Energy Policy is not front and centre of this election campaign. However, Ed Miliband took to X last week to claim that a report cited by Claire Coutinho, the Energy Secretary supported his claim that Labour’s 2030 clean power plan would save people money on their energy bills.
As a reminder, the Conservatives have set a target to decarbonise the grid by 2035 (NZ2035) and Labour wants to accelerate that by five years and deliver a Net Zero grid by 2030 (NZ2030). Time to dig into the report, examine Ed’s claim and the accuracy of the analysis.
The report in question was published in March 2024 by Policy Exchange, which acknowledges the modelling work was carried out by Aurora Energy Research. The report and associated slide deck and data book can be found here. Policy Exchange describes itself as the most influential think tank in the country. Aurora was founded by some professors from Oxford University and claims it is the largest dedicated power analytics provider in Europe. However, as we shall see below, it looks like doubling the brains on this report has halved the collective IQ.
Problems for Ed Miliband
The first problem for Ed is that the consumer costs in the quoted post from Aurora Energy Research cannot be found in the report, slide deck or data book. At the bottom of its thread, it does say you can get in touch if you have any questions. I did reply to its tweet thread asking what it meant by “total consumer costs” and how it arrived at them. Sadly, I have not received a reply.
The second problem for Ed is much more substantial. The slide deck says on page 6:
Technological and policy barriers are unlikely to be overcome to reach Net Zero in the power sector within the timescales of current political targets.
In other words, we are unlikely to hit a Net Zero grid by either 2030 or 2035. It goes on to say on page 25:
Further accelerating Net Zero in the power sector to 2030 requires more extreme policy action and is likely to be out of reach.
To give a flavour of how unfeasible both plans are (see p19 of the slide deck), to achieve NZ2035 requires the pace of offshore wind deployment to accelerate by a factor of three, from about 1GW per year to 3.2GW per year. However, the pace of offshore development needs to increase six-fold to meet the NZ2030 target.
In other words, a Net Zero power grid by 2030 is simply not going to happen.
However, the headlines are only the start of the problems for Ed Miliband, Policy Exchange and Aurora.
Missing Grid Costs
The Aurora slide deck (p28) says that to achieve a Net Zero grid by 2030, we will need to spend £116bn on wind and solar capacity up to 2035. As an aside, it also says we would need to spend a little less or £105bn to achieve the same thing by 2035.
However, despite acknowledging that the extension of the transmission grid must be accelerated, it appears to have glossed over the costs of this grid expansion. The National Grid ESO has announced £54bn of spending on the electricity transmission infrastructure up to 2030 and a further £58bn in the 2030-2035 period, a total of £112bn. These extra grid expansion costs broadly double Aurora’s cost estimates. Moreover, given that there is expected to be additional demand on the grid from electric vehicles and heat pumps by then, even more spending on the distribution network is likely to be required.
Missing Generation Capacity Costs
The Aurora slide deck (p7) indicates that to achieve a Net Zero grid by 2030 or 2035, extra generation capacity will be required in technologies such as BECCS, gas with carbon capture and storage (CCS), hydrogen gas turbines and both long term and battery storage.
However, some of these technologies do not yet exist (BECCS and ‘gas-plus-CCS’) or are extremely expensive (hydrogen and battery storage). Yet, it has not included a cost for this extra spending.
Unrealistic Costs of Renewables
The capital cost estimates it uses for renewables are also unrealistically low. Working through Section IV of Aurora’s data book, it assumes capex per GW of installed capacity can be calculated.
It indicates that to hit a Net Zero grid by 2030, a total £116bn will have to be spent on renewables capacity by 2035 (p28), with £93.5bn of this by 2030. This spend would deliver 26GW of solar power, 12.5GW of onshore wind and 36GW of offshore wind. The bulk of the money, nearly £70bn of the £93.5bn will be spent on offshore wind.
