Exploding the Cheap Offshore Wind Fantasy
As energy lobbyists ask for more subsidies for “record low” offshore wind prices, this article explains why the cheap offshore wind power bubble has popped.
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.
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? Now the Government is offering extra subsidies (bungs) in the form of non-price factors in AR5 CfD auction.
https://davidturver.substack.com/p/exploding-the-cheap-offshore-wind-power-fantasy