Bogtec (continued)

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The recently signed Memorandum of Understanding between Ireland and the UK on wind power has led to excited talk of tens of thousands of new jobs and billions in tax revenue and expert earnings. How realistic is that?

The Memorandum itself is silent on the implications of the deal. Pat Rabbitte and Ed Davey agreed to negotiate a treaty under the Renewables Directive. There are targets for renewables for all Member States of the European Union. Some countries will easily meet these targets, but most won’t. Under the Renewables Directive, Member States with a renewables surplus can sell this to the highest bidder or to an exclusive buyer.

Ireland may have more wind power than it needs. Ministers Rabbitte and Davey intend to enter into an exclusive agreement. This is obviously attractive to the UK. It is not obvious why Ireland would want this, rather than let the Brits compete against the French and the Poles. The first contours of the plan emerged shortly after the UK offered soft loans to bail-out Ireland’s public debt.

The UK cannot meet its renewables obligations. It cannot ignore these targets because the coalition is fragile enough and relations with Brussels already tense. Great Britain has plenty of wind, but people have effectively used the planning system to stop the erection of new wind turbines. So, the plan is to build turbines across the Irish Sea and transmit the power via a dedicated grid to England and Wales.

The Midlands are the leading candidate to build these new turbines. The plan is therefore known as Bogtec, after a similar plan involved the Sahara called Desertec. New wind capacity may amount to 5,000 MW. The current installed capacity is 1,700 MW.

Long distance power transmission is expensive. The East-West Interconnector cost 600 million euro. It has a capacity of 500 MW. Similar interconnectors elsewhere cost 200-300 million euro. Assuming that the Brits will not pay for gold-plating, the bill for the undersea cables alone would be 2-3 billion euro.

The delayed new North-South Interconnector will have a capacity of 400 MW. People are already up in arms against the planned pylons. Transmission from the Midlands to the sea will need 12 times as many pylons.

The potential benefits of Bogtec for Ireland are unclear. The more optimistic estimates aim to impress voters and politicians. Wind power does not generate a lot of employment. Estimates often ignore the jobs lost in thermal power generation, and the jobs destroyed by dearer electricity and higher taxes. There certainly are jobs in “sandwiches and concrete” as Pat Rabbitte put it. The more attractive jobs, however, are in manufacturing and in designing new turbines. There is overcapacity in wind turbine manufacturing, so companies would hesitate to build a new plant in Dublin Port – even if Ireland would suddenly discover its talent for mechanical engineering.

Export earnings depend on the selling price. The REFIT tariff in England and Wales is 25 c/KWh for small suppliers. The retail price of electricity is only 18 c/KWh, the wholesale price 6 c/KWh. If Irish wind farmers are paid the wholesale price minus the cost of transmission (2 c/KWh), revenue will be around €0.5 billion per year. Higher revenues will be at the mercy of the generosity of British subsidies.

If manufacturing jobs are in Denmark and revenues low, the government will not see much tax revenue. No royalties are paid on wind. Bogtec does not appear to be a great deal for Ireland.

Wind farms have real costs. They can spoil the landscape, affect wildlife, and disturb people living nearby. Do the benefits outweigh the costs?

There is not much information on Bogtec. The government has yet to publish an impact assessment, but it protests only meekly against the fantastical claims put forward by companies hoping for subsidies. Evidence is not the strongest point in Ireland’s energy policy. Paul Hunt has shown that energy policy in Ireland is run for the benefit of the state-owned energy companies and their workers, Minister Rabbitte disagreed. Mr Hunt’s analysis is based on data. Mr Rabbitte promised data, but has yet to deliver.

People that could be affected by the new turbines fear that planning regulations will not protect them. Indeed, Bogtec exploits the difference in planning between England and Ireland. The UN has ruled that Ireland’s National Renewable Energy Action Plan violates international planning standards. The High Court has agreed to hear this case in March.

Bogtec is a good deal for Britain.* Is it a good deal for Ireland too? We need to know before we proceed. Why is an exclusive deal with the UK better than selling to the highest bidder?  Is Bogtec related to the bail-out? Will the Irish government or state-owned companies invest money in Bogtec? What is the expected rate of return? What if UK subsidies are less generous? Will planning properly protect households? In the past, the Irish government repeated sleepwalked into a bad deal. It is time to kick that habit.

