Offshore wind industry in dire straights

[OVERKILL]

While there have been many models showing massive renewable growth that have been predecated on a perpetual decline in the cost of wind and solar, reality, thanks to inflation and rising interest rates, has had other plans. Probably the most affected industry is that for offshore wind, where skyrocketing contract price demands by developers has stalled growth. PPA's issued by governments and utilities are not sufficient for developers, who are demanding prices similar to that received by Vogtle. This is problematic because while Vogtle was a white elephant, it will produce reliable, round-the-clock electricity at 93% CF for 60-80 years, while a PPA for offshore wind provides sporadic, intermittent electricity at ~40% CF for ~20 years. Clearly, not much of a deal.

https://www.theguardian.com/busines...-wind-auction-bidders-government-energy-bills
Renewable-energy developers were required to submit sealed bids in the auction in the first half of August, before officials ranked the most competitive proposals over the second half of the month. Only the projects offering the lowest cost to energy-bill payers secure contracts.

The auction uses a mechanism known as contracts for difference, which guarantee consumers will pay a fixed price for the energy generated by the bidder. When wholesale prices are lower, subsidies added to customer bills top up the difference; when wholesale prices are higher, developers backpay the difference.

In recent decades, the price of offshore wind power has fallen steeply. For this year’s auction, the government set a maximum price of £44 a MW hour, a similar level to the previous round.

But the maximum seems to have been too low to attract bids. Offshore wind developers face soaring construction costs, owing to rising inflation and higher borrowing costs.

This summer such inflationary pressures caused work to stop on a large-scale offshore windfarm off the Norfolk coast. The Swedish energy firm Vattenfall said it would cease working on the multibillion-pound Norfolk Boreas windfarm, designed to power the equivalent of 1.5m British homes, because its costs had increased by more than 40%, so it was no longer profitable.
https://commonwealthmagazine.org/energy/avangrid-agrees-to-pay-48m-to-terminate-offshore-wind-deal/
AVANGRID and the state's three major utilities on Monday agreed to terminate a power purchase agreement they signed just last year, with the offshore wind developer agreeing to pay a total of $48 million to put the contract for Commonwealth Wind behind it.

The $48 million termination payment will be paid in three installments to the utilities — $25,900,800 to Eversource, $21,619,200 to National Grid, and $480,000 to Unitil – and the money will be reimbursed to ratepayers, according to filings with the Department of Public Utilities, which approved the power purchase agreement at the end of last year and must now approve the termination agreement.

Shell and Ocean Winds North America, the developers behind SouthCoast Wind, are expected to reach a similar agreement with the utilities, but their termination payment is expected to be higher — in the $60 million range.

https://www.bloomberg.com/news/arti...m_medium=share&utm_campaign=twitter#xj4y7vzkg

https://www.utilitydive.com/news/ne...nge-prices-orsted-equinor-nyserda-psc/692415/

• Proposals to increase prices in existing offshore wind and onshore renewable energy contracts in New York could increase residential electric rates by 2.5% and 1.5%, respectively, or a combined $4.67 a month, according to the New York State Energy Research and Development Authority.
• However, failing to update the prices for wind and solar contracts could kill the projects, leading to delays in meeting state clean energy targets, increasing carbon dioxide emissions, and potentially higher prices for future contracts, the agency said in a Monday filing at the New York Public Service Commission.
• Reflecting drivers behind the proposals, Ørsted, one of the petitioners, on Tuesday said it faces about $2.35 billion in impairments on its U.S. offshore wind portfolio related to supply chain challenges, the possible failure to be eligible for extra federal investment tax credits and higher interest rates.

On average, offshore wind developers are seeking a 48% increase in their contract prices to $167.25/MWh and a petition from the Alliance for Clean Energy New York asked the PSC to increase onshore wind contract prices by 71% on average to $115.66/MWh and solar prices by 63% to $102.22/MWh, according to NYSERDA.
https://www.wsj.com/business/energy-oil/americas-wind-farm-revolution-is-broken-fa82d64e


This is all on the heels of big problems at Siemens Gamesa, whose wind turbine division is plagued by quality control issues:
https://www.rtoinsider.com/48678-siemens-gamesa-quality-control/
https://www.reuters.com/business/en...ith-siemens-gamesas-wind-turbines-2023-06-23/

 

[demarpaint]

I know a lot of fisherman that would be very happy to see these go away. I hope we don't use taxpayer money to bail them out.

 

[Leo99]

In a strange twist of politics in NJ, the Republicans are aligned with the environmentalists in questioning if off-shore wind projects are contributing to whale deaths.

 

[Vil_Riker]

Luckily for the Brits, as their economy nose dives they won't need much growth in electricity in the future.

 

[mk378]

It's hard to get private investors excited about a project where they have to put all their money up front into first cost, then get slow returns.

 

[Vil_Riker]

It's hard to get private investors excited about a project where they have to put all their money up front into first cost, then get slow returns.

That's how capital investments work.

The risk is apparently too high as they have low confidence that the government will bail them out. These renewables ensure profitability with government subsidies and bailouts. Otherwise they make very little sense.

 

[4WD]

Offshore wind uses some of the same expensive and limited equipment as offshore O&G construction which is booming …
The land based wind farms are using pretty common cranes etc by comparison …

 

[BMWTurboDzl]

In a strange twist of politics in NJ, the Republicans are aligned with the environmentalists in questioning if off-shore wind projects are contributing to whale deaths.

