A paper published last week, from a team of academics at University College London, has claimed that wind-generated electricity has saved British consumers £104 billion since 2010. Most of this, the authors write, is because expanding renewable electricity has cut demand for natural gas, keeping bills lower than they would have been. They argue that “wind power should be viewed as a public good — like roads or schools — where government support leads to national gains.”

Both the Guardian and green energy tycoon and Labour Party donor Dale Vince have been getting very excited about the new research, which is currently undergoing peer review. Vince called it a “fab study”, suggesting it demolished the case for last week’s call by the Tony Blair Institute for Energy Secretary Ed Miliband to abandon his plan for Net Zero by 2030. However, energy experts I spoke to this week disagreed. They said the UCL study was based on faulty economics and ignored vast elements of the cost of decarbonisation.

Its lead author, Colm O’Shea, is a master’s student, and so still at an early stage of his academic career. Neither he nor his co-author, Professor Mark Maslin, are engineers or energy economists, but instead members of UCL’s School of Geography. Their other co-author, Piers Home, is not an academic at all, but works for a hedge fund, Comac Capital.

One of the criticisms made by energy experts is that the paper, to quote its own words, “does not include all system costs”, which for wind are already huge and set to grow. They include massive extensions to the grid to connect offshore wind farms to where the electricity is needed; storage systems to keep the lights on when the wind does not blow; and backups, such as gas-fired power stations that will run only occasionally. There is also the controversial issue of payments to operators not to generate when there is an electricity glut, or when the grid lacks enough capacity to carry power to its users.

Earlier this year, Gordon Hughes, a senior fellow at Washington’s National Centre for Energy Analytics, developed a sophisticated computer model of the UK’s energy system. It showed that while the wholesale price of electricity has been generally stable for 20 years, bills paid by businesses have almost quadrupled, and those of households have tripled as a result of these system costs. Miliband’s “Clean Power 2030” plan, meanwhile, would not see bills cut by an average £300, as he promised during last year’s election. Rather, they would be up to 80% higher than under the existing system.

Hughes’s view is that the new paper’s central argument is “economically illiterate”. It is based, he claims, on the mistaken idea that because wind-generated electricity has reduced demand for gas — itself a questionable proposition — this must have caused consumers’ gas bills to be lower than they would have been. Such a reduction might, in theory, happen over short periods. But in the longer term, says Hughes, big gas producers such as Norway and Russia would not continue supplying at unprofitable prices but would instead “keep it in the ground” until prices rose again. What’s more, most of the retail price of gas is accounted for not by the raw “wellhead” price, but by transportation costs.

Although the paper claims gas bills have been lower because of investment in wind, if its logic were correct, then the same would be true if, instead, we had built new power stations that burnt coal. Overall, Hughes says, it is “an ideological case for green energy dressed up by verbiage on price.”

I also spoke to another energy expert, David Turver. Besides echoing Hughes’s comments on the UCL paper’s failure to look at whole-system costs, he has also analysed the latest round of offshore wind licence auctions. These, he suggested, demonstrate “there is simply no chance” that Miliband will hit his 2030 target. Put simply, not enough new offshore wind capacity is being built. The Energy Secretary’s plan required that, every year from 2024 to 2030, between 4.1 GW and 5.1 GW would be installed. Last year, the total was less than 1.2 GW. And Turver says that just 3.4 GW of the 8.4 GW needed to make up the shortfalls of earlier years will be approved in 2025.

Miliband is regularly found to be Labour members’ favourite Cabinet minister, but the headwinds against his policies are strengthening. Last week Pawel Czyzak, the think tank economist who first came up with the claim that the 2030 plan would cut household bills by £300, said he had changed his mind because of the cost of offshore wind. On the same day, the Scottish Affairs Committee of MPs warned that far more jobs are being lost than created by the renewables drive.

For now, Miliband continues to double down on his agenda. But for how much longer he does this is becoming a pressing question for Number 10.

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David Rose is UnHerd‘s Investigations Editor.

DavidRoseUK

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