* Well, it is a good deal for Britain given the corner it has painted itself into. Without political constraints, the best solution would be to ditch the Large Combustion Directive and replace coal with gas over a 15 year period or so.

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19 Responses to “Bogtec (continued)”

  1. Brian Woods Snr Says:

    @ RT: “It is time to kick that habit.”

    No one ‘kicks’ such a habit. Other folk’s money is too addictive! What do money addicts do when they cannot get a new ‘fix’? Right! They mug their marks – again! And when that source dries up (as it surely will) they borrow – again, and again And when that source dries up (as it surely will) they install their own fiat money printer!

    “Paul Hunt has shown that energy policy in Ireland is run for the benefit of the state-owned energy companies and their workers, Minister Rabbitte disagreed. Mr Hunt’s analysis is based on data. Mr Rabbitte promised data, but has yet to deliver.”

    Let me again remind readers of Gouzenko’s Paradox: “Promises are made according to motive, but are fulfilled according to circumstance”. Pat Rabbitte’s verbal promise is not worth the paper its written upon. So that leaves him with the free option of dissing PH’s analysis (or any other critic). As for our anaethesized sheeple: all they are interested in are live TV and hot, take-away suppers – and whinging (over chilled Chablis) about the Government not giving them more – of All Kinds of Everything!

    Remember Arthur Askey’s signature call? “Wakey! Wakey!” Its not more power generation that is needed, but a tad more efficient use of what we already enjoy. Our Permagrowth economic paradigm has, eventually, arrived at its energy margin (its about a decade wide). One can certainly enjoy that free lunch – but at the expense of those who will go without their supper.

    In 50 years time will those ‘windmills’ be our equivalent of those Easter Island statues? Looks promising.

  2. Ossian Smyth Says:

    5GW of wind would generate about 12TWh of annual renewable energy. At 6c/KWh, that would be worth €720m. At 18c/KWh, that would be worth €2.16bn.

    Bord na Mona has 200,000 acres of cutaway bog in the midlands, Coillte owns 5% of Irish land area. Clearly there is the possibility for the state to profit from this venture so long as a fair deal is negotiated.

    Bilateral does not mean exclusive. Ireland has, for example, multiple bilateral tax agreements.

    Article 35 of he renewables directive encourages trade to meet national renewable obligations

    Whilst having due regard to the provisions of this Directive, Member States should be encouraged to pursue all appropriate forms of cooperation in relation to the objectives set out in this Directive. Such cooperation can take place at all levels, bilaterally or multilaterally.

    The UK has 3 times Ireland’s land area yet generates 6 times as much renewable energy. So the idea that Britain is unwilling to contribute its share of renewable generation is false. England has 5 times Ireland’s population density, so countryside is in short supply and the amenity value is highly prized. They don’t have 200,000 acres of cutaway bog.

  3. JohnBoyWalton Says:

    The worst place in the country to build wind turbines
    in terms of available wind resource is in the midlands.

    Regardless of any potential jobs it is
    a horrendous waste of turbines and ancillary services.

    The power in the wind is a cubic function of the
    wind speed so to say Ireland has abundant wind
    resource is true but the vast majority of it is available
    along the south and west coast and mountain regions.

    Another Irish example of building in the wrong place!

  4. Richard Tol Says:

    @Ossian
    You need to subtract the cost of transmission. I reckon it costs around 2 cent per kilowatthour to transmit power from the Midlands to England.

  5. Eoghan Says:

    @ Richard.

    I do not follow the policy debates closely – would you mind point me in the direction of Paul Hunt’s work you refer to?

  6. Sporthog Says:

    Well a lot is going to depend on the contract written up. The money borrowed to build + maintain + operate the infrastructure will have to be paid back, perhaps in the form of a “basic day rate”, which will pay for the capital costs and the salaries of the employees. Even if there is no wind blowing on any given day the basic day rate is still paid.

    After that perhaps a marginal rate for each Kw/hr used.

