Essay by Eric Worrall
h/t Peta of newark; “The economics do not stand up” for investing in the cheapest form of energy?
‘Biggest clean energy disaster in years’: UK auction secures no offshore windfarms
Lack of interest was widely expected after government failed to heed warnings about soaring costs
Jillian Ambrose Energy correspondentSat 9 Sep 2023 01.20 AEST
Lack of interest was widely expected after government failed to heed warnings about soaring costs
No new offshore windfarms will go ahead in the UK after the latest government auction, in what critics have called the biggest clean energy policy failure in almost a decade.
None of the companies hoping to build big offshore windfarms in UK waters took part in the government’s annual auction, which awards contracts to generate renewable electricity for 15 years at a set price.
The companies had warned ministers repeatedly that the auction price was set too low for offshore windfarms to take part after costs in the sector soared by about 40% because of inflation across their supply chains.
…
Up to 5 gigawatts of offshore wind was eligible to compete, which could have powered nearly 8m homes a year. That would have saved consumers £2bn a year compared with the cost of using electricity generated in a gas power plant, according to the industry group Renewable UK.
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The industry warnings intensified after Vattenfall said in July that it would cease working on the multibillion-pound Norfolk Boreas windfarm because rising costs meant it was no longer profitable.
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Keith Anderson, the chief executive of ScottishPower, said: “This is a multibillion-pound lost opportunity to deliver low-cost energy for consumers and a wake-up call for government.
“We all want the same thing – to get more secure, low-cost green offshore wind built in our waters,” Anderson said. “But the economics simply did not stand up this time around.”
…
Read more: https://www.theguardian.com/environment/2023/sep/08/biggest-clean-energy-disaster-in-years-uk-auction-secures-no-offshore-windfarms
Isn’t the cost of building the plant part of the cost of supplying energy produced by that plant?
If the plant is too expensive to build, how can it’s energy product possibly be described as cheap?
If the Norfolk Boreas wind farm is too expensive to complete, how can it also be described as a potential supplier of the cheapest form of energy?
At least this hilarious debacle has exposed the fiction of cheap renewables. This is why the UK is desperately contemplating energy rationing grid protection measures – Britain can’t afford to build the “cheapest form of energy”.
The drop in British renewable investment appears to be part of a worldwide collapse in interest. A recent wind auction in the Gulf of Mexico only attracted lacklustre interest. A few days ago WUWT reported on a drop in support for wind in New Jersey. Back in June, WUWT also reported a “profound slowdown” in renewable investment in Australia.
Renewables – the energy source so cheap, nobody can afford to build them.
For more information on why renewables are impractical and unaffordable click here.
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They can’t afford to build the “cheap” form of energy – post-modern economics or post-modern finance.
US/UK 56,000 MW OF OFFSHORE WIND BY 2030; AN EXPENSIVE FANTASY
https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-offshore-wind-systems-by-2030-a-total-fantasy
EXCERPT
The US government has the insane fantasy of wanting to build 30,000 MW of offshore by 2030, i.e., just 7 years, but several companies, building projects for Massachusetts, will be allowed to walk away from the signed PPAs, and rebid at much higher prices next year.
The UK government has the insane fantasy of wanting to build 26,000 MW of offshore by 2030, i.e., in just 7 years,
The continent-based European big wind companies have only one third of the capacity per year for building 56,000 MW offshore by 2030, or 8,000 MW/y. These companies will concentrate on the U.S. market, because the Biden “Inflation-Reduction-Act” subsidies are about much higher than in the UK
1) Vattenfall, Sweden, has put 1,400 MW on hold in 2023 (will re-evaluate its entire 4,200 MW zone), because Vattenfall spreadsheets show a “net revenue shortage” of about 40%, meaning the prices, c/kWh, offered by the UK auctions are about 40% too low.
https://www.offshorewind.biz/2023/07/20/breaking-vattenfall-stops-developing-major-wind-farm-offshore-uk-will-review-entire-4-2-gw-zone/#:~:text=Vattenfall%20has%20stopped%20the%20development,revealed%20in%20its%20interim%20report.
About 7,000 MW of offshore wind bids were rewarded by the UK 4th Auction, in 2022
Zero MW of offshore wind bids were submitted for the UK 5th Auction, in 2023
2) OERSTED, Denmark, is looking forward to a $2.6 billion loss on its three US East Cost offshore wind systems, mainly due to high inflation, high interest rates, supply chain constrains and disruptions, and not being awarded additional federal and state tax credits. Oersted, etc., urges Biden to ignore the domestic content requirements of the Inflation Reduction Act, so 100% of the wind turbines will be very expensively built in Europe, with US subsidies.
https://www.reuters.com/business/energy/denmarks-orsted-anticipates-730-mln-impact-us-portfolio-2023-08-29/
3) EU big wind conglomerates want, on average, 40% more, because turnkey capital costs (foundations, turbines, cabling to shore) have gone to at least $5,500/kW and interest rates to 6.25%
UK and New York State bureaucrats are grossly uninformed regarding market conditions, as usual. They have zero business sense.
New York State bureaucrats calculated their estimates of offshore wind contract prices, but when the owners saw those numbers, they said, we need up to 66% more, for OUR spreadsheets to make business sense. See Item 4 and note
Oersted, Denmark, Sunrise wind, original price $110.37/MWh, needs $139.99/MWh, a 27% increase
Equinor, Norway, Empire 1 wind, original price $118.38/MWh, needs $159.64/MWh, a 35% increase
Equinor, Norway, Empire 2 wind, original price $107.50/MWh, needs $177.84/MWh, a 66% increase
Equinor, Norway, Beacon Wind, original price $118.00/MWh, needs $190.82/MWh, a 62% increase
https://www.windtaskforce.org/profiles/blogs/liars-lies-exposed-as-wind-electricity-price-increases-by-66-wake
4)
Lifetime Performance of World’s First Offshore Wind Farm
https://www.windtaskforce.org/profiles/blogs/lifetime-performance-of-world-s-first-offshore-wind-farm
IRENA, a European Renewables Proponent, Ignores the Actual Cost Data for Offshore Wind Systems in the UK
IRENA, a government-controlled, offshore wind rah-rah site, that cannot be trusted
https://www.windtaskforce.org/profiles/blogs/irena-a-european-renewables-proponent-ignores-the-actual-cost
NOTE: “The all-in, turnkey capital cost associated with a typical US offshore project, before bonus tax credits related to the “Inflation-Reduction-Act”, has increased by 57% since 2021. Increased costs of materials, energy, components, labor, and supply chain disruptions and constraints (shortage of specialized ships) explain about 40% of that, with 60% due to increased interest rates.”, per Bloomberg recently reported, citing figures from Bloomberg-NEF.
“We all want the same thing – to get more secure, low-cost green offshore wind built in our waters,”
Like hell we do.!!
This reminds me of the old dictum about “Army volunteers”:
“I need several volunteers for a dangerous mission… You, and you, and You!”
That’s what will be required to find investors in this Unicorn charade.