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Moray East Offshore Windfarm Costings

September 22, 2021

By Paul Homewood

Andrew Montford has updated his costings for Moray East offshore wind farm:

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A year ago, I looked at the acccounts of Moray East, the first of the (allegedly) very cheap offshore windfarms that are supposed to be saving us from the perils of global warming. My review suggested that far from being very cheap, Moray East was in fact on the expensive side, with a likely cost approaching £4 billion, for a windfarm of around nearly 1 GW.

A year on, the windfarm has published another set of accounts, which reveal that in the last 12 months it has burned through another £1 billion – its spend to date is £2.2 billion. However, its website reveals that turbine installation only began in January this year. That means that there is well over a billion pounds of expenditure to come. That being the case, my estimate of the outturn cost remains unchanged at £3.8 billion. That said, there are hints that Moray East is having to do remedial works to protect offshore cables – the notices of operations speak of remedial works, placing rocks over the cables to protect them from scour. That work seems to have continued for the first six months of the year.

With a capital cost of £3.8 billion, and a prospective load factor in its first year of perhaps 47% (i.e. the same as Beatrice, the windfarm next door), we might optimistically expect Moray East to have a levelised cost of £130/MWh, which is pretty much typical of recent offshore units.

Which leaves us still with the mystery of why Moray East submitted a bid for a CfD at £57. It has been indexed up to £68 already, but even so, it’s hard to see how they make money in the short term.

https://www.thegwpf.com/moray-east-costs/

29 Comments
  1. AC Osborn permalink
    September 20, 2021 10:10 am

    Do they have some kind of trick up their sleeves whereby they can get more money for their output?
    Otherwise investors will be none too pleased.

    • T Walker permalink
      September 20, 2021 11:01 am

      They just threaten to go under and government (no us) will have to pay up or go without the output.

    • Adam Gallon permalink
      September 20, 2021 5:47 pm

      Yes, they do have a trick waiting.
      Well, two.
      If electricity wholesale prices soar to above their £130/MWh, they’ll pay an exit fee from their contracts & sell at the wholesale price.
      If this doesn’t happen, then they’ll be going back to the government for higher subsidies, with the threat of the lights going off.

  2. Harry Passfield permalink
    September 20, 2021 10:17 am

    Sorry to O/T – but has the screen format of the blog changed, or is it just my Chrome browser?

    • Martin Brumby permalink
      September 20, 2021 10:43 am

      Me too!

    • Rob carter permalink
      September 20, 2021 1:33 pm

      Mee to using Firefox the screen is about 50% wide

    • Ben Vorlich permalink
      September 21, 2021 1:03 pm

      It’s changed on Vivaldi on my phone. It’s like No Tricks Zone without the sidebar. But no problem on PC Firefox and Vivaldi

  3. Harry Davidson permalink
    September 20, 2021 10:35 am

    What they are doing is bidding at uneconomic rates to get the fossil and nuclear competition shut out, when that has happened the price will rise, as it is rising, and they will make money.

    It is a strategy that only works if the purchaser (i.e. the govt.) is daft enough to let it happen. It looks like they are. These costings demonstrate where the green industry thinks the price will rise above with their policies in place.

    • Cheshire Red permalink
      September 20, 2021 3:03 pm

      It suits government to allow these low-ball bids as they can then claim ‘the costs of renewables is falling and is lower then fossil fuels’.

      Just more proof of the magnitude of the swindle.

    • Phoenix44 permalink
      September 20, 2021 9:22 pm

      Exactly. What the government doesn’t seem to have understood is that we basically have to pay whatever the costs of the system are, when supply is closely matched to demand. Investors won;t risk the huge upfront capital costs unless they can be reasonably certain their supply will be off-taken, so it’s very hard to build much competition into a system. So once you build and are part of supply, your costs pretty much have to be the price we pay.

      Either the government are stupid and don’t understand that or else they hoped that the lies told to them by the Greens and wind investors weren’t actually lies.

    • Gerry, England permalink
      September 22, 2021 11:31 am

      The flaw in their plan – for us not them – is that when the wind doesn’t blow we have no power. Or there is the lunacy of subsidising reliable efficient generation that has been rendered uneconomic by subsidised uneconomic unreliable generation.

      My vote is that the government is stupid and thinks – probably with good reason – that the population are even dumber than they are. And the dumb legacy media are nowhere in exposing the role played in our energy fiasco by PotatohEd Davey over the years.

  4. September 20, 2021 10:48 am

    Hm Gov. and the Holyrood wasters need in their advisers not only Electricity and people knowlegable power generation but also Accountants, who must be listenedt otherwise, all these daft schemes avoidably aiming for zero carbon will ensure zero UK. resources

  5. Captain Flint permalink
    September 20, 2021 11:27 am

    Could somebody check the maths in that £130 levelised cost figure?

    • heriotjohn permalink
      September 20, 2021 12:54 pm

      Captain Flint,

      See Mountford’s GWPF paper Offshore Wind: Cost Predictions and Cost Outcomes, February 2021. This draws on mnay different sources, including Professor Hughes work considering some 300 sets of wind farm accounts.
      There are plenty of optimists in the renewable industry and the financial sector who publish far more optimistic costs, but the reality is that £130 is actually at the lower end of the outcomes analysed.

  6. September 20, 2021 12:26 pm

    Trenching of underwater telephone, oil and gas pipelines, and electricity line is has been practiced for years. Looks like a bunch of neophytes are in charge here so what could possibly go wrong. Government bailout over the horizon.