    As for this fantasy of 1000′s of jobs…. the more people employed.. the more expensive electricity becomes. i.e. a 500Mw gas fired station with 100 employees is cheaper to run than the same station with 1000 employees.

    As for it being a “good idea for Ireland”…… any carbon usage reduction globally is good for Ireland…whether it be in the UK, EU or China.

    Whether the idea will be good enough to generate serious income for the state is a different thing entirely.

  7. NeverMind Says:

    http://www.bloomberg.com/news/2012-11-01/wind-farm-operating-costs-fall-38-in-four-years-bnef-says-1-.html

    The running and maintenance cost of onshore wind currently currently stands at €20,000 per MW, but is falling. The most competitive companies are Enercon, Siemens and Vestas. None of whom are Irish. If all of this cost was designated for Irish jobs, which it won’t, @5000MW that would be €100m for employees in Ireland (75% of Googles pay roll bill), only some of whom would be Irish and very few of whom would currently be on the dole (incidentally much like Googles staff profile), which would be €30m in taxes.

    Remember a lot of the running can be done automatically via local software or remotely via the fibre cables that will in all likelihood run along side the transmission lines.

    If we get a great deal on the electricity and receive full ownership/use of the interconnector and associated fibe cables (at no cost) it may be a good idea. As it could benefit the countrys energy security and perhaps stop Eirgrid building more over priced problematic (phone line interference) projects, partly as they own something too :( (as opposed to ESB owning all key infrastructure)

    Incidentally the plantations and forest clearings of 1556 – 1690 by the ancestors of the current British policy makers is what allows this to be even feasible. A cross multi-generational complementary screwing of the Irish landscape for the sake of British energy demands, impressive when you think about it.

  8. EWI Says:

    Wind farms have real costs. They can spoil the landscape, affect wildlife, and disturb people living nearby. Do the benefits outweigh the costs?

    I’m considerably disappointed that Richard’s work has heretofore not exactly focused on the environmental costs of human activity (to put it mildly). Now, however, I look forward to seeing this addressed in future…

  9. Brian Woods Snr Says:

    @ EWI: “Do the benefits outweigh the costs?”

    Yes. No. Maybe. No one actually can quantify them. So its moot, and it comes around to the preferences of the locals versus the demands of the urbanized (for more and more electricity). So who blinks first? Paddy Power might be a good bloke to ask.

    We need those Midland ‘wind farms’ like we need a hole in our heads. We must first decrease our overall electricity usage by conservation measures. After that it becomes very tricky (politically) indeed. Power usage reduction => reduction in aggregate economic activity! Bad!

    NeverMind mentioned forests. That’s what we should be planting – forests, lots of forests from east to west and as high up as the trees will survive. How many hectares of broadleaf forest could we plant for the cost of those windmills? There is a significant amount of fallow land available. Why not? “The answer is blowing in the wind”.

  10. grumpy Says:

    “Wind farms have real costs. They can spoil the landscape, affect wildlife, and disturb people living nearby. Do the benefits outweigh the costs?”

    Anyone suggesting this will be told that the WHO or some equivalent has said that there are no adverse health effects from living close to a wind farm.

    Yes, it fails to address the actual point made, but you will find it is the response given.

  11. Richard Tol Says:

    @grumpy
    A quick scan of the medical literature suggests that the low-frequency noise from wind turbines disturbs sleep and annoys people, and thence negatively affects health.

    These studies were published in the last few years, and emphasize the tentative nature of the conclusions.

  12. EWI Says:

    @ Brian Woods Sr

    Power usage reduction => reduction in aggregate economic activity! Bad!

    It needn’t (despite the well-rehearsed whinging of IBEC etc.). Motor vehicles and computers have been subjected to aggressive power consumption limits in recent years, and the ‘holy market’ has been able to respond.

  13. grumpy Says:

    @Richard

    It is in a sense ridiculous that something as obvious as this:

    “low-frequency noise from wind turbines disturbs sleep and annoys people”

    has to appear in the medical literature before it can expect to be admitted as a factor for consideration.

    It is also obvious that some people will be comparatively insensitive to such things whereas others may be very sensitive to them, and not as a matter of personal choice.

