The Saudi Arabia of....

I’ve heard about things being the Saudi Arabia of various kinds of energy too many times.  Let's analyse that statement:

Saudi produces around 10 million barrels of oil a day - and a barrel of oil contains around 6 GJ.

Let's put that in scientific notation, as the zeroes will get away from us:

10^7 barrels at 6*10^9 J = 6*10^16 J/day.

Over one year, that equals 365 * 6*10^16 = 2.2 * 10^19 J/yr

Now let's look at wind farms:  a 1GW Wind farm, operating at a capacity factor of (let’s be generous) 50%, over a year produces 8760 * 60 * 60 * 50% * 10^9 = 16 * 10^15 J/yr = 1.6 * 10^16 J/yr

Roughly speaking, dividing 2.2 * 10^19 by 1.6 * 10^16 = about 1400.

So we need 1400  x 1 GW wind farms to be energy equivalent to Saudi Arabia.  With 12 GW already installed in Europe, and plans to get to around 230 GW by 2030, we're a long way off.  And as for the tidal energy claim, I think it only stands up if we consider it a commentary on concentration of resources, not absolute levels.

LCOE - why it's unfair on renewables technologies and how wind is cheaper than you think

I've been playing around with Levelised Cost of Energy and have seen that some arbitrary choices in its application can unfairly discriminate against renewables projects.  Renewables projects are long term and have low operating costs, and high capex, whereas conventional thermal projects have lower capital cost as a proportion of total costs, and higher operating costs (because of their fuel costs).

LCOE is conventionally calculated as NPV(costs)/NPV(energy) - the discounted sum of costs divided by the discounted total energy production.  Hidden within this are two critical factors - discount rate, and inflation rate.  There's a third one, too, which is a bit more difficult to handle - uncertainty in fuel gas prices.

LCOE is usually calculated without any inflation and BEIS' most recent Electricity Generation Costs report applies a discount rate of 7.8% to gas, but 8.9% to offshore wind.  On this basis, BEIS has CCGT's LCOE (exceeding carbon taxes) at £47/MWH, and offshore wind at over £100.

It gets interesting when you scale back the offshore wind costs, to get an LCOE equal to the recent strike prices under CfD2 of £57.50.

Inflation
Current HMG inflation forecasts are about 2-3% - and it seems that adding inflation at 2% to the BEIS figures increases the CCGT LCOE to £60/MWh and the offshore wind one to £64/MWh - a much closer gap.

Discount rate
Given that the revenue risk in offshore wind CfD projects is much mitigated by the CfD (and its Government backing), and there is real variability in future gas prices, it seems reasonable to use the same discount rate for CCGT and offshore wind.  Especially if the offshore wind develop can mitigate capex risk through its contract structure.  At the same discount rate, the offshore wind LCOE (in an inflation free work) falls from £57.50/MWh to £54/MWh.

Combination
If you accept my points on both inflation and discount rates, the LCOE's for the technologies align at £60/MWh!

And that's before you consider the fuel price risk faced by CCGT projects (or the intermittency of offshore wind, to be fair).

But this does suggest that offshore wind isn't just miles cheaper than nuclear, it's also competitive with the backbone technology of CCGT!

ITES 2017

Busy this week attending the International Tidal Energy Summit. Ambitious title, but legitimate, because there are developers here from Scotland , Spain, United States and Wales.

There’s lots of discussion about how to reduce levelised cost of energy and whether it’s best to start small and innovate quickly or go large soon. 

What do you think?

Redfield Tidal Report

Redfield Consulting is pleased to announce that its updated Tidal Energy Report is now available.  Covering more than 150 tidal energy devices, and reviewing the top 20 in more detail, the report provides an authoritiative and objective overview of the current state of the tidal stream energy sector.

For device developers, it provides a review of the competitive landscape; for potential investors, it permits identification and high-grading of potential investment opportunities.

It is available as a pdf for £295+VAT, or in hardcopy for £350+VAT.  More details are available in the flyer available at http:www.redfieldconsulting.co.uk/Redfield Tidal Report flyer.pdf

If you’d like to order, would like further information or have any questions, please contact Redfield Consulting, at reports@redfieldconsulting.co.uk

Scotrenewables update

A tweet from Scotrenewables claims 20MW output over 24 hours.  With a 2MW device, that equates to a capacity factor of 20/(24*2) = 41.7% over the period.

The period was September 21/22, when the moon was new and tides were therefore at their springiest - especially as it's around the autumn equinox, when springs are at their springiest.

But either way, a capacity factor of better than 40% is comparable with offshore wind.

