Remember all those debates that used to be had over the viability of renewables? The argument against them because of their costs are starting to look rather weak, says IoM Friends of the Earth’s Cat Turner
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There was a time when opponents of wind and solar power said they shouldn’t displace fossil-fuelled electricity plants because they weren’t economic.
This would have been hilarious, had it not been such a serious matter.
Only this summer, the IMF produced a report entitled ‘Counting the Cost of Energy Subsidies.’ You can find it at http://www.imf.org/external/pubs/ft/survey/so/2015/new070215a.htm.
As well as reminding readers that fossil fuel subsidies dwarf those given to the renewables industries, it pointed out that worldwide, ‘Eliminating global energy subsidies could reduce deaths related to fossil-fuel emissions by more than 50 per cent and fossil-fuel related carbon emissions by over 20 per cent’.
Those are pretty persuasive arguments, even if you don’t care about human wellbeing - think of the savings to world health and social care systems if we could avoid those unnecessary deaths.
The knock-on costs of the environmental and public health harms caused by fossil fuels are often conveniently ignored, but are significant.
In fact, in the UK itself, the fossil fuel sector received subsidies of over £26bn in 2015.
That’s huge - more than £400 per individual, and the equivalent of 1.4 per cent of UK GDP.
In comparison, the UK only spends a bit more - 2.1 per cent of GDP - on defence, which sets in context just how much its citizens are paying to prop up this last-century, environmentally damaging industry.
Compared to the handout the UK Government gives to fossil fuels, its support for renewables has been laughable. In 2014-15 it was just £3.5 billion, according to figures from the Department of Energy and Climate Change itself.
This despite the health savings, new jobs and other benefits that flow from the renewables industry.
This hasn’t stopped the gas-crazed UK government from making a massive song and dance about the need to cut renewables subsidies because: ‘They’re adding to householders’ bills’.
This sends emerging businesses to the wall, with significant job losses, to protect fossil-fuel interests.
But even without government subsidies, wind power is now the cheapest electricity to produce in both the UK and Germany, according to a recent report from Bloomberg New Energy Finance.
In addition the Netherlands also announced in separate reporting that it had also passed this point as well in 2015.
Falling costs of production and maturing technologies have helped breach this threshold.
And these benefits are likely to grow, because of what’s called the ‘capacity factor’.
That’s the percentage of a power plant’s maximum potential that’s actually achieved over time. Here’s how it works.
If we think about a solar project, it’s obvious that there’s no sun at night, and it can also be variable in daytime - brightness, weather, seasons.
So a project that can produce 100 mWh on a sunny day might produce just 20 per cent on average, over a year. We call that a 20 per cent ‘capacity factor’.
An advantage of fossil fuel power plants is that they can have very high and predictable capacity factors.
A natural gas plant, for example, might produce about 70 per cent of its potential.
The reason it won’t reach 100 per cent is because of things like seasonal demand and time-outs for maintenance.
This is all changing, though, and it matters a lot. Right now, the widespread uptake of renewables is effectively lowering the capacity factor for fossil fuels. Once a wind or solar project is built, the marginal cost of the electricity it produces is almost nothing-free. But fossil fuelled power plants need more fuel for each unit of power produced. If you’re an energy company with a choice, and make rational decisions, you’ll choose the free option every time.
This should prove to be a virtuous cycle as we see more renewables installed around the world, coal and natural gas plants will get used less.
Indeed the lifetime costs attributed to new coal and gas plants over the second half of 2015 have continued to rise.
As less coal and gas is used, the cost of using them for power generation will continue to rise. As the cost of coal and gas power rises, more renewables will be installed regardless of concerns about energy security, environment or human health.
Let’s hope the island catches up soon and starts to explore the huge opportunities in onshore wind and solar so as to secure these energy benefits for its citizens both in terms of energy and price security and the new jobs and economic opportunities we’re missing out on.