.
Table data : page 14 of Early contracts for renewable electricity
|Projects||Technology||Target commissioning date||Contract term or fixed end date||Capacity developer aims to install (MWe)||Strike price (£/MWh, 2012 prices)||Strike price (£/MWh, 2013-14 prices)||DECC||My|
|cost of support (£bn, 2013-14 prices)|
|Teesside Renewable Energy Project||Biomass combined heat and power||31/07/2018||15 years||299||125||129||1.9||1.9|
|Drax 3rd Conversion Unit (Unit #1)||Biomass conversion||01/02/2016||2027||645||105||108||1.7||1.7|
|Lynemouth Power Station||Biomass conversion||31/12/2015||2027||420||105||108||1.1||1.1|
|Beatrice Offshore Wind Farm – Phase 1||Offshore wind||31/03/2018||15 years||280||140||144||1.0||1.28|
|Beatrice Offshore Wind Farm – Phase 2||Offshore wind||31/03/2019||15 years||384||140||144||1.3||1.75|
|Burbo Bank Extension Offshore Wind Farm||Offshore wind||31/03/2017||15 years||258||150||154||1.0||1.29|
|Dudgeon Offshore Wind Farm – Phase 1||Offshore wind||01/03/2017||15 years||90||150||154||0.4||0.45|
|Dudgeon Offshore Wind Farm – Phase 2||Offshore wind||01/08/2017||15 years||210||150||154||0.8||1.05|
|Dudgeon Offshore Wind Farm – Phase 3||Offshore wind||01/10/2017||15 years||102||150||154||0.4||0.51|
|Hornsea 1st GW Offshore Wind Farm – Phase 1||Offshore wind||31/03/2019||15 years||400||140||144||1.4||1.82|
|Hornsea 1st GW Offshore Wind Farm – Phase 2||Offshore wind||31/03/2020||15 years||400||140||144||1.4||1.82|
|Hornsea 1st GW Offshore Wind Farm - Phase 3||Offshore wind||31/03/2021||15 years||400||140||144||1.4||1.82|
|Walney Extension Offshore Wind Farm – Phase 1||Offshore wind||31/03/2017||15 years||330||150||154||1.3||1.66|
|Walney Extension Offshore Wind Farm – Phase 2||Offshore wind||31/03/2018||15 years||330||150||154||1.3||1.66|