Wind Power in the UK (PDF). - Sustainable Development Commission

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Wind Power in the UK (PDF). - Sustainable Development Commission

4 Costs and benefits of windSimilarly, 20% wind by 2020 would add about0.17p/kWh to electricity prices, with gas at30p/therm (today’s prices), or 0.03p/kWh withgas at 40p/therm. This compares with a netaddition of 0.32p/kWh with gas at the originalprice of 19p/therm.Figure 12 shows how the 20% wind powerscenario compares to the conventional(gas/coal) scenario by breaking down the costcomponents used in the analysis. This illustrateshow additional balancing and infrastructurecosts are only a small part of the net additionalcost of incorporating 20% wind power.Further qualificationsIt should be noted that the net additionalsystem cost of wind energy derived from thisanalysis might be slightly pessimistic, for threereasons:• No allowance is made for the ‘cost of carbon’under the EU Emissions Trading Scheme, sinceit is difficult, while the scheme is in itsinfancy, to estimate an overall incrementalprice for gas generation. This issue is dealtwith below.• It is argued by some that the price of gasshould be adjusted for ‘market risk’.Generation costs for a gas-fired plant mayincrease during its life, due to increases in theprice of gas. Several studies have attemptedto quantify this risk by ‘loading’ the price ofgas, and the additional generation cost is ofthe order 1p/kWh 41 . It should be noted thatthere is no comparable price uncertaintyassociated with wind energy generation costsas, once the plant is built, generation costsare more or less determined – apart fromunforeseen charges in interest rates, whichwould affect all generators to some extent.• The model used by Dale et al reflects ‘reallife’, in as much as the introduction of new,high load factor plant will depress the loadfactor of all the existing plant as discussed inAnnex B. This results in a small increase in thegeneration costs of the existing plant. Theaddition of new nuclear, rather than wind,plant to the portfolio would push upFigure 12: Breakdown of the cost of electricity generation under conventional and 20% wind powerscenarios (with gas at 30p/therm)pence/kWh4.54.03.53.02.52.01.51.00.5■ Transmission infrastructure upgrades■ Onshore connection■ Offshore transmission & connection■ Onshore wind capital + O&M■ Offshore wind capital + O&M■ Balancing services■ Fuel0.0Conventionalscenario20% windpower scenario34 Wind Power in the UK sustainable development commission

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