A tale of two errors
Last year, the Royal Society published a paper on the production cost of electricity in a decarbonised grid, and we at Net Zero Watch responded with a critique – of its use of highly optimistic assumptions about technological improvements, and thus costs and efficiencies, and of its failure to show policymakers the much higher costs that would arise with currently available technology.
Over the last few months, there have been a few developments. In particular, two errors have been identified – one in the NZW paper, and one in the Royal Society’s paper.
My error was as follows. I had noticed that the Royal Society had used an inappropriate seasonal demand curve in their study, and had suggested that this made a material difference to the results. However, it turned out that there was an error in my spreadsheet, and in fact the difference is immaterial. I have amended the report, although I should note that my main findings are unaffected.
The error in the Royal Society report was in their claim that the investment cost of delivering a Net Zero grid (i.e. excluding any running costs) would be of the order of £410 billion. This figure essentially assumes that all those highly optimistic technological improvements noted in the first paragraph of this article are delivered immediately. (There is no doubt that this is what they have done [1].) This is implausible. With currently available technology, the investment cost figure is £2200 billion (£2.2 trillion!).
A better representation would be the reduction of costs over a 30-year period, from current levels to those envisaged in the Royal Society report, alongside the gradual construction of the Net Zero generation system. If that happens, the investment cost is around £960 billion, and the Royal Society’s error is around £550 billion or around £20,000 per household.
The Royal Society author team is aware of the error and there has been considerable discussion, but I have been asked to keep these exchanges confidential. Thus far, the error – all half a trillion pounds of it – remains uncorrected.
The Royal Society model and the Net Zero Watch model now give broadly similar results, so the differences in our positions are now mostly about appropriate input assumptions, what should be presented to politicians, and what the results tell us about the UK’s decarbonisation plans. On the latter point, our models’ ability to say anything much about those plans is somewhat limited because they only look at the electricity system. An analysis that took in the Net Zero system costs and the (alleged!) benefits of reducing its carbon dioxide emissions would reject the decarbonisation proposition, even if those benefits were given a very high value. However, the electrification of the grid is an enabler for a much larger decarbonisation project, and to that end I have been working on a wider cost benefit analysis, which combines the electricity system modelling discussed here with some of the cost and other benefits from the wider economy, using, where appropriate National Grid ESO’s published costings from 2020. The results will be published in due course, but it’s fair to say that it’s not looking good for the idea that decarbonisation is a rational proposition.
Note
[1] The Royal Society report says (p. 81) ‘£210 billion for wind and solar capacity…according to BEIS’s 2020 estimates of the costs and capacity factors, assuming commissioning in 2040.