LONDON — A new report compares the equivalent total consumer cost of converting existing coal-fired power stations to run on biomass to replacing a proportion of power generation from biomass conversions with an equivalent level of generation from offshore wind. It finds that the biomass conversion scenario is considerably cheaper.
The research commissioned by Drax — the owner of the UK’s largest coal-fired power station currently undergoing a biomass conversion to three of its boiler units with a total combined capacity of 1,935 MW — found that building sufficient offshore wind generation to deliver the equivalent low-carbon energy produced by a single coal-fired generation unit converted to run on biomass would cost the country between £650 and £900 million (US$1-1.44 billion) more in terms of net present value.
Considering the differing total costs of investment, rather than looking at generation costs alone, the analysis from Frontier Economics concludes that offshore wind has higher transmission costs — existing coal-fired power stations already have a grid connection — as some wind sites are situated in the far north of the country and other future sites are expected to be far from shore in deeper water. Frontier also quantified the additional reserve and back-up generation requirements across the system resulting from offshore wind deployment given the different load factors for wind power and thermal generation. Again the analysis found these costs represent a substantial impact on the consumer — as a result of differences in load factor (38-39 percent for offshore wind and 65 percent for biomass) 500 MW of biomass generation would need to be replaced by just under 855 MW of offshore wind, the authors note.
The report concludes that in 2020 the upfront capital costs of offshore wind are significantly higher than those of biomass, outweighing the availability of lower cost energy once the wind farms are built by £161 million. However, by 2030 as the cost of building offshore wind reduces, the generation costs for wind is £11 million lower than those of biomass.
Meanwhile, assuming existing coal-fired assets have zero grid connection costs, planned 2020 offshore wind connections for 855 MW of offshore wind likely to connect to the onshore grid in Scotland are estimated at £14 million to £226 million. There are also significant costs associated with building the transmission capacity necessary to connect offshore wind to the onshore transmission network, estimated by Frontier at £313 million to £470 million.
The variable output nature of wind power also suggests additional costs associated with back-up and balancing reserves, calculated at £101 million and £80 million, respectively.
Even without all transmission cost impacts, offshore wind would be more expensive than biomass conversion by £170 million to £342 million, the analysis finds.
Furthermore, the study’s conclusions suggest that Drax’s existing biomass conversions represent total savings to the UK of between approximately £2.5 billion and £3.4 billion compared with the equivalent generation from offshore wind.
However, factors beyond cost will influence the optimal generation mix, including potential scale. For example, some projections see over 30 GW of offshore wind deployment by 2030, underlining the importance of its contribution to the energy mix. Nonetheless, affordability is an important factor and costs for wind power are likely to increase further as more wind is added to the system and premium locations are occupied, forcing developers to more expensive or challenging locations.
Despite this, the projections do show wind costs falling relative to biomass conversions over time as experience gained through installations and manufacturing scale contribute to decreasing the costs of offshore wind whilst the costs of biomass conversion remain relatively static.
Furthermore, biomass conversion represents a transitional technology which, given its economic, technical and government imposed budgetary constraints, can only ever deliver a modest, but important contribution to the UK’s overall renewable generation requirements, the authors note. In the UK there are perhaps 3 GW of potential coal-fired capacity available for conversion, a relatively small volume when compared with the potential for offshore wind.
Hamish Forsyth, one of the authors of the report, explains: “At the margin, offshore wind is a more expensive option than biomass conversion, but cost is not the only consideration and biomass cannot completely replace offshore wind.”
Dan Roberts, also responsible for the research, added: “Given the importance of affordability and competitiveness now and in the future, the way in which we decarbonise cannot ignore the cost to society.”
Lead image: Biomass pellets via Shutterstock