The wind in its sales: UK set to be first tur­bine su­per­power

With off­shore costs plum­met­ing, the coun­try will ri­val Saudi Ara­bia soon, says Am­brose Evans-Pritchard

The Daily Telegraph - Business - - Business -

The eco­nomic ar­gu­ment over wind power has been set­tled. Bri­tain’s na­tional gam­ble on off­shore wind ar­rays in the North Sea and the Ir­ish Sea has been vin­di­cated in spec­tac­u­lar style. This should be pro­claimed, as­sid­u­ously nur­tured, and ex­panded where com­pat­i­ble with marine ecosys­tems. If you are look­ing for a turbo-charged ven­ture to lift Bri­tish for­tunes af­ter Brexit, off­shore wind is as good as it gets.

The prospects are sud­denly so en­tic­ing that we could in the­ory be an ae­o­lian su­per­power by the 2030s, trad­ing places with Saudi Ara­bia to be­come the en­ergy sheikhdom of the north­ern seas. The ques­tion is not whether we can do it, but whether we should com­pro­mise the in­tegrity of the North Sea in such a fash­ion.

In­dus­try in­sid­ers are not sur­prised by the strike price of £57.50 per megawatt hour un­veiled this week for two gi­ant wind projects, half the lev­els struck in con­tracts two years ago. They al­ready knew the tech­nol­ogy was ad­vanc­ing by leaps and bounds. But it seems to have stunned ev­ery­body else.

The UK is the world leader by far in off­shore wind with 10 gi­gawatts (GW) of in­stalled ca­pac­ity planned by the late 2020s, as is fit­ting given the near per­fect mix of shal­low wa­ters and op­ti­mal wind speeds through the North Sea. The depth at Dog­ger Bank off York­shire is 50 feet in places – it was once a Pa­le­olithic hunt­ing ground, with woolly rhi­nos. Economies of scale are kick­ing in with a vengeance. Dong En­ergy was able to slash its ten­der for the 1.4GW Hornsea Two project – the world’s big­gest off­shore ar­ray – be­cause it al­ready op­er­ates Hornsea One nearby. The in­fra­struc­ture is there. The two will share the same hub in Grimsby.

Think what this is do­ing for that once-blighted sea­port, home to the world’s big­gest fish­ing fleet be­fore the “Cod Wars” and the Com­mon Fish­eries Pol­icy re­duced it – fa­mously – to the “worst place to live in Eng­land”.

Across the river, Siemens has opened a 700-strong fac­tory for wind tur­bines in Hull. “The Hum­ber is be­com­ing the ‘en­ergy es­tu­ary’. We’re see­ing a re­gen­er­a­tion of coastal towns along the North East,” says Matthew Wright, head of Dong’s op­er­a­tions in the UK. What be­gan as a for­eign push by Dan­ish and Ger­man com­pa­nies has be­come a Bri­tish ven­ture over time, tap­ping into the spe­cial­ist skills of the North Sea oil and gas in­dus­try. UK lo­cal con­tent was 43pc two years ago: it will cross 50pc with the lat­est projects.

JDR Ca­bles in Hartle­pool has be­come a sup­plier of un­der­sea power lines to Europe, China, Africa, and the Mid­dle East. The town’s Vic­to­ria Dock is hum­ming again. “The UK has be­come a global leader in the sup­ply chain,” says Mr Wright. “It is a fan­tas­tic suc­cess story.”

The Hornsea Two strike price is so far be­low the nu­clear con­tract for Hink­ley Point – in­dex-linked and al­ready £102 per MWh – that it en­tirely changes the na­ture of Bri­tain’s en­ergy de­bate. Patently, no such nu­clear deal could ever be struck again in the new cir­cum­stances. A new con­tract would have to jus­tify it­self against “big wind”.

The UK has locked it­self into a £50bn sub­sidy for France’s EDF last­ing 35 years. We will have to live with this since the le­gal and diplo­matic costs of walk­ing away are too high. But if we re­place our nu­clear plants in the fu­ture, they will have to be leaner an­i­mals – such as molten-salt re­ac­tors that can use up our stock­piles of plu­to­nium waste rather than mak­ing more of it.

You can make the same cost-cri­tique of the early wind con­tracts, of course, but those were start-up sub­si­dies to achieve crit­i­cal scale. They worked Wind farms across Bri­tain, such as the Burbo Bank one in the mouth of the River Mersey, above, could turn Bri­tain into a pow­er­house like a charm. The new £57.50 MWh ten­ders for projects com­ing on stream from 2022-2023 are roughly level with nat­u­ral gas plants in the UK even at to­day’s low price of global gas.

The wind saga is by now well-known, The lat­est tur­bines have aero­dy­namic “smart blades” made of car­bon com­pos­ite with wire­less sen­sors that can pitch in and out of the wind as air flows shift. Cam­eras re­lay data through cloud com­put­ing. Drones inspect off­shore ar­rays in­stead of men on ropes. The tur­bines have grown into 8MW mon­sters tow­er­ing 200 me­tres, (656ft) rais­ing “ca­pac­ity fac­tor” to the once un­think­able level of 50pc in new projects. The ceil­ing was 30pc a decade ago. By the mid-2020s, the tur­bines will be ap­proach­ing 15MW, and by then cost pro­jec­tions will be drop­ping to­wards £45 per MWh.

