Tag Archives: cobalt

Weakest link for EV’s is in China’s supply chain

From CFACT

Federal and state energy policies, now pushing electric vehicles on a reluctant public, are running in conflict with other social and environmental restrictions banning vital materials and component imports.

As consequences, U.S. and European auto companies are racing into Chinese rare earth monopoly and other supply traps posing inevitable economic and national security threats.

American EV consumers who ride along will be left in a ditch along with dealers who lack essential inventory and profitable markets.

This is already occurring.

U.S. customs officials have seized thousands of German Volkswagens over a single part made in China’s Xinjiang region, believed to be in violation of the Uyghur Forced Labor Prevention Act (UFLPA), which requires importers to provide evidence that their goods were not produced with forced labor in order to avoid penalties.

The German company is a joint venture partner with Chinese-owned SAIC Motors, which owns a factory in Xinjing’s capital, Urumqi.

Volkswagen was previously linked to such a violation when the German newspaper Handelsblatt reportedly obtained photographs showing Uyghur workers in military uniforms during the three-year construction of a car-testing track.

As reported in the Financial Times, U.S. authorities have also impounded and are investigating luxury brands produced by Porsche, Bentley, and Audi over suspected UFPLA violations involving electronic components, resulting in delivery delays of uncertain length.

A recent Human Rights Watch report has also warned that carmakers, including Tesla, General Motors, Volkswagen, and Toyota, are failing to ensure they aren’t using aluminum produced by Uyghur forced labor.

Aluminum is used extensively in EV manufacture as a mileage economy measure to compensate for heavy battery weight.

Whereas Tesla owns a factory in Shanghai that builds cars for both Chinese and international markets, they had reportedly tracked its supply chain back to the mining level without evidence of forced labor.

Then, factor in influences of new and existing environmental regulations influencing rare earth mining and processing for batteries, which represent a major EV cost

Biden administration’s anti-drilling and pro-EV policies have made America increasingly dependent on rare earth minerals mined for those batteries under atrocious slave labor and environmental conditions bureaucrats ignore.

China controls a stranglehold monopoly of about 80% of the global supply, with Congo a 90% source of vital cobalt.

As a consequence, Mountain Pass in California, the sole remaining operational U.S. rare earth mine that lost two years of production due to a 2016 bankruptcy, incredulously continues to send its mined ore to China for processing.

Expect those battery costs to escalate in concert with increased global demands for nickel — a primary component of lithium-ion cathodes — having already risen over six years from $10,336 per metric ton in August 2016 to $16,104 currently.

Purchasers should consider that, with a Tesla battery typically costing about $10,000, their resale price will likely have to be significantly higher than that of a comparably aged and sized internal combustion model in similar condition.

Also, expect that on the resale end, an average on-the-road 12-year-old used EV will be on its second or third new battery before an owner can sell it.

FordToyotaVolkswagenHondaNissan, and Subaru have meanwhile all had to adjust new model sales prices upward due to the scarcity of semiconductors, a supply condition that will only become more precarious if and when government-mandated EV numbers multiply.

Currently, despite huge auto investments and government subsidies, this isn’t happening.

As reported in The Wall Street Journal, in September of last year, it took retailers over two months to sell an EV, compared with around a month for gas-powered vehicles and only three weeks for a gas-electric hybrid.

Falling demand and rising prices have prompted Ford to cut previously planned 2024 production of its F-150 electric truck in half after losing $60,000 on each EV sold while also pausing construction of a $3.5 billion battery plant in Michigan.

Facing similar realities, General Motors has said it will delay opening a planned large EV truck factory in Michigan by a year, citing a need “to better manage capital investments while aligning with evolving EV demand”.

This slowdown and resulting industry business losses are occurring both despite and in addition to generous $7,500 federal tax credit subsidies offered as EV incentives to reluctant buyers and jacked-up costs for gasoline models consumers truly want to keep vehicle manufacturers financially afloat.

Consequentially, China isn’t the only EV supply chain threat.

A 2024 political climate change returning the presidency and Congress to Republican control will hopefully replace that EV subsidy supply chain with free market choices that will end the greatest threat of all — Biden and Beijing’s influence over what we buy and drive.

This article by Larry Bell originally appeared at NewsMax

More than 3,000 auto dealers sign letter opposing Biden’s electric vehicle mandate

Electric vehicles ‘are stacking up on our lots,’ car dealers write to Biden

https://www.foxbusiness.com/politics/3000-auto-dealers-sign-letter-opposing-bidens-electric-vehicle-mandate

By Thomas Catenacci

FOXBusiness

A coalition of more than 3,000 auto dealers nationwide is sending an open letter to President Biden, calling on him to “tap the brakes” on his administration’s aggressive electric vehicle (EV) push.

The coalition — which includes dealers located in all 50 states and who collectively sell every major car brand — is taking particular aim at the Biden administration’s tailpipe emissions standards released earlier this year which are the most aggressive federal regulations of their kind ever issued. Under the regulations proposed by the Environmental Protection Agency (EPA), the majority of new vehicle purchases will be electric within a decade.

“These vehicles are ideal for many people, and we believe their appeal will grow over time,” the dealers wrote in their letter to Biden on Tuesday. “The reality, however, is that electric vehicle demand today is not keeping up with the large influx of BEVs [battery electric vehicles] arriving at our dealerships prompted by the current regulations. BEVs are stacking up on our lots.”

“Last year, there was a lot of hope and hype about EVs,” the letter continued. “Early adopters formed an initial line and were ready to buy these vehicles as soon as we had them to sell. But that enthusiasm has stalled. Today, the supply of unsold BEVs is surging, as they are not selling nearly as fast as they are arriving at our dealerships — even with deep price cuts, manufacturer incentives, and generous government incentives.”

They added that, while the goals of the EPA regulations are admirable, they are also “unrealistic based on current and forecasted customer demand.” The dealers further noted that the best indicator of customer demand in the auto marketplace is how EVs are stacking up in their lots.

The letter further noted that there are many issues facing the EV industry such as lacking charging infrastructure, energy grid instability and a lack of reliable mineral supplies vital for EV batteries.

“Mr. President, it is time to tap the brakes on the unrealistic government electric vehicle mandate. Allow time for the battery technology to advance. Allow time to make BEVs more affordable. Allow time to develop domestic sources for the minerals to make batteries,” the letter stated. 

“Allow time for the charging infrastructure to be built and prove reliable. And most of all, allow time for the American consumer to get comfortable with the technology and make the choice to buy an electric vehicle.”


According to the International Energy Agency (IEA), for example, China produces about 75% of all lithium-ion batteries, a key component of EVs, worldwide. The nation also boasts 70% of production capacity for cathodes and 85% for anodes, two key parts of such batteries.

In addition, more than 50% of lithium, cobalt and graphite processing and refining capacity is located in China, the IEA data showed. Those three critical minerals, in addition to copper and nickel, are vital for EV batteries and other green energy technologies. Chinese investment firms have also been aggressive in purchasing stakes in African mines in recent years to ensure a firm control over mineral production.