It indicates an additional 36GW of offshore wind would need to be installed by 2030, giving a spend of £1.9bn/GW of capacity. By way of comparison, the 3.6GW Dogger Bank offshore windfarm is currently under construction and in 2021 was estimated to cost £9bn, and in December 2023, the cost estimate had apparently increased to £11bn. This gives a cost per GW of £2.5bn/GW (2021) or £3.1bn/GW (2023) which are 29-58% more expensive than Aurora’s assumption. Dogger Bank A was awarded its Contract for Difference (CfD) at £39.65/MWh (2012 prices) in AR3. Since then, strike prices have gone up considerably with developers being offered £73/MWh (2012 prices) or £102/MWh (2024 prices) for new offshore wind in this years’ AR6 auction.
Moreover, even Aurora says that the CfD subsidy scheme needs to be updated to prioritise securing capacity over price competition. Any way you look at it, Aurora’s estimates are way too low.
Similarly, Sneddon Law onshore windfarm recently came online with a reported spend of £50m to deliver 30MW of installed capacity. This works out at £1.7bn/GW, some 70% above Aurora’s assumption of about £1.1bn/GW.
In addition, Aurora assumes that 26GW of solar power will be delivered by 2030 at a cost of £10.8bn. This is around £415m/GW. However, the most recent Government figures show the median cost of installing solar panels for 10-50kW installations was £1,376m/GW in 2023 or more than three times Aurora’s estimate. Larger solar farms may well be cheaper, but they are unlikely to fall to anywhere near Aurora’s estimate.
In summary, Aurora’s cost estimates for new renewables are ridiculously low, meaning its overall spending estimate is similarly too low.
Fantasy System Costs
Aurora’s report does not repeat the claim in its tweet about consumer costs being £109/MWh in a Net Zero by 2035 scenario or £107/MWh (or 10.7p/kWh) if we achieve a Net Zero grid by 2030.
However, we can challenge these numbers in two ways. First, if we spend more money earlier in the NZ2030 scenario than in the NZ2035 alternative, then any discounted cashflow model would put system costs higher under NZ2030.
In addition, the latest Ofgem price cap is 22.36p/kWh plus 60.12p daily standing charge. For a typical household usage of 2,700kWh per year this works out at a total cost of 30.5p/kWh or 2.8 times Aurora’s NZ2030 calculation.
The current day ahead wholesale price for electricity set by gas is £73/MWh or 7.3p/kWh, so the full retail price is approximately four times that of the wholesale cost. The basic CfD cost of currently installed offshore wind CfDs is around £145/MWh or 14.5p/kWh.
The idea that total retail prices can fall by two thirds and come in below the current price of offshore wind after a further spend of £200-300bn or so by 2030 is clearly for the birds.
Conclusions
Aurora is assuming costs for renewables that are a fraction of what we know apply in reality. It has also left out the costs of grid upgrades, BECCS, hydrogen storage and carbon capture. There are hundreds of billions of pounds missing from it analysis. The cost savings it claims are completely spurious.
It would not be surprising if the actual cost of delivering a Net Zero grid by 2030 is three times Aurora’s estimate once realistic costs are considered. The total consumer cost estimate from Aurora is clearly an untruth based on fantasy assumptions that bear no resemblance to reality.
It is not easy to be sympathetic to politicians. However, when they are fed shonky reports from thinktanks that purport to be the most influential in the country, it is easy to see how they become caught up in Net Zero mania.
However, when Ed Miliband seeks to use the report to claim his Net Zero grid by 2030 will save money when such a dodgy report clearly warns his plan is “likely to be out of reach”, then any sympathy that might have been forming rapidly evaporates.
Our democracy is in real trouble when misleading and false claims are made to justify policy action when the reports those claims are based on are built on such dubious assumptions.
David Turver writes the Eigen Values Substack page, where this article first appeared.
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Just wait until the pampered middle classes realise the true extent of the damage to the countryside and freedoms people like “Red Edd” are cooking up with Agenda 2030.
I suspect reality may come along sometime between now and 2030 and hit Miliband with an almighty uppercut. ——Reality is a very hard enemy to defeat, and I predict as Muhammad Alli used to do that Miliband and the phony planet savers in the Labour Party will fall in the third round
There is no point in calling these wankers hypocrites.
The hypocrisy is part of the process, of rubbing our noses in it.
It is like the delicious steak dinners and private jets at Davos.
