How civil servants deceived us
Six weeks ago, I explained how Professor Gordon Hughes and I wrote to Jeremy Pocklington, the Permanent Secretary at DESNZ, asking him to explain why his department’s predictions of the levelised cost of offshore windfarms were based on assumptions that appeared to have no grounding in reality.
For many weeks, there was no reply, until finally Lord Frost raised Mr Pocklington’s silence in a debate in the Lords. Twenty-four hours later, I received an letter from a Jenny Inwood, the official in charge of preparing the calculations. The text can be downloaded at the bottom of this post.
The first half was essentially an essay on the subject of “Strike prices are not levelised costs”. It might be seen as rather presumptuous of Ms Inwood to lecture Professor Hughes and me in this way. Gordon has a lifetime’s experience in the energy field, while I am a relative newcomer, with only 10 years’ involvement. Ms Inwood was appointed to her role in April 2023, having not previously worked on energy.
And regardless of whether strike prices are not the same as levelised costs, one would surely hope that they would move approximately in tandem. Indeed DESNZ and the CCC have been citing low strike prices as evidence of falling levelised costs for years. For them now to turn round and emphasise the differences is hypocritical to say the least.
And we still need an explanation of the huge numerical difference between offshore wind strike prices (£84/MWh) and the levelised costs claimed by DESNZ (£44/MWh). “Market and policy considerations”, which is as much as Ms Inwood is willing to tell us, is hardly an explanation.
As to the explanation for the absurd input assumptions on the levelised costs, Ms Inwood largely avoids the subject. There is nothing of any substance on the capital or operating costs, but fortunately she does address the question of why DESNZ assumes a lifetime average load factor of 61% for windfarms commissioning in 2025, when recent offshore windfarms open at 45% and then decline from there.
She tries to claim that this is due to bigger hub heights – i.e. bigger turbines – but this claim doesn’t stand up to scrutiny. Moray West, one of the windfarms that will commission in 2025, has a hub height of 130m. Its neighbour, Moray East, commissioned in 2021, has a hub height of 105m. How much extra output would we expect that to give? We can get a good sense from results published by Gordon Hughes in a paper for the Renewable Energy Foundation. His Figure 11B (reproduced below) shows that for UK offshore windfarms, the increase in hub height from 105m to 130m might only be expected to give a 4% higher load factor.
So why does DESNZ think that Moray West is going to give 61% output? The answer is in the final paragraph of Ms Inwood’s letter.
To enable comparison across technology classes it is standard for LCOE estimates to be calculated assuming that they operate at their technical maximum. This differs from actual annual operation that accounts for all reasons for wind plants to be operating at less than maximum capacity. This will include periods of maintenance and curtailment for example, which varies across years and across projects.
A load factor of 61% is perfectly reasonable for the maximum output of a windfarm. When the wind is blowing a howling gale, many windfarms give output of that kind, although it should be said that since, in DESNZ’s view, this is the lifetime average peak output, they are presumably expecting brand new windfarms to deliver 70% or so, with that figure declining as they age.
But of course, Ms Inwood’s explanation shows that the figure presented by DESNZ as the “levelised cost” is nothing of the sort. The levelised cost is, in simple terms, the lifetime cost divided by the lifetime output. Multiplying peak output by lifetime gives you a figure that is devoid of meaning. DESNZ is essentially asssuming that the wind is going to blow a howling gale 24 hours per day, every day for 25 years! They have – in my view quite deliberately – deceived the public, understating the cost of wind power by 50% based on this one “error” alone. Once the capital and operating cost “errors” are corrected, the scale of the deception will be seen to be much greater.
I have written to Mr Pocklington again, setting out these concerns (PDF below). As yet, I have had no response.
DESNZ’s cost calculations are widely used. They have been cited and/or used by NESO, the OBR, the National Infrastructure Commission, the Royal Society and the Royal Academy of Engineering. All have made grossly misleading statements to the public about the costs of Net Zero as a result. I have therefore copied the letter to Pockington to the CEOs and/or the Presidents of all of these organisations to point out how they have been deceived. To date, none have responded (or even acknowledged receipt of my message.
I will not let up..