UK government drops support for controversial deep sea mining as it backs temporary pause

Greenpeace International activists paint the word ‘RISK!’ on the starboard side of Normand Energy, a vessel chartered by the Belgian company Global Sea Mineral Resources (GSR). The Rainbow Warrior is bearing witness to equipment tests carried out by GSR using the Patania II nodule collector, at approximately 4500 metres deep in the Clarion Clipperton Zone. The mining company is aiming to commercially extract minerals from the seabed in the future. The Greenpeace ship is in the Clarion Clipperton Zone in the Pacific to bear witness to the deep sea mining industry. Part of the ongoing ‘Protect the Oceans’ campaign.

Environmentalists have warned deep sea mining could be “catastrophic” for the vast and little understood habitat, which holds minerals needed for green technologies.

The UK has for the first time come out in support of a pause in highly controversial mining of the deep sea bed, having previously supported it, reports Sky News.

On Monday, the government added its name to a group of countries seeking a moratorium on new licences to exploit minerals such as lithium, copper and cobalt – vital for green energy – from the deep sea.

The environment department said the precautionary pause is designed to protect the world’s ocean from such projects, which involve heavy machinery scraping deposits from the world’s largest habitat, until more evidence on the impact is available.

It said it would establish a new UK-based network of experts to collect further scientific data.

Components of a subsea mining machine pictured in 2014

Environment Secretary Therese Coffey said the UK will use “our scientific expertise to fully understand the impact of deep sea mining on precious ecosystems; and in the meantime, we will not support or sponsor any exploitation licences”.

The announcement comes as negotiations at the United Nations regulator, the International Seabed Authority, start on Monday, and take place one month before the COP28 climate talks commence in Dubai in December.

Previously, Prime Minister Rishi Sunak’s government had been in favour of exploratory licences, a position criticised by Labour and dozens of scientists.

Other than from a few small tests, no commercial mining has happened at scale yet, and campaigners say it will be extremely destructive, with full environmental impacts hard to predict.

But deep sea mining is regarded as a potential solution to the expected global shortage of raw materials considered critical to a greener energy future, and used in things like batteries and renewable power.

It is also seen as a way to reduce dependence on the relatively few countries that hold deposits on land, including China, Australia, Russia, South Africa and Zimbabwe.

Read the fullreport here.

Copper, “The New Oil”?

Critical materials for energy: aluminum, cobalt, copper, dysprosium, electrical steel, fluorine, gallium, iridium, lithium, magnesium, natural graphite, neodymium, nickel, platinum, praseodymium, silicon, silicon carbide and terbium.

From Watts Up With That?

Guest “There’s copper in them thar hills” by David Middleton

Copper Is Critical for America’s New Energy Economy

By Andy Kireta, Jr.
October 18, 2023

The U.S. Department of Energy’s (DOE) new designation of copper as a critical material follows the lead of the EU, China, Japan, and others in labeling the metal as critical – and shows copper is on the cusp of a generational shift from an everyday material to a geopolitically significant commodity.

This new strategic importance stems from copper’s criticality to a wide range of clean and renewable energy technologies, such as waste heat recovery and electric vehicles, which can reduce global GHG emissions by two-thirds. As a result, experts estimate copper demand is set to double between 2035 and 2050 as industries work to meet their climate goals.

It is no wonder, then, that some are referring to copper as “the new oil.” 

[…]

The shift from a global economy built entirely on oil to a digitized and electrified future, with copper at its foundation, has already begun. If Washington wants the U.S. to lead this global shift, it must recognize copper as a critical material for the nation’s future economic and national security.

Andy Kireta, Jr., is the President and CEO of the Copper Development Association and the North American Regional Director of the International Copper Association. RealClearEnergy

The notion that we are transitioning from fossil fuels to an electrified future is nonsense. However, technological advances and government policies are increasing the demand for many mineral resources. This is having an effect on the mineral resource criticality matrix. Non-critical mineral resources are shifting towards becoming critical materials.

U.S. Department of Energy, Critical Materials Assessment 2023

Critical Materials

The Energy Act of 2020 defines a “critical material” as:

  • Any non-fuel mineral, element, substance, or material that the Secretary of Energy determines: (i) has a high risk of supply chain disruption; and (ii) serves an essential function in one or more energy technologies, including technologies that produce, transmit, store, and conserve energy; or
  • A critical mineral, as defined by the Secretary of the Interior.

The Energy Act of 2020 defines a “critical mineral” as:

  • Any mineral, element, substance, or material designated as critical by the Secretary of the Interior, acting through the Director of the U.S. Geological Survey.

US Department of Energy

The US DOE’s 2023 critical materials report is an odd combination of wishful thinking and reality checks.

Wishful Thinking

Executive Summary

The global effort to curb carbon emissions is accelerating demand for clean energy technologies and the materials they rely on. Demand for these materials will only continue to grow, especially as some nations aim to achieve net-zero emissions by 2050. While some major materials like steel, copper, and aluminum are already powering the fossil fuel economy, others are more minor materials with potential supply risks. These risks could jeopardize the ability to reduce greenhouse gas emissions within the desirable timeframe to avoid significant climate change. In some cases, it may be necessary to take action to improve the resilience of these material supply chains and mitigate supply risks. Understanding the importance of individual materials to clean energy and the supply risks associated with them is necessary to identifying which materials may serve as potential roadblocks to a clean energy future.

[…]U.S. Department of Energy, Critical Materials Assessment 2023

Pretty well all of the assessed individual materials face roadblocks, irrespective of the government’s clean energy wishes.

Reality Checks

The report assesses the supply of critical materials under four scenarios:

Demand trajectories were developed for each material that passed the screening in Chapter 3. For each material, four trajectories were developed using high and low market penetration and material intensity assumptions for different energy technologies/applications, shown in Table 4.1. The goal of these trajectories is not to predict the future, but to outline various possibilities of material demand that can inform RD&D strategies.U.S. Department of Energy, Critical Materials Assessment 2023

U.S. Department of Energy, Critical Materials Assessment 2023

DOE forecasts that the demand for copper for uses other than energy (gray curve) will exceed current production by 2035. They forecast that copper demand will exceed current production capacity by the end of this decade.

DOE forecasts that cobalt demand will exceed production capacity by 2025 in three of the four trajectories. Cobalt is a key ingredient in long-range electric vehicle batteries.

The comma in 50,0000 is obviously misplaced; it should be 500,000. U.S. Department of Energy, Critical Materials Assessment 2023

The demand for almost all of the assessed materials quickly exceeds production capacity in almost all of the scenarios.