    • Dr Ken Pollock permalink
      September 20, 2021 3:14 pm

      Agreed! It started with jetting barges but they were slow. So the late Dr Alan Reece at Newcastle University adapted his knowledge of ploughs to create sub-sea ploughing. His company Soil Machine Dynamics was set up over 50 years ago. It now operates as SMD and has buried pipelines, electricity cables and telephone lines all over the world. Brilliant British engineering…

  7. mervhob permalink
    September 20, 2021 2:07 pm

    As is well recorded, Mathew Boulton after visiting a copper rolling mill in Wales which could not operate in summer due to lack of water power, convinced James Watt to develop a rotary version of his steam engine. Boulton well understood the importance of continuous power to the efficiency of manufacturing processes. The rotary steam engine set off the exponential growth in material productivity which we now enjoy, simply because, given coal and water, it provided a continuous output of usable energy. Boulton boasted to James Boswell, when he visited his Soho manufactory, ‘I sell here what the whole world desires – Power!’
    Now the green ‘luvvies’ want to return us to a fantasy ‘pre-industrial world’ where continuous power is outlawed. We have no storage method for electrical power that can compensate for the outages in supply inherent in the ‘climate friendly’ methods of solar and wind. This situation will become even worse if we all start to drive battery powered electric cars. The dangers of such an approach are obvious – we are currently in a gas ‘crisis’ generated by blantant market rigging. The processes we depend on, such as the safe production of food, depend on the use of CO2 to prevent the growth of aerobic bacteria and improve shelf life. The CO2 was a byproduct of fertiliser production using natural gas stocks – a 250% gas price rise shut the plant down… All industrial processes are highly interconnected and interdependent. And this situation will become much worse with the intermittency inherent in ‘green’ policies. If you want to see the full effects of power intermittency – ask the Taliban, a group obsessed by beliefs that make the ‘luvvies’ look rational!
    So ‘net zero’ is an unachievable fantasy, pushed by technical illiterates on the basis of implausible ‘science’. We will have to depend on fossil fuels or lose the ability to run many industrial processes and face a world that returns to pre-industrial levels of poverty and disease.
    The biggest problem we face is that generated by those aspects of human behaviour which generate the huge increases in waste and pollution – these are a very present threat, much more apparent than any real climate change. Those local changes in ‘weather’ complained of, are mostly down to the human mismanagement of resources, rather than a single vector such as CO2. It is notable that most of those responsible for the first industrial revolution; although some did die rich, most died relatively young, worn out by the struggle of putting in place a real, beneficial change. Now, we have hordes of ‘billionaires’ without any sign of the benefits gifted to us by those farsighted pioneers in the 19th century. These ‘lilies of the field’ claim to be capitalists – there is little sign of real capitalism – money must be put to work and its back whipped raw!

    • JBW permalink
      September 20, 2021 5:44 pm

      That reminds me that when our fleet of 747’s had their engines upgraded, an apparently relatively minor job to do, and which cost the company loads of cash The R.Royce engineer told me that they don’t sell jet engines they sell power!

  8. JCalvertN permalink
    September 20, 2021 3:48 pm

    In the accompanying picture, the nearest windmill appears to have a pronounced lean or tilt to it (or on the p!$$ – as some of my work colleagues would say)

  9. Derek Wood permalink
    September 20, 2021 5:57 pm

    “A levelised cost of £130-00”. Per pound? Yard? gallon?

  10. Duker permalink
    September 21, 2021 6:12 am

    The load factor isnt based on the rated max output of the wind turbines. They fudge by using an ‘average windspeed’ for the location.
    Yet hydro, nuclear and thermal stations are based on the maximum output of each generator.

  11. angryscotonfragglerock permalink
    September 22, 2021 9:01 am

    I used to teach air-air gunnery (in Hunters and Jaguars) in this area using ‘clear sea’ principles. I wonder how many turbines I could take out these days…

  12. Ian PRSY permalink
    September 22, 2021 1:30 pm

    Andrew Montford was on GBNews last night and gave a good account of himself. Sadly, Farage let the wind “expert” go second and he got away unchallenged with the usual claims about cheap wind.

  13. It doesn't add up... permalink
    September 22, 2021 1:57 pm

    The transcript of Dr John Constable’s appearance before the Lords is now available, discussing high wind farm costs and other matters.

    https://committees.parliament.uk/oralevidence/2754/pdf/

  14. 2hmp permalink
    September 22, 2021 5:23 pm

    In Renewables optimism is blunted by the truth but rewarded by the taxpayer . Simple.

  15. Chris Morris permalink
    September 23, 2021 6:50 am

    If they want wind, they need batteries and batteries seem to be failing to deliver.
    https://www.theage.com.au/business/companies/regulator-sues-tesla-big-battery-in-federal-court-over-power-grid-promises-20210923-p58u1b.html

    • Graeme No.3 permalink
      September 23, 2021 7:43 am

      Wow! When The Age turns against batteries ….what will the more conservative Guardian have to say?

  16. cookers52 permalink
    September 23, 2021 8:17 am

    Politicians competed to close power stations down as quickly as they could, with seemingly no regard for what happens after that.

    Politicians seem surprised that we now have an energy crisis, unfortunately the general public have not the faintest idea of how the infrastructure that keeps the lights on actually works.

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