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Turbine at EDF Renewable Energy's Bobcat Bluff Wind Project, spanning approximately 14,000 contiguous acres, in Archer County, Texas. Photo: EDF Renewable Energy.
Turbine at EDF Renewable Energy's Bobcat Bluff Wind Project, spanning approximately 14,000 contiguous acres, in Archer County, Texas. Photo: EDF Renewable Energy.
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EDF shows that wind makes better sense than nuclear

Chris Goodall

1st April 2016

EDF in the UK may be propelled by its disastrous nuclear ambitions, writes Chris Goodall. But across the Atlantic it's another story: the company is the US's biggest wind developer, and selling its power, profitably, for under 40% of the price it has been promised for Hinkley C, including federal tax credits.

EDF has just become the largest wind developer in North America with a portfolio in 2015 of over 1 gigawatt of new wind farms. At this rate it will be generating more electricity from wind by 2025 than would be provided by Hinkley C.

EDF's travails over Hinkley persist. The FT reported this week that engineers within the company have written a memo asking management to wait to proceed with construction until the other EPRs in Finland and Normandy have been successfully completed.

A director has said he will vote against the UK nuclear project. The £18bn project is stalled until internal debates within EDF are resolved. The Times has also reported on a looming £1.8 billion cost overrun pushing the cost up to £19.8 billion.

Michel Degryck of the Paris-based corporate financier Capitalmind and an expert on EDF, told the newspaper that Areva had been asking suppliers to resubmit detailed offers for key components of the Hinkley station.

"We understand that a number of costs were probably underestimated when they did their last pricing in 2013", said Mr Degryck. "They will have to take into account new costs ... The cost of the project could rise by 10 per cent."

Meanwhile EDF boss Vincent de Rivaz remains mysteriously ebullient on Hinkley C's prospects, insisting in a letter to the FT: "As I said categorically at the energy and climate change select committee hearing last week, this project will go ahead and the investment decision will be made very soon.

*EDF is fully confident that it will deliver this project on time and on budget ... Hinkley Point C will be operational in 2025. EDF has no plan whatsoever to change this date."

But across the Atlantic, it's all go for renewables!

Within the same company, they do things very differently on the other side of the Atlantic; there EDF focuses wholeheartedly on wind and has no nuclear under development.

It has just proudly announced that it has become the largest wind developer in North America with a portfolio in 2015 of over 1 gigawatt of newly constructed wind farms.

If it continues at the current rate, it will be generating more electricity from wind by 2025 than would be provided by Hinkley Point C. The numbers are as follows. Hinkley will generate about 25 terawatt hours a year. EDF's 2015 annual portfolio of new wind projects will provide about 3 terawatt hours a year at average US utilisation factors.

If it continues to develop new wind projects at the rate of 1 gigawatt a year, it will be generating well over 30 terawatt hours a year from wind by the end of 2025. 2025 is when EDF says Hinkley will be finished.

What about the capital cost of wind versus nuclear? The latest US estimates suggest a figure of about $1,700 per kilowatt of capacity. That means EDF's projects completed in 2015 cost about $1.8bn. Over ten years, that rate of installation will mean a total cost of around $18bn or about £13bn. Wind is therefore at least 30% cheaper to construct.

And it is much cheaper to operate. The most important project it completed in 2015, the 250 MW farm at Roosevelt in New Mexico, has sold its electricity for the next 20 years to a utility for $23.39 a megawatt hour, less than 20% of the price agreed for Hinkley of £92.50/MWh.

Note that the Roosevelt price is somewhat subsidised by Federal tax credits but even without this benefit the cost of wind would be less than 40% of the price of UK nuclear. Wind saves consumers money when compared to the nuclear alternative.

It's simple really: renewables are a better and more secure investment

EDF finances many of its US wind projects on the back of power purchase agreements with major companies such as Microsoft, Procter and Gamble and Google. They commit to buy the electricity produced at a fixed price, not the inflation adjusted figure that the UK will pay for Hinkley. The EDF press release said:

"Corporate America is increasingly turning to renewable energy to power its business operations, based both on consumer preferences and because renewable energy simply makes economic sense."

We never hear this line from EDF in the UK.

EDF cannot guarantee the wind will blow or the sun shine. Unlike in Britain, its US business is also investing heavily in energy storage. The US company has announced 100MW of battery systems in the US because "Energy storage is an attractive, cost-effective addition to intermittent energy generation projects." However there's no mention of batteries on EDF's UK web site.

For sensible reasons large international companies often pursue varied market strategies in different countries. EDF in the US has decided to back wind while the UK has gone for nuclear.

But even a quick look shows that the energy and financial returns to the US strategy seem far clearer and better for the company, and its customers, than the tactics of the UK business.

 


 

Chris Goodall is an expert on energy, environment and climate change, and a frequent contributor to The Ecologist. He blogs at Carbon Commentary. His next book, 'The Switch', is due for publication in 2016.

Also on The Ecologist: the Energy Brainpool proposal to replicate Hinkley C's power output at lower cost using 100% renewable energy by using a combination of onshore wind, power to gas technology and gas power stations.

This article was first published on Carbon Commentary. Ideas expressed in this article are explored in far greater detail in The Switch, a book about the global transition to solar power, to be published in June 2016 by Profile Books. This version contains some additional reporting by The Ecologist.

 

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