Ralph Collings

Engineer in Society Report

23 November 2011

Should off-shore wind turbines be an important part of British energy policy or are they a waste of money?
Ralph Collings, University of Bristol rc8860@bristol.ac.uk 23 November 2011

Ralph Collings

Engineer in Society Report

23 November 2011

Contents
1 2 Introduction ..................................................................................................................................... 3 Why not keep using Fossil Fuel Power? ......................................................................................... 3 2.1 2.2 2.3 3 Climate Change ....................................................................................................................... 3 Sustainability ........................................................................................................................... 4 Self-sufficiency ....................................................................................................................... 4

Government Policy on Future Energy Generation and Planned Projects ........................................ 5 3.1 3.2 Renewables Obligation............................................................................................................ 6 Offshore Wind Policy.............................................................................................................. 7

4 5

Comparing Energy Costs................................................................................................................. 8 Additional Considerations when Comparing Power Sources.......................................................... 9 5.1 5.2 5.3 Energy Resource...................................................................................................................... 9 Economic Factors .................................................................................................................. 10 Public Opinion....................................................................................................................... 11

6 7

Conclusion ..................................................................................................................................... 11 Works Cited................................................................................................................................... 13

Ralph Collings

Engineer in Society Report

23 November 2011

1 Introduction In recent decades wind power has grown from a fledgling industry into a significant part of the modern energy generation market. Fossil fuelled electricity offers a number of drawbacks which are likely to see it gradually phased out of use in years to come. In particular, high emissions of greenhouse gases, dwindling quantities of available fuel and the United Kingdoms reliance on fuel imports from unstable countries make it an unappealing choice for future electricity production. Driven by legally binding targets to increase renewable energy use and reduce carbon dioxide emissions, the government proposes to vastly increase the capacity of offshore wind generation by 2020 and beyond. However, this strategy requires tens of billions of pounds of investment in wind energy development and the existing electricity infrastructure. This paper aims to explain the positive and negative attributes of offshore wind generation, the drivers of renewable energy policy, and the strategy implemented by the government. Due to the scale of the topic, information is presented as an overview. Further details are available from the sources listed in the bibliography. 2 Why not keep using Fossil Fuel Power? In the United Kingdom, electricity has primarily been generated through the burning of fossil fuels since the late 19th century. Oil, coal, and more recently natural gas have been the foundations of our national power supply. However, there are increasing concerns about such sources due to their impacts on climate change, lack of sustainability and reliance on imported fuel. 2.1 Climate Change It is now accepted by the wide majority of scientists that the temperature of the Earth is increasing. In July 2005 a collaboration of 11 national science academies, including those of the United Kingdom, USA, Germany, France, Japan, India and China, released a joint statement (Joint science academies, 2005) declaring: There is now strong evidence that significant global warming is occurring... It is likely that most of the warming in recent decades can be attributed to human activities. Preliminary results from the ongoing Berkeley Earth (Berkeley Earth, 2011) project to quantify global temperature have drawn a startling conclusion that the average temperature on Earth has risen by approximately 1C in just 40 years from 1970 onwards.

Ralph Collings

Engineer in Society Report

23 November 2011

Figure 2-1 The Decadal Land-Surface Average Temperature (Berkeley Earth, 2011) The significance of the increasing temperature only becomes apparent when the impact on our planet is considered. Whilst the current temperature is not causing great damage, further increase has the potential to cause havoc. Estimates given by Nicholas Stern (Stern, 2006) suggest that an increase of 2-3C could cause: crops to fail in developing regions, water shortages for one billion people by the 2080s, possible collapse of the Amazonian rainforest, extinction of 20-50% of species, onset of irreversible melting of the Greenland ice sheet, reduced ability of natural carbon absorption, and the risk of large, abrupt shifts in the climate system the climate becomes more unstable. In order to prevent the possibility of a rise of above 2C, swift action must be taken to reduce the levels of greenhouse gases in the atmosphere. A further statement by 13 joint science academies in 2009 (G8+5 Academies, 2009) recommends rapidly increased adoption of, and investment in, renewable energy technologies such as wind, geothermal, solar energy, biofuels and wave power. Increasing the use of renewable energy generation sources, such as offshore wind, is one of the ways in which we can reduce our emissions of greenhouse gases. 2.2 Sustainability Supplies of fossil fuels such as coal and oil are limited. It is expected that at some point the global supply of these fuels will peak that the rate of production will drop due to the exhaustion of easily available resource. The timing of these peaks is hotly debated and estimates vary hugely. Predictions in coal production suggest a peak any time between 2025 (Energy Watch Group, 2007) and 2150 (Hubbard, 1956). However, the timing of peak oil is much sooner with many believing that it has already occurred. Even the most optimistic estimates suggest a peak by 2030 (UK Energy Research Centre, 2009). Clearly if electricity demand is to be met in the distant future, sustainable, long-lasting energy sources should be sought. Offshore wind power is one possible, sustainable alternative. 2.3 Self-sufficiency The production of fossil fuels within the United Kingdom is fast dwindling. Latest government figures show a 24.8 percent decrease in indigenous natural gas production in the second quarter of 2011 when 4

