A study by Dr Mark Cooper and commissioned by Mainstream Renewable Power reveals the central importance of wind to developing low cost energy policy in the UK
(Dublin 18 October 2012) – Mainstream Renewable Power, the global renewable energy company, today announces the publication of a report by energy expert Dr Mark Cooper, which seeks to apply modern investment portfolio theory to energy policy. It does so with the aim of helping policymakers attain an important, urgent policy objective: managing the decarbonisation of the electricity sector, while maintaining affordability and energy security.
When this is done the conclusions show that a UK generation portfolio dominated by unabated gas and coal would be the most expensive option, while developing a diverse incremental portfolio of assets including a significant amount of offshore wind lowers risk and the expected cost of electricity to UK consumers. The Report also suggests that adopting a carbon tax in place of targeted support for specific technologies will push up electricity prices and fail to deliver low cost decarbonised electricity.
• Putting coal and gas, which co-vary strongly and are price-volatile, into the UK’s energy portfolio increases the risk of dramatic price spikes which recent history shows are passed on directly to UK consumers.
• Taking early steps to incentivise reduction in the deployment costs of offshore wind will significantly reduce energy costs.
• As a major indigenous resource, generating electricity from offshore wind will also provide a major source of economic growth and exports.
The report “Capturing the Value of Offshore Wind”, develops a policy framework to enable the most effective transition to a low carbon economy. Applying principles of investment theory, Dr Cooper shows that policy makers need to incentivise sources of energy that will provide a hedge against the risk of fuel price volatility and protect consumers from bearing the cost of that risk and uncertainty. Such an approach can adapt quickly to future unknown policy decisions, such as Germany’s recent decision to abandon nuclear power.
For Mainstream, commissioning this report is part of the company’s commitment to communicating the “Value of Wind” – the understanding that the benefits to electricity consumers or taxpayers delivered by wind energy outweigh the costs.
The study is a companion paper to a Cebr report published in June this year, which revealed Offshore Wind would more than pay for itself in future and reap rich rewards in terms of UK jobs and GDP.
Dr Mark Cooper, author of the report, said: “In writing this report I hope to show that if energy policy is a series of hedges, with the excellent resource the UK has in offshore wind, the first hedge UK policymakers should want to buy is wind. Offshore wind is the best possible resource to enable the UK to keep its options open, costs down and energy secure. Building out the UK’s offshore wind resource will capture very significant benefits to the UK economy faster than by adopting other generation choices.”
Commenting, Eddie O’Connor, CEO of Mainstream Renewable Power, said: “We have embarked on a once off transition from fossil fuels towards a low carbon economy. All forms of renewable energy, from solar energy to tidal energy, will contribute to delivering this transition in the UK. Offshore wind provides this country with a clear global comparative advantage, and will assist in providing affordable electricity to consumers and enhancing the country’s energy security.
“As Cebr and Mark Cooper show wind energy, and particularly offshore wind, offers a clear low carbon growth path for the UK economy, and a clear low carbon growth strategy for the UK Government. Their work is a very valuable addition to the debate on this country’s energy policy and I welcome its publication.”
The full report is available here.
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About Mainstream Renewable Power
Mainstream Renewable Power is one of the world’s leading independent developers of renewable energy projects. With a development pipeline of over 15GW globally it has started construction on its first wind farm in Ireland and is about to start building five further wind and solar projects in South Africa, Chile and Canada this year.
As Europe’s leading independent offshore wind developer Mainstream is developing just under 8GW of offshore wind projects in England, Scotland and Germany with 4.45GW of secured grid connection for these offshore projects.
It employs more than 150 experienced staff across four continents with offices in Berlin, Cape Town, Chicago, Dublin, Glasgow, Johannesburg, London, Santiago and Toronto.
www.mainstreamrp.com
About Dr Mark Cooper
Mark Cooper is a Senior Research Fellow for Economic Analysis at the Institute for Energy and the Environment; his current project is Energy Assessment. Dr. Cooper holds a PhD from Yale University and is a former Yale University and Fulbright Fellow. He has provided expert testimony in over 250 cases for public interest clients including Attorneys General, People’s Counsels, and citizen interveners before state and federal agencies, courts, and legislators in almost four dozen jurisdictions in the U.S. and Canada. Dr. Cooper has published numerous books and articles on energy, telecommunications and high technology industries. His energy related publications include: "A Consumer Analysis of Energy Efficiency and Renewable Energy Standards: The Cornerstone of Consumer-Friendly Energy/Environmental Policy (Consumer Federation of America, May 2009); “The Failure of Federal Authorities to Protect American Energy Consumers from Market Power and Other Abusive Practices,” Loyola Consumer Law Review, 19:4 (2007); “Recognizing the Limits of Markets, Rediscovering Public Interest in Utilities,” in Robert E. Willett (ed), Electric and Natural Gas Business: Understanding It! (2003 and Beyond) (Houston: Financial Communications: 2003); “Economics of Power: Heading for the Exits, Deregulated Electricity Markets Not Working Well,” Natural Gas, 19:5, December 2002; "Protecting the Public Interest in the Transition to Competition in New York Industries," The Electric Utility Industry in Transition (Public Utilities Reports, Inc. & the New York State Energy Research and Development Authority, 1994); "The Seven Percent Solution: Energy Prices, Energy Policy and the Economic Collapse of the 1970s," in Energy Concerns and American Families in the 1980s (Washington, D.C.: The American Association of University Women Educational Foundation, 1983); "Policy Packaging for Energy Conservation: Creating and Assessing Policy Packages," in Jeffrey Harris and Jack Hollander (Eds.), Improving Energy Efficiency in Buildings: Progress and Problems (American Council for An Energy Efficient Economy, 1982). Energy and Equity: Rising Energy Prices and the Living Standard of Lower Income Americans (Westview Press, 1982).