Ed Hoskins: Capital Cost and Production Effectiveness of Renewable Energy in Europe – the Data

Guest post from Ed Hoskins
A comparison of both the Capital Cost and Energy Production Effectiveness of the Renewable Energy in Europe.

The diagrams and table below collate the cost and capacity factors of Renewable Energy power sources, Onshore and Off-shore Wind Farms and Large scale Photovoltaic Solar generation, compared to the cost and output capacity of conventional Gas Fired Electricity generation.

The associated base data is shown below:

The comparative results for the 15 European nations with major commitments to renewable Energy in Europe are shown below:

Expenditures and effectiveness across Europe is shown below:

These calculations are straightforward. Published figures from the 2013 version of “The State of Renewable Energies in Europe : EurOberv’ER Report [i]”, give the installed base of Renewables Name Plate capacity in Megawatts and also the total annual energy output recorded in Gigawatt hours. This annual output can be translated to equivalent Megawatt installed capacity by accounting for the 8760, (365 * 24), hours in the year[ii]. The reported output over the year converted to equivalent installed Megawatts of conventional generation capacity is then compared with the installed Nameplate capacity to give the capacity rating.

No figures were available for the actual output from Offshore Wind and so the higher end capacity factor of 35% has been assumed to generate the approximate output from Offshore wind power.

These figures show that European Nations have invested capital costs of at least ½ $trillion to provide electricity generating output of ~2.9% of the total 1024GW European generating capacity.  That production could have been achieved using conventional generation technologies for ~16^th of the cost. The electrical output that has been achieved is intermittent, dependant on weather and the earth’s rotation. Nor is it dispatchable to meet demand.

Although this calculation uses an estimate of the actual Renewable energy produced over the year, it in no way represents the usefulness of that electrical production. Electricity production is not necessarily available when needed to meet demand. In the event of any overproduction it is likely to be useless: particularly for example in Germany load shedding has on several occasions has resulted in a negative price for the Renewable electricity produced. Currently there are no mechanisms for industrial scale storage of electrical power:  the only option is pump storage which is only conceivable in a limited number of mountainous locations.

Note: Historically Wind power has proven to be a great technology for traditional applications, for example, grinding corn and pumping water, where it is not essential to have the product at a precise moment in time and the resulting product can be stored.

Comparison of costs

A yardstick of comparative capital cost values quoted in US$ is provided in the recent US Government Energy Information Association 2013 report[iii], table 1. It gives “Overnight Capital Costs” / Gigawatt for each type of Renewable and Conventional Energy. In addition it also gives comparative values for Operation and Maintenance, including fuel costs, for each generation type.

“Overnight Capital Cost”, (just as if an power generating installation has been created overnight), and as noted in the US EIA report is the standard comparative measure for capital costs used in energy industries. The specific Overnight Capital Costs used include:

• Civil and structural costs
• Mechanical equipment supply and installation
• Electrical and instrumentation and control
• Project indirect costs
• Other owners costs: design studies, legal fees, insurance costs, property taxes and local electrical linkages to the Grid.

However and very importantly “Overnight Capital Costs” specifically do not include:

• Remote access costs, which for Renewable Energy in many cases will be very onerous
• Extended electrical linkages to the Grid from remote locations
• Provision of Back-up power supply, “spinning reserve” for times when renewable power is unavailable.
• Fuel costs for actual generation and the spinning reserve
• Maintenance
• Financing   etc.

These further costs, excluded from “Overnight Capital Costs”, mean that the additional capital commitment for Renewable Energy is probably significantly more than the simple capital cost comparisons presented in these tables.

The US Energy Information Association data denominated in US$ is used.  These results are primarily for comparative purposes.  They do not purport to give precise actual expenditures in the various nations and by governments.  However, they do indicate the order of magnitude of the capital sums involved.  From the European Renewable Energy installed base the capital costs of each renewable energy type is calculated and this is cross-compared with the actual output achieved, priced as it were produced using conventi0nal Gas Fired power.  The actual output is then priced at the capital cost of normal Gas fired electricity generation to give the capital cost comparison.