Ralph Collings

Engineer in Society Report

23 November 2011

compared to the same period in 2010 (DECC, 2011). To offset this loss, a large amount of all fossil fuels are now imported. Figure 2.2 indicates that since 2004 the quantity of natural gas imported has sharply increased a necessity as supplies from the North Sea fall.

Figure 2-2 UK trade in natural gas from 1980 to 2010. The red line indicates net imports (DECC, 2011) In 2010, net imports were 413.1TWh, compared to the 1074.5TWh used (DECC, 2011). In other words, 38% of natural gas used was imported. The same government document shows that 47% of electricity supplied in 2010 was generated from natural gas. Such a reliance on imported fuel leaves consumers in the UK extremely vulnerable to any failure in the supply, be it due to technical difficulty or politics. The use of renewable power sources such as offshore wind to generate electricity in the UK would reduce our reliance on imported fossil fuels. 3 Government Policy on Future Energy Generation and Planned Projects In response to the concerns over future electricity production outlined in section 2, the UK government and European Union (EU) member states have created a number of legally binding targets regarding renewable energy and greenhouse gas emissions. Renewable energy EU leaders have set targets meaning that between its member states 20% of all energy used should be from renewable sources by 2020. This includes energy used for electricity, heating and transport. The UKs contribution towards the EU targets is to achieve 15% renewable energy by this deadline. The lead scenario proposed by the government is to meet this through 30% of renewable electricity generation, primarily wind power, alongside improvements in energy use for heating and transport (DECC, 2009). Emission reductions The Climate Change Act of 2008 (DECC, 2008) commits the United Kingdom to reducing greenhouse gas emissions. Compared against 1990 emissions as a benchmark, a reduction of 34% must be achieved by 2020, and reduction of 80% by 2050.

Ralph Collings

Engineer in Society Report

23 November 2011

In order to meet these goals, the government has created legislation to stimulate the industrial growth of many renewable electricity sources. Table 3-1 gives a central estimate of renewable electricity sources deployed by 2020. Technologies Onshore wind Offshore wind Biomass electricity Marine power (wave and tidal) Other (including hydro and solar) Central range for 2020 (TWh) 24-32 33-58 32-50 1 14*

Table 3-1 Breakdown of renewable electricity deployment in 2020 (DECC, 2011) It can be seen that biomass generation capacity will approximately match that of offshore wind, with onshore wind not far behind. Wave and tidal power are both in their infancy and will require significant investment to reach the 1TWh prediction. Hydro and solar will make up the remainder of the renewable energy mix. The UK government is therefore relying on a spread of renewable energy sources to meet its targets, with offshore wind a significant proportion. 3.1 Renewables Obligation The primary strategy employed by the government to promote renewable energy growth is the Renewables Obligation. This legislation encourages electricity suppliers to source electricity by renewable means and penalises them if they fail to meet government targets. It works as follows: 1. Each year, the UK government issues a Renewables Obligation Order. This specifies the number of Renewable Obligation Certificates (ROCs) that electricity suppliers must earn for each MWh of power generated in the upcoming 12-month period. It also details a buy-out cost should the target not be met. These values are calculated based on the current levels of renewable generation, and increased year on year to push growth in the area. 2. Following the next period suppliers earn ROCs for every MWh generated through lowcarbon means. The number of ROCs varies depending on the source. For example, at the time of writing onshore wind receives 1 ROC per MWh whereas wave energy gets 2 ROCs per MWh (see Table 3-2). Offshore wind is granted 1.5 ROC per MWh, or 2 if the generation facility is fully accredited. This allows the government to adjust the growth of each energy technology individually. 3. For every MWh that an electricity supplier falls below the government target, a penalty is paid into a national buy-out fund. Once administrative costs have been taken from this fund, the rest is split between all electricity suppliers in proportion to the number of ROCs they produced. Therefore the subsidy received by renewables will increase more if electricity suppliers fail to meet their targets by a greater margin than the previous year. Hence, the system is self regulating high-carbon power sources are penalised by an amount which provides a financial benefit to renewable generation. The value of each ROC has risen steadily
*

