Electricity bills could double to bail out new wind farms that have massively underestimated their operating costs, a former adviser to the World Bank has claimed. Two offshore wind projects secured contracts to supply renewable energy at reduced costs in 2017 and it was hailed the result of huge strides made in technology and engineering, sparking hopes of a green jobs boom. But Gordon Hughes, a professor of economics at Edinburgh University, claims that almost no attention had been paid to whether the contracts were sustainable and what would happen if they were not. In a report for the Global Warming Policy Foundation, a climate sceptic thinktank, he argues that the possible outcomes were “stark”, likening the Moray East project in Scotland to a “very high stakes game of poker” and questioning how it could possibly be profitable. “Either a consortium made up of large overseas energy companies and financial institutions is deliberately planning to lose money, or UK electricity customers will find themselves having to pay much higher prices so as to permit lenders to recover their loans and the developers to earn some kind of return on their equity,” he claims. At the Government’s Contracts for Difference auction, companies bid for a “strike” price they will be paid for electricity generated. Those who submit the lowest bid secure the deal. Subsidies in 2017 fell 50 per cent on the previous round in 2015, to £57.50 per megawatt hour for projects delivered in 2022/23. Denmark’s Dong Energy secured the deal for the second phase of its Hornsea project off the Yorkshire coast while EDP Renewables and Engie, formerly known as GDF Suez, was granted the same size contract for Moray East. The developers argue that they take on all the financial risk of delivering the Government projects and no costs will be passed onto consumers. However, Prof Hughes claims that even if the Moray East project performed well above long term averages, it could only earn a reasonable return on equity if the revenue per megawatt hour was 50 per cent higher than the strike price.
Telegraph 27th July 2019 read more »
Northern Ireland’s coastline is not suitable for off-shore wind farm development due to likely objections to how they would look. The findings were included in Department of Economy report. It said the “visual impact” to potential sites based within 13km of the shore would be a “significant issue”. As a result, NI has been excluded from a 2019 leasing round by the Crown Estate which controls the seabed. However the report says offshore wind may be a possibility in the future if technology changes and things like floating wind platforms come on stream.
BBC 26th July 2019 read more »