The Remarkable Claims of Mr Anderson

Scottish Power boss's claims are refuted by his own company's data.

In an article in the Guardian over the weekend, the boss of Scottish Power, one Keith Anderson, is quoted on the subject on the effects of a vast expansion of the Contracts for Difference scheme, under which uneconomic electricity generators bid for preferential access to the grid:

Keith Anderson, Scottish Power’s chief executive, said there was “minimal risk” to household energy bills because the cost of sea-based turbines is so low the projects may even help to make Britain’s energy cheaper.

As I pointed out in a post over the weekend, the cost of building an offshore windfarm doesn't seem to be falling much, if at all, so Anderson's claim is a startling one.

It's even more startling when you take a look at Scottish Power's flagship offshore windfarm, East Anglia One, currently nearing completion in the North Sea. This has a reported cost of £2.5 billion, which would make it, at £3.5m/MW, just as expensive as any other comparable windfarm in the North Sea. Its latest accounts show that it had clocked up spending of £1.9 billion by last Christmas, suggesting that construction work is on budget.

That being the case, it will probably generate electricity at a cost of around £110/MWh. It will sell it on under its Contract for Difference at a price of around £140/MWh, around £100/MWh more than the "reference price". In other words, you are having to pay £140 for electricity that is only worth £40. Over the lifetime of the windfarm, this subsidy will be worth well over £4 billion to Scottish Power.

So when he says the cost of offshore wind is "low", Mr Anderson is refuted by his own company's data. He should be ashamed of himself.