Guest contribution by Willis Eschenbach
I keep reading that offshore wind farms are the electricity generation method of the future because they are so damn cheap. Here is the New York Times on the subject:
The Biden administration wants up to 2,000 turbines in the water in the next eight and a half years. Officials recently approved a project near Martha’s Vineyard that languished during the Trump administration and announced support for large wind farms off the California coast in May. The $ 2 trillion infrastructure plan proposed by Mr. Biden in March would also increase incentives for renewables. “
The cost of offshore wind turbines has fallen by around 80 percent over the past two decades to as low as $ 50 per megawatt hour. Although they are more expensive per unit of energy than onshore solar and wind parks, offshore turbines are often economically viable due to their lower transmission costs.
So I thought I’d go over the cost of one of the few US offshore wind farms, the Block Island Wind Farm.
First, where is Block Island when it’s home? Well, it’s a small island off the coast of Rhode Island, not far from the tip of Long Island, New York.
The location of Block Island is indicated by the red pushpin
And what is the profitability of the Block Island wind farm? Well, it contains five 6-megawatt (MW or 106 watt) giant wind turbines. Of course, they don’t generate an average of 6 megawatts because sometimes the wind doesn’t blow … in fact, they only generate about a third of that, about 2 megawatts. This corresponds to around 92 million kilowatt hours (kWh) per year.
How much is this energy worth? Well, on a nationwide average, a kilowatt hour (kWh) of electricity costs around 4 cents … and is then sold on to the customer at around 13 cents / kWh.
And how much does Rhode Island pay for this “cheap” wind power? Hold on tight so it doesn’t fall to the ground … you pay 24.4 cents / kWh, six times the national average, and it increases by 3.5% per year … so in ten years it will be 34.4 cents / kWh be .
The five wind turbines off Block Island
But wait, there’s more. Since Rhode Island’s crazy “renewable mandate” is forcing Rhode Island to buy “cheap” renewable energy, they pay wind farm owners 24.4 cents / kWh to buy electricity … but the power company has to pay another ten cents / kWh for transmission and maintenance and profit. The poor Schlubs in Rhode Island pay the wind farm owners around 34 cents per kWh for this “cheap green wind power”; in a decade it will be 44 cents / kWh to the consumer. Oh, plus the extra charge for the transmission cable as described below.
Why are the electricity costs so high? Because … well … not to be too precise: The idea that offshore wind energy is cheap is a total myth. As a lifelong blue water sailor, I can confirm the old sea dog’s maxim “The wind is free … but everything else costs money”.
In addition, of course, there is the yaw factor …
Let’s start with the initial cost. The construction and installation of the wind farm cost $ 350 million. The transmission line from Block Island to the mainland was an additional $ 114 million paid separately by the mainland fee payers.
In addition, there are “O&M”, operating and maintenance costs, which are around 48,000 US dollars per megawatt per year for offshore wind, or around 290,000 US dollars per year on Block Island. At an average of 28.6 cents / kWh over the next ten years, electricity sales will bring in around $ 26 million a year … so the company that owns the wind farm won’t make a profit for more than 13 years … and that doesn’t count the “oops” factor.
What is the “oops” factor? Well, it’s unexpected maintenance, or a wind turbine destroyed in a storm, or something like the following:
Oops … in addition to paying $ 114 million for the transmission cable in the first place, the poor Rhode Island councilpayers are also looking for some of the 31 megabucks they have to pay for the power cable that goes through waves and wind was exposed, re-buried, and currents. And to add insult to injury, owners say it will cost more than the original estimate of $ 31 million to repair … double oops.
And where does the greed factor fit? Again from the Rhode Island “Providence Journal”:
National Grid reaps excess profits of 46 million
CAUTION: When policymakers started Rhode Island over a decade ago to host the country’s first offshore wind farm, they were getting a bargain. They knew electricity from the Block Island wind farm would be expensive, but were willing to pay the price in hopes that the project would stimulate the creation of a new clean energy industry in the state.
What they didn’t negotiate with was that the wind farm would become a gold mine for an energy company that already had a dominant presence in Rhode Island: National Grid, the state’s largest electricity company and owner of the 20-mile submarine transmission cable that runs through the project will bring electricity generated from a substation on Block Island to the mainland power grid.
In the four years since the five wind turbines began operating, National Grid has made $ 46 million in profit from delivering electricity over the cable, the utility submitted in response to questions from state regulators. That’s money that goes into National Grid, on top of estimates for the operation and maintenance of the cable, taxes on it, and even how much the company charged to pay off its installation and construction costs over time while making a reasonable profit . And it’s money that’s paid entirely by the Rhode Islanders by adding a surcharge to their electricity bills.
Even though a large portion of the money went to the operation and maintenance of the cable, National Grid never put the profits in a reserve fund. When the company agreed to re-bury part of the cable last year after it was exposed by waves, National Grid decided to capitalize on the $ 31 million repair cost. This brought the total cost of the transmission project to more than $ 145 million and the company will make electricity customers pay even more to use the cable. With the surcharge based on the value of the cable, the tariff is slated to increase in May, essentially rewarding National Grid with more money for fixing an issue that state coastal regulators warned about long before construction began. Meanwhile, Ørsted, the Danish company that owns the wind farm and the part of the cable that runs from the turbines to the Block Island substation, is paying its share of the reburial out of pocket.
And I haven’t even gotten to the shutdown costs when the turbines die, and they have to be removed far out to sea … Oops.
So there you have it folks – cheaper, cleaner, greener, cheaper offshore wind. What do you dislike?
My best to everyone, even the rapidly dwindling number of poor people who still believe that the sun and wind can power the planet …
w.
From the usual: PLEASE QUOTE THE EXACT WORDS YOU ARE DISCUSSING. I can and am happy to defend what I have written. I cannot defend what you mean when I wrote it.
Like this:
Loading…
Comments are closed.