In June last year, Jit posted an article which contained a remarkable graph. I urge you to take a look. It demonstrated a fairly obvious correlation between the penetration of wind in a nation’s electricity production and the cost of electricity charged to household consumers. Admittedly the graph related to electricity generated by wind and not by all renewable sources. Also, it referred to the costs to household consumers rather than to all consumers. Nevertheless, given that wind is regularly touted as the cheapest form of renewable energy, and given that consumers (in the absence of special subsidy regimes) will broadly pay the market price of electricity in the country in which they live, the correlation is one of which we should take notice. And the startling point about the graph is that it demonstrates that the more wind power in a nation, the more expensive is the electricity used by consumers.

You would be forgiven for rubbing your eyes in disbelief, given the tsunami of pieces in the mainstream media seeking to persuade us that we need more renewable energy in order to reduce energy costs. I shredded one aspect of this counter-factual claim in The Lies Have it.

Cost Savings in Northern Ireland?

Despite the reality, the claims continue to be made, and sometimes they contain a grain of truth. The problem is the failure to put such claims in context and to reveal the whole picture. This week the BBC joined in (again) with a piece on its website with the heading “Renewable energy: Wind power ‘saved Northern Ireland £243m last year’”. It relies on claims made in Wind Energy Ireland’s annual report and in a report by “energy specialists Baringa”. The BBC has a habit of describing partisan organisations in such favourable terms, presumably with a view to adding verisimilitude to their claims. I drew attention to one such example in Burning Ember. In fact, Baringa are management consultants, who make money out of the whole net zero boondoggle, as they cheerfully admit on their website:

From our UK hub, where Baringa was founded in 2000, we hurdle traditional sector boundaries to match our brightest minds – from anywhere in the world – with our clients’ greatest challenges. It’s how we bring our energy experts together with our financial services clients to build their net zero strategies.

According to Global Database Baringa’s 2021 year end profit after tax was £88.5 million, so they’re clearly onto something.

The Baringa report on which the BBC relies appears to have been prepared for Wind Energy Ireland, and I suppose he who pays the piper calls the tune. Including end pieces it runs to only seven pages. I won’t quote from it, as the last page is full of legal stuff that persuades me I might be unwise to do so. However, I have provided the link to it above, and it’s freely accessible on the internet, so feel free to check it out. In essence, it’s all about the gas saved as a result of electricity being generated by wind farms in Ireland. As the BBC reported:

They found that without wind energy, an additional £176m would have had to be spent on gas to generate power, with an additional almost £70m on carbon credits to burn it.

Fair enough, except that the £70m on carbon credits represents a cost only because of our insane policies in the first place – it’s an energy tax that has to be borne by consumers because the Government decided to punish them. As for the other £176m I have little choice other than to accept it at face value, but I note that nowhere is there any mention of the costs associated with this “saving”. First of all there is the cost of manufacturing the wind turbines and then transporting them to site (almost always from abroad, I’m sure) and the cost of constructing the wind farm (plus the environmental damage associated with it). Then there’s the cost of the pylons and associated infrastructure to move the electricity from the remote locations where it’s generated to where it’s needed. Then there’s the costs associated with the unreliability and unpredictability of wind as a power source, which causes all sorts of problems for the grid. There’s the extra costs associated with relegating gas as a power source to an inferior position in the grid, and expecting it to ramp up (and turn down) on (unpredictable) demand. This renders gas power stations more expensive than they would be if they were simply allowed to get on with their job without all this interference.

Needless to say neither the Baringa report nor the BBC article on it make any reference to all this to provide a bit of context and to ask the question whether these are real savings at all. The absence of the BBC Verify team and their fact-checkers is noticeable. They tend to be deployed only when the BBC seeks to discredit something of which it disapproves. Shame on you BBC – this is propaganda masquerading as news.

The UK-Denmark Viking Interconnector

We have also been subjected to a lot of media time and press releases seeking to persuade us that this interconnector is a jolly good thing (and that interconnectors generally are jolly good things), which will help with the UK’s energy security and that it will save us money.

National Grid has an intriguing puff piece under the heading “Why interconnectors play an essential role in our net zero future”. They claim three massive benefits: sustainability; security of supply; and affordability. Under the first head, the claim is that we in the UK can import net zero energy from Europe when the wind isn’t blowing and the sun isn’t shining in the UK (they don’t actually say that in this context; rather they describe it as supplementing our own energy generation mix. The days when the sun is shining and the wind is blowing is when we will supposedly sell our surplus power down the interconnectors).

The second point involves, in effect, an admission that reliance on an increasing proportion of renewable energy in the mix is causing problems. We are told that we need interconnectors to ensure that demand is met, not least because fossil fuel generation requires many hours to fire up (having been forced by the crazy system to sit, expensively, idle until wanted because renewables are letting us down), and that might be too long to wait (it appears renewable energy really is so unpredictable and unreliable). Drawing down on interconnectors is like turning on the tap, apparently – as if by magic, they can provide the energy we need within minutes. (No mention is made of how much this costs). Finally, affordability. Although I am sceptical about all three claimed benefits (and particularly sceptical as to the claim that they are massive), this is the claim with which I struggle the most:

Interconnectors help make energy affordable. They ensure that Britain has access to the lowest-priced electricity from a much wider pool of sources. This increased competition means better value overall for consumers.