At such lev­els the dis­cus­sion will no longer be about sub­sidy but about how much rev­enue is be­ing gen­er­ated for the Ex­che­quer. The UK will be sit­ting on a lu­cra­tive low-car­bon re­source, dou­bly valu­able once global CO2 pric­ing takes hold and ratch­ets above $50 a ton. So should Bri­tain go for broke and turn the North Sea into a gi­ant wind hub, pro­pelling the coun­try into the top rank of global en­ergy ex­porters? Should it strive to be­come the first big in­dus­trial econ­omy to achieve zero net emis­sions and rad­i­cally re­shape the nar­ra­tive of Brexit (falsely linked with “Trump­ism” in the global mind to­day)?

Such an am­bi­tion is no longer sci­ence-fic­tion. A con­sor­tium of Dutch, Dan­ish, and Ger­man trans­mis­sion op­er­a­tors signed an ac­cord this year with EU back­ing to de­velop the “North Sea Wind Power Hub” – a colos­sal nexus of 70 to 100GW, equal to a hun­dred nu­clear re­ac­tors. It talks of ar­ti­fi­cial is­lands as mid-sea op­er­at­ing sta­tions to ser­vice ar­rays and to con­vert AC into DC power for lon­grange ca­bles. Th­ese plans are a long way off. Bri­tain could ei­ther join in, or de­velop its own par­al­lel project and leapfrog ahead on a much faster scale. The UK’s ter­ri­to­rial zone cov­ers the lion’s share of the Dog­ger Bank and the best shal­low wa­ters in the South. “The po­ten­tial is ab­so­lutely huge,” says Giles Dick­son from the pan-EU fed­er­a­tion Wind Europe.

The group pub­lished a re­port in June that Bri­tain could the­o­ret­i­cally pro­duce up to 595GW at com­pet­i­tive cost, more than our en­tire power needs, even at peak times in the dead of win­ter (53GW). Even a frac­tion of this would re­quire a rev­o­lu­tion­ary step-change for Bri­tish in­dus­try, a mo­bil­i­sa­tion akin to rearm­ing for war. Yet it is in prin­ci­ple “doable”.

Some ex­cess power could be sold to Europe through in­ter­con­nec­tors, re­vers­ing the pat­tern of flows and gen­er­at­ing ex­port in­come. Much could be turned into ul­tra-green hy­dro­gen through elec­trol­y­sis and ei­ther ex­ported world­wide or kept as a re­serve source of baseload power.

This tech­nol­ogy too is mov­ing fast. The US Na­tional Re­new­able En­ergy Lab­o­ra­tory is work­ing on a “wind-to­hy­dro­gen” ven­ture in Colorado. The EU’s Don Qui­chote project has a pi­lot scheme in Bel­gium. Leeds aims to con­vert its whole grid to hy­dro­gen with its H21 Ci­ty­gate plan.

Sev­en­teen global com­pa­nies launched the Hy­dro­gen Coun­cil in Davos this year to ac­cel­er­ate the shift. This body ex­pects the cost curve to mimic the dra­matic falls seen in wind and so­lar over the last 15 years.

Hy­dro­gen has its prob­lems. It is highly flammable. It needs “ex­pert man­age­ment”. Yet it can be mixed with nat­u­ral gas for com­bus­tion. Siemens is de­vel­op­ing an H-Class of gas plants that al­lows a hy­dro­gen mix of 60pc.

Ul­ti­mately, new de­signs will be re­quired to burn it in pure form at ul­tra-high tem­per­a­tures but that is just a mat­ter of time. In short, so­lar and wind will soon be gen­er­at­ing their own re­serve baseload power at vi­able cost. The curse of “in­ter­mit­tency” is be­ing con­quered. It will cease to be a se­ri­ous bar­rier in the 2020s.

The ques­tion for Bri­tain is how far it should push this ex­traor­di­nary op­por­tu­nity. What is our eco­log­i­cal duty to the North Sea? What would sweep­ing ex­pan­sion do to the marine life and foraging birds of the Dog­ger Bank? Could mi­gra­tory species sur­vive such a for­est of tur­bines, even if the new vari­ants were to be vi­brat­ing “blade­less vor­tex” poles?

Th­ese are moral is­sues that de­mand de­bate. “Big wind” is a pow­er­ful lobby th­ese days. Its in­ter­ests are aligned with those of the Bri­tish na­tion but they are not iden­ti­cal.

What has be­come clear this week is that the long-stand­ing cost ob­jec­tions to off­shore wind have been blown to smithereens. Bri­tain is sit­ting on cheap and al­most lim­it­less green en­ergy. It has won the zero-emis­sion lot­tery.

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