In a delightfully illustrative episode of reality biting back, one of the UK’s largest offshore wind farm projects has ground to a halt, not because of a lack of wind, but due to an unabating gust of rising costs. The illustrious Swedish energy group, Vattenfall, has put a stop to work on its 1.4GW Norfolk Boreas site, following a 40% surge in project costs. Clearly, “going green” isn’t as financially breezy as some might have you believe.
Quoting Anna Borg, Vattenfall’s CEO:
“What we see today, it simply doesn’t make sense to continue this project.”
https://www.ft.com/content/f9d0f4f9-6d95-44a9-924b-d88627fd6485
This halt throws a monkey wrench into the UK’s fervent ambition to triple its offshore wind capacity by 2030 in order to decarbonize its electricity system. All this, while the cost efficiency and reliability of these grand projects remain questionable.
The Green Economy’s ‘Inconvenient Truth’
Interestingly, the UK government has been keen on flapping the wings of more wind power projects to meet its net-zero targets. However, with costs spiraling out of control, the move seems more like trying to fly into a headwind.
The fiasco stands as a testament to the impracticality of imprudently rushing towards renewable energy without addressing the inherent challenges and limitations of these technologies. Rising costs for equipment, supply chain disruptions, and the overarching reality of energy economics all play a part in this unfolding drama.
Sustainable or Unsustainable – That’s the Question
The defunct Norfolk Boreas was intended to be the kingpin of the country’s major offshore wind projects. Its aim? To power 1.5 million homes with up to 140 turbines. Yet, developers have acknowledged that projects with low locked-in electricity prices have turned uneconomical due to these escalating costs and disruptions.
This puts a spotlight on the term “sustainable.” While it sounds compelling in political speeches and looks impressive in policy documents, one is forced to question if these renewable energy ventures are truly sustainable – economically, that is.
The Green Mirage
In February, it was reported that Vattenfall, along with Denmark’s Ørsted and other wind farm developers, were seeking tax breaks or subsidies as a remedy to their fiscal ailments. Perhaps the mirage of “cheap” renewable energy is starting to dissipate, exposing the harsh desert of economic reality beneath.
Despite the British government’s past assurance of inflation-linked prices over a 15-year period, Kathryn Porter from Watt-Logic argues that these contracts ignored the “economic reality” of cost pressures that were already apparent. It seems the notion of ‘green at all costs’ is beginning to wilt under the scorching sun of real-world economics.
The race to net zero is leading us into a financial quicksand, sucking in vast resources for a future that will never materialize as envisaged.
As always, readers are welcome to share their views.
Source:
Financial Times Article
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https://www.energylivenews.com/2023/07/21/sse-reports-29-shortfall-in-renewable-output-due-to-weather/
oh dear, more renewables misery
It won’t be just them of course. The worry must be that we have had poor wind since 2021.
That’d be a right bummer, if climate change resulted in weaker wind patterns.
Question about Vattenfall. Does anyone know the answer, with a proper reliable source referenced?
When you bid for CfD in the UK, you put a bid in, win the auction, and then are approved to build.
And you are also approved, should you choose to do this, to separately enter a binding commitment to sell your power generated under the CfD regime. Some newer wind providers have, after bringing their installation on line, refrained from the second. So they sell at open market prices, which recently have been way higher than the CfD prices. If they had signed up to the CfD pricing plan, they would have had to pay back the income which comes from the difference between the CfD price and the price they sold at. Same thing works in reverse on the downside.
Obviously Vattenfall won the bid, so it got the right to build, and it started to build. Nick says it has also done the second, signed up to delivering at the CfD price. Unlike some of the others.
Does anyone have a reference showing that it has signed up to a CfD price contract? I cannot find one, but maybe someone here knows or can point to one.
https://group.vattenfall.com/siteassets/corporate/investors/credit_ratings/moodys/credit_opinion-vattenfall-ab-update-to-credit-06jul2023.pdf
Moody’s credit analysis report.
in 2022, it was awarded a 15-year Contract for Difference for Norfolk Boreas (1,800 MW), where onshore construction is set to begin in 2023.
But while the CfD was “awarded”, this report doesn’t assert that it was “executed”.
I guess only Vattenfall’s board / executives would know this.
