Subsidies & Profits At Sheringham Shoal Wind Farm
By Pau Homewood
h/t Dave Ward
Dave sent me this piece from the EDP, although he has not found it on line yet. It relates to the Sheringham Shoal wind farm, and gives a useful insight into the offshore market.
Sheringham is owned by Scira Offshore Energy, and is the latter’s sole activity, according to Scira’s Annual Accounts.
Scira is in turn owned by Statoil (40%), Statkraft (40%) and the Green Investment Bank (20%).
The following information can be gleaned from the Accounts, available here.
1) Revenue for 2015 was £140.0 million, and is split:
In other words, more than two thirds of income comes from ROC’s.
The Accounts also state that production last year was 1.17 TWh, so we can calculate unit revenue at £34.71/MWh for sales of power, and £83.90/MWh for the ROC’s, which is the subsidy element eventually passed on to consumers.
2) Profit after tax was £18.9 million, on equity of £447 million, giving a return on capital of 4.2%. However, there are also shareholder loans of £450 million outstanding, on which interest is paid.
It is therefore more sensible to look at profit before interest, which was £52.0 million. As the original capital cost amounted to £1366 million, the overall return last year, including interest, was 3.8%.
Whether they can maintain this level of profit is debatable. Although they say prevailing windspeeds were lower last year, capacity utilisation was up at 42%.
There is also the fact that they are now paying the Climate Change Levy. This could knock another £3 million off profits.
What all of this shows is that offshore wind is still an inherently expensive way of producing electricity.