You Can’t Get There From Here

Identified world terrestrial cobalt resources are about 25 million tons. The vast majority of these resources are in sediment-hosted stratiform copper deposits in Congo (Kinshasa) and Zambia; nickel-bearing laterite deposits in Australia and nearby island countries and Cuba; and magmatic nickel-copper sulfide deposits hosted in mafic and ultramafic rocks in Australia, Canada, Russia, and the United States. More than 120 million tons of cobalt resources have been identified in polymetallic nodules and crusts on the floor of the Atlantic, Indian, and Pacific Oceans.USGS

The USGS estimates the current global cobalt reserves to be 8,300,000 tonnes. Trajectory D would burn through the global cobalt reserves by the end of this decade. At the 2035 rate of 2,700,000 tonnes/year, Trajectory D would eat up the entire terrestrial resource in less than a decade.

Reserves vs Resources (BGS)

Who’s up for Deep-Sea Mining?

Although the nodules appear in various places around the deep ocean, the primary target of potential mining is the Pacific’s Clarion-Clipperton Zone (CCZ), a 5,000-kilometer stretch of seafloor between Hawaii and California that extends 4,000–5,500 meters deep. The CCZ hosts trillions of mineral-rich nodules.

The Clarion-Clipperton Zone spans approximately 4,500,000 square kilometers. Credit: HorizonCC BY 4.0

Reaching the nodules involves a three-stage process: First, a support ship lowers a remotely operated vehicle to the seafloor. Next, the vehicle—like a Roomba vacuum for seafloor mining—drives around through the soft sediments scooping up nodules. Last, a large pipe sucks the nodules to the ship above. Cobalt, copper, iron, manganese, and nickel can then be extracted from the nodules during onshore processing and refining.

A dozen European and Asian countries and several island nations have sponsored companies for exploration permits so far. The United States cannot apply for permitting through ISA because it has not ratified the treaty that presides over it, the U.N. Convention on the Law of the Sea. However, a subsidiary of the U.K. arm of the American company Lockheed Martin, UK Seabed Resources, has two permits for exploratory mining.

No need to worry about environmental issues… Wink, wink, nudge, nudge. I wonder how many opponents of offshore oil & gas drilling will be all for deep-sea mining?

Are You Psyched Up for Asteroid Mining?

Opportunities in Asteroid Mining

Generally, asteroid mining remains hypothetical, mostly because of its exorbitant cost. While specific estimates of the cost of commercial mining remain unclear, similarities can be drawn between such programs and NASA’s OSIRIS-REx mission, which seeks to obtain samples from a near-earth asteroid named Bennu. Despite only being projected to return between 400 grams and 1 kilogram of material, the mission is projected to take 7 years and cost over US$1 billion. Planetary Resources and Deep Space Industries were unable to finance themselves to meet such high development costs. Both companies were acquired by other businesses in 2018 and 2019, respectively.

Despite the high price tag, the development of asteroid mining technology may very well be a worthwhile endeavor due to the extremely valuable resources that asteroids have to offer. For example, Asterank, which measures the potential value of over 6,000 asteroids that NASA currently tracks, has determined that mining just the top 10 most cost-effective asteroids–that is, those that are both closest to Earth and greatest in value–would produce a profit of around US$1.5 trillion. There is also great potential for further expansion. One asteroid, 16 Psyche, has been reported to contain US$700 quintillion worth of gold, enough for every person on earth to receive about US$93 billion.Harvard International Review

Maybe the Psyche mission will save the day. Although, recent work indicates that the mineral treasure trove might be less than originally thought.

Better start rounding up the world’s best deep core drillers.

Meet the New Oil, Same as the Old Oil

Texas Sees Host of Oil and Gas Records

by Andreas Exarheas

|

Rigzone Staff

|

Wednesday, October 18, 2023

Texas has seen a host of oil and gas related records recently, the Texas Oil & Gas Association’s (TXOGA) latest monthly energy economic analysis, which is prepared by the organization’s Chief Economist Dean Foreman, pointed out.

In the analysis, TXOGA estimated that, for the month of September, Texas saw its highest crude oil production rate ever, at 5.9 million barrels per day, and its highest natural gas production gross withdrawal figure ever, at 34.6 billion cubic feet per day.

[…]Rigzone

Frac On Dudes!

References

Cobalt – USGS Publications Warehouse. (n.d.). https://pubs.usgs.gov/periodicals/mcs2023/mcs2023-cobalt.pdf

Duncombe, J. (2022), The 2-year countdown to deep-sea mining, Eos, 103, https://doi.org/10.1029/2022EO220040. Published on 24 January 2022.

Kireta, A. (2023, October 18). Copper Is Critical for America’s New Energy Economy. RealClearEnergy. https://www.realclearenergy.org/articles/2023/10/18/doe_is_right_copper_is_critical_for_americas_new_energy_economy_986948.html

U.S. Department of Energy, Critical Materials Assessment (2023). Retrieved October 19, 2023, from https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf.

Yarlagadda, S. (2022, April 8). Economics of the Stars: The future of asteroid mining and the global economy. Harvard International Review. https://hir.harvard.edu/economics-of-the-stars/

Carnage of Child Labor and Ecological Destruction “Elsewhere” acceptable to Wealthy Countries


From Watts Up With That?

Wealthy countries’ actions, to meet their emission goals, show little concern for the humanity atrocities and the environment degradation in “other” countries.

Published August 19, 2023, at the Heartland Institute https://heartland.org/opinion/carnage-of-child-labor-and-ecological-destruction-elsewhere-acceptable-to-wealthy-countries/

Ronald Stein  is an engineer, senior policy advisor on energy literacy for the Heartland Institute and CFACT, and co-author of the Pulitzer Prize nominated book “Clean Energy Exploitations.”

Global cobalt demand soared with the advent of cell phones and laptop computers. Cobalt improves battery performance, extends driving range and reduces fire risks. Now, cobalt, lithium, and other materials are exploding with the arrival of electric vehicles in tandem with government EV mandates and subsidies.

All that electrical transformation equipment will require billions of tons of cobalt, lithium, copper, nickel, graphite, iron, aluminum, rare earths, and other raw materials at scales unprecedented in human history. That will necessitate mining, ore processing, manufacturing, land disruption and pollution at equally unprecedented levels.

The Administration is laser-focused on ending the “climate crisis” by switching to “clean” electricity. It has few qualms about importing the critically needed materials from foreign countries, primarily China – regardless of economic, defense, national security, ecological or human rights implications. It just wants the dirty aspects of “clean” electricity far away and out of sight.

Cobalt mining involves unimaginable horrors that are never discussed by environmentalists nor by government leaders. However, the Biden Administration opposes mining in the United States even under stringent US pollution, workplace safety and mined-land reclamation regulations.

An educational and entertaining  45-minute discussion between Stu Turley of Sandstone Media’s Energy News Beat and Ronald Stein about “Clean Energy Exploitations” brings transparency to the humanity exploitations and environmental degradation in the developing countries that are mining for the exotic minerals and metals required to create the batteries needed to store “green electricity”.  Just a few minutes into the video I provide an explanation of the exploitations that should be considered in the buying process for an EV that should be viewed by all environmentalists and government leaders.

In California, Governor Gavin Newsom has been vocal about his commitment to reducing greenhouse gas emissions in the state. However, some of his recent actions of “leaking” emissions to other countries violate many sections of the written legal framework of The California Environmental Quality Act (CEQA) and California Global Warming Solutions Act (AB32).