It could be that many of their wealthy constituents are afraid that the offshore wind farms will spoil their ocean views. Reminds me of a time in GA where churches joined forces with package store companies over a law lifting Sunday beer/wine sales at supermarkets. The churches for obvious reasons didn't support it and package stores didn't want to have to open on Sunday.

 

[PimTac]

The costs to install and then maintain these structures has to be very high. The salt environment is not a friendly one.

 

[alarmguy]

I know a lot of fisherman that would be very happy to see these go away. I hope we don't use taxpayer money to bail them out.

Yes, like the Shoreham nuclear plant back in the 80s that never produced commercial electricity maybe this massive huge wind farm that they’re building off of Long Island in the ocean will be the next Shoreham?
Keep it up Long Island, you’re working towards getting your rates as high as California

 

[alarmguy]

It could be that many of their wealthy constituents are afraid that the offshore wind farms will spoil their ocean views.

no, it’s doubtful they will be able to be seen as they will be 20 miles off the coast of Long Island not sure about the others

The thing I love is the propaganda saying they’re going to power such as one project out on the east end of Long Island 70,000 homes, well hello it’s not gonna power 70,000 homes when the wind isn’t blowing.
Never mind scheduled blade replacements as well as the corrosive issues of marine water and congratulations more expensive electricity.
I’m so glad I got out of there!

 

[BMWTurboDzl]

no, it’s doubtful they will be able to be seen as they will be 20 miles off the coast of Long Island not sure about the others

The thing I love is the propaganda saying they’re going to power such as one project out on the east end of Long Island 70,000 homes, well hello it’s not gonna power 70,000 homes when the wind isn’t blowing.
Never mind scheduled blade replacements as well as the corrosive issues of marine water and congratulations more expensive electricity.
I’m so glad I got out of there!

Ya here's a link for all the proposed sites along the NJ coast. One site (Atlantic Shorts) is proposed to be 10-20 miles off the coast. Maybe they'll see it, but if what @Leo99 is saying is true there's always some underlying reason other than what has been mentioned publicly.

https://dep.nj.gov/offshorewind/projects/

 

[oil pan 4]

Well what did they expect, it's the most expensive way to make and transmit wind power. Also they're no delivering. Over the water wind turbines were supposed to have at least 70% capacity factor and we're supposed to work opposite of land based wind, when the wind wasn't blowing on land it was supposed to be blowing out at sea and vice versa. Nope the wind blows when it wants and over the water wind is struggling to hit 60% capacity factor.

 

[OVERKILL]

Well what did they expect, it's the most expensive way to make and transmit wind power. Also they're no delivering. Over the water wind turbines were supposed to have at least 70% capacity factor and we're supposed to work opposite of land based wind, when the wind wasn't blowing on land it was supposed to be blowing out at sea and vice versa. Nope the wind blows when it wants and over the water wind is struggling to hit 60% capacity factor.

Even the North Sea wind turbines, which was supposed to be THE prime location, the output still craps the bed in the summer, and CF is in the mid 40's percentage-wise on average:

 

[LenZee]

I know a lot of fisherman that would be very happy to see these go away. I hope we don't use taxpayer money to bail them out.

Why? Most man made objects in the ocean become havens for fish.

 

[demarpaint]

Why? Most man made objects in the ocean become havens for fish.

Check with the Long Island fishing groups there's a lot of info out there. I'm not looking to windup the green energy fans.

 

[IndyIan]

Even the North Sea wind turbines, which was supposed to be THE prime location, the output still craps the bed in the summer, and CF is in the mid 40's percentage-wise on average:
View attachment 177494

40% sounds not too bad actually, given the likely hood of wind being under and over the ideal speeds for them to work at.
I'm sure many hydro electric stations in southern ontario run around 40% of their capacity over a year? Just that most of the time they can match output with loads on demand. But if offshore wind needs 70% CF to be profitable then probably its not going to work out...
I suspect too that climate change effects in the mid upper latitudes, that's causing these heat domes, also reduces the average wind speeds more often in the summer of many of the northern european countries with wind farms?
It would be ironic that climate change is reducing the viability of wind farms.... I haven't really found a good website that explains how/if weather variability is changing, or if/how weather systems maybe more extreme but lingering longer than before?

 

[Cujet]

The thing is, there are groups who honestly believe we can use windmills to power the grid, to charge the batteries that will power the boats, big and small. At that point, why not go back to sailboats?

Something about all this does not sit well with me.

I had to add this in...

 

[OVERKILL]

40% sounds not too bad actually, given the likely hood of wind being under and over the ideal speeds for them to work at.
I'm sure many hydro electric stations in southern ontario run around 40% of their capacity over a year? Just that most of the time they can match output with loads on demand. But if offshore wind needs 70% CF to be profitable then probably its not going to work out...
I suspect too that climate change effects in the mid upper latitudes, that's causing these heat domes, also reduces the average wind speeds more often in the summer of many of the northern european countries with wind farms?
It would be ironic that climate change is reducing the viability of wind farms.... I haven't really found a good website that explains how/if weather variability is changing, or if/how weather systems maybe more extreme but lingering longer than before?

The problem is that 40% doesn't justify spending >2x as much vs onshore wind, which is ~30%.

Here's a seasonality graph for the North Sea:

 

[LenZee]

Check with the Long Island fishing groups there's a lot of info out there. I'm not looking to windup the green energy fans.

I used to fish in the NYC area, Any type of structure had lots of life on it and made for great fishing as long as you kept the fish from tangling into it. Lots of oil platforms in the gulf also had great fishing, A friend of mine used to fish from a platform when he had downtime and caught nice sized fish.