As far as I remember, these subsidies are really for green energy built out in the past; the new stuff is much cheaper and much more efficient and therefore there will be far less of a 'green levy'. I seem to remember Ambrose Evans Pritchard of the Telegraph writing that some of the new offshore windmill auctions were won at a strike price so low they might end up paying into the system. That said, I haven't looked into the actual numbers for ages (and even then it was only a cursory look), so I cannot say for certain. In theory, this could be part of a high quality industrial policy. We have made the decision to go for renewables, and so have Europe and NA (and even China). We have pretty much the largest offshore wind market in the world. We could leverage that and tell companies that if they want access, they have to build X% (preferrably >90%) off all components and their assembly in Britain: no domestication, no access. That would not only directly create good quality jobs, but also secondary jobs in the supply chain and R&D spend, too. Then, we could also start capturing export markets with our world class industry that would have, because of the size of our market, a Ricardian Advantage. But we don't; we just buy from the lowest bidder and bolt them together here -- which often means huge carbon expenditure as they're made in high carbon economies and then transported half way around the world.
Of all the various 'green' technologies, I'm probably most sceptical of offshore wind. The 'price' of the electricity it generates is a matter of where you pin the tail on the donkey. Fundamentally, though, there are only two things which matter: the cost of capital, and the depreciation schedule you choose. If interest rates are near-zero, and you choose to claim these things have a usable lifetime of, say, 25 years, then the electricity generated will be very 'cheap'. If interest rates go up, and a realistic operating lifetime for something stuck in the North Sea is, say, five years, then the cost of the electricity is going to be very much more expensive.
I strongly - very strongly - suspect/expect that the prices we hear are based on v low interest rates and very optimistic depreciation schedules. (Plus, history elsewhere suggests little if any decommissioning costs are included.)
On the other hand, you might be right, that Britain really might have a god-given Ricardian advantage on this one, which we could exploit. Even if the industry itself floats on a sea of bogus cost-calculations. . .
I'm unsure if I'm being fed green PR, but my understanding is that offshore wind costs/efficiency have followed something like Moore's Law -- and *if* that's true, it's possible that they could eat higher interest rates (a new neutral rate of, say, 4-5%?) They have also started using drones, for instance, for maintenance. Anyway, I think my general point is this: whatever we think about renewables, pretty much all of Europe is sold on them, meaning there will be significant investment and purchases. Given our government believes we have a natural advantage in offshore wind, why not leverage that to actually create an industry? If you're going to take the risk, why would you want all the manufacturing and research done elsewhere and all the profits upstreamed? I guess what I'm saying, to quote Sir Humphrey, is "If you're going to do this damn silly thing, at least don't do it in this damn silly way."
A 'Moore's Law' for wind-powered turbines seems extremely unlikely, given that the underlying physics of turbines is fixed. If price per MWh has fallen, it is likely because a) ever-bigger monstrosities have been allowed - out of sight in the sea; and b) some economies of scale in production have been won.
As for Europe being sold on them, I will wait to see what higher interest rates does to that appetite.
Still, your Sir Humphrey approach is doubtless right.
The direct problem, so far as I can see, is that the media never ask any of these questions. At least, not any of the media that seem able to bring any pressure to bear. There are plenty of people asking questions related to these issues but they don't seem to be able to make a dent. Why not?
As far as I remember, these subsidies are really for green energy built out in the past; the new stuff is much cheaper and much more efficient and therefore there will be far less of a 'green levy'. I seem to remember Ambrose Evans Pritchard of the Telegraph writing that some of the new offshore windmill auctions were won at a strike price so low they might end up paying into the system. That said, I haven't looked into the actual numbers for ages (and even then it was only a cursory look), so I cannot say for certain. In theory, this could be part of a high quality industrial policy. We have made the decision to go for renewables, and so have Europe and NA (and even China). We have pretty much the largest offshore wind market in the world. We could leverage that and tell companies that if they want access, they have to build X% (preferrably >90%) off all components and their assembly in Britain: no domestication, no access. That would not only directly create good quality jobs, but also secondary jobs in the supply chain and R&D spend, too. Then, we could also start capturing export markets with our world class industry that would have, because of the size of our market, a Ricardian Advantage. But we don't; we just buy from the lowest bidder and bolt them together here -- which often means huge carbon expenditure as they're made in high carbon economies and then transported half way around the world.
Of all the various 'green' technologies, I'm probably most sceptical of offshore wind. The 'price' of the electricity it generates is a matter of where you pin the tail on the donkey. Fundamentally, though, there are only two things which matter: the cost of capital, and the depreciation schedule you choose. If interest rates are near-zero, and you choose to claim these things have a usable lifetime of, say, 25 years, then the electricity generated will be very 'cheap'. If interest rates go up, and a realistic operating lifetime for something stuck in the North Sea is, say, five years, then the cost of the electricity is going to be very much more expensive.
I strongly - very strongly - suspect/expect that the prices we hear are based on v low interest rates and very optimistic depreciation schedules. (Plus, history elsewhere suggests little if any decommissioning costs are included.)
On the other hand, you might be right, that Britain really might have a god-given Ricardian advantage on this one, which we could exploit. Even if the industry itself floats on a sea of bogus cost-calculations. . .
I'm unsure if I'm being fed green PR, but my understanding is that offshore wind costs/efficiency have followed something like Moore's Law -- and *if* that's true, it's possible that they could eat higher interest rates (a new neutral rate of, say, 4-5%?) They have also started using drones, for instance, for maintenance. Anyway, I think my general point is this: whatever we think about renewables, pretty much all of Europe is sold on them, meaning there will be significant investment and purchases. Given our government believes we have a natural advantage in offshore wind, why not leverage that to actually create an industry? If you're going to take the risk, why would you want all the manufacturing and research done elsewhere and all the profits upstreamed? I guess what I'm saying, to quote Sir Humphrey, is "If you're going to do this damn silly thing, at least don't do it in this damn silly way."
A 'Moore's Law' for wind-powered turbines seems extremely unlikely, given that the underlying physics of turbines is fixed. If price per MWh has fallen, it is likely because a) ever-bigger monstrosities have been allowed - out of sight in the sea; and b) some economies of scale in production have been won.
As for Europe being sold on them, I will wait to see what higher interest rates does to that appetite.
Still, your Sir Humphrey approach is doubtless right.
The direct problem, so far as I can see, is that the media never ask any of these questions. At least, not any of the media that seem able to bring any pressure to bear. There are plenty of people asking questions related to these issues but they don't seem to be able to make a dent. Why not?
Bah!!
Loads of money in not-knowing.