Tag Archives: offshore wind projects

New Data Points In New York’s Unfolding Energy Implosion

From The Manhattan Contrarian

By Francis Menton

The energy implosion set in motion by New York’s Climate Leadership and Community Protection Act of 2019 (Climate Act) continues to unfold slowly. This week we have gotten a few more new data points. If you can read between the lines of wild spinning by the Governor and her team of bureaucrats, you will find that the scope of offshore wind projects moving forward with accepted bids has decreased by about two-thirds, while the price has just jumped by over 30%.

First, some background. The Climate Act sets several unachievable and impossible targets, the first of which is 70% of electricity from “renewables” by 2030. How to get there? The bureaucrats in charge of meeting the targets have no idea what they are doing, but they have established as a first goal to have some 9,000 MW of offshore wind turbines (nameplate capacity) up and running by some point in the 2030s. Does that sound like a lot? Current average demand in New York State is about 17,000 MW per this NYISO 2023 Report (at page 26), meaning that New York consumes about 150,000 [G]Wh of electricity in a year. (17 x 8760 (hours in a year) = 148,920). 9,000 MW of offshore wind turbines operating at a 30% annual capacity factor will generate 23,652 [G]Wh in a year (9 x 8760 x 0.3 = 23,652). That’s less than a sixth of current consumption. And did I mention that they are also planning to increase demand by 50% or more by forcing the electrification of all automobiles and home heating and cooking? So the 9,000 MW of offshore wind turbines will provide maybe 10% of our electricity needs in the 2030s, at random and often useless times — and that’s assuming that the turbines actually get built.

Forging ahead with its nonsensical and unworkable plan, in 2018-20 New York conducted a series of solicitations for bids from offshore wind developers to put up turbines in various sites off the coast of Long Island. Those solicitations resulted in accepted bids for close to half of the 9,000 MW goal. The big projects were named Sunrise Wind, Beacon Wind, and Empire Wind 1 and 2. Here is a map of where the turbine farms are to be located:

As I reported in this post from October 5, 2023, the prices that the State agreed to pay the developers after the auction were $110.37 per MWh for Sunrise Wind, and $118.38 per MWh for Empire Wind 1.

But then in July 2023 essentially all the developers with accepted offshore wind development contracts backed out of the deals, and demanded price increases averaging about 50%. The Chair of the New York Public Service Commission, Rory Christian, reacted with outrage. My post of October 15, 2023 covered a report of Mr. Christian’s reaction that had appeared in the New York Times. Excerpt:

Mr. Christian added that the state’s ratepayers, who would have borne the cost, could not serve as an “unlimited piggy bank” for companies to tap. “We have a deal,” he said to the developers, calling on them to stand by the terms they agreed to.

Sure. Here was my reaction to Mr. Christian:

Well, Rory, I’ve got news for you: the developers aren’t going to honor the deal. You’re going to have to hold a new auction. And the prices that will be bid will be as high or higher than those just demanded by these developers.

And, as I predicted, they proceeded to hold a new auction. By January, there was word that new bids had been received, but there was no information as to bidders or prices or awards.

Which brings us to the latest news. Last Thursday, February 29, the big announcement appeared on the website of Governor Kathy Hochul, headline “Governor Hochul Announces Two Offshore Wind Project Awards, to Deliver Clean Power in 2026.” From the introduction:

Governor Kathy Hochul today announced the State has conditionally awarded two offshore wind projects from its fourth offshore wind solicitation – a planned 810-megawatt project, Empire Wind 1, (developed by Equinor) and Sunrise Wind, a planned 924-megawatt project (developed by Orsted and Eversource). The competitively selected projects will create more than 800 near-term family-sustaining construction jobs and invest $2 billion in near-term enhanced economic development statewide, including developer-committed investments to support disadvantaged communities. The projects, totaling over 1,700 megawatts of clean energy, will be the largest power generation projects in New York State in over 35 years once they enter operation in 2026, and will continue progress towards achievement of the State’s Climate Leadership and Community Protection Act (Climate Act) goal to develop 9,000 megawatts of offshore wind energy by 2035.

Yes, it’s all happy talk about how great this is. Here’s some more:

“I promised to make New York a place for the renewable energy industry to do business, and we are delivering on that promise,” Governor Hochul said. “Offshore wind is foundational to our fight against climate change, and these awards demonstrate our national leadership to advance a zero-emissions electric grid at the best value to New Yorkers.”

And how about getting President Biden in on the credit:

“Today’s announcement is the latest step forward as President Biden continues to deliver historic progress on growing the American offshore wind industry, creating good-paying union jobs, and advancing our ambitious climate and clean energy goals,” said White House Deputy National Climate Advisor Mary Frances Repko.

Dare we ask how much is actually getting built and at what cost? If you can get past the introductory happy talk, you will finally come to this:

The weighted average all-in development cost of the awarded offshore wind projects over the life of the contracts is $150.15 per megawatt-hour which is on-par with the latest market prices.