We hear much about reparations for descendants of American slaves, but little about reparations for Native Americans, and zilch about compensating these modern-day slaves in developing countries like those in the Democratic Republic of Congo in Africa that holds 72 percent of the world’s known supplies of cobalt.

The silence is deafening from billionaires like Bill Gates, John Kerry, Mark Zuckerberg, George Soros, Michael Bloomberg, and President Biden. Through the encouragement of tax incentives and subsidies to go to EV’s and electricity from wind and solar, they are providing financial incentives to China, who already controls the supply chain for the minerals and metals to go green, furthering our total dependence on China to achieve the green goals of America.

With demographics of EV owners predominantly middle-aged white men earning more than $100,000 per year, Social Security shows that the national average wage index for 2021 is only $60,575 ($40,000 less than the average EV owner). US News recently reported that more than 60 percent of adults are living from paycheck to paycheck and that 48 percent of Americans with annual incomes over $100,000 are also living paycheck to paycheck. As U.S. consumers struggle to afford their day-to-day lifestyle, many are relying on credit cards or dipping into savings, making them financially vulnerable.

Besides the affordability of ANY new car, ICE or EV, is it ethical and morally responsible to purchase an EV knowing where the supply chain of EV battery materials originates?

Those that are less fortunate in poorer developing countries are the ones mining for exotic minerals and metals to support the movement in wealthy countries to EV’s and intermittent electricity from wind and solar.

The wealthy country elites continue to demonstrate their lack of ethical, moral, and social responsibilities, by using subsidies that encourage the continued exploitations of people with yellow, brown, and black skin and the environmental degradation occurring “elsewhere”, out of view of those living in wealthy countries.

Ronald Stein, P.E.

Ambassador for Energy & Infrastructure

Energy Literacy website           

Ronald Stein (energy consultant) Wikipedia page

Cobalt Carnage, Child Labor and Ecological Destruction

From Watts Up With That?

Horrific for cell phones, worse for electric vehicles, calamitous under Net Zero

Paul Driessen

Global cobalt demand soared with the advent of cell phones and laptop computers. It exploded with the arrival of electric vehicles and now is skyrocketing in tandem with government EV mandates and subsidies. Cobalt improves battery performance, extends driving range and reduces fire risks.

Demand will reach stratospheric heights if governments remain obsessed with climate change and Net Zero. States and nations would have to switch to electric cars, trucks, buses and tractors; end coal and gas electricity generation; convert gas furnaces, water heaters and stoves to electricity; and provide alternative power for windless, sunless periods. Electricity generation would triple or quadruple.

Weather-dependent Weather-dependent wind turbines and solar panels would require billions of battery modules, to stabilize power grids and avoid blackouts every time wind and sunshine don’t cooperate. and solar panels would require billions of battery modules, to stabilize power grids and avoid blackouts every time wind and sunshine don’t cooperate.

All that Net Zero transformation equipment – plus transmission lines, substations and transformers – will require billions of tons of cobalt, lithium, copper, nickel, graphite, iron, aluminum, rare earths and other raw materials at scales unprecedented in human history. That will necessitate mining, ore processing, manufacturing, land disruption and pollution at equally unprecedented levels.

Just President Biden’s first tranche of US offshore wind turbines (30,000 megawatts by 2030) will require some 110,000 tons of copper, for the turbines alone. Transmission lines, transformers and batteries are extra. Based on average global ore concentrations, getting that copper would require extracting 40,000,000 tons of surface rock (overburden) and 25,000,000 tons of copper ore.

But those 2,500 12-megawatt 800-foot-tall turbines would provide barely enough electricity to power New York state on a hot summer day, if the wind is blowing, and before its Net Zero mandates kick in.

However, the Biden Administration opposes mining in the United States – even for essential Net Zero materials; even under stringent US pollution, workplace safety and mined-land reclamation regulations. The President’s horse-blindered Secretary of the Interior has vetoed mining for materials in AlaskaMinnesota and almost anywhere critical metals and minerals might be found.

The Administration is laser-focused on ending the “climate crisis” by switching to “clean” energy. It has few qualms about importing the critically needed materials from foreign countries, primarily China – regardless of economic, defense, national security, ecological or human rights implications. It just wants the dirty aspects of “clean” energy far away and out of sight.

Cobalt mining involves unimaginable horrors. Cobalt Red, by Nottingham University associate professor of modern slavery Siddharth Kara, exposes the excruciating realities that Stop Oil and Net Zero campaigners strive to keep buried – along with the bodies of parents and children killed in cave-ins or dying slowly and painfully after being maimed or poisoned in cobalt mines.

Professor Kara took multiple trips to the Democratic Republic of Congo, risking his health and life to document conditions for desperate Africans in a region that holds 72% of the world’s known supplies of cobalt. He estimates that 70% of this cobalt (half the world’s entire supply) involves some measure of child labor, while much of the rest involves near-slave labor.

The DRC’s once-verdant southeastern corner hosts the largest, most accessible, highest grade cobalt ore deposits known on Earth. For EV buyers, Net Zero aficionados, and corporate and government elites, the land is blessed with cobalt interspersed with copper, other Net Zero metals, uranium, chromium, gold and silver. For those toiling at the bottom of the Congo food chain, the land is cursed with those metals.

In DRC mines, “labor is valued by the penny, life hardly at all,” Kara says. Miners in its big industrial mines get somewhat decent working conditions, medical care and pay (perhaps $10 per day).

But almost one-third of Congo cobalt is gouged from the earth by artisanal miners: men and women, and boys and girls as young as six. They and their families live and work in a treeless “hellscape of craters and tunnels patrolled by maniacs with guns.”

Noxious clouds of gas permeate air that even infants must breathe. Families fish, play and bathe in – and drink from – rivers and lakes contaminated with metals and industrial chemicals.

They labor ten to twelve hours a day in sweltering heat and toxic mud, water and dust, in enormous pits hundreds of feet deep – hacking at rocky walls and in long, narrow tunnels that collapse with frightening frequency. Injured miners may get initial medical care; then nothing.

In some areas, their clothing and skin are covered with mustard-colored dust – dried sulfuric acid from processing the ores. Almost everywhere, breast, kidney and lung cancers are rising, because adults, children and babies are exposed constantly to heavy metals and uranium in everything around them. High lead levels cause permanent neurological damage.

15-year-old Muteba hobbled on crutches, his shattered, mangled legs dangling below his skinny waist. He was the only survivor from a cave-in that buried his brother and six others alive. 16-year-old Makano fell into a pit, broke and gashed his leg and hip, and was left with a festering, infected wound that desperately required antibiotics and medical attention he was unlikely to receive.

There are thousands more like them – maimed, paralyzed, disfigured or dead.

“Fair living” wages? Male artisanal miners receive around $2-4 a day – for output that might reach two 90-pound (40-kilogram) sacks of heterogenite cobalt ore. Women and children are typically paid half that, regardless of how much they produce or the purity of the ore they mine.

