Blowing away money

The Federal Government may have dumped, technically deferred, one nutty green scheme, that of the emissions trading, but an equally nutty scheme requiring electricity distributors to buy green electricity remains in place.

This scheme is nutty because no one has shown that green electricity supplied to an operating power network actually reduces emissions. The government, various green lobby groups and the mass of voters have simply assumed that it does. Doubts about efficiency losses due to the whole network having to be retailored to accommodate renewables, and more doubts over just how much additional backup generator capacity will be required for intermittent power sources, are either ignored or, when acknowledged, dismissed as “myths”.

There are now a few, incomplete reports from real world networks that use substantial amounts of alternative/renewable/green power, and those reports indicate that the problems of wind networks are not myths at all. Those reports indicate that these sources of energy may be up to three times more expensive than conventional coal and gas generated energy. As for the actual savings in carbon achieved by renewables, there are virtually no reliable estimates from operating grids.

To explain the problem let us stay with the most common form of alternative electricity generation, that of wind power. If wind power is generating just 1 or 2 per cent of power on a network grid operators can work around it. Power supply has to equal demand at all times on power grids, but changes of 1 or 2 per cent either way can be tolerated. At levels of 5-10 per cent grid operators cannot simply adjust the grid, instead they have to adapt the grid to using wind power. Because wind power can vary a lot this usually means they have to ensure that there are more open cycle gas turbines available. These are like aircraft engines and they can be powered up and down quickly to meet changes in supply if the wind falls or picks up. However, they are less efficient than larger, closed cycle gas plants and that efficiency will be further degraded because they have to power up and down frequently to accommodate changes in wind. That variability of wind also means that grid managers also have to keep more of what are generally called spinning reserves, that is generators that are operating (and so generating emissions) off the grid which can be connected at a moment’s notice.

Power grids always have some spinning reserve in case one of the conventional power plants have to shut down unexpectedly. Grid managers use arcane risk management procedures to work out how much reserves of various types they should have at five-minute, ten-minute and two-hour intervals and so on, throughout the day.

A network using lots of wind has to increase those reserves, but by how much?

Green academics and wind lobby groups insist that only a small amount of additional reserves will be required, and that overall wind energy will not cost all that much. A common estimate is that a 20 per cent penetration of wind (that is wind generates 20 per cent of total power) will boost wholesale prices by 10 per cent. This implies that wind power is 50 per cent more expensive than conventional power.

Engineers who have done the calculations have come up with estimates that wind power is double the cost of conventional electricity, and that the additional reserve requirements will almost completely wipe out any savings in carbon. (The references to these reports are given in my upcoming book.) Engineers tend to be conservative in dealing with new technology, it’s what they do, but then the green academics and lobby groups are hardly likely to emphasise difficulties. A glance through the reports shows that the assumptions they use can be changed to reach any conclusion the author wants.

However, there are some bits of evidence from the real world use of wind, including the much quoted Wind Report 2005 issued by E.ON Netz GmbH, which owns a lot of wind power stations on the Baltic coast. The report says that “traditional power stations with capacities equal to 90 per cent of the installed wind power capacity must be permanently online in order to guarantee power supply at all times”.

This is not fair to wind as, for various reasons, at the time of the report the company could not use wind towers over a wide area and had to rely mostly on wind off the Baltic which is highly variable. Now the company is drawing on wind towers over a large slice of Germany and uses wind forecasting systems to reduce reserve requirements. So what level of spinning reserves does the company now consider to be safe? E.ON Netz has said nothing at all on that key issue since the 2005 report. In fact, no company or grid manager using wind in any quantity seems to have said anything about reserve requirements. As any favourable pronouncement would have been repeated endlessly by green academics, this silence is ominous but that is about all anyone can say.

On the issue of costs there is a report from the Rheinisch-Westfalisches Institut fur Wirtschaftsforschung (a leading economic research institute based in Essen) issued in October 2009. Entitled Economic impacts from the promotion of renewable energies: The German Experience, it says that extensive subsidies for wind power has resulted in the country having the second largest installed wind capacity in the world, behind the US.

Despite having a lot of wind turbines and retail distributors of power paying wind farms three times the going wholesale rate for power (through the mechanism of “feed-in tariffs”), only about 6.3 per cent of total power consumption is supplied by wind. The subsidies required to get to that level, the report estimates, costs power consumers an additional 7.5 per cent on their bills. The contribution from photovoltaics is a negligable 0.6 per cent, despite utilites paying eight times the going rate for electricity from those projects.