The CFDs were signed, and are listed here:
https://www.lowcarboncontracts.uk/cfd-register/
Type Boreas in the search box and the project comes up divided into 3 phases. The key dates are set in relation to the Target Commissioning dates (each phase is different), setting various milestones.
To become bound by the CFD price, they have to issue a formal Start Date Notice which can only be done once the wind farm section is commissioned – but which does not ahve to be done at all for an AR4 wind farm.
There is a Long Stop Date after which there would be no option to issue a Start Date Notice. The option of shutting the wind farm down would of course be shooting yourself in the foot at that point.
Some reference numbers. A while ago I redid the blatantly false EIA LCOE for CCGT and on shore wind. Details in guest post True Cost of Wind over at Judith’s. Correctly calculated AND ignoring subsidies, CCGT LCOE about $58/MWh compared to on shore wind at $146/MWh. About 2.5x.
EIA says off shore wind is about 3x onshore. That is likely low, but means offshore wind is 7.5x CCGT. And UK has plenty of natural gas if they would only frack for it. Won’t end well.
Who will be responsible for decommissioning, waste, and recycling for wind and solar?
An educational and entertaining 30-minute Podcast Event by Armando Cavanha in Brazil with Ronald Stein
https://www.linkedin.com/events/7087184044043452416/comments/
Isn’t it obvious what happens next?
First they sold the project on the basis of lies and wishful thinking. Now they’re demanding more subsidies. Nut Zero can’t go forward without this sort of fiscal bloodletting, so of course your worthless politicians will cave.
Wind is the cheapest energy source donchaknow? And you’re getting more and more bird shredders. That’s why electricity prices are soaring, obviously.
Imagine being heir to the crown, and realizing that if the country is forced to switch to wind power, you will suddenly be the one collecting the profits for all the power!
But I am 100% certain nothing like that has a single thing to do with any of it.
I note that the Treasury decided to dock the amount handed over to the King for the Civil List because of his unexpected windfall profits from wind farms.
Does this project use the newer, poorly tested, extra large generators that are failing at a high rate in other projects? That would mean projected warranty payouts are likely to be much higher than originally anticipated.
I think there is a high possibility that Vattenfall are nervous about the likely performance of the Siemens-Gamesa turbines they had selected.
https://www.siemensgamesa.com/en-int/newsroom/2021/11/211108-siemens-gamesa-press-release-vattenfall-norfolk-offshore
Perhaps they are completely rethinking the design choice. Certainly the risk of high maintenance bills and accompanying downtime awaiting fair weather time on the maintenance cranes or for spare parts to be manufactured would give a big dent to the economics.
We get an update from Siemens Gamesa in early August when they announce their annual results, following their earlier admission of problems with some of their turbines leading to losses on maintenance contracts.
It’s easy to see a way out for governments: declare rebewables a public necessity like roads and sewer lines and ports. No cost-benefit justifications are needed for fundamentals (like the military, MI6, coast guard etc) that are presented as required for the country/civilization to be healthy or even exist.
You ever see a cost-benefit analysis of the tax departments?
It’s called financial nationalisation. Already applied in the UK to the railways (again!) and banks – the controversial Coutts/NatWest is still 40% state owned for instance.
The usual result is starvation of investment and decay of services, often coupled with strikes.
Having read a good sample of comments, and Nick’s dogged stance in the face of adversity.
I find the whole thing, CfD’s etc, totally confusing, and I’m glad that many of you are ‘switched on to the subject’, and understand what’s going on.
The one thing I have concluded from these posts and other articles I’ve read about the renewable industry in the US, the whole financial dealings within the industry are just one gigantic fiddle, designed to extract money from our pockets, to fill theirs.
Irrespective of the fiscal side of the double dealings, at a technological level, it is patently obvious, that ruinables are not economically viable.
In consideration, that wind, requires tens of thousands (if not hundreds) of turbines, the resource materials required to construct them, the technological issues to overcome, maintenance etc. etc.
It is obviously cheaper to base our supply on a (relative) handful of reliable power stations, easier to manage, less complex and so on.
Regardless, in spite of the obvious pitfalls, and ‘writing on the wall’, our stupid government, will plough on regardless, plunging us ever deeper into the mire.
As Prof Michael Kelly (Camb U, Electrical & Electronics Engineering) said in a podcast, ‘what happens if, after massive investment, years down the line, it is discovered that the entire project isn’t workable, what then?’