And yet you will not find anywhere in this press release any mention of the prices of the previously accepted bids. But you read Manhattan Contrarian, so you know that the previously accepted prices were $110.37/MWh for Sunrise Wind and $118.38/MWh for Empire Wind 1. In other words, despite Mr. Christian’s outrage, the prices have gone up by in excess of 30%. And this is for only 1700 MW of capacity. Previously they had accepted bids for 4300 MW of capacity, and plans for 9000 MW. 1700 MW of offshore wind capacity operating at a 30% +/- capacity factor might provide 2% or so of New York’s electricity needs in the 2030s, and at mostly uselessly intermittent times. What’s happening with the rest of their big plans? No word here.

And what does the cost here mean for consumer utility bills? You can divide the $150/MWh by 1000 and quickly figure out that they are planning to pay $0.15 per kWh as a wholesale price for intermittent electricity at the source. Nothing is included in that for transmission upgrades, backup, or storage to make for a reliable 24/7/365 grid. By the time you add in those extra costs, as the percent of electricity from the wind turbines gets to around 50% it would be amazing if you could get electricity to the consumer for less than $0.50/kWh. And if the percentage of electricity from the wind turbines goes well above 50%, then all bets are off. $1.00/kWh? $2.00? Easily.

Meanwhile, the Energy Information Administration reports here in 2023 (page 6) that the “levelized cost” of electricity from a new combined cycle natural gas plant is under $50/MWh — for dispatchable power with no transmission upgrades, backup or storage needed. That translates into electricity to the consumer of well under $0.20/kWh.

Governor Hochul’s press release actually includes a line as to the costs to the consumer of the newly accepted offshore wind farm bids:

The average bill impact for customers over the life of these projects under these awards will be approximately two percent, or about $2.09 per month.

Talk about deceptive. They give no methodology or assumptions as to how they came up with the cost figure. But it is obvious that it includes just the cost of blending into the grid the new power from these particular turbines, and otherwise using existing transmission lines and existing fossil fuel plants for the backup role. There is no effort whatsoever here or anywhere else in New York’s propaganda to figure out how much it will cost the consumer for electricity when the grid has been converted to all renewables plus massive amounts of some kind of backup or storage that hasn’t even been invented yet.

Memo to Attorney General James: If you have any real interest in prosecuting people who lie about plans to supposedly achieve “net zero” carbon emissions, here is the worst offender of all right under your nose.

Global Wind Industry’s Sudden Collapse Proves Physics Beats Platitudes, Every Time

The wind energy sector’s days are numbered. The greenies’ dream of “clean” (except for millions of dead birds) energy from wind farms is dying in the face of the poor economics (even with tax subsidies) and unreliable technology.

From STOP THESE THINGS

The wind and solar industry’s sales pitch has been exemplary, but their product delivery and after-sales service is pure rubbish. Incapable of delivering electricity on demand, wind and solar will never amount to anything other than an effort in pointless vanity signalling.

It’s late 2023, and the wind industry’s glory days are long gone: investment has collapsed across Europe, turbine manufacturers are losing $billions and dozens of offshore projects have been scrapped in the last 12 months.

The reason for the sudden collapse starts and ends with the product, really. As this Doomberg post spells out below, when physics and platitudes come head-to-head, physics wins, every single time.

Windbaggery: The wind energy sector’s days are numbered
Substack
Doomberg
17 September 2023

Captain Platitude, reporting for duty | Getty

“Reason, I sacrifice you to the evening breeze.” – Aimé Césaire

To be an effective podcast guest requires a few basic tactics. First, it is important to let the host get their full question asked before beginning to answer yourself. In normal conversation, it is not uncommon to understand where a friend is going and to get there before they do, but in a podcast setting it can be off-putting. It is also advisable to directly address the host’s questions in a concise manner and to mix in a few memorable phrases that listeners can work into their own discourse. Driving home a key communication objective with a catchy turn of phrase—a verbal meme, if you will—can make the difference between being remembered or forgotten.

One phrase that we coined and have popularized on various podcast appearances is “In the battle between physics and platitudes, physics is undefeated.” It is a polite way of articulating that the hard realities of life must eventually be confronted, and no amount of pompous speech, deceptive statistics, or outright fabrications can overcome the laws of physics. It might take many years, involve billions in misallocated money, and cause significant social and political upheaval, but one simply cannot wish away the fundamental constraints of the universe. The global energy strategy is no exception.

Perhaps no sector is more guilty of leaning on platitudes than the wind industry. Through dishonest manipulation of cost estimates and a relentless campaign of propaganda, proponents of wind energy have convinced countless politicians to support a technology that disrupts the smooth operation of electricity grids and is utterly dependent on the intermittency of the weather. Anybody with a passing knowledge of energy fundamentals knows this simply can’t be sustainable, as we explained back in February (emphasis added throughout):

“…the fundamental challenge plaguing wind technology: low energy density. Wind is dispersed and to harvest economically significant amounts of energy from it with any semblance of efficiency requires huge plastic composite blades that are designed to be both lightweight and exceptionally strong. The forces and material science challenges involved are substantial. Offshore wind blades now exceed 100 meters in length, and their tip speeds can surpass an incredible 200 miles per hour. The blades convert kinetic energy into rotational energy, which is then usually fed into a gearbox, which increases the rotational rotor speed. A generator is then used to produce electricity. Electrical, mechanical, and blade failures are common and expensive, as are the myriad ongoing servicing activities needed to maintain smooth operation. Confronting these fundamental limits of physics is challenging.”

