Yesterday’s publication of a report on the comparative cost of different electricity generation scenarios by AF Consult (available by following the link from here) was well-trailed in advance. It was also well-knocked in advance, as the government and renewables industries got in their pre-emptive first strike.
The headline from the report is a suggestion that the UK’s binding carbon reduction targets can be met more cheaply by building gas and nuclear power stations rather than wind turbines. It will be like manna for those opposed to wind turbines, of course. But then, if it really is possible to meet the UK’s targets by a cheaper means than governments are currently pursuing, why wouldn’t we want to do that?
As ever, it isn’t quite that simple, and although ‘if’ is a small word, in this case it represents a large caveat – or rather, series of caveats.
The first, and most obvious, is that it assumes that the targets set for the proportion of electricity which must come from renewable sources can simply be ignored. Breaking an international obligation – the target is a binding one – is not exactly a minor issue. For sure, if the target is the wrong one, then one can argue that it should be renegotiated; but simply to assume that it can be ignored is not a safe assumption to make.
And it is assumptions which go to the heart of the problem with this report. It’s based on a complex mathematical model. There’s nothing wrong with that; lots of things are based on mathematical models. But models are only ever going to be as good as the assumptions with which they start; and in this case, my main argument with the conclusions isn’t the methodology or the calculations performed, it’s the assumptions which act as the starting point. And if the assumptions are wrong, it's hardly likely that the conclusions will be very robust.
Not all the assumptions are explicitly stated; nor would I expect them to be. But four in particular are worth more attention.
The first is the question of future fuel prices, and the comparison between fuel prices. They have used the central estimates from a DECC study. That’s an entirely reasonable thing for the report authors to do; they have to start somewhere. The question, though, is whether the DECC have got it right, and on that point, I’m sceptical.
One of the big advantages of renewables is precisely that they are not vulnerable to fuel price shocks during their operational life (although, obviously, variations in fuel price can affect construction costs, this is a small factor in the overall cost comparison). Gas prices, on the other hand, can be much more volatile. The volatility is generally upward as world demand increases, although I’d accept that shale gas – if we decide to exploit it – could change that equation. But to what extent do we want to gamble on the price – or, potentially worse, put ourselves in a position where we are dependent on fracking?
The second big assumption concerns the cost of decommissioning nuclear plant and nuclear waste management. Again, the report’s authors have, entirely reasonably, used the assumptions to which the UK Government is working, and which were detailed in a DECC report from Parsons Brinckerhoff in 2011. They had to start somewhere; my problem with that, however, is that since no-one is yet entirely certain how waste will be managed for the long term, there is a high degree of uncertainty about the costs involved. Experience suggests that they are more likely to increase than to decrease.
The third big assumption is that at least some of the new gas plants can be fitted with CCS technology. This assumption is key to achieving the required reduction in carbon emissions, but as the report itself conceded, the technology is to date unproven on the large scale required.
And the fourth is that we do not expand the production on electricity to increase its use in heating and transportation. If we do make such an increase, then the carbon reduction targets cannot be achieved with the fuel split used in their scenarios. We would have to use renewables.
I agree with the UK Government assessment that this paper is badly flawed. The tragedy is that it will, nevertheless, be recycled regularly in the local and national press by anti-wind campaigners who will claim that it ‘proves’ that we shouldn’t be building new wind turbines. It actually proves no such thing (and didn’t even set out to prove that, merely to compare the costs of alternative approaches of meeting a target).