Greencoat Renewables Purchase Another Poor Performing Wind Farm

Greencoat Renewables have purchased another poor performing wind farm in Tipperary, Cnoc Wind Farm, which made a loss of €897,000 in 2019. Its debts exceeded its assets by €1.1 million which is an indicator of insolvency although the accounts state that up front losses are a facet of wind farm development during the operational stage. The wind farm did trade during the year however with turnover of €1.4 million. Included in the loss is depreciation of € 872,000.

Irish Energy Blog previously showed that many wind farms in Ireland are making losses.

Brookfield Renewables have today indicated that they intend to sell the remainder of their Irish wind platform.

 

Greencoat Wind Farms Part 2 - Lisdowney

Lisdowney Wind Farm in Co.Kilkenny was purchased by Greencoat Renewables in 2017. At that time, it was making losses. The latest accounts filed are showing profits of € 345,000 for 10 months or about € 400,000 for the year 2018. Whilst this looks more promising, the wind farm's debts still stands at € 13 million which means it will take another 32 years to pay off. Since the wind farm has been operating for about four years, the likelihood is that it will continue to operate for another 10-15 years, when at that stage it will need further capital investment to extend it's useful life.
 

Greencoat Wind Farms Part 1 - Gortahile

Greencoat Renewables recently purchased Gortahile wind farm in Co. Laois for an undisclosed sum from a Dutch owned company Glennmont Clean Energy. It has been operating for about eight years and has a capacity of 20MW. It was originally built by German company ABO Wind, then sold to a Danish green fund, then repurchased by ABO for €42 million in 2010. It was also apparently owned by a French company at some stage. It is now back in Irish hands.

It's accounts for last year show it made a profit of € 288k but with gains on financial instruments, comprising interest rate swaps, making up about 45% of these profits. Like depreciation, these financial instruments are non cash items. To get a better look at the financial position of the wind farm, one needs to look at the cash flow statement.

The actual cash generated after paying interest was €1.5 million. The company repaid borrowers to the tune of € 2 million and so incurred a cash deficit of about half a million euros. However, they still showed total cash assets of € 2 million thanks to the waiver of a  € 3.6 million  parent company loan in 2017.

The wind farm's short term liabilities exceeded its short term assets by € 90k, which means it was unable to meet it's debts as they fell due.  The Dutch parent company had vouched it's willingness to provide enough income to keep the wind farm in operation till 2019. At the end of last year, it had combined losses of €2.3 million and debts of over € 18 million.

Will Greencoat need to prop up the wind farm with more cash? It remains a bit of a mystery why a wind farm in such difficulties has generated so many buyers but perhaps it's telling that the recent price tag was not disclosed.

ESB Profits show that Wind Energy has not Reduced Reliance on Fossil Fuels

ESB operate most of the fossil fuel powered generators in Ireland. Their gas, peat and coal generating plants amount to about 3,400 MW. Hydro about 400MW and wind about 450MW. So about 80% of their generation is from fossil fuel sources.

Given that Ireland now has in total about 3,500MW of wind, we should, if the wind energy supporters are right, see wind energy eroding profits in ESB generation.

But their latest results show that their Generation and Trading business has increased it's profits by    € 26 million to € 70 million. Although there was lower running in Moneypoint, this was more than offset by a higher margin in gas plants. 

A breakdown of this profit is not given, but we can safely assume that most of it came from fossil fuel generation since that comprises 80% of their business as I have shown above. It is indicative that during the same period, there was an impairment charge (i.e. a write down) of €1.8 million for a wind farm.

So almost a decade on from Ireland's Renewable Energy Action Plan which stated that :

Renewable energy reduces dependence on fossil fuels, improves security of supply, and reduces greenhouse gas emissions creating environmental benefits while delivering green jobs to the economy, thus contributing to national competitiveness. 

 we can now see that wind energy does not reduce dependence on fossil fuels, rather, it maintains dependence on it.

