Is Wind Power Cheaper Than Gas? – Watts Up With That?

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

OFFSHORE WIND POWER V GAS POWER?

Which is cheaper – offshore wind or gas power?

We always seem to go round in circles when we discuss this! Politicians and the wind lobby always refer to the official Levelised Costs, last published by the BEIS in 2023, often dishonestly including Carbon Pricing in the cost of gas power, even though it is a TAX, not a COST.

Others point out that you cannot simply compare levelised costs, as they do not include the indirect costs associated with intermittent renewables, particularly the need to pay for standby capacity.

In fact the only valid comparison is to compare the TOTAL COST of wind power, with the FUEL COST of CCGT power stations. The latter, of course, will still have to be fully manned and maintained whilst on standby, so those costs are in essence fixed. The only extra cost they incur when actually generating is fuel itself.

The following analysis is based wholly on the assumptions used in the BEIS Electricity Generation Costs report, referred to above, and other official data.

In 2023, gas power supplied 101 TWh, a third of total electricity in Great Britain.

The latest government mid-range projections for the price of gas are around 70p/therm, which is £24/MWh. With a fuel efficiency of 53%, that works out at £45/MWh of electricity produced, or an annual total of £4.5bn.

https://www.gov.uk/government/publications/fossil-fuel-price-assumptions-2024

Now we come on to offshore wind power.

The BEIS costings assumed capital costs of £2200/kW – this is the top of their range, which is more realistic, given the massive increase in strike prices offered in last summer’s CfD auction. To generate 101 TWh, we would need 26 GW of new offshore wind capacity, which is more than we have presently. That works out at a total capital cost of £57 billion.

To this can be added the operating costs of offshore wind, which the BEIS estimated at £19/MWh.

So over a life of fifteen years, operating costs plus capital come to £86 billion. The cost of natural gas over the same period to produce the same amount of electricity would be £67 billion.

Even then wind power costs are understated, because we should add on the cost of grid upgrades, projected at over £100 billion, or at least the appropriate share for the extra 26 GW.

We know that wind power already on the system costs considerably more than the BEIS’ optimistic calculations. But even using these for new wind farms, it is clear that CCGT is much cheaper.

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