During our July Doom Zoom presentation—Doom Scrolling: Searching the Globe for Things to Worry About—we made the case that the wind sector might be teetering on the verge of collapse. We argued that the never-ending pursuit of longer blade lengths would be the industry’s undoing, that the resulting balance-of-system stresses were being wholly underestimated, and that the existing fleet of turbines in the field are stationary point-sources of future liability for those who installed them. We repeated our claim that levelized cost of electricity (LCOE) estimates were tantamount to fraud, and that the veil would soon be lifted, causing significant disruption to the entire wind value chain.

In the intervening weeks, the pace and severity of news articles detailing the wind industry’s persistent struggles have surprised even us. At a time when the Biden administration is pushing for massive new installations of both onshore and offshore wind turbines, the sector is recoiling from one disaster after another, calling into significant doubt the wisdom of throwing good money after bad. Are we finally nearing the crossroads? Will the realities of physics conclusively reassert themselves? Let’s stick a finger in the wind and find out.

This might come as a surprise to some, but projects that require an enormous amount of concrete, steel, high-performance plastic resins, fiberglass or carbon fiber reinforcement materials, high-end magnets derived from rare earth metals, designer lubricants, and labor are susceptible to inflation dynamics and particularly sensitive to the price of fossil fuels. This is further pronounced if all this effort is directed toward harvesting ultra-low-density energy sources like wind. Even the Washington Post was forced to begrudgingly admit as much last week:

“Renewables have also been hurt by broader inflationary dynamics. The cost of raw materials and construction labor has gone up. And to an extent, the industry has been hurt by its very growth, which is not restricted to one country or region but is global.

The current squeeze is particularly acute in the field of offshore wind projects, which are extremely important to the energy future of the northeastern US. These are places with progressive politicians who want to decarbonize, but they’re not as sunny as California and they don’t have the wide open spaces of the plains to deploy utility-scale onshore wind.”

While the wind sector has certainly grown—and this has crimped the supply of certain materials—the manner in which it expanded has exacerbated the problem. The industry lacks much in the way of standardization, and many developers have agreed to localize various aspects of their supply chains across innumerable states, provinces, and cities to win political backing for new projects. As a consequence, benefits from economies of scale have been difficult to realize.

These ominous currents have put the developers who already inked fixed-rate contracts with utilities in a spot of bother, and many are seeking a do-over. In some instances, companies are walking away from their commitments, preferring to pay substantial breakup fees over embarking on money-losing mega-projects. Here’s just one example from New York, where the sobering effects of reality are finding their way into the political conversation:

“Multiple offshore wind projects that are not even built yet have asked the state’s Public Service Commission (PSC) to renegotiate their strike prices—the amount they will be paid per megawatt hour (MWh) of electricity produced. (A megawatt hour is roughly enough electricity to power 750 homes for one hour.)

Ørsted and Eversource have asked for a 27 percent increase for their Sunrise Wind project, which would raise their strike-price from around $110 to nearly $140 per MWh. And the joint venture of Equinor and BP has asked for increases on all three of the projects it is developing. For Empire Wind 1, they want a 35 percent increase that would raise its strike-price from $118 to almost $160, for Empire Wind 2 a 66 percent increase that would bring its strike-price from $107.50 to almost $178, and for Beacon Wind a 62 percent increase to lift its strike-price from $118 to over $190.”

With an inability to generate a profit at reasonable electricity prices, it is unsurprising that planned future projects are suddenly going “no bid”:

“No new offshore wind project contracts have been bought by developers at a key government auction, dealing a blow to the UK’s renewable power strategy. Results showed no bids for new offshore wind farms, but there were deals for solar, tidal and onshore wind projects.

Firms have argued the price set for electricity generated was too low to make offshore wind projects viable. The government said a ‘global rise’ in inflation impacting supply chains had ‘presented challenges for projects.’”

All this industry backpedaling comes on the heels of long-held claims that wind energy is the cheapest form of electricity available on the market. This lie is based on faulty LCOE calculations, a methodology of cost estimating that is designed to make renewable energy projects look better at the expense of traditional power sources like natural gas, coal, and nuclear. In fact, LCOE “is so spectacularly contrary to reality that it doesn’t nearly do it justice to call it just a ‘lie.’” In the face of the events of the past few months, anybody who continues to push this metric should have their intentions questioned.

If cost pressure was the only issue facing the wind industry, things might not be so dire. Inflationary pulses come and go, after all, and governments in the West aren’t usually afraid to throw money at problems of their own making. But there’s a giant scandal brewing in the offshore wind industry, one that seems to involve an overt coverup on the part of scientists at the US National Oceanic and Atmospheric Administration. Dozens of endangered whales are dying all along the US East Coast, and the wind industry is almost certainly to blame. Michael Schellenberger and the team at Public have done an incredible job exposing this troubling series of events:

“The increase in whale, dolphin, and other cetacean deaths off the East Coast of the United States since 2016 is not due to the construction of large industrial wind turbines, U.S. government officials say. Their scientists have done the research, they say, to prove that whatever is killing the whales is completely unrelated to the wind industry.

