The answer is blowing in the wind

I am no fan of wind energy. It is hugely over-rated. But, like most energy sources, it has its place. To dismiss it or condemn it out-of-hand is as distorted a view as to hail it as the solution to all our energy problems.

The Times today printed a damning article on an urban wind installation. A turbine installed four weeks ago at the home of Mr John Large, it reports, "has so far generated four kilowatts of electricity", compared to an average household's consumption of "23kw every day", and offering a return of "9p a week" compared to the £13,000 that Mr Large spent on the installation.

As many were quick to point out in comments on the article at The Times's website, and on many blogs, the journalist's ignorance of basic energy and engineering was revealed by his use of terminology. Kilowatts (or kW - lower-case k, upper-case W) are a measure of potential - the capability to deliver a given amount of energy in a given time if working at full load. Kilowatt-hours (kWh - as above, plus lower-case h) are a measure of energy - specifically the amount of energy produced if an engine with the potential to produce 1 kW is run at full load continuously for one hour. The phrase "has so far generated four kilowatts" is therefore a nonsense - kW contain no notion of time, so one cannot say that any number of kW have been generated "so far".

"23kw every day" is likewise wrong, not only in the spelling, but also in fact - to the extent that averages are in any way meaningful (which is a very limited extent), the figure should be 23 kWh, not 23 kW. 23 kW every day would, according to the best interpretation one could put on it (23 kW of demand continuously for 24 hours) equate to 552 kWh per day, which is way over the top. As it is, even 23 kWh per day is excessive - total domestic consumption of electricity in the UK is around 115 TWh (1 TWh = 1 billion kWh) each year, which is equivalent to around 4,800 kWh per household annually (there are just over 24 million households in the UK), or 13 kWh per household per day.

That is not the only suspect aspect of the report. Mr Large is, in fact, an energy and engineering consultant, lead partner in Large & Associates (L&A), specialising in nuclear risk and to a lesser extent sustainable energy. No mention is made of this in the article, where the turbine is described as being installed "at his home". That contrasts strangely with L&A's Press Release on the subject, which announces that "Large & Associates has installed and commissioned a wind turbine system to augment power to its London offices". The obvious explanation is that L&A's offices are in Mr Large's home. That is fine, but as home-offices have larger, more extended electricity demands than either a home or an office separately, it is relevant to understanding the circumstances of the scheme (see below), and a strange thing to conceal.

The Press Release records that the turbine installed is a "Proven Energy WTR2500, of 2.5KWe capacity" (kWe is an electrical kilowatt, to distinguish it from a thermal kilowatt or kWth). Perhaps wind-turbine manufacturers should start referring to the capacity of their units in terms of kWp (peak kilowatts), as the photovoltaic suppliers do, to make it clear that the rated output is only what it is capable of under ideal conditions, not what it will deliver continuously. But it is perfectly clear from Proven's literature that output varies according to wind speed across the blades.

What is really important here is that the installation of this 2.5 kW turbine cost, according to the article, £13,000. As The Times article noted, 9p per week is not much of a return on an investment of £13,000. But a sensible scheme should be neither that expensive nor yield that little return. It will still be pretty sick without a grant, but it should be an order of magnitude better.

I am not familiar with Proven's prices. Perhaps they really are that expensive. If so, they deserve to go out of business. A wind turbine in a less than ideal setting in the South-East of England should not be expected to deliver more than a 25% load factor (the ratio of actual output to the output that could be produced if the turbine ran at full load continuously for a year). That means it is reasonable to expect the turbine to produce no more than 5,000 kWh in a year. The spec. sheet for this model, indeed, predicts that it will produce between 2,500 and 5,000 kWh per annum at a reasonable site. To the extent that the turbine displaces electricity that Mr Large would otherwise have had to buy from his supplier, it is worth around 10p/kWh (depending on supplier, scheme, price-movements etc.). To the extent that Mr Large exports it from the property and sells it as renewable electricity, it is currently worth around 9p/kWh. Those prices represent fairly good value historically (from the perspective of a producer, bad value from the perspective of a consumer), including a strong component of "green" value. It would be unreasonable for Mr Large to have expected significantly more. But at these prices, he could have expected to make/save no more than £500 p.a. and probably rather less. That may not be as bad as 9p per week, but it is still a return that no sensible investor would accept. If Mr Large expected a return on his investment, and if that really was the cost, he was a fool.