In other words the actual energy output derived over the year from renewable sources could have been generated for about a sixteenth of the cost by conventional Gas Fired generation. And, using conventional technology, that energy would have been usefully available whenever needed to meet demand.

Based on this US comparative pricing, the major Nations in Europe have expended of the order of about $0.5trillion on Renewable Energy installations to generate an amount of electrical energy that could have been provided by conventional sources for about 16th of the capital cost. This 16^th of the cost also represents an estimate of the approximate cost of the spinning reserve needed to support Renewable the intermittent and non-dispatchable Technologies.

Renewable Energy technologies:

• Onshore Wind power is the most effective form of Renewable Energy in capital cost terms. It is only ~9 times the cost of conventional power generation. However its capacity measures only ~23% on average.
• Offshore Wind power is about ~17 times more expensive in capital terms but its capacity factors mean that it should be significantly more productive when compared with Onshore installations. Nonetheless as well as the significant additional capital costs, Offshore Wind power appears to have major problems with costly longer term maintenance and reliability[iv].
• Large scale photovoltaic Solar power has proven to be the least economic Renewable Energy source at about 34 times in terms of capital cost, but its maintenance costs are hardly more than the maintenance and fuel costs of conventional Gas Fired generation. On average, in Europe it provides ~11% of its nameplate capacity. As well as the impact of cloudy weather Photovoltaic units are susceptible to performance degradation from Ice or snow or obscuration with accumulating dust in drier climates.  Solar power might operate reasonably well at mid latitudes but is a poor investment in Northern Europe where yields are low because of adverse weather, the seasons and of course the daily rotation of the earth.

Although the costs of the actual Photovoltaic elements of the systems are reducing, these high-tech elements are becoming an ever smaller part of the final installation.  The costs of the support infrastructure and linkage to the grid are not reducing to any extent. It is also clear that the service life of the actual solar cells is limited, degrading over time, and it is particularly important that the DC to AC inverters are an expensive element in any solar system which also have a very limited operational life.

Renewable energy acceptance and mix of technologies in individual nations

For the purposes of this note only 15 European nations with the most significant commitments to Renewable Energy are considered.  Altogether these 15 Nations account for about 96% of the Renewable Energy commitment across Europe.

The following charts show the comparison between the different European committed nations.

The scale of the commitment to each Renewable Energy type by each Nation is shown below.

And the proportional investment in each type of Renewable Energy is shown below:

Acceptance of Renewable Energy is assessed by the Renewable Megawatts installed  per ‘ooo,ooo head of population.  Unsurprisingly Denmark has the greatest penetration followed closely by the investment commitment in Germany.

The experience of certain individual nations

Germany

Germany has been the leader of renewable Energy promotion and installation in the Europe.  Its investment in Renewables has apparently been comparatively both almost the most expensive and also the least efficient overall, mainly because of its more than 50% commitment to Solar Photovoltaic power.

Germany has made these investments in the expectation that that its Energiewende “Energy Transition” policy would make the country a world leader in advances in Renewables. This optimistic approach is not being justified [v] [vi].

Germany has ~38% percent of all Renewable installations in Europe, costing about $200 billion in these comparative cost terms. Of these installations more than half are for large scale photovoltaics. These have cost ~64% of Germany’s Renewable investment. German photovoltaics operate with a capacity factor a capacity factor of only ~9%. Overall Germany’s renewables operate at an overall capacity factor of less than 14%.

It seems incredible that Germany, a Nation with such great engineering and pragmatic prowess, could have become so convinced about Renewable Energy that it has collectively managed to forget that Germany is a northern country, where it is often cloudy and that the world rotates every day. ie Solar Energy can never operate well. See later about Intermittency and Dispatchability.

In addition Germany by policy is withdrawing from Nuclear electricity generation after the Fukushima tsunami.  As a result Germany is now installing coal fired generating plant as rapidly as possible to maintain base load power.  This new plant burns either lignite, (the most polluting type of coal), or ordinary coal. These plants have no facility for Carbon Capture and Storage, probably because CCS in operation is a costly engineering fallacy.