But now, a new documentary, ‘Thrown To The Wind,’ by Director and Producer Jonah Markowitz, proves that the US government officials have been lying. The full film  documents surprisingly loud, high-decibel sonar emitted by wind industry vessels when measured with state-of-the-art hydrophones. And it shows that the wind industry’s increased boat traffic is correlated directly with specific whale deaths.”

Adding insult to their injury, there’s yet another nagging issue plaguing the wind energy sector: turbine blades are practically impossible to recycle, and most will remain buried in landfills, effectively forever. The very toughness that is necessarily designed into these high-performance composites is what makes them extremely challenging to recycle, and despite claims to the contrary, there aren’t yet any viable processes to handle the avalanche of end-of-life blades coming in the years ahead. Amazingly, the industry has made the problem significantly worse in its reach for yet more government handouts. We turn to an explosive report in Texas Monthly for the shocking details:

“The Sweetwater piles are also at least partly the indirect result of a rule clarification the Internal Revenue Service issued in 2016. Before then, a wind farm could collect valuable federal tax credits for only its first ten years of operation. But the IRS determined that it would restart the clock on the credits if a wind farm ‘repowered’ its turbines—replacing most of their equipment with newer parts. So, despite the expected two-decade lifespan for turbine blades, wind farms across Texas and other states began replacing many that remained in good shape years early.”

As we reflect on the current mess that is the wind industry, we can’t help but ponder how future historians will marvel at the sheer lunacy of it all. As evidence of the sector’s ongoing implosion continues to mount, efforts to further impose this failed technology upon our society are only accelerated. The Biden administration is still insisting that there will be 30 gigawatts of offshore wind capacity installed between now and 2030, actively pretending that the real world simply does not exist. Spinning turbine blades now stand as the perfect metaphor for the circular nature of our broken energy policy.

We might just have to add that last line to our podcast repertoire.
Substack

Kathryn Porter: The myth of affordable green energy is over

The dream of green cheap energy and green jobs is over.

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

The pervasive narrative about offshore wind in recent years has been that costs are falling and that wind power is cheap. But scratch below the surface and you find that things are not quite so rosy. Turbine manufacturers have been losing money hand over fist in recent years. Collectively over the past five years the top four turbine producers outside China have lost almost US$ 7 billion – and over US$ 5 billion in 2022 alone. Last year the chief executive of turbine-maker Vestas said that the company lost eight per cent on every turbine sold.


Some of these losses are down to warranty issues – this means the turbines have not performed as expected requiring the manufacturers to compensate windfarm developers and rectify problems. Privately this is attributed to the pressure for ever larger windmills which are harder to get right. Insiders now suggest that the growth in capacity per turbine has peaked, at least for the time being.


But the losses have also been driven by pricing structures designed to win market share, and aggressive windfarm developers who have refused to pay up, often while pocketing billions in subsidies. The market has started to look, if not like a Ponzi scheme, then like a house of cards built on the shakiest of foundations. Turbine producers are all busily re-negotiating contracts and insisting on better terms to stem their losses, otherwise they will simply shift to other, more profitable, activities. This is putting pressure on developers who are now going cap in hand to governments, begging for more subsidies and more tax breaks, all of which must be paid for by tax-payers or bill-payers.


To combat the growing threat from Chinese turbine makers, the EU is considering launching an investigation into China’s use of subsidies to promote the country’s turbine manufacturers. The EU has already imposed tariffs on Chinese glass fibre fabrics, which are used in wind turbine blades. Acting EU competition commissioner Didier Reynders has said that cheap Chinese imports could threaten European businesses. A decision on whether to go ahead with an investigation is expected later this month, despite an angry reaction from Beijing over a similar probe into electric vehicles.


Offshore wind projects have been drying up around the world. During the whole of 2022 there were no offshore wind investments in the EU other than a handful of small floating schemes. Several projects had been expected to reach financial close last year, but final investment decisions were delayed due to inflation, market interventions, and uncertainty about future revenues. Overall, the EU saw only 9 gigawatts worth of new turbine orders in 2022, a 47 percent drop on 2021.


Full story

Investors are starting to abandon clean green energy as they realize it’s never going to be cheap

Investing in a green transition will lower electricity prices, free funding from entrenched fossil fuel subsidies and create new jobs all over the world is a myth.

From JoNova

By Jo Nova

Image by ThankYouFantasyPictures from Pixabay

Kathryn Porter in The Telegraph, has compiled quite the list of failures as offshore wind projects get frozen around the world.  Decisions are being delayed, contracts abandoned, auctions left without bidders and almost no new projects started. The awful truth of inflation, the maintenance cost shocks and cable failures is all too much. Then there was the problem of needing a 100 years of copper, nickel and lithium production before Christmas.

It’s all been kept quiet. Who knew there were no offshore wind investments in the EU last year, apart from a few floating projects?

After years of subsidies, wind power was meant to get cheap enough to be profitable and competitive all by itself, instead, 25 years later, it just needs bigger subsidies. When the great oil and coal price crunch came, wind power was supposed to rise through the ashes, instead we discovered that wind turbine and battery factories needed cheap coal and oil like the rest of the economy.

