From the climateREALISM
By Linnea Lueken
A recent article on OilPrice.com explains why wind energy is unprofitable and details some of the economic hurdles faced by the development of industrial wind energy. Supply chain problems, inflation, likely high fossil fuel prices, and other issues have resulted in billions of dollars in losses. Despite this, wind power companies are not afraid of going bankrupt, largely due to the fact that governments are mandating that more and more wind turbines be added to the grid to pursue net-zero carbon dioxide emissions policies, complete with generous subsidies.
The author of the OilPrice.com article “Wind Power Has A Profitability Problem”, Felicity Bradstock, points out that despite the massive investment and construction mandates by governments that are fueling growth in the wind power industry, “companies are realizing that this is difficult Converting wind power into profits.” Bradstock says the return on investment has not met the companies’ expectations, writing:
Last June there were reports that some of the world’s largest wind energy companies were struggling with heavy losses. Vestas Wind Systems, General Electric Co. and Siemens Gamesa Renewable Energy all faced extremely high raw material and logistics costs in the wake of the pandemic as supply chains were disrupted. This came after an arms race in which wind majors competed to build the tallest, most powerful wind turbines at any cost to give them an edge over the rest.
Losses were seen across the board in 2022, with GE’s renewable energy division losing $2 billion, largest turbine maker Vestas $1.68 billion, and Siemens Energy losing $943.48 million. Dollar.
While companies appear optimistic, not least because governments are mandating the use of their products through renewable energy regulations, high demand is “promising” and “new grants and subsidies are keeping sentiment high in the wind energy industry, and we can expect more.” Incentives for new wind capacity globally as other countries and regions adopt their own climate policies.”
Given the unreliability of the product itself, the wind industry’s losses aren’t too surprising. For example, in several posts here, here and here, Climate Realism has discussed the failure of wind power to deliver the promised energy to customers.
Climate alarmists and renewable energy advocates often make claims that wind power, or renewable energy in general, is cheaper than fossil fuels, but the reality is different. The fluctuating nature of wind energy results in higher grid operating costs. In addition, the service life of these turbines is much less than that stated by the manufacturers. In the case of one of Oregon’s largest wind turbines, Bigelow Canyon, the turbines fail so often that they only survive half of their claimed service life. The facility is averaging 27.6 percent of its rated production capacity. Even when wind turbines are not in operation, power must be supplied from elsewhere, mostly from fossil-fueled plants, but the costs of sitting idle or operating such plants below peak levels are not billed to the wind farms. as it should be.
What is clear is that wind farms have huge upfront capital costs during the construction and installation of the turbines. The OilPrice.com article also confirms that these costs are increasing rapidly due to higher material costs, higher energy costs, supply chain and global trade issues.
Despite their huge losses, these companies continue to exist solely because of interventions by federal and state governments in the form of mandates, tax credits, property tax breaks, subsidies, guaranteed pass-throughs to taxpayers, and other types of support. As Climate Realism discusses here, “without government subsidies and mandates, wind and solar energy would be largely boutique power supplies for the wealthy.”
The public owes a debt of gratitude to news outlets like OilPrice.com for reporting on the high costs and limited benefits of wind energy. Unfortunately, most media reports on wind power through “pink lenses” that distort the true cost of wind power. If the technology were really that great, it could compete in the market without further government support.
Linnea Lueken is a Research Fellow at the Arthur B. Robinson Center on Climate and Environmental Policy. While an intern at the Heartland Institute in 2018, she co-authored a Heartland Institute policy brief, Debunking Four Persistent Myths About Hydraulic Fracturing.