Note:  Were it to work, Carbon Capture and Storage, CCS, is a costly way to throw away comparatively miniscule amounts of useful plant food.

In spite of the fact that Renewable Energy output has grown ~fourfold, there has been an overall increase of CO2 emissions from Germany since the year 2000.

Germany has invested very little in Offshore Wind Power development and so far its experience has been poor [vii], emphasising the technical difficulties of ever making Offshore power fully operational. Even if large scale Offshore wind power in the North sea were eventually successful there is also a major question about the non existence of suitable high capacity transmission lines across Germany from the North to its industrial heartlands [viii].

Onshore wind power in Germany accounts for ~35% of its massive Renewable investment but about half of its Renewable electricity output.  German wind power  operates at a relatively low level of capacity at ~18%. Unsurprisingly Germany has almost the highest installation of Renewables / head of population

Spain

Spain has made the second largest commitment to Renewable Energy in Europe at ~16% of the European total. Even though Spain has a southerly position in Europe it has invested in a preponderance of Wind power, (~80%), rather than Solar power. It is understood that Renewables subsidies have been a significant contributor to the Spanish financial crisis and that they are now being cut back substantially.

Italy

Italy has made the third largest commitment to renewable Energy in Europe at ~14.5% of the European total. Not unreasonably with its southerly location this investment is largely in Solar power ~68%. It is believed that Renewable Energy subsidies are contributing to the poor financial position of the country. Renewables in Italy are close  to being the least cost effective.

France

At 6.9% France has made a significant commitment to Renewable Energy, about 65% in wind Power.  As France already has a lower CO2 output / head than China[ix], (currently ~75%, less ), because of it 85% commitment to Nuclear power electricity generation, investment in Renewable Energy would seem to be a rather pointless exercise as it is unlikely to reduce CO2 output further, than the French have already achieved. The French CO2 output level  / head at 5.50 tonnes/head is rapidly approaching the world-wide average at 4.9 tonnes/head.

United Kingdom

At 6.3% of European installations the UK still only has a moderate commitment to Renewable Energy so far. But because of the legal obligations made in the 2008 Climate Change Act, this investment is expected to grow substantially, unless it is eventually repealed. The UK has encountered substantial resistance to on-shore Wind Power and has committed ~30% of its capacity offshore.  These installations are high cost and will be subject to the reliability and maintenance problems of all off-shore wind generation into the future.  At ~8% Solar power in the UK has a poor capacity factor.

Denmark

Denmark is the world leader in wind power installation.  It has the highest installed base of Renewables per head but its installations are still only 2.7% of the total European installations. Its Wind Power capacity record at 28% is the highest in Europe as opposed to the European average of ~22%.  Danish Renewable Energy is insignificant in saving CO2 emissions, being only 0.13% of current (2013) World CO2 emissions and only 1.14% of total EU emissions.  By contrast Danish Renewable energy is about ~2.7% of the total Renewable installation effort in the EU.

 Belgium

Although only accounting for ~2% of European renewable energy, Belgian investments in Renewable Energy are the least cost effective and have a very poor capacity factor.

Intermittency and Non-dipatchability

There still remains a further major problem with all Renewable Energy sources. Their electrical output is intermittent and non dispatchable. Their electrical output cannot respond to electricity demand as and when needed. Energy is contributed to the grid in a haphazard manner dependent on the weather, as reported here for Germany[x] and here for the United Kingdom[xi].

The following two charts from the show the magnitude of the problems associated with Renewables in Germany:

Summer.

Winter.

Solar power inevitably varies according to the time of day, the state of the weather and also of course radically with the seasons. Solar power works most effectively in latitudes nearer the equator and it certainly cannot be seriously effective in Northern Europe. In the example above in July 2014 wind power input varied from 15.5 GW to 0.18 GW and the Solar contribution varied from nil to some 15 GW.

Thus this Renewable Energy variability combined with the “Renewables Obligation”, which mandates that the electricity grid has to take energy from renewable sources preferentially, if available, resulted in demands on conventional generation in Germany varying from ~23GW to ~47GW over the period.