Right now Australia has no offshore wind turbines and is about to jump onto a burning ship:

The myth of affordable green energy is over

Kathryn Porter in The Telegraph,

Progress is stalled around the world as nobody wants to admit the real costs

Turbine manufacturers have been losing money hand over fist in recent years. Collectively over the past five years the top four turbine producers outside China have lost almost US$ 7 billion – and over US$ 5 billion in 2022 alone.

But the losses have also been driven by pricing structures designed to win market share, and aggressive windfarm developers who have refused to pay up, often while pocketing billions in subsidies. The market has started to look, if not like a Ponzi scheme, then like a house of cards built on the shakiest of foundations.

Offshore wind projects have been drying up around the world. During the whole of 2022 there were no offshore wind investments in the EU other than a handful of small floating schemes. Several projects had been expected to reach financial close last year, but final investment decisions were delayed due to inflation, market interventions, and uncertainty about future revenues. Overall, the EU saw only 9 gigawatts worth of new turbine orders in 2022, a 47 percent drop on 2021.

Over in the United States, despite the massive support offered by the Inflation Reduction Act, windfarm projects are also struggling. Orsted, the global leader in offshore wind, has indicated it may write off more than US$2 billion in costs tied to three US-based projects – Ocean Wind 2 off New Jersey, Revolution Wind off Connecticut and Rhode Island, and Sunrise Wind off New York – that have not yet begun construction, saying it may withdraw from all three if it can’t find a way to make them economically viable.

Meanwhile, projects off New York are asking for an average 48 percent increase in guaranteed prices that could add US$ 880 billion per year to electricity prices in the state.

Investors are starting to run

The S&P Global Clean Energy Index is down by 30% this year and most of that is in the last three months:

S&P Global Clean Energy Index

The S&P Global Clean Energy Index, comprised of major solar and wind power companies and other renewables-related businesses, has lost 30 per cent in 2023, with nearly all of the decline since July.

By contrast, the oil and gas-heavy S&P 500 Energy Index is up slightly this year.

In the last three years the real S&P energy sector is up 287% (white line below), but the clean energy sector (the green line) is down 32%.

Energy Sector Index growth (white) compared to the Global Clean Energy Sector (green) in the last three years.

“The energy sector has been the best-performing market segment so far this month, with oil prices surging 30% over the past three months.” — Globe and Mail

Yahoo Finance graphs the extraordinary growth of the S&P 500 Energy Index since 1994.

Thanks to NetZeroWatch

Bubble Bursts: Rising Costs Mean More Massive Offshore Wind Projects Scrapped

From STOP THESE THINGS

The spiralling cost of erecting ever-larger turbines at sea is matched by the spiralling costs of the raw inputs needed for the turbines themselves, which means the offshore wind power bubble has truly burst.

The Sweden’s Vattenfall has just scotched a massive project proposed off the coast of Norfolk, moaning about rocketing turbine manufacturing and offshore construction costs, as it makes the last bid attempt to screw the British taxpayer for even more massive subsidies to keep the wind scam afloat a little longer.

And while Vattenfall might be miffed about the collapse of its Norfolk Boreas project, it’s no doubt crestfallen over its events in its home country, Sweden. The Swedish government has decided to scrap another of Vattenfall’s offshore projects – Stora Middelgrund. Chances of it ever being resuscitated are next are nil, given Sweden’s recent about-face on energy policy by which it has determined to back ever-reliable nuclear over never-reliable wind.

Here are a couple of pieces describing what appears to be a very miserable time for offshore wind scammers. Oh dear, how sad, never mind.

Giant windfarm off Norfolk coast halted due to spiralling costs
Newsbreak
Jillian Ambrose
20 July 2023

The government’s green energy ambitions have been dealt a blow after plans for a giant offshore windfarm off the Norfolk coast ground to a halt due to spiralling supply chain costs and rising interest rates.

The Swedish energy giant Vattenfall said it would stop work on the multibillion-pound Norfolk Boreas windfarm, designed to power the equivalent of 1.5m British homes, because it was no longer profitable.

The state-owned company said costs had climbed by 40% due to a rise in global gas prices which have fed through to the cost of manufacturing, putting “significant pressure on all new offshore wind projects”.

“It simply doesn’t make sense to continue this project,” said Anna Borg, Vattenfall’s chief executive. “Higher inflation and capital costs are affecting the entire energy sector, but the geopolitical situation has made offshore wind and its supply chain particularly vulnerable.”

Vattenfall won a government contract to build the Norfolk Boreas project last year after bidding a record low price of £37.35 per megawatt hour (MWh) for the electricity generated.

Borg said it was “so obvious to everyone that the situation has changed dramatically since last year”, meaning the price would now need to be “significantly higher” to make financial sense.

According to its latest results, the decision to stop work has cost the company 5.5bn Swedish krona (£415m) but Borg said the move was “prudent” given the impact of costs on the project’s future profitability.

“The market framework is simply not reflecting the market situation,” Borg said. “Something needs to happen. It’s important to understand that our suppliers are being squeezed. They have problems in their supply chain so it’s not so easy to mitigate these situations.”

Borg said Vattenfall has called on the UK government to adapt the financial framework which controls the price and was in “constructive discussions” with officials.

Industry experts have said that without an overhaul of the government’s financing approach to take into account the steep climb in costs, the UK risks missing its target to increase its offshore wind capacity fivefold to 50GW by 2030.

Jess Ralston, the head of energy at the thinktank the Energy and Climate Intelligence Unit, said the government had set the starting price for the next contract auction before the global rise in market prices, meaning it was now too low.

“There are some concerns that this could be too low for projects that have suffered supply chain price inflation, excluding them from entering the auction,” she said. “The sensible strategy would be to seek to involve in auctions as much capacity as possible.”

Under the government’s scheme developers can compete in the auction for a contract which gives a guaranteed price for the electricity generated. If wholesale market prices are below this level the project receives a “top up” payment through a levy on energy bills. But if market prices are above the “strike price” the project must pay back the difference to consumers , leading to lower bills.

Setting the auction’s starting price at a higher point would still result in contract prices well below the current market rate, according to Ralston, meaning windfarms will continue to pay money back to households for the foreseeable future.

Dan McGrail, the chief executive of RenewableUK, said ministers would have to take into account global inflationary pressures “which have significantly changed the economic landscape”.

“We need a stronger industrial strategy for the sector, which the chancellor should support with new measures in the autumn statement as a matter of urgency,” he said.

“The government needs to step up with a robust response to enable industrial growth throughout Britain .”

Newsbreak

Sweden rejects Vattenfall’s planned Stora Middelgrund wind farm
Reuters
Louise Breusch Rasmussen
27 July 2023

The Swedish government has rejected utility Vattenfall’s application to construct a wind farm at Stora Middelgrund on Sweden’s west coast, the ministry for climate and enterprise said in a statement on Thursday.

Vattenfall had said it planned to build around 50 wind turbines at Stora Middelgrund, each measuring some 290 metres (950 feet) in height, with the aim of producing between 2.5 and 3.0 terrawatt hours (TWh) of power per year [only on those occasions when the wind was blowing with sufficient speed, of course].

A spokesperson for Vattenfall said in an email that the company regretted the government’s announcement, adding “we will now analyze the decision more closely to see what consequences it brings.”

“An establishment at Stora Middelgrund would risk damaging sensitive natural values in an unacceptable way,” Minister for climate and environment Romina Pourmokhtari said in a statement.

“The risk of negative impact on national interests in shipping has also weighed heavily in the Government’s assessment,” she said.
Reuters

Dominion hides huge offshore wind cost risk

From CFACT

By David Wojick

The offshore wind industry is suffering a runaway cost crisis, but Dominion Energy says the cost of its monster project will not go up. Apparently, there is not even a risk of it going up. This preposterous claim is worth exploring.

On the crisis side, I recently wrote about it in general terms.

See my https://www.cfact.org/2023/07/26/offshore-wind-has-a-cost-crisis/.

The financial magazine “Barrons” has done some work on this crisis situation. Here is a telling quote from a recent article:

“But behind the scenes, the news about wind power is more sobering. Financially, the industry is teetering, with a parade of companies planning to renegotiate or pull out of contracts, jeopardizing plans for projects that were expected to provide electricity for millions of homes. Inflation is erasing profits, causing some of the largest energy firms in the world to back away. “Returns on offshore wind are becoming more and more challenged,” Shell CEO Wael Sawan told Barron’s last month, just days after a Shell joint venture said it would pull out of a power contract in Massachusetts. Shell won’t build renewable projects that can’t earn initial returns of 6% to 8%, he said.

At least eight multinational companies in three states have quietly started to back out of wind contracts or ask to renegotiate deals in ways that will pass more costs to consumers. Beyond Shell (ticker: SHEL), they include BP (BP), Denmark’s Orsted(DNNGY), Norway’s Equinor (EQNR), Spain’s Iberdrola (IBDRY), Portugal’s Energias de Portugal (EDPFY), and France’s Engie (ENGIY) and state-owned Electricite de France. The projects those companies are building will collectively cost tens of billions of dollars to construct and connect to the grid. The cost problems they’re facing make offshore wind a dicey investment proposition today, with the potential for substantial write-downs ahead.”

https://www.barrons.com/articles/offshore-wind-power-energy-costs-24a9b387

“Financially, the industry is teetering” has an ominous ring to it. This is truly serious for the companies involved in offshore wind, especially the developers.

Dominion Energy is developing one of the biggest American offshore wind projects, a 2,600 MW monster. It will lie out from Norfolk Naval Base (the world’s largest), and Virginia Beach, the state’s biggest city.

Dominion has estimated the project cost at just under $10 billion. One would expect the cost crisis to increase substantially. In fact, the cost increase typically cited by other industry players is a whopping 40%.

But in Dominion’s latest 6-month status report, submitted just this May, they amazingly predict no cost increase at all. This astounding prediction is then repeated in a July submission (or basically right now), which incorporates the May report by reference.

There is no public discussion of risk in the May status submission. There may be some admission of risk, but most of that submission is kept secret.

Here is how veteran Dominion watcher Steve Haner reported this strange secrecy in the great Virginia-focused blog called “Bacon’s Rebellion”:

“Dominion Energy Virginia’s first wave of offshore wind remains on schedule, and within the announced capital cost of $9.8 billion; and the cost per unit of the energy from the turbines will be lower than initially projected, the utility reported last week.”

