by Owen Martin
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| All Island Wind (in green) Vs Demand (in red) for the past two months - above and below graphs |
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| The capacity factor for wind was 13% over the past two months according to data taken from Eirgrid's dashboard |
There have been unprecedented low levels of wind energy in the past two months as the two charts above reveal. The unusual hot and calm weather is due to a large area of high pressure in the Atlantic Ocean which is blocking the prevailing south westerlies :
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| High Pressure region in the Atlantic |
Some green campaigners are saying that this is caused by "more energy in the climate" due to climate change, but actually in this case there is less energy. Cloudless skies, no wind, no rain, it looks like a climate devoid of energy to me.
How much would a NAMA for wind cost ?
A megawatt of wind energy capacity costs somewhere in the region of € 1-2 million. So 3,500MW of wind (in the Republic of Ireland) would cost about €5 billion to bail out. If we take a discount of about 50% for serviced debt and a haircut for shareholders, this means the cost to the taxpayer would be €2.5 billion. This is roughly equal to the total wholesale cost in electricity bills, which comprise 50% of an average bill. So a NAMA for wind could cost the consumer about half of an average annual electricity bill.
The cost of installing a wind farm varies according to the amount of work in preparing the site, the access routes and the cabling.requirements. One 10 MW wind farm planned for East Cavan will involve about .8 km of new access roads and 5 km underground cables. I estimate the cost at 17 million Euros. (including VAT).
ReplyDeleteThat would buy 13 one hundred acre (40 hectares) farms in the area, fully stocked with cattle and all the farm sheds and dwelling houses on them. Add to that the cost of 2 good public houses in the nearby town and 6 good four bedroom family homes in the Dublin area.
The wind conditions on this site which is 34 meters above sea level will yield about 24% load factor, down to about 21% this year at about 72 Euros per MW. This will decrease with age.
A big surprise when reading wind farm company accounts is the high running costs. In a normal year, expenses can leave a very low margin. Some struggle to break even. None pay a genuine dividend or can pay off capital loans. Only wind farms with no capital debt are viable.
A huge difference between the wind farm and the alternative property mentioned above is that at the end of the operating life of the wind farm there is no residual value, nothing to sell, whereas with the other property, it holds its value or may increase in value. The alternative property will be worth at least 17 millions Euros, whereas the value of the wind farm will be just scrap value. The decommissioning cost will absorb all that leaving nothing.
There is currently about 380 MW of wind farms in the Republic of Ireland alone for sale these several past months. There is no interest from investors to date. Into this market Government insists on installing more wind farms and more solar farms. The size of the cake is the same, the number to get a slice of it is increasing. It is a bottle neck of fierce competition, which will land on a minister's desk soon.
Consumers will not be able to afford the bail out cost of half their annual bill. In Northern Ireland, one in five householders is in arrears and the Republic of Ireland is roughly similar.
Experience teaches that in these situations lenders take the hit. The two main Irish banks and at least one British bank will suffer. I believe its is time to forget about wind farm companies and time to look at their creditors. Where is our money stored or deposited.? If its in the shares of credit institutions, it's time to worry because in the collapse of 2008, bank shares collapsed.
In 2010 the National Capacity factor for wind farms was 23.8% In arriving at the capacity factor used to determine capacity required to meet the 37% target Eirgrid dismissed the 2010 figure as an outlier. But outliers can only be dismissed from sample data if the reason(s) for the outlier is identified and the conditions which gave rise to it has been permanently eliminated. Eirgrid must have superhuman ideas about their capabilities to think that they and they only can prevent weather conditions that can give rise to such a capacity factor will never occur again.The wind business must be on the verge of total bankruptcy.
ReplyDeleteVery interesting points you have remarked, thanks for posting.
ReplyDeleteThe accounts of the above wind farm shows that about 2.3 million Euros in equity is available from Irish Private investors. The amounts range from 50,000 to 25,000. Of the 49 investors, most are Dublin medical doctors and consultants. The rest are connected with other professions. That leaves another 14.7 million be be found. There are tax breaks but it is an obvious attraction for money launderers. Ireland has a history or off shore accounts. They don't give up. The problem is they can never get their money back
ReplyDeleteLooking at the National picture, there are three companies trying to sell off wind farm in the Republic. Gaelectric for about 380 MW, Coilte for a portfolio in which percentages is for sake for a total of 31.5 MW and now Element power want to sell operational wind farms of 32.4 MW making a total of 443 MW, This is 15% of total capacity. Sellers would like to receive 1.5 million per MW for a total of 665,000,000.
ReplyDeleteI can see only one potential buyer, the state backed Greencoat Renewabkles which in is the process of mopping up distressed wind farms. They raise 250 million for Irish investors and are likely to raise a further 250 million. However they are likely to pay dividends out of this capital leaving less for the purchase. My bet is that the 3 sellers, Gaelectric, Coilte and Element Power will sell for 450, million and be glad to get out. Wind energy is now flavour of the month and it seems you can fool enough people all of the time.
To allow ,this Green Coat renewables buy up these valueless distressed assets, you have to be dumb. The Dumb and dumber government starring varadkar and murphy . The wind farms on the market are hopelessly insolvent.It will be a miracle if any dividend is paid out of profits generated.The wind farm accounts also show significant asset over valuation. Buy these wind farms and face a massive down ward devaluation of these assets.You would better off burning your money.
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