This estimate includes energy from non-electrical generation sources including geothermal and domestic heat. Exact predictions for solar and hydro prediction are therefore unknown. Where 1 MWh (Mega-Watt hour) is equivalent to 1000 units of electricity

Ralph Collings

Engineer in Society Report

23 November 2011

since the scheme was introduced in 2003, and stands at 38.69 for the period 1 April 2011 to 31 March 2012 (Ofgem, 2011).

Technologies Landfill gas Sewage gas, co-firing on non-energy crop (regular) biomass Onshore wind; hydro-electric; Offshore wind; dedicated regular biomass Wave; tidal stream; fuels made using anaerobic digestion; dedicated biomass burning energy crops (with or without CHP); dedicated regular biomass with CHP; solar photovoltaic; geothermal;

ROCs / MWh 0.25 0.5 1.0 1.5 2.0

Table 3-2 Number of ROCs awarded to common renewable energy sources (DECC, 2011)

3.2 Offshore Wind Policy The United Kingdom already leads the way in the offshore wind sector with an installed capacity of 1.52GW at the time of writing (Renewable UK). Based on the methods used by Renewable UK, this is sufficient to power around 850 thousand homes when at peak operating conditions. However, in order to meet its targets, the UK government plans to increase this capacity by almost 12 times to 18GW in 2020.

Figure 3-1 Installed offshore wind capacity, forecast to 2016. Bars show annual installed capacity, line shows the total capacity (Renewable UK, 2011)

Offshore wind generation stations granted full accreditation or that have additional capacity recognised in the period 1/4/10 to 31/3/14 are awarded 2 ROCs/MWh Based on an estimated annual household energy consumption of 4.7MWhrs

Ralph Collings

Engineer in Society Report

23 November 2011

In order to facilitate this massive ramp up in offshore wind generation, the Crown Estate, which owns the seabed up to 12 miles from the coast, has held a number of leasing rounds. In each one, companies have been able to bid for the rights to build offshore wind turbines on any of the specified sites. The first round was held in 2001, with 18 companies reaching agreements for leases totalling 1GW. The second round was initiated in 2003, when approximately 6.2GW was leased. Figure 3-1 shows that these projects, signified by light green colouring, are only now beginning to reach completion. The Crown Estates third round of leasing offers up to 32GW of new generation capacity. The government will be hoping a significant amount of this capacity is in operation by 2020 if they are to meet the renewable energy targets set. To push offshore wind energy the government has given it a high number of ROCs in comparison to many other sources. However, this is required in part to offset the cost of installing and generating electricity in harsh sea conditions (see 4 Comparing Energy Costs). This is one of the largest drawbacks to offshore wind energy, and to combat the problem the government is pledging up to 30m of investment from 2011-2015 specifically to drive down costs (DECC, 2011). Additionally, up to 60m has been promised for the development of offshore turbine manufacturing facilities at UK ports. To further improve expertise in offshore wind power, the government has announced intentions to create and fund an Offshore Renewable Energy Technology and Innovation Centre. These facilities would create a hub for industry companies, who could then work together and with universities to flourish. Not only would this promote industry growth and create new jobs, but it would also cement the United Kingdoms reputation for technical expertise in the field. 4 Comparing Energy Costs An important factor in the consideration of renewable sources is the cost of the energy generated. Figure 4-1 estimates the present cost of electricity from a range of sources, as calculated by the Department of Energy and Climate Change.

Figure 4-1 Estimated cost ranges for electricity technologies in 2010 (DECC, 2011)

Ralph Collings

Engineer in Society Report

23 November 2011

The figure excludes any subsidies, ROCs or feed-in tariffs. It is clear that offshore wind power is currently a little more expensive than many alternative, green energy sources. This is not helped by a high capital cost - the engineering required to install these large devices in rough seas adds hugely to their expense. A 2010 report by Mott MacDonald (Mott MacDonald, 2010) estimates at present a capital cost of approximately 124 per MWh. This compares unfavourably to 12.4 per MWh for combined-cycle gas turbines (CCGTs) and 33.4 per MWh for advanced super critical coal plants. Fuel costs, when taken into account push the ultimate electricity cost closer to that of offshore wind. With all factors taken into account, Figure 4-1 shows that CCGTs provide electricity at approximately half the price of offshore wind. Financially, there is little incentive for the UK government to invest in non-fossil fuel plants. However, government strategy also takes into account the expected changes in electricity cost over time. The prediction of energy costs in 2020 is given in Figure 4-2.

