Sunday, 19 October 2014

Calm Weather Blow to Wind Farms

September a bad month for wind farms as their income is slashed

This September was unique for its very calm and dry spells as a high pressure moved over most of Europe. The above graph shows how poor wind power output was compared to the previous September with the average wind output roughly half that of September 2013. Records from SEM-O show that the incomes of wind farm companies fell, as a result, by as much as 72% from last year.

A wind farm company in Cavan lost € 372,022, a drop in income of 72% from last September, while a large wind farm in Donegal lost a total of € 706,996, a drop of 68%. In Cork, another large wind farm lost € 537,360, while a wind farm in Galway lost € 388,221, both representing a collapse in income of 64% . Wind farms in Mayo and Leitrim also took a big hit while those in Kerry and Wexford fared slightly better with drops of income in the region of 44% - 46%. A sample of 12 wind farms from around the country were taken and among them, there was an average loss in income of 61.7% from the previous September. 

This sample represented a combined capacity of 560MW and if extrapolated out to 2,000MW, gives an estimated total loss of € 13.9 million for a single month to the wind industry. 

If the high pressure activity continues in the coming months, these companies may well face financial difficulties as their bottom line is further eroded. This could shake investor confidence in the wind industry with losses like these unexpected from such a heavily subsidized industry. The Renewable Feed in Tariff (REFIT) guarantees a fixed price for wind energy with an additional payment of 15% on top of this fixed price, but if the wind doesn't blow strong enough, then they don't get paid. 

Larger companies like ESB, Bord Gais, Energia and Airtricity (who all operate wind farms) will be able to absorb these losses for longer than smaller private companies. In particular, ESB, who own most of the thermal (fossil fuel) plant in the country, a profitable business to be in when we get calm periods like these. 

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