Helm and the death of UK wind and solar
In his recent post on the Helm Review Euan Mearns predicted that Helm’s recommendation that “intermittent producers need to bear the cost of converting intermittent to firm capacity” will, if adopted, “sound the death knell for new wind and solar projects in the UK”. This post presents ball-park estimates of the economic impacts of Helm’s recommendation for two cases – wind-plus-storage and wind-plus-CCGT. The wind-plus-storage case is uneconomic at any reasonable carbon price and the wind-plus CCGT case is at best marginally competitive with alternative generation sources. These results suggest that Euan’s prediction is probably correct for wind and probably for solar too, although I did not review any solar cases.
First a brief disclaimer on Helm’s “firm capacity” recommendation. It can be interpreted to mean that intermittent producers would have to convert their output into 100% dispatchable form before it can be sent to the grid, and for the purposes of analytical simplicity I have assumed here that this interpretation is the correct one. However, Helm’s recommendation refers not to “firm capacity” but to “equivalent firm capacity”, which according to Helm:
…. focuses on the de-rated capacity value to the system of the different forms of generation. As the cost of addressing intermittency falls with DSR and storage, so the de-rating factors lessen.
In three pages of explanation (beginning on page 192 of his review) Helm fails to make it clear how these de-rated capacity factors are to be calculated, and because I don’t know how to calculate them either I have ignored the potential impacts of a de-rating approach.
Estimating wind generation
Rather than attempt a market-wide study I structured this review around a hypothetical 1GW offshore wind farm in the North Sea, the annual generation from which I assumed would be proportional to the generation achieved by Danish offshore wind farms in 2016 (hourly data from P-F Bach). I then performed the following operations:
…click on the above link to read the rest of the article…
