London Array Made Excess Profit Of £160 Million In 2021
By Paul Homewood
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I looked at the 2020 Annual Accounts for the London Array a few months ago, and we now have the latest set for y/e December 2021.
You may recall that there are four equal shareholders, Orsted, RWE, Masdar and CDPQ, respectively Danish, German, Aby Dhabi and Canadian owned. The London Array does not file its own accounts, instead each shareholder has set up its own company to report on its share of the business. Below is the Orsted set:
https://find-and-update.company-information.service.gov.uk/company/06638251/filing-history
Note how gross profit has nearly doubled year on year, on the back of a 43% increase in revenue, due to higher market prices, as they note:
We need to bear in mind that prices really only took off in the summer of 2021, so the full year effect won’t become apparent till last year’s accounts are filed:
https://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators
This year they have not published the breakdown of revenue, as they did in the previous year, which showed £66 million from Renewable Obligation subsidies:
According to REF figures, London Array produced 2153 GWh in 2021. As Orsted’s quarter share of the revenue was £123 million, this means that the London Array’s total revenue was £492 million, at an average of £228/MWh.
This breaks down to about £110/MWh from subsidies and £118/MWh for sale of electricity. I would expect the latter to jump to about £200/MWh for last year.
As it is, London Array received some £236 million in subsidies in 2021, along with an excess profit from higher prices of about £160 million. All of which has to be paid for on our energy bills.
And London Array is just one of the wind farms benefitting from obscene subsidies, at the same time as raking in excess profits they have done nothing to earn.
Altogether there is 19 GW of wind farms subsidised this way; by contrast London Array is tiny, just 630 MW.
Based on these accounts for the London Array, the wind sector, both onshore and offshore, will have made excess profit of around £3.6 billion in 2021, on top of the ROC subsidies also amounting to £3.6 billion.
And we pay for it all.
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NOT A LOT OF PEOPLE KNOW THAT 
All hail the ‘9 times cheaper than gas, zero-carbon, renewables revolution’!
Unreliable and unaffordable electricity, that is progress according to the eco loons.
So
So
So sad, especially as it on ly really produces when the wind is suitable
‘excess profit’
You sound like Benny Peiser.
What would be the correct profit?
Try stripping out the 66 million of “government grants” and you’re getting close.
Wind farms do not a profit make. Somebody in the bowels of the climate industry is making large profits at the electricity users’ expense, thanks to a totally distorted “market”.
We don’t need to name names; we all know who we are talking about. Happy to bring the country to its knees on the basis of a con trick on top of a lie.
You don’t answer the question.
The profit you get from the minimum acceptable return on capital where there’s competition. That’s how UK regulation generally works. So look at the capital, decide on the WACC and there you go.
Personally, I’d really like them all, and most particularly the combined Civil “Servants”, “Experts” and Politicians who put these deals together; to profit from meeting their Maker. Really soon.
Monckton cites interesting research by Douglas Pollock (E=N-D) soon to be published showing that once nameplate capacity of unreliables exceeds demand there is no CO2 saving so the whole effort is in vain (even on the Thermogeddonistas terms) beyond that point. UK N/D = 1.16 and Germany nearly 2. So any new unreliables capacity is only useful as a scam now.
At lest the Germans have started demolishing windmills to get at the coal.
https://wattsupwiththat.com/2023/01/11/the-final-nail-in-the-coffin-of-renewable-energy/
All the interets parties in London Array have published there FY21 results and they all report different outcomes but at least with four of them you get some info from some that others haven’t revealed to form an overall picture.
Masdar reveal power sales 38m, ROCs 40m recycled ROCs (whatever they are?) 3m. Nett profit of 27m after paying tax of 10m. They advise power generated which equates to slightly less than 20% of the REF figure so that can be relied upon.
RWE claim power price achieved was lower than 2020 at £37.59MWh?? Nett profit of 29m after paying 15m in tax.
Boreas made 11m after paying 1.2m in tax. They reveal O&M costs of 27m so that is over 100m pa – what on earth do they spend it? No way a CCGT at this power level would need that much.
All moan about lower availability due to kit issues compounded by poor wind conditions
Good research. I note that the Orsted accounts include that they purchased 4.9GWh of electricity to operate the wind farm – keeping the blades turning to avoid brinelling, yawing the turbines to stop the cables from getting too twisted inside, navigation lights, etc. I see that Paul missed the bottom of page 30, where they reveal £64,758,312 in “government grants” and £57,308,460 in sales and £977,713 in other revenues.
There is a truly extraordinary statement in the RWE report:
Over the course of the past year prices quoted in the electricity forward market hit an all time high. As a result, the earnings prospects of the London Array have become more adverse.
That suggests an extraordinary price formula on their intra-group sale to the marketing side, which will be where the profits are being harvested, and the low sales prices reported confirm it. It is an illustration of the difficulties of designing a windfall tax. Tracing through to RWE Supply and Trading GMBH they note that amid their €3.2bn profit from oil, gas, LNG and power trading there was a loss at the Commodity Solutions section due to hedges for a wind farm having to be repurchased at high prices following lower output.
I note they also mention the array cable replacement and repair programme which doubtless accounts for high maintenance charges if expensed rather than written off old cables and capitalised new ones. They also extended the loan financing the windfarm by 10 years to 2032, presumably to reduce the burden of repayments. They give a rather different breakdown of energy usage, covering heating for the onshore base, fuel for service vessels, and electricity use on- and off-shore, totalling 5.4GWh against a reported 650GWh of output for their 30% share.
So assets of around £340m and net profit of £50m. That’s a return on assets of 14.7%. Given the leverage (63%) the return on equity is pretty impressive.
Follow the money then think of what you are paying in subsidies and tax, offshore to boot?
Great analysis, Paul. As for London Array being owned by foreign companies, so much of the money leaches out of the country, sadly that is par for the course, as I discussed here: