From Watts Up With That?
In a delightfully illustrative episode of reality biting back, one of the UK’s largest offshore wind farm projects has ground to a halt, not because of a lack of wind, but due to an unabating gust of rising costs. The illustrious Swedish energy group, Vattenfall, has put a stop to work on its 1.4GW Norfolk Boreas site, following a 40% surge in project costs. Clearly, “going green” isn’t as financially breezy as some might have you believe.
Quoting Anna Borg, Vattenfall’s CEO:
“What we see today, it simply doesn’t make sense to continue this project.”
This halt throws a monkey wrench into the UK’s fervent ambition to triple its offshore wind capacity by 2030 in order to decarbonize its electricity system. All this, while the cost efficiency and reliability of these grand projects remain questionable.
The Green Economy’s ‘Inconvenient Truth’
Interestingly, the UK government has been keen on flapping the wings of more wind power projects to meet its net-zero targets. However, with costs spiraling out of control, the move seems more like trying to fly into a headwind.
The fiasco stands as a testament to the impracticality of imprudently rushing towards renewable energy without addressing the inherent challenges and limitations of these technologies. Rising costs for equipment, supply chain disruptions, and the overarching reality of energy economics all play a part in this unfolding drama.
Sustainable or Unsustainable – That’s the Question
The defunct Norfolk Boreas was intended to be the kingpin of the country’s major offshore wind projects. Its aim? To power 1.5 million homes with up to 140 turbines. Yet, developers have acknowledged that projects with low locked-in electricity prices have turned uneconomical due to these escalating costs and disruptions.
This puts a spotlight on the term “sustainable.” While it sounds compelling in political speeches and looks impressive in policy documents, one is forced to question if these renewable energy ventures are truly sustainable – economically, that is.
The Green Mirage
In February, it was reported that Vattenfall, along with Denmark’s Ørsted and other wind farm developers, were seeking tax breaks or subsidies as a remedy to their fiscal ailments. Perhaps the mirage of “cheap” renewable energy is starting to dissipate, exposing the harsh desert of economic reality beneath.
Despite the British government’s past assurance of inflation-linked prices over a 15-year period, Kathryn Porter from Watt-Logic argues that these contracts ignored the “economic reality” of cost pressures that were already apparent. It seems the notion of ‘green at all costs’ is beginning to wilt under the scorching sun of real-world economics.
The race to net zero is leading us into a financial quicksand, sucking in vast resources for a future that will never materialize as envisaged.
As always, readers are welcome to share their views.
Financial Times Article
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