Figure 4-2 Estimated cost ranges for electricity technologies in 2020 (DECC, 2011) The chart shows that the cost of electricity from less-developed, low carbon sources is predicted to drop compared to 2010 levels. This is to be expected as the engineering behind these devices improves, operational experience is gained and larger scale manufacture is possible. However, the energy cost from CCGTs has actually increased due to the prospect of higher fuel costs. Nevertheless, it remains a cheaper source of energy than offshore wind. Looking at alternative renewable sources, onshore wind remains cheaper than offshore, biomass is comparable and anaerobic digestion (AD) plants offer the potential for cheaper power. It can be concluded that, based purely on energy costs, offshore wind power would be poor value for money and an unwise investment. 5 Additional Considerations when Comparing Power Sources When comparing different electricity generation technologies, there are a number of additional considerations. 5.1 Energy Resource It is widely proclaimed that the UK potentially has the greatest offshore wind resource in the world. Strong winds blowing in from the Atlantic Ocean reach Britain and Ireland first and weaken as they travel over the continent. Figure 5-1 shows that in the North of the United Kingdom, mean wind speeds are in the region of 10m/s at 100m, close to the hub-height of modern offshore wind turbines. 9

Ralph Collings

Engineer in Society Report

23 November 2011

Nevertheless, such winds cannot be expected at all times in 2010 the average load capacity for offshore wind was just 30.5 percent of the maximum output (DECC, 2011). One of the largest drawbacks to wind power is the intermittent generation of power. Firstly, the National Grid faces considerable difficulty in predicting how much electricity should be generated elsewhere to satisfy demand. Secondly, with wind power making up a large part of our future energy mix, how will we produce electricity on a still day? Both problems can be partly alleviated through the combination of different renewable energy sources. For example, solar power could provide an alternative to wind on a bright, still summer day. Additionally, a surplus of electricity from wind sources could be generated, with the excess stored for use later. Potential forms of storage include hydrogen gas, compressed air, pumped hydroelectric power, batteries and flywheels (Jacobson & Delucchi, 2011).

Figure 5-1 Generalised offshore wind climate across Europe (Ris National Laboratory, 1989) 5.2 Economic Factors The economic impact of investment in offshore wind energy is not straightforward. A rise in the average cost of electricity is inevitable, predicted to be 18% for domestic consumers (DECC, 2010). This will reduce consumer spending power. However, the expected growth in wind power will lead to thousands of jobs being created. The organisation Renewable UK has published research which estimates as many as 67,700 people may be working in the offshore wind industry and supply chain by 2021 (Renewable UK, 2011). The government has suggested that offshore wind could be a prime opportunity to re-establish manufacturing jobs, bringing the benefits of reduced unemployment and 10

Ralph Collings

Engineer in Society Report

23 November 2011

extra tax revenue. Further, the United Kingdom is in a brilliant position to exploit its current position as a market leader in wind power through the export of goods and services. Renewable UK predict spending on domestic offshore wind projects to total 80 billion overseas and 50 billion within the UK by 2022 (Renewable UK, 2011). The export of industry goods and services will provide 25 billion in income to help offset the expense. However, the large capital expenditure will be offset by a reduction in fossil fuel imports once wind farms are erected. When all new wind farms have reached the end of their lifetime in 2042, the net balance to the government is estimated at between a 12 billion loss and 2 billion gain, dependent of fossil fuel costs during the period. 5.3 Public Opinion In a survey of 1,931 adults, MORI found that 78% support the building of offshore wind farms with only 6% opposing their construction (Ipsos MORI, 2005). Figure 5-2 shows how this compares against other common energy generation sources. Of those polled, no alternative power method was viewed more favourably. Onshore wind farms received 72% support. It could be speculated that the main reason for their lesser popularity is the greater visual impact they have on countryside. Offshore wind farms are typically located at least 12 miles from the coast at which distance they are barely visible from shore if at all.
100

Level of support or opposition (%)

80 60 40 20 0 -20 -40
Coal (if zero CO2 emissions) Nuclear Gas Wind onshore Wind offshore

