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Forget The Spin: Offshore Wind Costs Are Not Falling

September 25, 2017

By Paul Homewood



A new analysis by Gordon Hughes and John Constable casts doubts on the latest apparent drop in offshore wind costs :




Spin put on the government’s recently announced strike prices to three large offshore wind farms has misled many into thinking that the costs of offshore wind are falling.

However, no actual capital cost figures have been provided for the three windfarms (Hornsea, Moray East, or Triton Knoll), and the strike prices are a poor guide to underlying costs.

In fact, empirical CAPEX data collated for the first time in a new statistical study published today by GWPF shows that the capital costs for offshore wind remain high. Moreover, as the wind industry moves into deeper water, costs are actually rising offsetting any reduction in costs due to technical progress.

The study’s authors conclude that wind farm companies are probably willing to offer economically non-viable CfD prices because they regard the CfD contract as low cost, no penalty “option” for future development. At the same time, they are securing a market position and inhibiting competition, with actual wind farm construction conditional on obtaining more generous terms in the future.

Should the market price rise above the contracted price, because of rising fossil fuel costs or a further rise in the UK’s carbon tax, companies would simply cancel the CfD contract and go with the higher price. However, if there is no significant probability of that elevated market price, these sites are very unlikely to be built.

Professor Gordon Hughes, the paper’s lead author, said:

“Contrary to gullible media exaggerations, capital costs for offshore wind have not fallen, and the sites are not economic at the recently announced prices. The developers are just gambling on the small chance of very high fossil fuel prices in the near future, or more likely on a high carbon price.”

Professor Hughes added:

“The low CfD prices offered in the auction are just a normal albeit very risky business speculation. They certainly are not the dawn of a new age for offshore wind.”

  1. September 25, 2017 7:11 pm

    In the previous thread I referenced today’s statement by Climate Change Minister Claire Perry, where the message about offshore wind hasn’t got through. She said of the £13trillion needed to be invested by 2030″:

    “It is increasingly clear that if we meet our decarbonisation challenges but also look to build on our positions of strength in finance – or offshore wind or electric vehicles – we can export our expertise, generate jobs and improve productivity right across the country. And that means that while the low carbon challenge is a steep one, the opportunity is far greater.”

    Madness on stilts.

    • 1saveenergy permalink
      September 25, 2017 8:01 pm

      Claire Perry MP – Climate Change Minister
      Masters degree in Business Administration.
      Special Advisor to the Prime Minister on preventing the sexualisation and commercialisation of children
      Worked for Bank of America, McKinsey and Company, and Credit Suisse before starting her own small business offering online financial advice to women.
      Proclaimed debts and deficits to be “the same thing” during a Radio 4 interview in 2012.
      No background in science or climate…. & apparently not good at maths.

      A perfect CV for a Climate Change Minister !!!

    • jim permalink
      September 25, 2017 9:00 pm

      Philip, its madness to you and I, but to the ‘establishment’ its just a means of extracting ‘rent’ from the plebs with little or no risk through taxation and utility prices.
      Fairness, economic logic, even national security of supply ( now there is one you don’t hear often these days) are gone. Its feudal ‘rape and pillage’ wrapped up as eco-virtue

    • Gerry, England permalink
      September 26, 2017 12:55 pm

      I wonder where the money for this is coming from this if you add in all the other mental schemes they have in mind. And with a no deal walkaway Brexit in January starting to look likely – a destitute UK will have no money for much at all.

  2. stephen m lord permalink
    September 25, 2017 7:22 pm

    Not gambling but planning on lobbying for high carbon prices using taxpayer money to bribe the needed go officials
    SIMILAR to the NGO SCAM.

  3. J Martin permalink
    September 26, 2017 7:19 pm

    When they fail to make profits out of it they will simply have meetings with the relevant people in government and in due course a bill will be produced or some form of executive bypass will lead to them getting more money from the tax payer.

  4. It doesn't add up... permalink
    September 27, 2017 5:15 pm

    I was amazed to discover that there were no real financial penalties for simply withdrawing from the CFD. Of course there should be a considerable impact on the reputation of any firms that do so, so it is probably not quite as cost free as this article suggests.

  5. September 27, 2017 6:13 pm

    Yes but the Times and the Government tell us Solar is on the Brink of Being Subsidy Free
    Dr John Constable:debunks

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