From NOT A LOT OF PEOPLE KNOW THAT
APRIL 14, 2022
By Paul Homewood
h/t Joe Public
More evidence that low wind prices at auctions are unsustainable:
Raw material and logistics inflation coupled with downward price pressures from auctions have led to an unsustainable situation where wind OEMs are selling at a loss, with the sector unable to deliver Europe’s planned tripling of wind capacity by 2030, industry leaders have warned.
“The state of the supply chain is ultimately unhealthy right now,” GE Renewable Energy chief executive for onshore wind, Sheri Hickok, told a panel at the WindEurope 2022 conference in Bilbao on Tuesday.
“It is unhealthy because we have an inflationary market that is beyond what anybody anticipated even last year. Steel is going up three times.”
Steel for offshore wind towers is currently being purchased at over $2,000 per tonne, Hickok gave as example, adding that the prices of copper, carbon and logistics had also soared.
“It is really ridiculous to think how we can sustain a supply chain in a growing industry with these kind of pressures.”
After hefty price hikes last year in the wake of the Covid-19 pandemic “things were higher but stabilising,” Hickok said, but added that with Russia’s war in Ukraine, the entire system had “unhinched” again in the past eight weeks, making it unsustainable at an unprecedented level of uncertainty.
The GE executive said she is very fearful for the entire wind industry ecosystem.
“Right now, different suppliers within the industry are reducing their footprint, they are reducing jobs in Europe,” she explained.
“If the government thinks that on a dime, this supply chain is going to be able to turn around and meet two to three times the demand, it is not reasonable.”
The European Commission’s recent REPowerEU plan, formulated in response to Russia’s invasion of Ukraine, wants wind power capacity to soar from 190GW today to 480GW by 2030.
Destructive loop
Nordex chief executive José Luis Blanco stressed that even before the Ukraine war, the economics in the wind industry had been destroyed due to price pressures from competitive tenders coupled with a low visibility of wind capacity pipelines due to failed government policies.
“We are investing in volumes in trust in market dynamics, then the volume doesn’t come, then a factory is empty, [and then] it is better [to have] some cash flow than no cash flow — and [consequently] the sector enters into a self-destructive loop.”
Blanco also said if Europe wants to triple its wind power capacity, it needs to better support the independence of the supply chain.
Currently, some 85% of the industry’s components are, however, coming from China, he said.
“The energy independence is supported by a supply-chain dependency policy. This a huge risk.”
Blanco was not only referring to rare earths, but said “normal things” such as metallic shafts in turbines, 95% of which are sourced in China.
All onshore OEMs in trouble
Enercon’s new chief executive Jürgen Zeschky went even further, saying “all European onshore OEMs are in trouble.”
Over the past eight years, cost was the only driver for developments, with low levelised costs of energy and low turbine prices driving the whole business, he told WindEurope 2022.
“We have reached a low cost base, but at the price of outsourcing to low-cost countries,” Zeschky admitted.
“If you look at Europe and Germany, we are constantly losing jobs in industry by relocating to other places.”
But the situation has changed fundamentally, he pointed out.
Due to Russia’s war in Ukraine, “we are faced with a situation, where it is not only about cost, but about an independent, resilient and reliable energy situation in Europe”.
To have sustainable energy generation, Europe needs a sustainable industry, and thus has to overcome being constricted to the lowest cost, he explained.
“That needs to change.”
Two words:
The essence of the problem: They want to industrialize the landscape with windmills but green energy causes de-industrialization.
Gee whiz, who coulda seen this coming? Almost anyone with a thinking brain. Isn’t that some sort of economics thingee…like, supply and demand driving prices for just about anything.
The actual value has nothing to do with it, however, the imagined value to the planet is what is being touted. So, the price for the materials to make the useless wind things will continue to rise and the taxpayers will continue to get gouged to pay for them.
Political economics at its finest. Just sayin’.
Where’s Griff on this post?
Hiding probably. He can’t cope with too much reality at one time or his little brain overheats.
His handlers have strict instructions to divert away from reality, especially if it involves wind industry issues.
No, he awaits instructions but Putin seems distracted by other matters.
Maybe soon Merkle will take over those duties
He’s probably sobbing under his bed.
What these companies are complaining about is hyperinflation caused by just a small disruption in global fossil energy supply. The irony of this situation does not escape me. The fact that solar and wind, in large enough quantities to actually matter, are not economically feasible without subsidies will soon be obvious even to the zealots.
That has been obvious to the zealots from the beginning. They just don’t care; ideology trumps rationality.
