Burning Cash: (Occasional) Offshore Wind Power More Than Six Times Cost of (Constant) Gas-Fired Power

The true cost of wind power is staggering – the cost of offshore wind power is astronomical: the latter is more than six times the cost of gas-fired power.

The operating cost of maintaining any industrial machine in a marine environment starts out high and only increases over time, thanks to the corrosive power of saltwater and salt-laden sea air.

Take a machine that, at best, has an economic lifespan of around 12 years and it doesn’t take long before the cost of operating a wind turbine offshore gets out of control.

Andrew Montford runs the numbers on what is a staggeringly expensive way of generating a trivial amount of sporadically delivered electricity.

The levelised cost of floating offshore wind
Global Warming Policy Forum
Andrew Montford
29 July 2021

We present what may be the first estimate of the levelised cost of floating offshore wind.

Last year, I wrote a blog post setting out the financial situation of Hywind, the UK’s first commercial floating offshore windfarm, and indeed the first in the world. It was an ugly tale, with a hugely lossmaking operation kept in the black only by a vast transfer of subsidies. However, Hywind has recently published its second set of financial results since it became fully operational, and so we can now start to get a handle on its operational performance and underlying costs, and publish what I believe is the first estimate of the levelised cost of floating offshore wind.

Situated off Peterhead, in what appears to be something of a sweet spot for wind, it is unsurprising that Hywind’s performance is rather better than your typical offshore windfarm. Renewables advocates are keen to point out that its capacity factor (the electricity generated as a percentage of the theoretical maximum) has reached 57%. However, in 2020/2021, that fell back to just 51%, which is only a few points ahead of recent fixed offshore windfarms.

Meanwhile its costs are extraordinarily high. We already knew that its capital cost, at £8.9m/MW. was around three times that of fixed offshore wind. But its opex costs are also much higher than might be expected. As a rule of thumb, fixed offshore wind opex starts at around £100,000/MW per year, and then rises from there as the turbines age. However, Hywind seems to have started out from a much higher base – its opex costs have averaged over £200,000/MW per year since it became operational.

With only marginally better operational performance than fixed offshore, and costs that are several times higher, there is no hope that Hywind’s overall levelised cost will be anything other than disastrously expensive. I estimate the LCOE figure as £224/MWh, a value that is unchanged since last year, suggesting that the value is reasonably robust. This is approximately double that of fixed offshore wind, and perhaps five to six times what we would expect for electricity from gas turbines. (As always when comparing wind and gas, we should note that the comparison is misleading since wind should carry a considerable extra cost burden because of its intermittency, which is expensive to correct).

There can therefore be little doubt that Hywind is a failure. Kincardine, the UK’s second floating offshore windfarm, looks as though it will be more expensive still. It seems beyond doubt that floating offshore wind is a financial disaster.

Unsurprisingly, the government is ploughing ahead with it regardless.

=====================

LCOE assumptions

WACC: 5%
Lifespan: 20 years
Output deterioration: 2.1% per annum
Opex increase: 5.7% per annum

The calculations can be seen in this downloadable spreadsheet hywind.

Global Warming Policy Forum

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.

Comments

  1. ronaldsteinptsadvancecom says:

    Continuation by the healthier and wealthier countries for intermittent electricity from breezes and sunshine will result in extreme costs, painful reductions in living standards for all but the richest, national weakness, societal instability, and the eventual failure of the decarbonization effort. The hoped-for climate leadership by these few elite countries will become only a stern deterrent.
    The healthier and wealthier countries policies have been to accelerate the rate of reduction in carbon dioxide emissions, with a near-exclusive focus on the electricity generation sector from breezes and sunshine.

  2. Peter Pronczak says:

    Wow, the AU The Conversation site has gone burko supporting the IPCC released report. When I first saw the site years ago I thought it was practice for writing terms of reference for royal commissions – opinion not changed.

    Apparently I’m a climate change denier; it changes all the time just not the way the IPCC says.
    Shellenhuber got a queen’s gong for convincing Prez G H W Bush that population numbers were a greater threat than terrorism. USA lost its way at the end of WWII; for anyone who knows why the War of Independence happened. F D Roosevelt created ‘lend lease’ & modern debt; there’s a French Freemason lodge named in his honour.

    I’m getting hammered (on TC) by those claiming to have ‘countered’ my 2 comments; I think they’ve spelt counted wrong.
    I must be missing some acumen with:
    “Someone, anyone, define where and when, anywhere on the planet, a pristine, natural, static environment existed? No takers? Thought not.”

    Not bothering to respond will have some thinking they’re winners, but like Jonny Appleseed there is always some fertile soil. Oh well, such is life.

    Rusting? If it wasn’t for paints & other anti corrosion measures most metals I know of revert to their oxide state.
    Perhaps there’s no research on ship, etc., protection coatings contributing to ocean acidification. But these days in equality of opinion, it’s difficult to believe governments’ promoting any establishment support position, like tax evasion.

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