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World’s largest offshore wind farm ‘unprofitable’, government-funded report confirms

November 20, 2021

By Paul Homewood

 

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London, 20 November — A report  commissioned by the Norwegian government has contradicted Boris Johnson’s recent claim in Parliament that offshore wind costs have fallen by 70% in a decade.

It confirms that the UK’s newest offshore wind farms remain high-cost operations. Indeed, the academics who produced the report have said the forthcoming Dogger Bank wind farms will be unprofitable, and are essentially worthless, with a value of around minus £1 billion in current terms.
Remarkably, the findings have not been disputed by the developers.

The findings, however, are just the visible tip of a very large iceberg of unprofitable offshore wind projects that are threatening to hit pension funds that have invested in similar renewable energy schemes.

The report confirms as series of findings published by the GWPF and others [1–5], which show that offshore wind costs are very high, at best are only falling slowly, and are far above the auction strike prices being agreed.

Andrew Montford, Deputy Director of Net Zero Watch said:
“We have been warning since 2017 that there has been no revolution in offshore wind costs. Every time we get new financial data from offshore wind farms, the cost estimates go up. Just this week, our estimates for the Seagreen 1 wind farm have increased by nearly 20%, and those for Dogger Bank by a similar amount.”

The Government’s Net Zero plans rely on a five-fold increase in the wind fleet, mostly from offshore developments, and an extraordinary decline in the cost of the power it produces.
The latest findings mean that the costs of delivering Net Zero will increase by hundreds of billions of pounds, and probably by trillions.

Craig Mackinlay MP, the chairman of the parliamentary Net Zero Scrutiny Group, said:

“It is becoming increasingly obvious that our dash for renewables, notably wind, is failing on the two key criteria of energy security and affordability. An avoidable energy crisis is approaching but sadly our government is yet to recognise it.”

Dr Benny Peiser, Net Zero Watch director said:
“The Climate Change Committee’s Net Zero plan has already been shown to have used wildly optimistic assumptions on the cost of renewable energy. The Norwegian report is another nail in the coffin of its credibility.”
The Climate Change Committee is chaired by Lord Deben, who
stood down as chairman of Forewind, the Consortium that is developing the £9 billion Dogger Bank wind farm, when he took on the role of CCC chairman. He was replaced by Charles Hendry, who had previously been a minister in the then Department of Energy and Climate Change (DECC).

https://www.netzerowatch.com/worlds-largest-offshore-wind-farm-unprofitable-government-funded-report-confirms/

The new Dogger Bank development is currently prices at £47.20/MWh, but this will increase in line with inflation each year.

39 Comments
  1. Chaswarnertoo permalink
    November 20, 2021 12:04 pm

    Greentards lie? Never!

    • Adam Gallon permalink
      November 21, 2021 10:22 am

      Not Greentards, big business.
      Raising billions to fund these developments, looking for a good return in their investments.

  2. Mad Mike permalink
    November 20, 2021 12:26 pm

    Instead of the South Sea Bubble we now have the North Sea Bubble. This will all end in tears and we will be looking around for someone to blame.

    I think the Insulate mob will be safer in prison. Don’t knock it folks.

  3. Gamecock permalink
    November 20, 2021 12:28 pm

    This changes nothing. Boris doesn’t read Net Zero Watch.

    It gives us an academic paper to wave to back up what we are saying, and have for many years, but TPTB aren’t listening. In fact, it sounds like they are making money off destroying England’s power supply.

    “It is difficult to get a man to understand something, when his salary depends upon his not understanding it.” – Upton Sinclair

  4. Barrie Emmett permalink
    November 20, 2021 12:34 pm

    It is becoming increasingly obvious that snouts in troughs has exceeded all expectations. What will it take to bring a halt to this disastrous green agenda. Paul, do you know.

    • Ray Sanders permalink
      November 20, 2021 1:32 pm

      “What will it take to bring a halt to this disastrous green agenda” A nationwide power outage with all the major problems that would inevitably cause that was shown to be an absurd reliance on intermittent energy sources.

      • Tim Spence permalink
        November 20, 2021 1:42 pm

        That’s bordering on optimism, the green blob do not back down, we are dealing with the Borg.

    • Harry Passfield permalink
      November 20, 2021 1:55 pm

      What will it take? A bonfire of the inanities: the likes of Deben and other SoSs and MPs who are free to leave the departments and very quickly (I know there’s a ‘quarantine period’) become filthy rich becoming the go-between for wind/health/comms/etc and Gov. I don’t for one moment believe that Deben has any business acumen or skill except on how to line his family’s pockets.

      The law needs to change: no MP or family member should be allowed to profit from a business that had any tax-payer funding or Government licencing. That should definitely include ex-PMs’ Fathers-in-law feathering the family nest with taxpayer payments for windmills on their land.

      Furthermore, reports like this have to stop telling us that these are ‘Government-funded reports’: They are Taxpayer-funded; you and I paid for them.