State of play on offshore wind CfDs and RO projects

I thought that a list of wind farms and their financial support arrangements might be useful:

RO-accredited operational projects (per OFGEM ROC Register)

Generating Station	MW	Country	Commission Date	Organisation
Barrow Offshore Windfarm - A	90	England	01/01/2006	Barrow Offshore Wind Limited
BLYTH OFFSHORE WIND FARM	2	England	01/02/2001	EON UK plc
Blythe Offshore Wind Turbine WTG 2	2	England	01/12/2000	EON UK plc
Burbo Offshore Windfarm - A (31/01/07)	90	England	01/07/2007	SeaScape Energy Ltd
Kentish Flats Ltd - A,C	90	England	01/08/2005	Vattenfall Wind Power Ltd
North Hoyle Offshore Wind Farm  - A	60	Wales	28/10/2003	Beaufort Wind Ltd
Scroby Sands Wind Farm	60	England	01/05/2004	EON UK plc
Gunfleet Sands I	108	England	24/07/2009	SeaScape Energy Ltd
Gunfleet Sands II	65	England	24/07/2009	SeaScape Energy Ltd
Beatrice Offshore Windfarm	10	Scotland	08/05/2007	REPSOL SINOPEC RESOURCES UK LIMITED
Rhyl Flats Wind farm	90	Wales	15/07/2009	Innogy Renewables UK Limited (Wind)
Ormonde Wind Farm	148	England	18/08/2011	Ormonde Energy Limited
Thanet Offshore Wind Farm	298	England	02/07/2010	Vattenfall Wind Power Ltd
Robin Rigg Offshore Wind Farm (West)	89	Scotland	18/07/2009	EON UK plc
Sheringham Shoal	315	England	02/09/2011	Scira Offshore Energy Limited
Gunfleet Sands Demo	12	England	26/08/2013	DONG Energy Gunfleet Sands Demo (UK) Ltd
Walney Offshore Wind Phase I	182	England	13/01/2011	Walney (UK) Offshore Windfarms Ltd.
Greater Gabbard	500	England	23/02/2011	Greater Gabbard Offshore Winds Limited
London Array Offshore Windfarm	626	England	04/11/2012	London Array Ltd
Teesside windfarm	61	England	05/07/2013	Teesside Windfarm Ltd
FEPODWT	7	Scotland	31/03/2014	ORE Catapult
Westermost Rough	205	England	12/09/2014	Westermost Rough Limited
Humber Gateway Offshore Wind Farm	215	England	02/03/2015	EON UK plc
West of Duddon Sands Offshore Wind Farm	374	England	10/02/2014	Morecambe Wind Limited
Walney Offshore Wind Phase II	182	England	25/08/2011	Walney (UK) Offshore Windfarms Ltd.
Lincs Wind Farm	256	England	27/08/2012	Lincs Wind Farm Ltd
Kentish Flats Extension Wind Farm	50	England	01/09/2015	Vattenfall Wind Power Ltd
Robin Rigg Offshore Wind Farm (East)	83	Scotland	20/04/2010	EON UK plc
Gwynt y Mor	570	Wales	30/09/2013	Gwynt y Mor Offshore wind farm limited
Inner Dowsing Offshore Wind Farm	90	England	20/04/2008	Inner Dowsing Wind Farm Ltd
Lynn Offshore Wind Farm	90	England	15/03/2008	Lynn Wind Farm Ltd
Race Bank	565	England	08/06/2017	DONG Energy RB (UK) Ltd

Contracts for difference - project name, capacity, developer, CfD price, target commissioning date

CfD introductory round (April 2014)

Burbo Bank, 258MW, DONG, £150/MWh, 2017

Hornsea 1, 1.2 GW, DONG, £140/MWh, 2020/21

Walney Extension, 660MW, DONG, £150/MWh, 2017/18

Beatrice, 664MW, Repsol and SSE, £140/MWh, 2018/19

Dudgeon, 400MW, Statkraft/Statoil, £150/MWh, 2017

CfD Round 1 (February 2015)

East Anglia One, 714MW, Scottish Power, £119.89/MWh, 2017/18

Neart na Gaoithe, 448MW, Mainstream, £114.39/MWh, 2018/19

CfD Round 2 (September 2017)

Triton Knoll, 800MW, Innogy/Statkraft, £74.75/MWh, 2021/22

Moray Firth, £57.50/MWh, 2022/23

Hornsea 2, DONG, £57.50/MWh, 2022/23

There are a number of other projects under development at present which may, if they commission in time, be ROC-eligible (e.g. Rampion), or alternatively could apply for CfDs or operate on a merchant basis.