“Details? Well, many of those are secrets. Much of the brief report the utility filed with State Corporation Commission remains redacted, with large blocks covered by black ink. The redacted data involves reports from an affiliate corporation, Blue Ocean Energy Marine LLC. There apparently is also another document ‘filed under seal under separate cover.’

“Finally, Dominion refers to an Excel file that includes all the data on the new levelized cost of energy (LCOE) calculations which was posted to a shared eRoom. The password is available only to the SCC and case parties who signed non-disclosure agreements, reports the SCC’s communications director in response to a query about access for Bacon’s Rebellion.”

CVOW on Schedule and Budget, Utility Reports

Potential cost overruns are a sensitive topic for this monster project because there are rules over who will pay for them. Any increase taking the cost up to $10.3 billion is split 50-50 between Dominion and their customers. But beyond and up to $13.7 billion, Dominion pays it all. Beyond that, who pays what will be up to the SCC.

By an amazing coincidence, $13.7 billion is a 40% increase in cost, which now looks entirely possible. If that happened, Dominion would be on the hook for almost $4 billion, a big risk indeed.

I can find no public disclosure of this risk to the public, to investors, or to the Virginia or Federal Authorities that oversee this monster project.

Even if Dominion already has fixed-price future contracts for all the construction and equipment, the risk is still there. As Barrons says: “Financially, the industry is teetering, with a parade of companies planning to renegotiate or pull out of contracts, jeopardizing plans for projects…”

Under these dire circumstances, all long-term, big-dollar contracts are risky. Companies go bankrupt or renege to keep from going bankrupt. Contracts rendered ruinous by cost increases will simply not be met.

I understand this kind of big-dollar risk must be publicly disclosed to stockholders and potential investors. Maybe the SEC should be looking at Dominion’s handling of this huge risk. So should Virginia.

Author


David Wojick

David Wojick, Ph.D. is an independent analyst working at the intersection of science, technology and policy.

For origins see http://www.stemed.info/engineer_tackles_confusion.html For over 100 prior articles for CFACT see http://www.cfact.org/author/david-wojick-ph-d/ Available for confidential research and consulting.

Green Schemes Broken by Reality

From Science Matters

By Ron Clutz

James E. Hanley provides a roundup of failed Green expensive ventures in his Real Clear Policy article Green Projects Hit Iron Wall.  Excerpts in italics with my bolds and added images.

Developers looking to build thousands of wind turbines off the Mid-Atlantic and New England coast are coming up against a force even more relentless than the Atlantic winds: the Iron Law of Megaprojects, offering a warning of the trouble ahead for green-energy projects.

The Iron Law, coined by Oxford Professor Bent Flyvbjerg, says that “megaprojects” — which cost billions of dollars, take years to complete, and are socially transformative — reliably come in over budget, over time, over and over.

From Boston’s Big Dig to California’s high-speed rail to
New York’s 12 years-overdue and 300% over-budget East Side Access rail project,
big boondoggles routinely demonstrate the validity of the rule.

Offshore wind projects are not immune to the Iron Law, regularly experiencing vast cost overruns before a single watt is generated.

The New York state government, looking to replace oil- and gas-fired powerplants with hundreds of wind towers off Long Island, set out in 2019 to create an offshore wind supply chain from scratch, beginning with a massive state-funded turbine fabrication facility about 100 miles north of New York City on the Hudson River.

Port of Albany factory’s fate at stake as leaders race for a solution The $700 million-plus project is expected to create work for generations, but hopes are dwindling that more funding will become available

Ground still hasn’t even been broken, but the budget certainly has: The price of that Port of Albany facility has already doubled from $350 million to $700 million. An additional $100 million may be needed for equipment costs, raising the final price tag to $800 million.

It’s been billed the future hub for wind power infrastructure. So far, though, the only thing that continues to get billed over and over in recent years is the Connecticut taxpayer.

A similar situation is playing out in New London, Connecticut, where a state-funded pier facility being built to support that state’s offshore wind buildout has more than doubled in price from an original estimate of $95 million to $250 million.

Commonwealth Wind Declares that the largest offshore wind farm in the state’s pipeline “cannot be financed and built” under existing contracts,

And in Massachusetts, developer Commonwealth Wind has asked the state to scrap its power purchase guarantees and rebid the project, arguing that inflation and supply chain problems mean the project is not financially viable under its current contracts.

Big projects tend to exceed their cost projections for many reasons. One is the unanticipated, and sometimes unprecedented, complexity of these projects. Further uncertainties and costs arise from the challenge of navigating the red tape of the modern regulatory state. In addition, there is the risk of inflation for projects that take years, sometimes decades, to develop.

Underlying all these is often a failure to spend enough time on careful planning
that treats reality as a fundamental constraint.

But sometimes project sponsors may simply worry that accurate cost projections could scare away public support at the outset, and choose to employ what Prof. Flyvbjerg politely calls “strategic misrepresentation.”

As former San Francisco Mayor Willie Brown said, “If people knew the real cost from the start, nothing would ever be approved. . . . Start digging a hole and make it so big, there’s no alternative to coming up with the money to fill it in.”