There are reasons to suspect that either this price is inaccurately reported or that Proven make very expensive turbines. One of their competitors, Windsave, sell a unit for £1,500 including site survey and installation, notionally rated at around 1 kW although it has a lower wind-speed-range (the range of wind-speeds in which it can produce electricity) and therefore lower capacity factor and is therefore more comparable to a 0.8 kW Proven unit (if such a thing existed). The Proven unit may have some advantages (e.g. the wider wind-range already mentioned, the fact that it can export to the grid, and possibly quieter operation), but is it really worth nearly three times more than three Windsave units producing roughly similar amounts of power annually? Is Mr Large overstating the cost, or did he invest in an uneconomic model? Either way, this story should not be held up as representative of the economics of wind power. The economics of small-scale wind power is sufficiently marginal without finding ways to make it look worse than it is.

Now let's have a look at that 4 kWh in four weeks (as we must assume the journalist intended to report) and the 9p per week. Those two figures are roughly consistent. But 4 kWh is an absurdly low amount of production for that length of time. It represents a load factor of 0.24%, equivalent to running at full load for less than 2 hours out of the 672 hours in the period. Anyone who has looked out of the window occasionally or watched the weather forecasts over the past month knows it hasn't been that calm. Either this figure has also been misreported, or Mr Large's turbine has been installed in an impossibly bad location. It is probably a bit of both.

One suspicion is raised by the Press Release, which states that the system "matches the base load of Large & Associates exporting any surplus electricity to the Grid via an inverter". The Times article, on the other hand, reports that the system "puts power directly into the national grid" - no mention of supplying the building's base load demand before exporting the surplus. Is that 4 kWh net or gross of any domestic consumption? If net of consumption, the figure of 4 kWh exported may represent nothing more significant than that Mr Large's property has a high base load electricity demand that is consuming most of the production of the turbine. If so, the output from the turbine will have reduced the amount of electricity that Mr Large has had to buy to supply his property, and the value of the reduction in imported electricity should be counted toward the return from the turbine. If gross of consumption, total production of 4 kWh over 4 weeks is feeble, and marks a turbine that is operating at a very much lower frequency than should have been possible given the weather.

As it happens, production may well be lower than typical for such an installation in a suitable location. The supplier claims that they advised Mr Large that his location was not suitable. Mr Large denies this, but have a look at the picture on his Press Release. Pictures can be deceptive, but the turbine certainly seems to be surrounded by trees and not significantly higher than the roof line (given the perspective of where the picture is taken from). If interference and turbulence from surrounding objects diminished the effective wind speed that hit the turbine blades, the resulting reduced output might well be insufficient on all but the windiest days to supply more than the internal consumption of Mr Large's property. If so, that says rather little about the practicability of wind-power, and rather more about the practicability of Mr Large's installation.

Like most things nowadays, the energy debate is characterised by ignorance and mis-information. The wind lobby are as guilty of overstating their case and fostering misunderstandings as any group. To a large extent, they deserve the backlash of which this article is one example. Whilst much about the article in The Times is questionable, the above should not be taken as illustrating the opposite - that wind energy is practical and economic. In most cases it is not. But we should not be weighing wind according to Mr Large's claims any more than we should be weighing it by the experiences of Shetland wind farms, where geography produces load factors approaching 60% or roughly double the national average (for an enlightening analysis of the real performance of the major renewable technologies, see the set of reports on the Renewable Energy Foundation's website). Most wind projects will be neither as good as the Shetlands nor as bad as Mr Large's project. Whether that moderate performance is good enough to justify the investment or not will depend on circumstances. It is not necessary for us to make a judgment, nor can we reach a general conclusion that covers all circumstances equally.

Mr Large has many options for reducing his carbon footprint. There is no moral virtue in choosing one option over another. Nor, of course, are the choices mutually exclusive. But to whatever extent Mr Large is willing to invest to reduce his emissions, it is not only to his advantage, but also to the advantage of the environment and the economy, that he chooses those options which deliver the most "bang for the buck". The environment does not care how carbon is reduced. But if it cares about carbon at all (and it seems a prudent bet, though not certain, that it does), then it simply wants to see the most effective methods of reducing carbon emissions adopted as quickly as possible. Money wasted on expensive carbon-savings is money that cannot be spent on more efficient solutions. That is why the only sensible approach to climate change is to put a price on carbon and leave the rest to the market. How you derive a sensible price for carbon is another matter for another post, but the basic principle is sufficient in this case.