  5. Mad Mike permalink
    November 20, 2021 12:44 pm

    From another site on the report. Equinor is the owner of the site in question

    “Equinor has not disputed the study’s conclusions, but emphasised that it had benefited from selling stakes in the project.”

    It’s a case of who’s left holding.

    It happens with solar farms in this country. Someone gets the planning and may or may not build it but subsequently sells the farm on.

    • Julian Flood permalink
      November 21, 2021 7:28 pm

      Watch SUNNICA,

      JF

  6. November 20, 2021 12:56 pm

    Even the wind itself is falling well short of expectations.

    https://www.cnbc.com/2021/08/12/low-wind-speeds-hurt-profits-at-two-of-europes-major-energy-firms.html

    • November 20, 2021 1:14 pm

      From the same link:
      RWE said: “The extreme cold snap in Texas led to an earnings shortfall of around €400 million.”

      Gotta sell a lot of wind power to cover that loss. How many ‘cold snaps’ like that would sink their whole business model?

    • Graeme No.3 permalink
      November 20, 2021 8:17 pm

      And from that report the output from wind was below expectations for the first half of the year (2021), so it seems there has been a ‘problem’ with wind all year, not just after July.
      History mentions the storms at sea during the Little Ice Age, but strong winds would result in shutdowns (and possibly damage), not extra generation ‘recouping losses’.
      And if the developers know that the scheme is unprofitable but are making their money from selling ‘stakes’ one wonders whether the thing is realy a Ponzi scheme.

  7. Phoenix44 permalink
    November 20, 2021 1:04 pm

    The point is though that these projects know the government will simply cover their costs and a return through increasing prices. The only question is how high can prices go to keep these projects viable before there’s a revolt?

  8. Derek Wood permalink
    November 20, 2021 1:10 pm

    “The Saudi Arabia of wind.” – Boris Johnson. “This boy is a fool”. – Eric Morcambe”

  9. Mad Mike permalink
    November 20, 2021 1:14 pm

    I’m no accountant and not fantastic with figures but isn’t the study using the strike prices to determine profitability and don’t we know that the final price they get is usually far above this?

  10. Joe Public permalink
    November 20, 2021 1:31 pm

    The report states:

    “One of the study’s authors told Upstream that the massive project’s rate of return does not exceed Equinor’s rate of return requirement, so the researchers deem the project to be unprofitable.”

    A project’s rate of return failing to exceed Equinor’s rate of return requirement, doesn’t make it unprofitable. It could simply be less profitable than an exceedingly high RoR preferred it to be.

    • November 20, 2021 6:11 pm

      That’s what I thought. In fact they say the rate of return is 3.9%.
      This is lower than their target, but it is still not a loss.
      If I could get 3.9% on a savings account I would be overjoyed !

      • Gamecock permalink
        November 21, 2021 12:20 pm

        It’s not a good return for a large capital project.

  11. Douglas Dragonfly permalink
    November 20, 2021 1:34 pm

    Is the sea floor around the UK owed by the Monarchy who charge rent accordingly ?

    As for Craig Mackinlay’s observation,
    “An avoidable energy crisis is approaching but sadly our government is yet to recognize it.”
    Terrifyingly understated.
    More could die than because of Covid 19 – yet it is test and trace that Bozo ploughs billions of £s into !!!
    So once again should his staff or real media be reading this –
    AVOIDABLE ENERGY CRISIS APPROACHING.

  12. Robert Jones permalink
    November 20, 2021 2:27 pm

    This unsurprising revelation makes it all the more important for the UK to throw some sustained support behind Rolls Royce’s production rate of its Small Modular Reactors and disband the useless Climate Change Committee.

    • Jordan permalink
      November 20, 2021 9:54 pm

      There is nothing small about them.

      • Duker permalink
        November 20, 2021 11:49 pm

        Compared to the existing mega scale nuclear reactors, they are smaller but not ‘tiny’

      • Ray Sanders permalink
        November 21, 2021 2:29 pm

        Yes that term is somewhat of a misnomer given the RR variant is 470MW and likely to have a 92% capacity factor generating 3.8TWh per annum which is close on 1% of total annual GB grid generation.

      • Jordan permalink
        November 21, 2021 7:58 pm

        AGR stations are up to 1.2GW. Vague claims about the footprint could pare things down to a small number of football pitches. It just depends on which elements of the operation we include.
        A spokesman for RR claimed the 470MW SMR design would fit within the space of two football pitches (Jeremy Vine show a couple of weeks ago), but we don’t know what this includes. The nuclear island alone? Or the nuclear island plus turbine/generator island?
        It’s pretty safe to assume electrical connection is not included, or steam cycle cooling (rows of large forced draft towers these days). Buildings for offices, workshops, and spares holding are probably not included either. And for a nuclear licensed site, there would be a lot of space for site security.
        The move to 470MW (whether that means electrical or thermal) is also telling. Looks like getting SMR all the way down to 50MW level is not feasible. Technical, manpower, economic and safety/security challenges must be too great. If so, the lesson would be tha economic returns to scale still dictate. Therefore 470MW today will probably morph into 1.5GW tomorrow.
        We would then be talking about the development of the UK PWR. It will take a lot of UK taxpayer support to get there – including a medium-sized town’s worth of specialist scientists and engineers.