If prices are high in the UK, interconnection allows power to be imported immediately from countries where generation is less expensive.

Please remember these claims when we come to look at the question of cost later on.

Specifically, then, let’s look at the Viking Link (the world’s longest land and subsea interconnector). National Grid’s press release makes a big thing of it, including the claim that it “will bring more than £500 million in savings for UK consumers in the first ten years”. That’s quite a claim, even if it doesn’t represent a great return on capital (approximately £50m p.a. on a £1.7Bn spend, which will presumably cost a fair bit to maintain). And this brings me to an exchange of correspondence I have seen between a curious onlooker and a representative of Viking Link. He pointed out that the claim of £500M+ savings over ten years is not guaranteed, and is based only on the claims of the link’s promoters, namely Energinet and National Grid. He also pointed out that the rate of return is poor, especially taking account of the cost of repairing possible failures, ongoing maintenance etc, and given that costs are borne by consumers, the suggested (and unsubstantiated) cost savings don’t represent value for money or anything which could be considered commercially sound (I paraphrase slightly). The response was about as anodyne and soft-soaping as it possible for a response to be. It quoted extensively from the online press release I linked to above, and justified the £500M+ figure by saying no more than that this would be achieved by importing cheaper energy from Denmark and that the figure was calculated looking at internal forecasts and average UK home consumption from Ofgem.

David Turver

Cliscep readers will (or certainly should) be familiar with the excellent work of David Turver. However, it’s possible that not everyone has seen his Substack article headed “The Great Interconnector Swindle” and carrying the sub-heading “Our electricity interconnectors are costing us a fortune to cover up shortfalls in our dispatchable generation”.

I won’t quote at great length from the article, as that would be a disservice to its author. I urge you to read it for yourself. When doing so, however, please bear in mind the specific claims made by National Grid regarding the supposed massive benefits of interconnectors, with particular regard to the cost saving alleged in respect of the Viking Link.

In summary, however, he has analysed the data with regard to the volumes and prices of electricity flowing in both directions down the interconnectors, and has established that we buy at much higher prices than those at which we sell. In short, it seems that when we have surplus power, so do our European neighbours, to the extent that we are sometimes paying them to take our surplus off our hands. Equally, when we are short of power (because the wind isn’t blowing and the sun isn’t shining) the same is often true of our European neighbours, and we end up paying premium prices for whatever electricity they deign to sell us. Presumably much of it is generated by fossil fuels.

I promised not to quote extensively from the article, but a few quotes are nevertheless particularly useful:

Overall, in the period 2021-2023 we “lost” £811m on the interconnector transactions, with £445m of the total loss being on the buys and £366m on the sales. If we treat 2022 as an outlier year, it looks like the trend is getting slightly worse over time, because the losses on sales in 2023 are higher than in 2021 even though the volume sold was much lower.

We do not tag each electron in the network to identify whether it was produced from a wind farm or a coal-fired power plant. So, we cannot say for certain one way or another whether the power provided is clean or not. However, when import prices are significantly above market rates, we can be fairly certain that generation from wind and solar across Europe is low and that every sinew is being stretched to bring online every single dispatchable power source to meet demand. These marginal dispatchable sources are likely to be diesel engines and coal-fired power stations. Conversely, when we are selling electricity at negative prices, we can be reasonably sure there is excess wind and solar supply. This means that our imports from the interconnectors are more likely to be marginal “dirty” sources and our exports more likely to be “clean.” Probably the opposite of what the Energy Secretary claimed.

It is crystal clear that interconnectors do not provide cheaper energy. In fact, quite the opposite is true. The data shows that interconnectors have helped us to perfect the art of buying high and selling low. The price we pay for imports is consistently above the market price and the price we get for exports is significantly below market rates and we frequently pay others to take surplus power off our hands. In what world does it make economic sense for consumers to pay elevated subsidies to generate wind and solar power, and then pay people overseas to take the same power off our hands?

Do read the article for yourself. It’s a masterclass, and it should be read by those in charge of making decisions regarding our energy policy. I wish they would. It might open their eyes.

Postscript

Right on cue, the Telegraph published an article yesterday with the heading “French ‘rubbing their hands’ as Britain forced to import £1.5bn of electricity” and the sub-heading “UK buys a record amount of power from Europe as wind and solar fall short”:

The UK forked out £3.5bn on electricity from France, Norway, Belgium and the Netherlands last year, accounting for 12pc of net supply, according to research from London Stock Exchange (LSEG) Power Research.

According to official data, France accounted for around £1.5bn of power sold to the UK in the year to November 2023 while Norway earned around £500m.

Electricity imports were brought to the UK via the growing network of interconnector cables designed to boost the collective resilience and energy security of neighbouring countries.

But closures of British power stations means the traffic is increasingly one-way with the UK instead becoming dependent on its neighbours.

Thank goodness for the interconnectors, then, as perhaps they are enabling to keep on lights that would otherwise be doomed to go out. However, as for the massive benefits of sustainability, security of supply, and affordability, only the second claim would seem to have much merit, and even it is vulnerable to the possibility of problems caused by bad actors and to the (expensive) charity of foreigners. Making the UK dependent on interruptible undersea cables doesn’t seem like the brightest idea in terms of security of energy supply. Producing our own energy, cheaply and reliably, makes far more sense to me.