The Green God of Wind has failed them.
Next up Griff will repeat the propaganda line of achieving wind quotas for the fatherland.
Maybe they need wood and corn stalk engineering to hold up the windmills along the lines of some wood-based multi-story buildings being hyped.
Biden will just need to proclaim the great offshore wind farms as union-only domains with union steel, union subsidies, and preferred union electricity pricing.
It’s now a tossup between coal-based Chinese steel for wind structures and Chinese forced labor and coal-based silicon components for solar.
Don’t forget the acres of solar glass, melted and refined with
wind energyfossil fuels.I thought I said that.
You did, I thought it needed a boost.
Typical lefty bureaucrat thinking lead to this. Midwit Barack Obama and his band of shallow thinkers FELT the path to greenie utopia was simply to make fossil fuel based energies super expensive and leaving green tech the economic choice. Not once did any of these new age oligarchs consider that rise in petro price adversely affects the price of manufacturing turbines and panels. Wind isn’t used to make turbines and the sun isn’t used to make solar panels. Not to mention the materials made from petroleum. I’m hoping this is the first and not the last of the leftist’s unintended consequences to hinder the green dreams.
Gee whiz. Government subsidies and a magical belief system lead to a frothy market, fierce competition and logistical issues. Conclusion? We need protection from these market forces which serve to reduce prices! Reducing prices are a sign of market failure? Obviously we need government price controls to fix this market failure. It’s Great Depression thinking all over again.
The only market failure here is the government injecting too much money into an industry and making regulations favoring this industry to the exclusion of more sensible alternatives. How does one go about rectifying such thinking — the idea that a few people in government, on the basis of partisanship, have anything like the wisdom to design systems? I doubt a required reading of Henry Hazlitt’s “Economics in One Lesson” would be sufficient but would be worth a try.
Wonderful, Kevin! In only two succinct paragraphs, you’ve fully described the poison of ‘progressivism’ and provided the antidote of Austrian economics.
Thirty five years ago a length of 3/0 copper wire sold for about the same price as an equal length of US Pennies. That was when a US penny had 95% copper. Today, that same length of 3/0 copper wire is over $5.00. Prices are for better quality insulated wire suitable for Powerplant, commercial buildings, High-rise or homes. If you have underground service you want the BEST wire, closer to $9.00/ft, 3/0 Gauge (AWG) wire has an amperage capacity of 300 amps for a length of 15 feet, enclosed. Recommended for a 200 amp service drop to a home.
Buy Copper stock/futures.
Domestic energy costs are currently a massive issue here in the UK. I recently had my revised monthly charges sent by my domestic energy supplier: gas has gone from 51 pounds to 66 pounds per month – a 29 percent increase, and electricity from 101 pounds to 152 pounds per month- a massive 50 percent hike. The current international situation may be responsible for the increase in global gas supply cost inceases, but given the UK now being heavily dependent on wind power, what explains the 21 percent further increase in electricity costs? Wind generated electricity is claimed to now be cheaper than that from fossil fuel burning so something doesn’t add up. Trawling the internet, it seems that at least part of the explanation is the much bigger infrastructure required to support thousands of wind turbines rather than a few power stations. This will not go away – it will be translated into higher ongoing maintainence costs. This article suggests that even at current levels the wind energy sector is uneconomical, but how will it be funded? I will survive but already many people are facing the situation of unaffordable electricity bills and a choice between heating or food, a further increase in energy supply costs would be a catastrophe.
In socialist countries the common person often does not survive – they end up in a cold wet shelter with little food or medicine. In a democracy the common person CAN survive if they wake up and vote the liberal idiots out of office. There has to be pain and suffering for many people to acknowledge their beliefs in the politics were wrong…So it is a question of how much suffering before enough people wake up.
I am cautiously optimistic that this is occurring in the U.S. I think our next big election (Nov 2022) will through a lot of these out-of-touch liberals from office. This will stop the bleeding. Then with the 2024 elections we can put adults back in charge of the economy. With our fossil fuel industry healthy, we will be able to get prices back under control.
Or just having basic protection (i.e. walls and roof) against the weather
From the above article:
“Nordex chief executive José Luis Blanco stressed that even before the Ukraine war, the economics in the wind industry had been destroyed due to price pressures from competitive tenders coupled with a low visibility of wind capacity pipelines due to failed government policies.”
Hey, José, strongly suggest you investigate the word “intermittancy” and the phrase “lack of battery backup capacity” as some technical reasons for the abject failure of large scale energy generation from wind.