In Germany, its massive commitment to solar energy can briefly provide up to ~20% of country wide demand for a few hours either side of noon on some fine summer days, but at the time of maximum power demand on winter evenings solar energy, costing ~65% of their capital investment, input is necessarily nil[xii].  Germany has similar insolation and cloudiness characteristics as Alaska and the UK being even further North has an even worse solar performance.

But at the same time the output from wind power can be equally variable[xiii].  Electricity generation from wind turbines is fickle, as in the week in July 2014, clearly shown above, where Wind-Power input across Germany was close to zero for several days. Similarly an established high pressure system, with little wind over the whole of Northern Europe is a common occurrence in winter months, when electricity demand is at its highest.

Conversely, on occasions Renewable Energy output may be in excess of demand and this has to dumped expensively and unproductively.

This is especially so, as there is still no solution to electrical energy storage on an industrial scale. That is the reason that the word “nominally” is used throughout these notes in relation to the name plate capacity outputs from Renewable Energy sources.

Conclusions

Overall European nations that have committed massive investments to Renewable Energy.  Conservatively in capital alone this amounts to at least ~$0.5 trillion or ~2.7% of combined annual GDP.  

This investment has resulted in a “nominal” ~30Megawatts of electrical Generating Capacity from an installed Nameplate Capacity of ~169Megawatts.  This is only one sixth of the total installed nameplate generating capacity.  It was installed at ~16 times the capital cost.

As well proven in France the most effective way of reducing and controlling CO2 emissions is the use of Nuclear Power for Electricity Generation.

Renewable Energy now provides ~2.9% of European Generating Capacity for the price in capital terms only of ~$0.5trillion.  

At the resulting price $16.87 billion/Gigawatt for Renewable Energy, replacement of the 1024GW European Generating fleet would cost ~$17.3trillion or according to the IMF[xiv] a sum closely equivalent to the whole annual GDP of the European Union of $18,5trillion.

But that 30GW of Renewable Energy production is not really as useful as one would wish, because of its intermittency and non-dispatchability.

Renewable Energy installations in Europe have cost about 16 times as much as the equivalent Gas Fired electricity production. These uneconomic investments have been promoted by government subsidies and other market manipulation.  

But the expense of the policies has been loaded mainly on the electrical bills of Electricity customers:

these policies have already caused very substantial hardship to poorer individuals in European society

these policies are severely damaging the competitiveness of European industries.

[i] http://www.energies-renouvelables.org/observ-er/stat_baro/barobilan/barobilan13-gb.pdf

[ii] Prof David MacKay in “Sustainable Energy – without the hot air”, page 334

[iii] http://www.eia.gov/forecasts/capitalcost/pdf/updated_capcost.pdf

[iv] http://notrickszone.com/2014/09/11/spiegel-germanys-large-scale-offshore-windpark-dream-morphs-into-an-engineering-and-cost-nightmare/

[v] http://notrickszone.com/2014/12/05/top-renewable-energy-expert-warns-of-collapsing-euro-energy-supply-germanys-energy-policy-suicidal/

[vi] http://notrickszone.com/2014/12/09/energiewende-takes-a-massive-blow-top-green-energy-proponent-concedes-blunder-with-ugly-consequences-huge-blow-to/

[vii] http://notrickszone.com/2014/09/05/giant-400-mw-bard-i-offshore-windpark-shut-down-extended-yet-again-delay-is-now-more-than-1-year/

[viii] http://www.thegwpf.com/vahrenholt-lecture/

[ix] https://edmhdotme.wordpress.com/2014/09/13/the-record-of-recent-man-made-co2-emissions-1965-2013/

[x] http://www.agora-energiewende.org/service/recent-electricity-data/stromerzeugung-und-verbrauch/

[xi] http://www.ukpowergeneration.info

[xii] http://theenergycollective.com/robertwilson190/456961/reality-check-germany-does-not-get-half-its-energy-solar

[xiii] http://notrickszone.com/2014/07/21/germanys-habitually-awol-green-energy-installed-windsolar-often-delivers-less-than-1-of-rated-capacity/

[xiv] http://en.wikipedia.org/wiki/Economy_of_the_European_Union