Latest data reveals no revolution in offshore wind costs
The publication last week of the annual report of Rampion Offshore Windfarm marked the start of the 2020 reporting season – most of the UK’s offshore fleet will publish their accounts in the next three months. This new information gives us here at GWPF a chance to update our estimates of the levelised costs of the fleet.
Long-time readers here will recall that there is an ongoing controversy over offshore wind in the UK, with the Government and renewables advocates insisting that costs are falling through the floor, while a series of studies of financial accounts show that they are at best only falling modestly, and then from a dizzy height.
The Government insistence that we are in the midst of a cost revolution is based on the very low offers to supply power to the grid that offshore windfarms started making in 2017. However, it has been pointed out that these so-called Contracts for Difference are not binding, and claims of low costs were anyway refuted by the announcements of windfarm developers themselves, which revealed little change.
The new reporting season gives us a chance to see if the actual build costs of the newest, (allegedly) super-cheap windfarms are coming in below budget, or if the operating costs of slightly older ones are markedly cheaper.
Although the accounts may take a few months to appear, we can already get hints about the performance of some of these windfarms from other places. Take Triton Knoll for example, an 860 MW development off the Lincolnshire coast, Phase 1 of which switched on in March this year. It has a Contract for Difference currently worth £89/MWh. However, its announced cost is £3 billion, which, on a very optimistic estimate of its performance, would indicate that it needs to earn £67/MWh just to cover its capital costs.
And optimism about its performance doesn’t appear warranted. Data from the Low-carbon Contracts Company, which runs the CfD scheme, suggests that Triton Knoll’s performance – its “load factor” – is a few percentage points worse than that of Hornsea 1. So there has certainly been no revolution in operating performance. The figures we see are just what you’d expect, since Hornsea is a bit further out in the North Sea, and at similar latitude. But Hornsea’s annual average is 47%. At, say, 45%, Triton Knoll would need to earn £75/MWh or so to cover its capital costs.
In other words, there will not be a lot of the £89/MWh CfD income left to cover operating costs, which are unlikely to be less than £40/MWh. I’d therefore assume Triton Knoll’s 2021 accounts, still more than a year away, to show a substantial loss.
Assuming, that is, there are no surprises in the capital costs in the accounts. I will report back when these appear.
The post Still waiting for cost reductions appeared first on The Global Warming Policy Forum.
via The Global Warming Policy Forum
June 15, 2021
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