BTW, the phrase “low visibility of wind capacity pipelines” is bureaucrat-speak for what, exactly?
“BTW, the phrase “low visibility of wind capacity pipelines” is bureaucrat-speak for what, exactly?”
I’ll take a shot at it.
“low visibility of wind capacity pipelines”
“Windmills need fossil fuels and tax subsidies to exist. Pipelines such as Keystone have been shutdown and subsidies are less than we need.”
“Wind capacity pipeline” had me confused as well, but I think I figured it out. It refers to the “planned” growth of nameplate wind capacity of future wind farms. If you have 100Gw nameplate capacity today and in 10 years you “plan” to have 200Gw than you have a “Wind Capacity Pipeline” of 100Gw.
What is so funny about this is nameplate capacity is almost a useless metric for power – it refers to the absolute maximum power the infrastructure can deliver and says nothing about the expected power, the variability of power, or the minimum power of the infrastructure. It says nothing about the capacity to reduce variability for a given amount of time using storage either, but when talking about wind power it’s their favorite metric.
He’s saying new and improved future wind CF isn’t sufficiently recognized. These new and improved turbines are already being manufactured (in the pipeline), and very soon wind CF, he suggests, will see a quantum improvement from going from 2.5 MW to 10+ MW turbines…especially offshore maybe 40 CF soaring to say 45CF. Slightly more efficient, way more expensive. Kill the beast.
10 years is not a “pipeline” . . . it is a constipated marketing-vs-technology mashup.
Batteries for a few days of calm weather costs 10x more than the turbines, and battery prices are increasing. N2N, Natural Gas to Nuclear with blue hydrogen as an antidote for the CO2 is killing us crowd.
Seriously, can anyone think of a situation where the government stepped in to solve what it saw as a market shortcoming that worked instead of creating a total disaster?
This is a 4th wall question.
Government created the problem by distorting the market, corrupting the meaning of the word market, so now the only solution is even more distortion.
So, to summarize, a nonviable business model that required direct & indirect government subsidies & mandatory purchase at a government set price turns out to be a nonviable business model.
There are only two options: double down, or pull the plug.
So the war on fossil fuels has caused some unintended collateral damage?
Reality bites sometimes.
Ban economics Ban Math. Ban Money Ban people Ban Freedom, Ban Reality…. Forward Ho…. down the rat hole. There needs to be a separation of Church of the Mean Greenies and State.
“Ban economics Ban Math.”
Yes, they are racist anyway.
No worries. They can make it up in volume.
Maybe they can use steel formerly used in cars, trucks, and construction to make subsidized wind farms with enough lobbying.
I’m sure union, trade-protectionist steel can come up with some response. Governments have a long history of protecting domestic steel and now they can weld it to green protectionist strategies and goals.
Wait – what? They’re losing money???? Oh, gee whizzikers!!! How sad! How dismal! How sniffly ‘pity me’!!! It’s hard to find any pity to send to them. I had some in a jar in the fridge the other day, but I was saving it for the off-chance that it might snow in my AO next week… and the forecast says it just might.
So those obnoxious things can’t even be used to grind grain now? That was the original idea, y’know: use the wind in the sails on the windmills to grind grain in to flour.
So The Plan is falling flat? OK, well, if I can find anything in my “pity jar”, I’ll let you all know. Meantime, yesterday, I saw a huge bald eagle pull a fish out of a recently restocked lake north of me, and that’s a lot more important than those whiners!!!
The eagle’s last meal?
OH, no, not even remotely last meal! Huge bird, picked that finny fish up and moved aloft with enormous dignity. There’s an old Army base to the south of me, which has about 25 acres set aside for bald eagles and other feather flockers. The base was sold for suburban housing (of course) and those acres are a birder’s magnet. At least three pairs of bald eagles live there, and I’m thinking that the Big Guy I saw is part of one of those pairs. Hope so, anyway.
Until a few wind turbines are installed.
It goes without saying that retards cannot see their own effect on things.
Europe installs renewables to get free power and instead price themselves out of industry.
Then they propose carbon tariff walls to protect their industries, but green energy is supposedly cheaper or at least they keep screaming it so if our sky was red instead of blue then China would institute tariffs on Europe due to chinas inability to compete with Europe’s green economy
And yet the sky is blue, europe is heavy in renewables, and they are collapsing.
And no way to turn it around, the few industries they have will continue to fail, they can’t compete with China’s established coal-fired industries. Death by a thousand cuts. Ouch.
Loving it