Dong Energy boss says falling price of renewables means they must power the electric car revolution or the environment will gain only a pyrrhic victory.
The rise of electric cars will be a pyrrhic victory for the environment if they are powered by fossil fuels instead of renewables, according to the UK boss of the world’s biggest offshore windfarm developer.
Matthew Wright, the new managing director of Dong Energy UK, said the cost of windfarms at sea had fallen so much that the big issue facing the industry was no longer levels of subsidies but how they integrated with the National Grid and emerging technologies.
“The challenge is that having reached this tipping point in terms of its cost competitiveness, how do we integrate more offshore wind into the the modern energy system?” he said. “How do we combine it with the rise of electric vehicles, the rise of storage and batteries, smart technology? It’s becoming a different phase [for the sector].”
The cost of offshore wind power fell by nearly a third between 2012 and 2016 (pdf), and the windfarms now generate 5% of the UK’s electricity (pdf), compared with 8% for onshore ones. It is the only large-scale form of renewable energy still supported by the government.
Wright, the former chief executive of Southern Water, took over the UK arm of the Danish state-owned Dong in June, shortly after the company sold off its remaining oil and gas business for £1bn to Ineos.
Dong announced last week that its operating profits were up by 74% in the second quarter of the year on the back of new windfarms. The company has invested £6bn in the UK, with a further £6bn planned by 2020.
Although Dong will not confirm so publicly, it may be among the offshore wind developers bidding for part of a £290m-a-year pot of government subsidies – known as contracts for difference – which are paid for through household energy bills.
The auction results are due in early September. Some in the industry have already predicted that windfarms, due to be built early next decade, will come in cheaper than the deal for the Hinkley Point C nuclear power station of £92.50 per Mwh, about twice the wholesale price of electricity.
The government’s pledge to ban new petrol and diesel car sales from 2040 was welcome because it would create extra demand for power, he said, but it would be a “bit odd” if vehicles were powered by a fossil fuel such as coal.
“It would be somewhat of a pyrrhic victory at that point, reducing NOx emissions in cities [from diesel engines] for increasing CO2 elsewhere [from a conventional power station]. The fit between renewable energy and electric is a natural fit,” he said.
More electric cars and large-scale storage facilities would help with the variable nature of wind power too, he said, though he said the importance of its intermittency was “overplayed”.
The company is planning to add a sizeable, 2MW battery to its offshore windfarm at Burbo Bank in Liverpool Bay, to provide services to National Grid, similar to one already being built by Sweden’s Vattenfall at a Welsh onshore windfarm.
Wright said that the potential for offshore wind was huge, citing a recent report that found there was enough wind resource for it to power 75% of all the UK’s households.
He urged governments around the North Sea, including Britain, to help ensure future projects are more strategically sited, to make best use of the power.
“The wind is blowing somewhere in the North Sea 75-80% of the time, therefore if you think a little harder about where to site projects, you can get closer to baseload [continuous power, as provided by atomic reactors] from offshore wind than many people think,” said Wright.