Matt Ridley

Pride in our offshore wind farms is wildly misplaced. They are costlier
than all other forms of energy

Here’s a short quiz. Question One: which source of energy is allowed to charge the highest price for its electricity? Question Two: which source of energy is expected to receive the greatest capital expenditure over the next seven years? The answer to both questions is offshore wind.

Offshore wind farms are the elephant in the energy debate. Today, the energy department estimates that electricity prices are 17 per cent higher as the result of green policies and that this will rise to 33 per cent by 2020 or 44 per cent if gas prices fall, as many expect. Offshore wind is the single biggest contributor to that rise. Of the £15 billion a year that the Renewable Energy Foundation thinks consumers are going to be paying in total green imposts by 2020, the bulk will go to support offshore wind.

Britain is a proud leader in offshore wind. “The UK has more offshore wind installed than the rest of the world combined and we have ambitious plans for the future,” says Ed Davey, the Energy Secretary. I wonder why that is. Could it be that other countries have looked at the technology and decided that it’s far too costly? George Osborne says he does not want Britain out ahead on green energy. He should take a long hard look at why we are so far out ahead on this extravagant folly.

Currently we get under 3 per cent of our electricity from offshore wind, or less than 0.5 per cent of our total energy. If Mr Davey’s ambitions are realised and 20 per cent of our electricity comes from offshore wind in 2020, then we will need 20 gigawatts of capacity because wind turbines, even at sea, operate at less than 40 per cent of capacity. That’s about six times what we have today and the cost of building it would be greater than the investment in nuclear energy over the period.

On the face of it, sticking wind turbines in the sea sounds like a great wheeze. There’s no need to tangle with turbulent parish councils worried about their views, or to bribe landowners with annual payments. The wind blows a little more reliably and strongly. But the engineering problems have proved daunting. Three years ago the cement grouting began to dissolve on more than half of all Europe’s offshore turbines, leading the turbines to move on their foundations. This necessitated hefty repairs and redesign. The urgency of meeting political targets was partly to blame. “There is an alarming asymmetry between construction risks and the number of players who can manage these risks effectively,” says one insider.

As a result, costs have not fallen as expected. The Government had set a target of cutting the price it offered to pay for offshore wind power to “only” double the wholesale price, but it quietly abandoned that ambition this summer when it announced that the “strike price” for offshore wind would drop only a little. Connecting cables and transformers, dealing with corrosion, losing days to seasickness, stopping pile-driving during the season when it might upset porpoises — these have all proved more challenging than expected and have added to the costs and delays. Many in the industry think that the lifespan of a turbine in the North Sea is going to be a lot shorter than the hoped-for 25 years. One study by Gordon Hughes of Edinburgh University found that the operating efficiency of Danish offshore wind farms dropped from 39 per cent to 15 per cent after ten years. Certainly, Britain’s oldest offshore wind farm — off Blyth in Northumberland — has spent a good part of its first 12 years out of action.

It is also becoming clear that monstrous turbines are not as environmentally clean as had been imagined. Last week the £3 billion Navitus Bay wind farm, off Dorset and highly visible from the Isle of Wight, revealed that it needed 22 miles of cabling to be dug into the New Forest. Sea birds are at risk too. Pink-footed geese are apparently avoiding wind farms on migration, while songbirds are thought to be at risk of becoming confused by flashing blades while crossing the North Sea. The British Trust for Ornithology concluded that 2,603 adult and 1,056 immature gannets will be killed each year by existing and consented wind farms around the British coast. Since gannet populations are currently growing, this may not matter much, but it is a far greater toll than taken by any other industry.

And then there is the risk of an oil tanker hitting a turbine, or hitting another ship because of having been squeezed into a narrow shipping lane past a wind farm. As Lord Greenway (an Elder Brother of Trinity House) put it in the House of Lords this year, the risk of collision is increased by more than 400 per cent at some choke points and “if you place an object in the sea, either a fixed structure or a floating one, sooner or later a ship is bound to hit it”. Of course, none of these objections is fatal in itself — all economic activity entails some risks. They are however a reminder that this very expensive form of electricity is not “clean”.

Yet even the high price on offer — £155 per megawatt-hour compared with £90 for nuclear and below £50 for the typical wholesale price — may be too low to lure the investment needed if the target of 20 gigawatts of offshore power is to be met by 2020. With coal being phased out, gas restricted and onshore wind, wave, wood and water of limited capability, and even with a hugely ambitious nuclear programme, we will need some £45 billion invested in offshore wind by 2020, and another £54 billion by 2030, if the lights are to be kept on. That is considerably more than in any other energy technology, even nuclear.

Such sums are surely now unrealistic in a time when energy prices are a political hot potato. If you are sitting in the boardroom of an energy company worried about the reputational damage of putting up prices today, you must be getting cold feet about the future cost of offshore wind. Or, as a spokesman for SSE said last week: “Although we are continuing to develop offshore wind projects, it’s now also becoming increasingly hard to see how a final decision on investment in new offshore wind capacity could be made before the 2015 election.”

The defenders of renewable energy used to argue that fossil fuel prices would rise inexorably as supplies ran out, thus making even expensive offshore wind look like a bargain. Some still do —  Lord Stern made this argument to the BBC last week. But most now realise that the superabundance of shale gas and oil has postponed peak oil once again and is already driving down coal, gas and oil prices in the United States, with other parts of the world likely to follow suit. There is very little chance now of offshore wind undercutting coal or gas fired power in coming decades.

In short, Ed Miliband’s politicising of energy prices may have killed the industry he most cherishes. Soon the
energy debate will no longer be about whether offshore wind farms should or should not be built, but about how we are to fill the gap caused by the inevitable failure of the offshore wind industry to meet the capacity targets expected of it. And that’s a difficult question, given that the obvious answer — shale gas — has just effectively been made less feasible by a new environmental rule passed by the European Parliament.

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