If that sounds too cynical, note that the current Chair of the Connecticut Port Authority has admitted that when officials first proposed the pier facility, they already knew it would cost more than they were claiming.

Ironically, the New York and Connecticut projects aren’t even big enough to be considered megaprojects, and yet even they have run into the Iron Law of being over budget and behind schedule. The challenges won’t diminish with bigger and more ambitious green energy projects.

In New York, the state’s huge Climate Leadership and Community Protection Act — of which the Port of Albany project is the first substantial investment — is projected to cost between $270 and $290 billion. At that price it is a gigaproject composed of numerous individual megaprojects.

The benefits, mostly in the form of greenhouse gas reductions, are supposed to be up to $415 billion. But if the overall cost of the policy climbs by merely 55 percent, which is in the normal range for megaprojects (and much less than the Port of Albany cost overrun), the costs will exceed the benefits, creating a net loss for New Yorkers.

If costs balloon to twice the initial estimates, which is not uncommon, the state stands to spend more than more than a hundred billion dollars more than gained in benefits That would be a loss of over $30,000 per New York household by 2050.

And that’s assuming the benefits are as good as promised. It gets even worse if,
as is common, the benefits have been overstated.

The tale of megaprojects is a cautionary one for the whole country as we attempt to transition away from fossil fuels. Cost estimates for a nationwide transition span from $4.7 trillion to over $60 trillion – almost three times U.S. GDP. Such uncertainty should give us pause for thought before jumping wildly into the financial unknown.

If we’re not careful, we may be digging Willie Brown-style holes, and politically and financially we may find ourselves in too deep to ever get ourselves out.

Marine Mammal Deaths and Wind Power Development: Evidence Aplenty

From Master Resource

By Sherri Lange — May 15, 2023

“As of mid-March 2023, NOAA Fisheries has handed out 15 marine mammal Incidental Take Authorizations (ITAs) to offshore wind projects from NC to MA. These will allow companies to ‘take’ 111,817 whales, dolphins and seals. The harassment, injury, and killing of marine mammals are referred to as ‘takes’.”

Let the debate continue on the cause of the recent surge of whale deaths in the vicinity of several wind farms off the northeastern coast. But note the case of such a causal relationship, which appears to be growing, not receding.

Consider this letter from a local citizen in the local newspaper, EastBayRI (May 10, 2023), “‘Take’ authorizations prove NOAA is lying about whale deaths:

The marine science community knows this much for certain: The high-resolution geophysical (HRG) surveys used to site offshore wind turbines and transmission cabling causes harm and mortality to marine mammals. They know the intense noise of pounding thousands of monopiles deep into the seabed, along with an exponential increase of vessel traffic during construction and for maintenance afterwards will do the same—disturb, injure, and kill marine life.

Here’s the proof: As of mid-March 2023, NOAA Fisheries has handed out 15 marine mammal Incidental Take Authorizations (ITAs) to offshore wind projects from NC to MA. These will allow companies to “take” 111,817 whales, dolphins and seals. The harassment, injury, and killing of marine mammals are referred to as “takes.”

The 111,817 figure is the tally of 118 “Level A” and 111,699 “Level B” takes. Level A includes permanent hearing loss and other bodily injury. Level B harassment includes behavioral disturbance (such as frightening an animal from its normal feeding area) and temporary hearing loss. A deafened whale fleeing into a shipping channel is likely a dead whale.

It is illegal to take any federally listed animal, that is, unless one applies for and is granted an ITA. An “incidental” take is defined as, “an unintentional, but not unexpected taking of a protected species.”

NOAA is in the final stages of approving an additional 1,272 Level A and 477,285 Level B takes of marine mammals for another 11 wind projects. Soon the approved ITA count will permit wind companies to disturb, injure or cause the death of 590,374 marine mammals. These figures were compiled by carefully searching 26 individual wind project ITA requests. NOAA either does not have or will not share cumulative take numbers.

The data reveals that NOAA has either granted or is in the final stages of granting Level B takes for 915 critically endangered North Atlantic right whales, of which there are only 334 remaining animals alive. Either this means NOAA and the wind companies expect repeated harassment (including recurrent hearing impairment) of numerous right whales, or they have not taken the trouble to realize they have granted more “takes” than the number of live whales who exist today.

A total of 387 A and 21,704 B takes have been or are close to being approved for whales. These numbers include the taking of five species of endangered whales. For eight dolphin species A takes total 140; B takes total 474,605. A takes total 658 for harbor porpoise; B takes total 24,122 porpoises. A takes total 205 harbor, grey, and harp seals; B takes total 68,553 seals.

The numbers of “not unexpected” harassment and injury of marine mammals are staggering.

NOAA states in its February posting of Sunrise Wind’s ITA request (NOAA-NMFS-2023-0012): “Project activities likely to result in incidental take include pile driving…and vessel-based site assessment surveys using HRG equipment.”

Still NOAA has only one answer to the question being asked by thousands of coastal residents as to whether wind companies’ recent seismic testing might be related to the highly unusual number of whale strandings: NO.

Why are they lying?

– Constance Gee Westport, RI