By Paul Homewood
No new offshore wind farms are expected to have been bid for in a government auction this week, in a significant blow to the government’s clean energy ambitions.
Ministers are scheduled to announce tomorrow the winners in their annual auction of financial support contracts for renewable energy projects.
A number of sources have told The Times they understood the auction had failed to procure any big new offshore wind farms, after the government ignored repeated industry warnings that support on offer was too low to reflect soaring inflation.
Such an outcome would jeopardise the government’s ambitious target of more than tripling offshore wind capacity to 50 gigawatts by 2030 — more than enough to power every home, and up from less than 14 gigawatts today.
Five offshore wind projects with about 5 gigawatts combined capacity are believed to have been eligible for this year’s auction — enough to power more than 5 million homes. However, their developers — Vattenfall, ScottishPower and SSE — have all sounded the alarm over cost inflation.
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A few first thoughts:
1) The inflation argument is a bit of a bogus one, because the strike prices are index linked anyway.
The govt’s price cap is £44/MWh at 2012 prices, something like £55/MWh at current prices, and £65/MWh by the time they start generating.
2) The wind industry has been hoisted on its own petard, consistently low balling the true costs in order to influence govts.
This also applies to the turbine manufacturers, who appear to have woefully underestimated the costs and problems of building large turbines for operation offshore.
3) According toSky, a recent auction in Ireland set a price of Eu 150/MWh, about £125/MWh.
4) WSJ report that:
According to George Bilicic, global head of power, energy and infrastructure at Lazard, building a U.S. offshore wind farm can cost $4,000
That’s £3000, and compares with the BEIS levelised cost estimates, which are based on £1500 (at 2018 prices)
BEIS figures came out at £54/MWh
At £3000, we are looking at something like £100/MWh.