Those who disobey mine overseers can get “locked in a shipping container with no food or water for up to two days.” At Kanina, two boys who tried to get more than the usual pittance for their 65-pound bags of ore were gunned down – murdered – by security guards.

“Here it is better not to be born,” a mother lamented. A miner reflected, “Here we work in our graves.” Of course we fear the dangers, said another, “but if we do not work, we do not eat.”

And still mining, tech and EV companies, ESG investment firms, politicians and climate zealots tell us they require and ensure “responsible sourcing” of Net Zero supply chains, good wages, safe working environments, and prevention of child labor and slavery. What indifferent, self-serving fraud.

No DRC buyer knows or cares where a quantity of cobalt ore came from, under what conditions it was mined, or whether children dug it out. The entire marketplace is designed to collect and mix ores from formal industrial mines and legal or illegal artisanal operations – making it impossible to trace sources or tell whether child slaves or brutal militias were involved.

At least one marketplace is a remote night operation that can have no other purpose “than to launder artisanally mined cobalt into the formal supply chain completely our of view.” Every mixed load of ore is then thrown into acid baths for initial processing – before being sent out of country, mostly to China.

We hear much about reparations for descendants of American slaves – but little about reparations for Native Americans, and zilch about compensating these modern-day slaves.

Nor do we hear from billionaires like Bill Gates, John Kerry, Mark Zuckerberg, George Soros and Michael Bloomberg. They lavishly fund “climate crisis” and “clean energy” campaigns. Have they spent one dime bringing decent wages, working conditions, living standards and medical care to Congo’s miners?

These human rights issues should top their charitable giving – and the agenda for anyone promoting the climate crisis, ESG, Net Zero and batteries, especially President Biden, Senator Sheldon Whitehouse and UN Secretary General Antonio Guterres.

Paul Driessen is senior policy advisor for the Committee For A Constructive Tomorrow (www.CFACT.org) and author of books and articles on energy, climate change, environmental policy and human rights.


Mining Of Cobalt for Electric Vehicle Batteries: THE SOCIAL IMPACTS

From Friends of Science Calgary

Contributed by Robert Lyman © 2023. Robert Lyman’s bio can be read here.

Inside practically every electric vehicle (EV) is a lithium-ion battery that depends upon several key minerals to help power it. Typically, these include nickel, graphite, aluminum, copper, steel, lithium, cobalt, and manganese. Of these, the mining and processing of cobalt has attracted the most recent media attention because of the adverse social and environmental impacts. The purpose of this article is to shed more light on the nature of the social impacts.

The typical EV battery needs 6-12 kilograms of cobalt. The majority of the cobalt that is extracted in the world is a by-product of existing copper mines. Four fifths of the existing cobalt reserves are located in the Democratic Republic of the Congo (DRC), and it is by far the largest producer. Most of the cobalt production in the DRC is from deep, highly mechanized mines. However, about 15% of the world production comes from “artisanal” and small-scale mining (ASM). In the latter, labourers work with primitive tools like picks, shovels, and buckets. The mining and refining processes are labour-intensive and associated with a variety of health problems due to accidents, overheating, overexertion (lifting of heavy loads), dust inhalation, exposure to toxic chemicals and gases, poor sanitation and violence.

Cobalt production from artisanal mining in the DRC exceeds that from industrial mining in any other country. While in theory there are legal differences between industrial and artisanal mining supplies, in reality the boundary between the two remains quite blurry. Companies mix the two sources together as part of their supply chains prior to processing.

Artisanal mining is not new; it has been going on for decades. While data are poorly collected, it is currently estimated that between 140,000 and 200,000 people work as artisanal miners in the DRC. According to the U.S. Department of Labor, at least 25,000 and perhaps as many as 40,000 children are working in artisanal cobalt mines in the DRC, a number that is sure to grow as the production of electric cars increases.

The adverse conditions in the artisanal mines also affect the women who work in them. The Women’s International League for Peace and Freedom in 2016 published a report on the working conditions these women face. The women work under difficult conditions for eight to ten hours per day. They experience “immeasurable” fatigue. The work is highly liable to lead to cancer in the future and to malformations in their offspring. Most of them work barefoot. Most of them suffer from menstrual disruption and are victims of miscarriages . Most of them have vaginal yeast infections. The report offers a sad picture of the lack of adequate shelter in one area.

“On both sites, there are makeshift houses consisting of huts made from tree branches, without any conveniences, that do not protect the population against bad weather. These huts do not have any sanitation whatsoever. These sites do not have a health centre or medical staff. Injured and sick people and pregnant women have to travel long distances in difficult conditions to reach a treatment centre.”

The reasons people work in these conditions are largely economic. Most artisanal miners in the DRC earn less than US $10 per day. While that is low compared to incomes in the OECD countries, it is considerably more than most earners in the DRC, who are living on an estimated US $1.90 per day. According to the World Bank, ASM is “indispensable” and “the most important non-farm activity in the developing world”.

Yet, the social costs are extraordinary. Siddharth Kara, a UK-based expert on modern slavery and senior fellow at the Harvard School of Public Health, recently published a book entitled Cobalt Red. Based on her research, “The destruction caused by cobalt mining in the name of renewable energy is without contemporary parallel”. She writes:

“We shouldn’t be transitioning to the use of electric vehicles at the cost of the people and environment of one of the most downtrodden and impoverished corners of the world,” he says. “The bottom of the supply chain, where almost all the world’s cobalt is coming from, is a horror show.”

Before one begins to blame western mining companies for these practices, it is best to be reminded of the role played by Chinese companies, owned and controlled by the government of China, in the cobalt supply chain. They dominate it, from extraction of the mineral at mine sites in the DRC to smelters and refiners. Fifteen of the 19 cobalt-producing mines in the DRC were owned or financed by Chinese companies in 2020, according to the New York Times. Two-thirds of the world’s cobalt production is processed in China. Miners complain that the Chinese impose the price as they see fit, keeping it low to supply Chinese industry. As in many other areas, China is the primary beneficiary of the climate policy decisions made in OECD countries.

The Expensive Impossibility of Green Hydrogen From Part-Time Wind and Solar

From Real Clear Energy

By Frank Lasee

There has been some new thinking from the anti-CO2 religionists. The fact that the world is desperately short of lithium and

for electric vehicle batteries, at the scale they want to force, is dawning on them. There isn’t enough and likely will not be enough in the coming decades to meet the electric batteries demand. Certainly not enough for grid scale electric batteries too.  

The climate alarmists haven’t let the facts get in the way of their unrealistic green fantasy of averting climate doom with part-time wind and solar. That it could somehow replace all the coal, oil, and natural gas we use, which provide us with 80% of our energy.  

Except one huge, huge problem. Wind and solar produce little or no energy 70% of the time.  

Reliable, full-time, on demand electricity keeps the heat going and the lights on when it is dark, and the wind is not blowing. The new expensive, impractical, and impossible federal $9.5 billion hydrogen subsidies talking point is wasted spending.  

