Cash Inferno: Offshore Wind Power Fastest Way to Squander Countless $Billions

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In the absence of endless subsidies and guaranteed, fixed-price contracts (set at ludicrously high prices), the purported economic case for wind power never, ever stacks up. And the metrics are far worse out at sea.

Notwithstanding the $billions in subsidies – gouged from taxpayers and/or lumped on power consumers’ crushing power bills – proposed projects are floundering at sea, and the major turbine manufacturers are well and truly underwater.

As John Hinderaker outlines below, throwing money at offshore wind power projects makes a cocaine habit look like a canny investment.

Offshore Follies
John Hinderaker
25 June 2023

There could be a worse way to generate electricity than by implanting giant windmills in the ocean, but it is hard to think what it might be. Not surprisingly, Britain is finding its plans for offshore wind to be illusive: How Britain’s offshore wind industry ran out of puff.

Championed by politicians as a controversy-free alternative to onshore wind and solar farms, the Government wants offshore wind capacity to surge from 13 gigawatts today to 50 gigawatts by 2030.

Why giant turbines in the ocean should be controversy-free is hard to understand. In any event, things are not going well.

A string of major projects are under threat from spiralling costs, sclerotic planning rules and shrinking subsidies. Industry sources warn that it risks tilting the economics into negative territory. “Things are very hard out there right now,” one source says.

“Negative territory” in this context means that government subsidies are not large enough, and need to be increased.

The malaise is triggering fresh questions about whether the Government’s 2030 target is still achievable – and if the long–assumed maxim that offshore wind costs will keep falling can hold.

There is no significant element of offshore wind’s costs that should be expected to decline, and increasing government-driven demand for the minerals of which wind turbines consume vast amounts will inevitably cause those prices to rise.

Britain’s offshore wind industry exploded over the past decade, with most development concentrated off the east coasts of Scotland and England. Capacity has grown tenfold since 2010, when it stood at just 1.3 gigawatts, with ever-bigger turbines boosting output.

One example is Dogger Bank, a phased development in the North Sea that will eventually generate enough power for 6 million homes.

It would be more accurate to say that if completed, it will occasionally generate enough power for 6 million homes. Wind turbines create electricity 35% to 40% of the time. Most of the time, another source will need to be found.

But rising supply chain costs globally – fueled by energy prices that jumped after the Ukraine war – have slammed the breaks on this progress.

But wait! The energy prices that “jumped after the Ukraine war” were those for natural gas and gasoline. Why would that impact the supply chain for wind turbines? Can’t you just use wind energy to run the factories that produce wind turbines?

Just kidding. You can’t run a factory on electricity that is AWOL 60% to 65% of the time. Reliable energy sources will always be needed to manufacture unreliable energy sources. Although why you would want to do that is anyone’s guess.

Apparently everyone is losing money on wind turbines:

General Electric’s renewables business, which makes the 260 metre-tall Haliade X turbines used at Dogger Bank, reported a $2.2bn (£1.7bn) loss in 2022. The division has been loss-making for eight straight quarters.

Rival manufacturers Siemens Gamesa, Vestas and Nordex also posted further cumulative losses of €3bn in the same year, notes Kathryn Porter, an independent analyst at energy consultancy Watt Logic.

“There has been this narrative, that wind farm costs are falling and will keep falling, but the reality is these prices are too low.

“Turbine manufacturers have effectively been selling at a loss – and those losses have become huge now.”

Wind energy is a sinkhole for money. The only solution is more government subsidies. In that regard, the Brits are jealous of us Americans, who are going deeper into debt to keep the “green” money machine going:

Many of these problems are not unique to the UK. But they are colliding with domestic issues, including the slow planning system and shrinking British subsidies – which now look even meaner when compared to those being showered on companies in the US through Joe Biden’s Inflation Reduction Act.

Thanks, Joe. Another problem is that giant wind turbines anchored in the seabed don’t actually work well, even when “working” is defined as 35% production:

The “bigger is better” approach to turbines is leading to more failures, costing manufacturers more in warranty claims, Porter says.

In an effort to cut costs, some developers are attaching the turbines using cheaper foundations on the sea floor, the executive adds.

“Offshore wind is not the Nirvana that everybody thinks it is,” they add. “The risks are enormous. And the rewards are not very good.

“Everyone is going for the biggest turbines, the cheapest foundations, and they’ve all gone for cabling solutions that mean if you get a failure, you could lose the wind farm.”

I think that in 25 years, offshore wind will be seen as one of the worst follies in the history of technology. Even now, a few are asking good questions:

[F]or some, these problems raise much bigger questions about subsidies for offshore wind generally.

“We are 20 years on from when we started subsidising offshore wind, yet we are still having to do it”, says Porter at Watt Logic.

“If you are meant to be supporting a nascent technology until it gets to maturity, then subsidies should eventually fall to zero over time. If that is not your goal, then what is the point of these subsidies now?”

The real point is the biggest transfer of wealth in world history, but don’t hold your breath waiting for anyone to say that out loud.