Strongly Oppose Tend to oppose Tend to support Strongly Support

Figure 5-2: Support and opposition for common energy sources (Ipsos MORI, 2005) In the same survey 83% of participants agreed that the UK should aim to be self sufficient in energy. This helps explain the reduced support for non-renewable sources. In conclusion the results give a clear indication that the wide majority of people would like to see an increase in offshore wind capacity and renewable energy in general. 6 Conclusion In summation, the combined effects of global warming and insecurities in the supply of fossil fuels in the UK have made further generation from high-carbon fuels hard to justify. With no operational greenhouse gas emissions or fuel requirement, offshore turbines have become a very viable generation technology. Additionally, polls have shown that public opinion favours increasing offshore wind capacity. This, combined with vast wind resource has driven the government to propose a strategy in which offshore wind capacity would need to multiply by twelve times in just 9 years. To achieve this, 11

Ralph Collings

Engineer in Society Report

23 November 2011

renewable generation costs are heavily subsidised and there is significant state investment in the industry. However, the fundamental cost of producing electricity from offshore wind turbines is significantly greater than non-renewable power sources, nuclear power, onshore wind and many biomass sources. This is exacerbated by high capital costs in the manufacture and deployment of the turbines. Further to this, the intermittent nature of electricity generation poses the National Grid difficulties in power management. The measures necessary to deal with varying, uncertain electricity generation may well add further to energy costs. To help offset the expenditure in converting to a more renewable electricity network, the government will be hoping the UK economy can achieve success in the export of wind energy goods and services. Following the investigation undertaken for this report, both positive and negative aspects of offshore wind farms have been examined. With the government required to meet stringent renewable energy targets, it is the view of the author that current policy on wind turbines is justified. Alternative renewable technologies are currently even less cost effective than wind power or cant offer the required generation capacity. The government is left with little choice but to support the few technologies which could, when combined, satisfy renewable electricity demand in 2020. However, if the only targets in place were to achieve reduced greenhouse gas emissions it would be difficult to justify the choice of wind energy above nuclear power. Nuclear energy does not emit carbon and is cheap, reliable, has fuel in ample supply and has a good recent safety record. Perhaps the one drawback is significant public opposition on account of safety fears. It is the opinion of the author that offshore wind turbines should remain an important part of British Energy Policy.

12

Ralph Collings 7 Works Cited

Engineer in Society Report

23 November 2011

Berkeley Earth. (2011, October). Berkeley Earth Temperature Averaging Process. Retrieved from http://berkeleyearth.org DECC. (2008). Climate Change Act 2008. DECC. (2011). Digest of United Kingdom Energy Statistics 2011. DECC. (2011, 11 11). Eligible Renewable Sources and Banding Levels. Retrieved from Department of Energy & Climate Change: http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/renew_obs/eligibilit y/eligibility.aspx DECC. (2011). Energy Trends: September 2011. DECC. (2010). Estimated impacts of energy and climate change policies on energy prices and bills. DECC. (2009). The UK Renewable Energy Strategy. DECC. (2011). UK Energy in Brief 2011. National Statistics. DECC. (2011). UK Renewable Energy Roadmap. Energy Watch Group. (2007). Coal: Resources and Future Production. G8+5 Academies. (2009). Climate change and the transformation of energy technologies for a low carbon future. Hubbard, M. K. (1956). Nuclear Energy and the Fossil Fuels. American Petroleum Institute. Ipsos MORI. (2005). Energy Issues Research. Jacobson, M. Z., & Delucchi, M. A. (2011). Providing all global energy with wind, water, and solar power, Part II. 39. Joint science academies. (2005). Global Response to Climate Change. Mott MacDonald. (2010). UK Electricity Generation Costs Update. Ofgem. (2011, 11 11). Renewables Obligation. Retrieved from http://www.ofgem.gov.uk/Sustainability/Environment/RenewablObl/Pages/RenewablObl.aspx Renewable UK. (n.d.). Offshore Wind Farms. Retrieved October 31, 2011, from Renewable UK: http://www.bwea.com/ukwed/offshore.asp Renewable UK. (2011). Offshore Wind: Forecasts of future costs and benefits. Renewable UK. (2011). State of the Industry Report - Onshore and Offshore Wind: A Progress Update. Renewable UK. (2011). Working for a Green Britain: Vol 2. future Employment and Skills in the UK Wind & Marine Industries. Ris National Laboratory. (1989). European Wind Atlas. Roskilde. Stern, N. (2006). The Economics of Climate Change. Cambridge University Press. UK Energy Research Centre. (2009). Global Oil Depletion: An Assessment of the evidence for a near-term peak in global oil production. 13