Green hydrogen made from wind and solar is not practical and is a very expensive form of energy storage and transport.  

Hydrogen is not a fuel. Hydrogen must be created; it must be made from another energy source, just as electricity must be made from other energy.  

No one is making green hydrogen at scale because it is difficult, expensive and requires major factories. Spoiler alert, there isn’t excess “green” energy – wind and solar – to make hydrogen with. 

Green hydrogen requires 13 times more water than hydrogen produced. Sea water must be desalinated first for an added cost. More water is needed for cooling. So, it is a good idea to locate hydrogen facilities near abundant water, not in the chronically short of water western U.S.  

Then the water must be heated to 2,000 degrees and electrocuted. Then the hydrogen must be super chilled to near absolute zero. Then it’s compressed to 10,000 psi, three times the psi of an average scuba tank. Then you have usable hydrogen- liquid, super- cold, compressed hydrogen. This is an expensive energy-intensive process. 

The insurmountable problem with this process is that it cannot be turned on an hour after sunrise and an hour before sunset when solar panels provide the electricity. Or turned on when the wind blows and turned off when the wind stops.  

Without some other energy storage device to store the “over-produced” wind and solar electricity, making green hydrogen is impossible. The costs of over-building wind and solar, then adding batteries to provide a steady stream of 24/7 electricity to make “green” hydrogen is astronomical. And in 25 years when the wind towers and solar panels wear out, or when the batteries need to be replaced every 10 years, you need to essentially start over. 

Green hydrogen sounds good. And there is a well-funded industry of selling it and obscuring the truth. They have to cover up the facts and mislead people in order for the government and investor gravy train to keep them in business.  

Don’t fall for the green or the pink hydrogen hype. It just doesn’t make sense. Apply a little common sense and critical thinking and you will join me in opposing this waste of money.  

The hydrogen lobby duped congress to provide $9.5 billion for hydrogen hubs. Even red states who know this is a boondoggle are attempting to land this federal largesse. 

Because it will create jobs with borrowed taxpayer money. I remind you that the US is $31 trillion in debt, with estimates it will balloon to over $50 trillion over the next decade.  

These hydrogen jobs will last only as long as the subsidies do. Then like the Obama U.S. solar revolution, they will go bankrupt.  

Frank Lasee is a former Wisconsin state senator and former member of Governor Scott Walker’s administration. The district he represented had two nuclear power plants, a biomass plant and numerous wind towers. He has experience with energy, the environment, and the climate. You can read more energy and climate information at www.truthinenergyandclimate.com which Frank leads.

Exploding the Cheap Offshore Wind Fantasy


From Substack

By David Turver 

Summary

The energy industry lobbyists are out with their begging bowls demanding more subsidies to deliver more “investment” in renewables in general and offshore wind in particular. It looks like the developers cannot deliver the wind farms they promised at “record low” strike prices of £37.35/MWh and claims of wind being nine times cheaper than gas were just so much hot air.

The Government’s predictions of decreasing costs of offshore wind were based on continued low commodity prices, the availability of cheap money and unrealistic assumptions about improved operational performance. It’s not looking likely that any of their operational improvement targets will be met.

In addition, the costs of raw materials and energy have gone up dramatically and interest rates have risen sharply pushing up the costs of capital. These factors have had a dramatic effect on the price of offshore wind.

Sensitivity of Offshore Wind Prices to Various Factors

Who would have guessed that a highly mineral intensive and capital intensive source of energy would be very susceptible to commodity and energy price inflation and rising interest rates?

The work of Professor Simon Michaux has shown that the prices of critical minerals are going to continue to rise as demand increases and ore grades for new discoveries fall leading to higher processing costs.

It is beginning to look like the offshore wind power bubble has burst and the fantasy of ever cheaper renewables has come to an end.

Introduction

This week, Energy UK and RenewableUK ran campaigns to lobby the Government for more subsidies for renewables in general and offshore wind in particular. Essentially, Energy UK admits that the bids of £37.35/MWh made during Allocation Round 4 (AR4) in mid-2022 were far too low and now the operators need more money to make their projects viable. This is a far cry from the claims made at the time by Carbon Brief and others that offshore wind power is nine times cheaper than gas.

In earlier articles, we looked at the hidden costs of renewable electricity generation and the pernicious effects expensive electricity has on the overall economy, now this article examines why the claims made in the 2022 auctions were unrealistic and why this is likely to remain the case.

The Government forecast a cost of £100/MWh for new offshore wind farms coming on stream in 2025, in their 2016 energy costs report . Their 2020 report showed the cost falling to £57/MWh for offshore wind farms coming on stream in 2025.

There are many cost drivers that govern the eventual price that needs to be charged for wind power. This article looks at initial capital costs for construction and infrastructure, cost of capital, build time, load factor the expected life of the asset. The actual performance of four wind farms from their published accounts is compared to the Government forecasts and industry publications.

We then take a look at the sensitivity of Government forecasts to changes in these cost factors to explain why Government forecasts and the AR4 bids were unrealistic.

Finally, we take a brief look a the work of Professor Simon Michaux who shows that the prices required to deliver increased supply of key minerals required to deliver wind farms are only going to get more expensive as new discoveries have lower ore grades and are thus more expensive to produce.

Demands from Energy UK and RenewableUK

The results of the Contracts for Difference Round 4 (AR4) auction were announced in July 2022. The winning bids for Offshore wind were set at a strike price of £37.35/MWh at 2012 prices. Now Energy UK says:

“The investment climate has changed dramatically since these contracts were awarded at record low prices. There are now serious concerns that many AR4 projects may not be deliverable at current strike prices.”

They also explain that supply chain and financing costs have risen, raising questions about the deliverability of projects. They also say that developers were relying on the windfall of high electricity prices to justify their projects, by delaying their commitment to Contract for Difference (CfD) prices:

“There are immediate concerns whether CfD Allocation Round 4 (AR4) projects will go ahead. Generators who secured AR4 contracts did so during a period of high prices. As such, many AR4 projects had low strike prices that took account of the ability of generators to factor in a period of merchant exposure before implementing the CfD.”

They also state that the expected prices for AR5 are too low, jeopardizing new projects coming forward. Their solutions are higher prices in the CfD auctions, and tax breaks so renewables providers escape much the Electricity Generation Levy (EGL). In other words, the begging bowl is out for even more subsidies.

RenewableUK used more flowery language to describe the problem and solutions, but also called for higher CfD prices, more tax incentives for renewables and less expensive grid charges. In other words, they demand that others pay for the very long copper cables through hostile terrain that are required to connect up new offshore wind farms. So again, the demand is for ever more subsidies for what is supposed to be a cheap source of energy.

Let’s look at why it has all gone wrong for the offshore wind industry.

Actual Costs of Offshore Wind Farm Electricity

First of all, offshore wind has been far from cheap so far. Modern wind farms receive a subsidy in the form of a CfD contract that guarantees index-linked prices for 15 years.