I can think of a solution but don’t want to seem to incite murderous violence on this wonderful site.
They aren’t completly lacking in self-consciousness so the will be aware of the hypocrisy. Some will justify it based on dubious utilitarian calculations. The greater good will be served. A problematic way of thinking but most are worse than that. They see themselves as a cut above. Subject to different rules and regulations and beyond good and evil. It’s a nice racket if you can get it. With the caveat that in order to be able to behave like this you have to be venal or stupid or both. The internal life of a hopelessly addicted masturbator.
Yes, the old ‘Greater Good’ theorem. Now a popular BA DisHons degree available at Cambridge, and other leading red-bricks.
“There is a level of hypocrisy: academics know that flying is bad for the environment,” said Professor Jonas De Vos of UCL, the lead author of the study. “But still, we often fly to international conferences, often to [make the argument] that society should be more sustainable.” “
Translation:
Even though we know we are all a set of hypocritical and lying Next Tuesdays we are still going to carry on with our jaunts. F. the plebs.
flying around “necessary to win promotions and funding” It’s all a scam.
Of course they do. They’re the new aristocracy and what they do and where they travel is of paramount importance. It’s the rioty little people in their stinky blue and yellow planes that need to be stopped.
Yes the dirty people with tattoos that go to Spain and watch Football. We can’t have that!
I wouldn’t stress too much about this agenda. If you live in England then you can be rightly worried as the Brits are the prgenitors but if you look at the money it is being pulled out very quickly because those people know how to respond rapidly to changes in public sentiment. Look at the major car manufacturers. You will not see much new investment in ‘renewables’ because they know that people rightfully hate them in their current form. I garantee you that within 2 years the green agenda will be utterly destroyed. It won’t be a pleasant time and the insects won’t come back but at least we will be more concerned with serious issues. Unravelling the Great Poisoning will take several decades.
And the Reset!
“Four legs good, two legs bad.
Four legs good, two legs not such a bad idea.
Four legs best for you kafir, two legs for us.
Get back in your pen!”
Ideas of self-poisoning are very common at the end of empire. You can call them crisis cults. Any lapse in self-discipline can leave you open to ideas of self-abjection. We didn’t do anything bad to ourselves in the post-war era. In fact in terms of anti-imperialism we gave up our empire very quickly and civally. Regardless of your point of view the behaviouor the British after 1945 was exemplary and civil. And for a short while we had an independent system of science. Graham Greene was asked in 1962, what is wrong with the world. And he gave a one word answer – America.
The most important question arises when you ask yourself, what can I do to stop this hypocrisy or these flights? Very little because they have spent every year since 2008 in reinforcing their bunker. Acknowledgment of our current status is an important first step.
I am utterly shocked by this revelation….
As Jarvis Cocker once said, ‘Everyone hates a tourist’…. except when that tourist happens to be them!
Who?
Global Warming was debunked years ago yet it still tips up now and again. Why do so many fools lie to themselves and others about all this stuff? Half an hour of research tells you all you need to know about this crap.
Climate Change certainly exists; there wouldn’t be a planet if it didn’t but man made is conceited and incredibly ignorant. Hopefully the bubble will burst before it is too late but I fear it will not.
Most of the politicians bureaucrats media pop stars and actors will not have the slightest clue about this issue. —–If we ask that plonker Lammy eg how much CO2 is in the atmosphere and how much is emitted by humans he likely won’t know. ——-“Climate Change” to all of these people (or most of them) is simply a concept. It is to them, without realising it, something that has been decided as fact elsewhere, and they don’t have to know about it. All they need to know is “Climate Change is real and happening now”. The details are not necessary. ———–Well actually the opposite is true. The details are absolutely necessary, and on closer inspection there are no details, or science that supports the idea of a “climate crisis”——Yet nearly every politician we see on TV and most media commentators brainwashed by the groupthink and supporting it for political purposes speak of “climate change” as if it were all ultimate truth —-IT ISN’T.
97% of climate scientists would be unemployed if there was no climate crisis. Their behavior is far worse than just hypocrisy. They are members participating in a cult like movement actively and knowingly destroying millions of people’s lives.
Flying Hypocrites Fly to Climate Events