Mr Large's incentives are distorted by a myriad of government interventions. Carbon emissions are a cost to the environment wherever they occur. Technologies that do not emit carbon do not "save" carbon. Their value should be the avoidance of cost, not the award of credit for notional carbon "savings". The cost of carbon emissions should be equal at any point in time wherever those emissions occur, and the value of their avoidance should thus also be equal however they are avoided. But thanks to the complete mess that successive governments have made of energy and environmental policy, this is far from the reality. Carbon avoided in one way (for instance through the production of renewable electricity) is treated differently to carbon avoided in others (for instance through the production of renewable heat). Thanks to government policies, carbon values differ substantially between the three major forms of energy-consumption - transport, heat and electricity. They are made to vary widely between different sectors (domestic, industrial, public-sector), and between different technologies (renewables, nuclear, gas and coal for electricity, or gas, oil, electricity and renewables for heat). They even vary significantly depending who is supplying them (various grant schemes and other incentives designed to be restricted to "preferred suppliers" or to provide more benefit to some businesses than others) or who is having them supplied (e.g. allocations under EU Emissions Trading, or access to Climate-Change Agreements that reduce the cost of the Climate-Change Levy for some businesses and not others). In some cases, the cost of carbon can be counted as many as four times (e.g. uncompetitive renewable electricity generation schemes receiving grants, exemption from the Climate-Change Levy, and value from the Renewables Obligation and from the impact on wholesale electricity prices of EU Emissions Trading). In other cases, carbon is not valued at all, and indeed may even be penalised (e.g. domestic green heat, which has no means of realising a carbon value as no direct valuation is available and no cost of carbon is applied to domestic fossil fuels, whose use is actually encouraged through the special low rate of VAT). Energy policy is a mess, which the Government is determined only to make worse (e.g. by introducing a differentiation in the carbon values of the different types of renewable electricity).

The result of that mess is that wind power is one of the most strongly supported forms of carbon-avoidance in which it is possible to invest. The government really want us to pick wind, even where it's a loser. Thanks to this, many large wind projects and some smaller ones are economic though inefficient ways of avoiding carbon emissions. And yet despite this, even the government couldn't convert Mr Large's loser into a winner. There was never any prospect that Mr Large's project would have paid him back, if the figure for the capital cost is correct, even if the output had been as much as could reasonably have been expected. There was no environmental merit in spending that amount of money to achieve such a small environmental benefit.

There will always be fools who waste their money on bad investments. If Mr Large is one of them, it tells us very little about wind in general, but quite a lot about the man and his scheme.

In a free market economy, there's not much harm done, apart from to Mr Large's bank balance. Those like him who went for inappropriate installations lose money and those who went for appropriate installations make money. Gradually we discover the best way to proceed. Those with the best judgment earn the most money to reinvest in more schemes. Those with the worst judgment have to stop investing or eventually go bankrupt. Natural selection drives towards the optimal solution. Profits are the signposts on that route, a sign that the profitable business has invested wisely, not a mark of exploitation.

But imagine if decisions about how to invest are taken centrally, and based on Mr Large's advice. After all, he is an expert (of sorts) in the field, and the government like basing policy on the advice of experts. We would swing from encouraging lots of schemes like Mr Large's, to discouraging lots of schemes including some that are not as bad as Mr Large's. The sweeping generalisations and lack of information that characterise central planning would produce one irrational result after another. Rather than Mr Large and people like him losing money, the effect would be amplified so that the whole country lost money.

Or imagine that investment decisions were widely considered to be not just a matter of economics but of morality too - that the prevailing opinion was that you should invest in things that were somehow morally "right" even where the economics said they were wrong. The public are persuaded by the media, pressure groups, politicians, the Establishment and so on that certain techniques such as wind turbines (or photovoltaic panels, or recycling) are somehow worthy in their own right, regardless of practicality. The Mr Larges of this world multiply, while the voices of those who take a contrary view are ignored or even suppressed as somehow morally wrong.

Oh, hang on. No need to imagine it. That is the world we are living in.