I have taken an in depth look at four offshore wind farms that provide sufficiently detailed information. Links to the relevant pages at Companies House are provided in the list below.

Figure 1 shows the revenue per MWh of electricity generated (£/MWh) for the most recent two financial years. For Beatrice this is the years up to 31 March 2021 and 2022. For the others it is for the two years ending 31 December 2020 and 2021. The horizontal dashed lines show the BEIS forecasts of the Levelised Cost of Energy for Offshore wind farms. The red line shows their estimate (£100/MWh) for new farms coming on stream in 2025, taken from the 2016 report. The 2016 estimate for new capacity in 2020 was £106/MWh. The green line shows the estimated cost for offshore wind farms coming on stream in 2025 (£57/MWh) taken from the 2020 report. In each case, the actual prices achieved are far higher than the estimates for new farms in 2020.

Figure 1 – Revenue per MWh generated by Year for Selected Offshore Windfarms

To some extent, this is to be expected because the Government is anticipating improvements in technology to bring costs down in the future. Sheringham Shoal came on stream in September 2012, Dudgeon in February 2017, Beatrice in July 2018 and East Anglia One in July 2020. Looking at Dudgeon, Beatrice and East Anglia One, it does look like there is a general trend downwards in the price of electricity sold for the more recent wind farms.  However, East Anglia One that came into operation in 2020, received prices for its electricity 18.8% more expensive than the Government forecast in 2016 for new wind farms in 2020. Moreover, because the CfD contracts are index linked, the prices per MWh rise year on year.

Aficionados of the UK offshore wind sector may ask why Hornsea One and Hornsea Two have not been included in the analysis above. The answer is that these wind farms are operated by Ørsted and their published accounts do not disclose the amount of power generated, so it is not possible to determine their actual performance. Hornsea One was fully commissioned on 28 December 2019 and has a CfD for £140/MWh recorded in its favour, some 32% above the Government’s forecast for 2020. Hornsea 2 began operation at the end of August 2022 and had signed an CfD with a strike price of £57.50/MWh. Similarly, Triton Knoll and Moray East agreed CfDs with strike prices of £74.75/MWh and £57.50/MWh respectively at 2012 prices. However, it has been reported that these farms have not taken up their CfDs and are instead selling power at much higher prices. Of course, these CfDs are index-linked, so by the time they take them up, the strike prices will have risen.

Given that new windfarms coming on stream around 2020 are nowhere near meeting the Government’s forecast for 2020 and lobbyists are already bleating about AR4 agreed prices, it’s not looking good for the 2025 forecasts made in 2020. Let’s dig a bit deeper into the factors that make up the price of offshore wind energy.

Factors Governing Wind Farm Costs

There are a number of factors governing offshore wind farm costs. They include initial capital costs for construction and infrastructure, cost of capital, build time, load factor the expected life of the asset. Between the 2016 and 2020 reports, the Government has made some important changes to its assumptions for wind farms coming on stream in 2025. These are shown in Figure 2.

Figure 2 – Changes to Offshore Wind Cost Factors

The reference size has increased from 844MW to 1,000GW. This is probably justified given that windfarms that have come on stream recently have been larger than 1GW. The load factor has increased from 47.67% to 51%. The construction time has been reduced by 33% from three years to two years. The expected lifetime of the wind farm has increased 36% from 22 years to 30 years. Construction costs have fallen 28% from £2,100/kW of capacity to £1,500/kW. The fixed operation and maintenance costs have decreased 20% from £45,400/MW/yr to £36,300/MW/yr and very importantly, the hurdle rate cost of capital has fallen from 8.9% to 6.3%.

Let’s take a look at each of these factors and judge how realistic they are.

Capital Costs

The capital costs for the turbines, installation and infrastructure are a key driver of the price of wind power. Clearly, the higher the costs, the higher electricity prices have to be to recoup those costs. The 2020 Government report assumes that construction costs of wind farms deployed in 2025 will fall 28% compared to what they assumed in their 2016 report.  Some of this reduction is driven by the increase in wind turbine size. The larger the turbine, fewer machines are required to deliver the same output. However, each turbine is larger and so contains more materials and requires even larger concrete foundations.

In essence, the construction costs represent the costs of the materials required to manufacture the turbines and secure them on the ocean floor, plus the costs of the energy and labour to transform the raw inputs into the finished article. Figure 3 shows how the prices of key commodities have changed over the past 10 years (all taken from Trading Economics).

Figure 3 – Changes in Energy and Commodity Prices

The Brent oil price has roughly doubled from ~$40/bbl in 2016 and 2020 to over $80/bbl today. Oil is the feedstock to make the fuel used to extract minerals from the ground and transport materials around. UK gas prices have gone up roughly six-fold from ~20p/therm in 2016 and 2020 to 128p/therm today. Looked at another way, gas prices are still 3 times higher than what might have been regarded as a long-term average of 40p/therm. Coal prices have increased 3-fold from $60-70/t in 2016 and 2020 to $209/t today. Gas and coal are used as fuel to generate the electricity to make steel and concrete and power factories. Iron ore prices have gone up from around $60/tonne in 2016 to over $127/tonne today. Coal and iron ore are the raw materials used to make steel for the turbine towers. Copper prices have roughly doubled from ~$2/lb in 2016 and 2020 to over $4/lb today. Copper is used in the rotors of the turbine generators and in the cables to connect them to the shore. Neodymium prices have more than doubled from ~CNY40K/t to over ~CNY93K/t. Neodymium is a rare earth metal used as a key ingredient in the permanent magnets used in the generators.

It seems unlikely that the massive increase in commodity costs will have been offset by the economies of scale derived from the larger turbines. This is borne out in the recent investor presentations from Vestas and Siemens Gamesa and of course by the reports from Energy UK and RenewableUK described above.

Vestas is loss-making and its overall order intake is shrinking. Offshore order intake has risen overall, but for Europe was very small at just 60MW, or four of their very large turbines. Figure 4 shows the average selling price of its offshore wind turbines increased 34% from Q4 2021 to Q4 2022.

Figure 4 – Vestas Order Intake and average selling price per MW

Siemens is also loss-making and its order intake is also shrinking. Siemens doesn’t disclose the selling price per MW of its offshore turbines, probably because it didn’t sell much in Q1 2023, but its onshore prices increased 25% from Q1 2022 to Q1 2023 and by over 50% since Q1 2020.

The costs of the raw commodities have risen substantially since the Government’s reports were put together, the two main turbine providers are losing money and need to increase prices further to become profitable. It looks highly unlikely that the costs of turbines and installation are going to fall by the predicted 28% between now and 2025 and instead will rise substantially.

Cost of Capital

The cost of capital, or discount rate is a crucial determinant of offshore wind farm costs. The cost of capital is used to discount future cash flows to current values. The higher the discount rate, the lower the current value of future cash flows. The Government changed its hurdle rate assumption for wind farms delivered in 2025 from 8.9% in its 2016 report to 6.3% in its 2020 report.

