Albert Einstein’s thoughts on 40% wind energy!

Einstein reportedly had a sign on the door of his office which declared “Not everything that counts can be counted, and not everything that can  be counted counts”! This in a nut shell describes the concept of cost benefit analysis (CBA).

CBA is not difficult to get one’s head around, we all perform CBAs all the time. In order to make a decision, whether it is to have that extra slice of cake or to take the washing off the line because it might rain, we weigh up the pros and cons and come to some conclusion.

The broad purpose of CBA is to help social decision making and make it more rational. When you think of it, if it were used systematically, it would also counter the malignant culture of lobbying power of big business; decisions would have to be evidence based. In this instance a CBA should have been undertaken to ascertain of Ireland’s National Renewable Energy Action Plan (NREAP)  of providing 40% of our electricity from renewable sources, mainly wind, represents a net benefit to Ireland or if, in fact its costs outweigh its benefits.

So how does a CBA work? “A CBA attempts to evaluate on a monetary scale, the costs and benefits of all ‘marketed’ and ‘unmarketed’ consequences of projects and to estimate the net social benefit.” In plain English that means that CBA must consider costs and benefits which may have a value to society but whose value, in money terms, might not have been calculated, for example, the value we place on our landscape or silence at night. The superiority of a particular project must be demonstrated relative to all alternatives, including the status quo, before the intervention takes place.

In Ireland the Public Spending Code states that “The Public Spending Code is intended to introduce best practice in the appraisal, implementation and evaluation of projects and programmes. CBA is the mandatory appraisal technique for projects costing more than €20m.” Minister Brendan Howlin , the minister for Public Expenditure and Reform has stated:  “The new Public Spending Code, ….. applies to all public expenditure programmes. The overall aim of the new Code is to improve how public money is allocated and managed”.

Wind Aware Ireland has repeatedly called for an independent CBA into the wind energy and grid upgrade project in Ireland. These NREAP developments aim to provide 40% of our electricity from renewables by 2020. No CBA has been forthcoming!

In 2007 a PhD candidate, Eleanor Denny, submitted her doctoral thesis entitled “A cost benefit analysis of wind energy” which gives a good overview of some of the costs and benefits which  should be included in a CBA, but does not include the ‘softer’ costs or benefits such as visual impacts etc.

As is normal in this kind of analysis, many of the figures used are ‘assumptions’ when no hard data is available. Researchers commonly vary these figures in a ‘sensitivity analysis’ to see how the results would change should you change any one of these assumptions. Thus, you will typically end up with ‘basecase’ ‘best case’ and ‘worse case’ scenarios, that is, three different results depending on the inputs you used.

The question being asked in this CBA is “Does wind generation represent a positive net benefit for Ireland?” She found that the net benefits of wind were significantly affected by the type of generating plant used as back up, as per my previous blogs. She analysed the ideal % of wind in the system for three years 2010, 2015 and 2020. Remember we plan to reach 40% wind in the electricity grid by 2020. Would this be a good thing for Ireland? Her results are represented below.

How much wind energy is the right amount?

percentageWind

 

As you can see, there are massive differences in the answer to the question “How much wind in the grid represents a benefit to Ireland?” and in no case does the magic figure of 40% appear! In her ‘base case’ we are already there or thereabouts and cannot add more wind to our grid, in her ‘best case’ we can go to 30% which is a lot lower than the 40% recommended by SEAI and in her ‘worst case’ we are already way beyond the point where wind makes economic sense. Bear in mind she hasn’t included the values we place on our landscape, sleep, health, tourism and all the other factors potentially negatively affected by industrial scale wind farm development. Were these consider the thresholds would be lower again.

Most importantly, even in her ‘best case’ analysis the stated aim of 40% wind in the system is clearly not possible.

Wind Aware Ireland has called for the economic, environmental and social sustainability of wind energy to be assessed. All three of these pillars should be included in a CBA. Thus, the following could be included as parameters within the CBA.

Economic sustainability: capital costs, backup source analysis, subsidies and constraint payments, grid reinforcement, feed-in tariffs, loss of earnings from land use change, property and land devaluation, impact on tourism and other industries (eg. thoroughbred horse industry)

Social sustainability: valuations of negative externalities such as noise, visual impact, shadow flicker, loss of amenities.

Environmental sustainability: cumulative effects of wind farms (SEA) including effects on wildlife etc., displacement of cleaner back-up sources of energy, grid reinforcement environmental effects, embodied carbon in turbine construction (carbon life cycle analysis), analysis of ‘cycling’ effects of back up sources, decommissioning environmental effects.

To conclude, as with my previous blogs, in Ireland, amazingly, no such analysis has been done!

By Paula Byrne