Hydro at Northenden Weir – Poor subsidising the Greens?

The South Manchester Reporter carried an article about a plan to install hydro power in South Manchester.

The Didsbury Greening and Growing Group (DGG) is hoping to install a new water-powered turbine on the grounds of the old Northenden Mill on the River Mersey.”

For around £500,000 they group, lead by the local Rector Greg Foster, hope to install an Archimedes Screw generating up to 50kw.

Will this save the world? I commented

For half a million quid you get 50kw (67hp) – the power of a small car. For most of the year it will be less. It will only be financially viable due to the 18.7p/kwh feed-in tariff. That is a charge added to everyone’s bill. So those with money to invest in this green scheme will (in a small way) be increasing fuel poverty.

Another way of seeing how the true perspective of this scheme is to measure it against a modern nuclear power station. This can churn out over 25,000 times the power at steady levels 365 days per year. With accelerated closure of fossil-fueled power stations we need to build one such power station every year for a generation.

I received the following reponse

“Manicbeancounter”: let’s just look at your 1.2l petrol engine comparison and see if it really stands up. Your engine has to go flat out, foot to the floor all the time to get say 50kW at the shaft. It’s going to chew through about 10 litres of petrol an hour. Let’s get that to run for the 40 years or so life of a hydro plant (without major refurb). So at say £1.30/litre for petrol, that engine gets through £4.55 million pounds worth of petrol at today’s prices. So does £0.5million all in for the capital expense of an environmentally friendly scheme look so silly after all? Oh, and your little 1.2l car would have done about 35 million miles flat out at 100mph. And that one little generator would have made enough electricity for about half a billion cups of tea in its lifetime taking into account seasonal variations in rainfall. Not such small numbers after all eh?

Must admit, David Slee has done his maths. However, his calculations are out by a factor of two. A stationery generator’s consumption is measured in grams per kwh. 10 litres to produce 50 kwh works out at around 170g/kwh. (RD of petrol approx. 0.85?) This is roughly the fuel consumption of a diesel engine in a large ship. A small petrol engine optimised for flexible power output would use about twice as much.

However, I do not use the comparison of a 1.2 litre petrol engine for cost, but for power output. If anyone was daft enough to generate power from an internal combustion engine filled up from the filling station, they would do the over-taxed masses a favour. Of the £4.55m (or £9m) fuel cost, over half would be tax. So the rich investors would be subsidizing everyone else. A power station does not pay tax. (Generators use red diesel – and businesses reclaim the VAT). A quick calculation reveals is that if this hydro scheme averages 25kw over the year, over 25 years the index-linked subsidy (4% inflation) would generate £1.7m. If the wholesale price of around 8p/kwh is inflated by just 1% a year, the investors will get their money back under 8 years*. From selling electricity to the grid over 40 years investors would get a further £1.7m. Then around £300k for an overhaul to keep £80k+ a year rolling in.

So if this scheme gets off the ground, those lucky enough to have £50,000 to invest could secure a pension equivalent to the basic state pension, and will probably get a national award for their money-making wheeze. Most will be green with envy, or red with anger at their rising utility bills.

*NB If a discount rate of 8% is used, NPV = 0 in just over 11 years. Over 40 years to the projected major overhaul, NPV is £400k.

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