The hurdle or discount rate required is related to the “risk-free” rate represented by the yield on UK Government gilts.  In 2016, the yield on the 10-year gilt was around 1.25% and about 0.35% in 2020. The 30-year gilt yielded around 1.85% and 0.85% respectively in the same two years. Averaging these yields, the 2016 report assumed a 7.35% premium to gilt yields and the 2020 report assumed a 5.7% premium, the average of those two premia is 6.53%.

10-year and 30-year gilts are currently yielding 3.5% and 3.9% respectively. Taking the average of those two figures and applying the 6.53% average premium gives a more realistic hurdle rate for 2025 of 10.23%.

We will look at the dramatic impact this has on the prices of wind electricity in the section on sensitivity.

Build Time

The build time is an important driver of the costs of offshore wind. If it takes longer to build out, the operator has to wait longer before it is generating revenue to repay the money borrowed to build the wind farm. The Government has reduced its assumed construction time by 50% from 3 years to 2 years between the 2016 report and the 2020 report.

The various different wind farms in the comparison shown in Figure 5 below have websites that describe the timeline for construction. The times shown are the time from construction start to full commissioning.

Figure 5 – Total Construction Time for Selected Offshore Wind Farms (Years)

In practice, the wind farms go into partial production part way through construction as some of the early turbines are brought onstream. Therefore, the build times are probably exaggerated a little, but probably not enough to make a significant difference to the overall picture. Most of the offshore windfarms took longer than 3 years to construct, none of them took two years and there’s no apparent downward trend in the overall build time.

It doesn’t look likely that total construction times are going to fall by a whole year by 2025, especially when one considers that windfarms are getting larger and being located further out to sea, complicating logistics.

Offshore Wind Farm Load Factors

Load factors (also known as capacity factors) measure how much electricity will be generated compared to the theoretical maximum if the wind blew at the correct speed all year. The higher the load factor, the more electricity is produced which should lead to lower costs per MWh as the capital expenditure is spread across more units of electricity.

Of course, there are times when the wind doesn’t blow fast enough, or even at all and the turbines produce nothing. There are also times when the wind blows too hard and the turbines have to be turned off to avoid damage and so they produce nothing then either. Figure 6 shows the performance of actual wind farms compared to the Government assumptions for 2020 and 2025.

Figure 6 – Load Factor by Year for Selected Offshore Windfarms

In 2016, the Government assumed a load factor of 47.67% for new wind farms commissioned in 2020 and 2025. The 2020 report assumes a load factor of 51% for turbines commissioned in 2025. These assumptions are averages for every year of the life of the wind farm, not a maximum. In its first full year of operation East Anglia One failed to hit the 2020 target by over three percentage points. Even the performance of Dudgeon in 2020 should be viewed as a one-off performance as it had much lower load factors in its other years of operation as shown in Figure 7.

Figure 7 – Dudgeon Wind Farm Load Factor by Year

The load factor of a wind farm is driven by a number of elements including the turbine technology, the layout of the turbines in the sea, the sophistication of the control system and the operation and maintenance regime. To help with its forecasts, the Government commissioned a report from DNV GL to examine the improvements in technology that might improve load factors in the future. The results are shown in Figure 8 below.

Figure 8 – DNV GL Offshore Wind Load Factor Projection to 2035

Their baseline estimate is for load factors for new wind farms of 49.7% in 2022, rising to 51% in 2025 and 52.9% in 2030. The improvements to 2030 are driven by moving to larger turbines (15MW compared to 7MW typical today), more advanced control systems and more optimal layouts. We might expect Hornsea One to have a similar performance to East Anglia One as they both use the same model of Siemens 7 MW turbines. Hornsea Two was built using 8MW turbines. Moray East and Triton Knoll, both fully commissioned in 2022, were built using Vestas 9.5MW turbines. However, we won’t know the actual performance of these sites for quite some time.

Vestas is now marketing a 15MW turbine with an implied load factor of over 60% in ideal conditions. Siemens is also marketing a 14MW turbine, but doesn’t make a specific claim for its capacity factor.

We shall have to wait and see how the newer wind farms perform before coming to a complete judgement on the accuracy of the load factor forecasts. However, the first year of operation of East Anglia One shows that hitting the 2020 target even once is challenging, let alone as an average over the life of the wind farm. In its 2020 report, the Government assumes load factors rising to 57% by 2030 (in line with DNV’s upper case) and 63% by 2040 (DNV had a maximum of 60% in 2035). It seems very optimistic to assume the upper case as an average over the whole life of the asset.

Asset Lifetime

The Government changed its assumption on the lifetime of offshore windfarms between its 2016 and 2020 reports. The 2016 report assumed a life of 22 years and the 2020 report increased the life by 36% to 30 years.

Figure 9 sets out the depreciation policies in the accounts of many wind farm companies. The expected life falls well short of 30 years and averages around 24 years.

Figure 9 – Expected Asset Life of Selected Offshore Wind Farms

In addition, the expected life of the new 14MW Siemens turbine is 25 years, although Vestas is claiming 30 years for its 15MW turbine. Putting all the data together, it seems very optimistic to assume a 30-year average lifetime for all new offshore wind farms.

Sensitivity of Offshore Wind Prices

A Discounted Cashflow model has been constructed using the parameters set out in the Government’s 2020 report. This gives a zero NPV using £56.94/MWh strike price so is giving results very close to the Government model; close enough to be a rounding error. Then the various cost drivers were varied to test the sensitivity of prices to the different parameters. The results are shown in Figure 10.

Figure 10 – Sensitivity of Offshore Wind Power Prices to Various Factors

The prices for offshore wind are most sensitive to increased costs of construction and infrastructure and the cost of finance. A 35% increase in the costs of construction (note some projects reporting a 50% increase according to Energy UK) results in an 18.8% increase in the price of electricity. A few percentage points increase in the cost of capital push the electricity prices up 26.5%. Shortfalls in the load factor, asset life and extending the build time have relatively little effect.  If all of the changes in the cost drivers come to pass, then offshore wind farm prices rise by 74% to £99.10, almost back to the figures assumed by the Government back in 2016.

Who would have guessed that a highly mineral and capital-intensive source of energy would be very susceptible to commodity and energy price inflation and rising interest rates?

Implications

If scientists such as Professor Simon Michaux are correct, the era of cheap minerals is over. Technologies such as wind and solar power and associated battery storage will demand more and more critical minerals such as copper, nickel, cobalt and lithium. New discoveries of these minerals are required and new discoveries tend to have lower ore grades and so are more energy intensive and expensive to transform into useful metals. This means that these minerals are going to continue to get more expensive for some time to come. This will lead to structurally higher inflation which will mean higher interest rates, so the era of cheap credit is coming to an end.

Therefore, the most important cost drivers for wind power are going to get more expensive, pushing up the price of wind power, which itself will further increase inflation. More subsidies will not fix these problems. In fact, they will make them worse. It is starting to look like offshore wind bubble has popped.