  13. MrGrimNasty permalink
    November 20, 2021 3:25 pm

    Just watching Flog It and reminded of this:

    https://en.wikipedia.org/wiki/South_England_flood_of_February_1287

    The historian said the period from 1285-1330 was one of exceptionally increased storminess – how is that possible with no AGW to blame!

    • Douglas Dragonfly permalink
      November 20, 2021 5:38 pm

      Thanks Mr Grim for sharing your knowledge. As for what brought about the 1285-1330 stormy weather, either the BBC must have been impartial back then or their version of a young Greta had more worth while things to be getting on with 😉

    • Graeme No.3 permalink
      November 20, 2021 8:37 pm

      Some historians have placed the start of The Little Ice Age around 1280 when there was a famine (and drop in population) in England. Iceland was desperate and traded their independence for the hope of Royal relief from Denmark (didn’t get any) and a French army got stuck in the mud at Courtrai in Flanders (1302) and the peasantry had revenge. (Supposedly the local church wall was covered by gold spurs taken from those formerly arrogant knights who were casualties.)
      And there was the rains (and resulting famine) in the “Great Dying of the Beasts” in 1315-17 when up to 12% of the population died.

  14. November 20, 2021 7:48 pm

    Do the costings include the backup fossil fuel plants for when there is no wind ? In most cases these backup plants have yet to be built ?

    • Ray Sanders permalink
      November 21, 2021 3:08 pm

      It is not just back up plants. On the occasions when simultaneously the wind is blowing strongly and the sun is shining brightly the GB grid is potentially at its weakest. Synchronicity, voltage and frequency control and reactive power management are in their worst states. The GB grid has had its last 3 major outages this century in either May or August and not winter.
      Do the costings include synchronous condensers, SVC units (Static VAR Compensators) and all the other equipment required IN ADDITION to back up fossil fueled back up supplies which offer all those services as part of their package? How many of these totally unqualified exponents of renewables have even heard of reactive power?
      https://www.drax.com/power-generation/keeping-electricity-systems-voltage-stable/

  15. November 20, 2021 11:09 pm

    Don’t look at me. I am a nuclear energy advocate and understand units of energy

  16. November 21, 2021 4:49 pm

    Waiting for cheaper renewables? Don’t hold your breath…

    …inflation is driving up the prices of renewables, too, and threatening a lot of planned capacity addition projects with cancellation because of surging material and component costs.

    https://oilprice.com/Energy/Crude-Oil/Bidens-Baffling-Oil-Policy-Faces-Backlash-From-All-Sides.html

  17. Ray Sanders permalink
    November 22, 2021 11:08 am

    Note to poster Jordan’s comment above. You seem to have tried to make a comment downplaying the RR SMR but you seem to have very limited knowledge of the systems. Comments such as “The move to 470MW (whether that means electrical or thermal) is also telling.” are quite absurd – it is 470MWe and that is exceptionally clearly quoted in all their literature.
    ” or steam cycle cooling (rows of large forced draft towers these days)” – no operational UK nuclear plants have those, neither will these SMRs as they will almost certainly be seawater or lake water cooled with initial sites likely to be Hartlepool, Trawsfynned and Dungeness.
    “Looks like getting SMR all the way down to 50MW level is not feasible.” perhaps you should discuss that with NuScale as I am sure they will beg to differ. There are numerous other strange claims you make.
    You seem clearly to have some anti nuclear agenda – that’s okay but at least have the decency to educate yourself a great deal more about the subject.

  18. Mikehig permalink
    November 24, 2021 3:46 pm

    Back on the topic of offshore wind costs, from the Net Zero Watch (ex GWPF): https://www.netzerowatch.com/needed-a-rational-and-affordable-climate-policy/

    “The Global Warming Policy Forum is today publishing the evidence given by the GWPF’s energy editor, Dr John Constable, to the Industry and Regulators Committee of the House of Lords on 14 September 2021.”

    The post includes a link to a PDF of the proceedings which is well worth a read.
    Dr Constable makes a number of very strong arguments in a very clear, rational manner (as one would expect).
    What is striking is the whole tone of the discussion and the quality of the questions from their lordships. It is a forensic examination of the points raised by NZW in their prior, written submission. Clearly much homework had been done. If only more of the debate about climate/energy issues could be conducted this way.

    It will be very interesting to follow because the committee asked for specific documentation on the true cost of wind to which they will ask the wind industry to respond in subsequent hearings.

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