    The line that there is no scientific proof that wind farms are detrimental to health will be trotted out over and over again. If anyone is bright enough to cite scientific studies that dispute this it will be dismissed as “very much in the minority” “an outlier” etc etc.

    This is just how these things get bulldozed through the planning and consultative processes.

    You could cite studies demonstrating digitally pulsed RF damages DNA if you liked but the only thing that matters in relation to things like cell phone transponders for example is the officially accepted guidelines.

    The point is that in the places where the power resides, there is one particular conclusion that is welcomed, and another that will be rejected.

    People who make obvious observations along the lines of your comment, or pointing out valuation effects (which are simply common sense) will be met with attempts to suggest they are being irrational or unreasonable and cannot prove what they claim is correct.

  14. Bunbury Says:

    Regarding climate change, I came across the following from Clive James’s ‘Point of View’ book (from his BBC Radio 4 series) just recently:

    “We shouldn’t expect the less fortunate nations to cut themselves off from industrial progress in the name of a green planet. It wouldn’t be fair even if it was likely, and anyway, we aren’t civilized by the extent to which we return to nature, only by the extent that we overcome it”. James attributes the latter comment re returning to nature to Sigmund Freud.

  15. Richard Tol Says:

    @grumpy
    It is always good to check whether the obvious is really true.

    The literatures on wind turbines and health and on wind turbines and property values are new (post-2010). The officially sanctioned view always lags behind.

    The latest results, though, show that wind turbines are bad for your health and bad for the value of your house.

    The WHO, by the way, has no position on the health impacts of wind turbines. Some wind advocates cite the WHO, but that is just another myth.

  16. grumpy Says:

    @Richard

    “It is always good to check whether the obvious is really true.”

    In pure mathematics, yes, otherwise, not always.- although it is always good for the academics occupied doing the checking, and those who make hay in the meantime. Two decades ago the oestrogenic effects on fish, and likely people, of chemical pollution (mainly plastics, detergents etc) of the waterways was sufficiently mainstream in the scioentific community to warrant a “Horizon” programme.

    Its front page UK tabloid headlines tomorrow. Whocudaknowd.

  17. Ed Says:

    The proposed turbines are not even on the cut away bogs or on coillte lands who now own alot of the cut away bogs and planted them with trees. Its all on private farmers lands which is much closer to where people live. So thats another big question, if the government are so keen to push bogteck then why have they not first signed up the state lands for it. Surely one nuclear power station would be much less intrusive and environmentally friendly than thousands of gigantic turbines, millions of tonnes of concrete, and thousands of acres of land ripped up for roadways to service turbines. This is pure madness, i think we are going backwards not forwards

  18. Richard Tol Says:

    @Ed
    The private companies fishing for this project claim they will build on private farms. (Quasi-)government sources always mention Bord na Mona and Coillte.

    I find it hard to believe that there would be any substantial energy project in Ireland without substantial involvement of the state-owned companies that dominate the sector and have worked hard to keep private companies out.

  19. Brian Woods Snr Says:

    @ grumpy: “People who make obvious observations … … will be met with attempts to suggest they are being irrational or unreasonable and cannot prove what they claim is correct.”

    Yep. Except science works from the empirical, statistically significant (at 0.01 level) evidence that the Null Hypothesis (no damage) can be rejected. Painful stuff, but that’s the way. No one can ever ‘prove’ a claim is positively correct, but refutation is an altogether different matter! In a situation where damage is being alleged you may have to wait 20-30 years for sufficient date to be accumulated. In the meantime … …

    @EWI: Now about Hedonics. I once used a manual slot-head screwdriver and conical wood-screws. Needed pilot holes:slow and gave me repetitive-strain injury. Then I used a rachet equivalent (faster fixing, tricky to align but with same injury problem). Now I have THREE battery powered drivers (for PZ, pre-coated, shark-toothed screws). I’m a bloody speed machine! 8-)

    ps: I still have my first manual typewriter! Its a genuine work of mechanical artistry.

    @ED: “This is pure madness, I think we are going backwards not forwards.”

    Yep. But the Oliver Twist types with their pecuniary begging bowls in outstretched hands are crying (all the way to bank) – “Please minister, may we have more of that taxpayer moolah – or else!” Minister will oblige.

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