Greencoat Renewables and the Magic of Fair Value Accounting

Make the prices rather higher than lower so that you can make a larger profit - Luca Pacioli, 16th century mathematician

The Irish media recently announced with great fanfare that Income and Profits were up sharply at Greencoat Renewables for the year 2018. On closer scrutiny, things don't look as rosy as one might think. The accounts show income of € 58m.

The majority of this income, € 46m, has nothing to do with actual wind energy or trading as most people would have assumed. It is in fact due to an accounting trick called a fair value adjustment. This boosted the income figure to produce a profit of €43m compared with a loss of € 2.5m for the previous year.   Interestingly, this new profit figure did not result in any tax to be paid.

The Accountancy Standard IFRS No. 13 allows assets to be stated at their Fair Value as opposed to their cost, which conventionally would have been the case. The Fair Value is the amount that an asset (in this case the wind turbines) could be traded for, i.e the selling price. A clause in the accounting standard allows room for subjective assumptions where there is no readily available market information. Greencoat have made use of this clause by increasing the asset life assumption from 25 to 30 years which allows them to record a higher fair value for their wind farm investments. This subjective increase in the value of their wind turbine assets is then recorded in the Income Statement as if normal income.

No actual cash is generated from fair value adjustments, it is simply a bookkeeping exercise to boost profits.

Leitrim Wind Farm Racks Up Losses of € 5.6 Million

Garvagh Glebe, a 26MW wind farm in Leitrim,  made a loss of € 3.5 million last year and has racked up combined losses of € 5.6 million after nine years. In 2017, it had a load factor of 23% after it's availability dropped to 59%. This means it was out of operation for 40% of the year and when it was operating only running on average at 23% of it's potential output.

The wind farm was completely dependent on funding from it's shareholder ESB to continue operating for another 12 months. This makes a complete mockery of the idea that renewables are competing against fossil fuels. ESB, which owns most of the fossil fuel power stations in the country, can only maintain investment in it's  loss making wind farms with funding from it's more profitable fossil fuel power sector. 

In 2008, during construction of the wind farm, 6,000 fish, mainly trout, were killed when tonnes of peat swept through the Owengar river which runs into Lough Allen. A similar incident occurred in Co.Galway during construction of another ESB owned Derrybrien wind farm where around 50,000 fish were killed. 

How Greencoat Renewables Were Able to Pay a Dividend

In theory, dividends should only be paid to shareholders from profits generated during a trading year. Profits arise from excess trading income over expenses. On the other side of a set of accounts are capital items like assets and shareholdings in the company. 

According to the new book "Bean Counters" by Richard Brooks, historically speaking, English common law allowed companies to pay dividends only out of profits. The books goes on to describe how some of the large and badly managed railway and shipping companies of the 18th and 19th centuries were found to have paid dividends from shareholders funds (capital) converted into income, which allowed them to boost their share price further. These companies eventually needed Government bailouts when the bubble burst.


Both Irish and UK law presently allows companies to reduce their share capital and use the funds for distribution i.e. paying dividends, once certain procedures have been followed. This is known as "Capital Reduction". As part of the process, the company must apply to the High Court for approval.  Alternatively, the directors must sign a statement of solvency for which they could be held liable if it turns out to be false.

Greencoat Renewables, which owns around 300MW of Irish wind farms, made a loss last year, yet were still able to declare a dividend. They did this though a capital reduction where the share premium account of €267,000 was converted to Distributable Reserves of € 250,000. It was from this that dividends of € 11 million were paid to shareholders. In effect, shareholders were paid a dividend out of their own money (to which the shareholders would have agreed to). Greencoat obtained High Court approval for this capital reduction.

Greencoat are not alone in this. Other Irish companies have also applied to the High Court for a capital reduction - Bank of Ireland in 2012 and AIB in 2017 both were successful in their applications. Irish News and Media applied to the High Court in 2017 but the outcome I have been unable to ascertain.

Wind Energy, Diseconomies of Scale and Market Cannibalization

How the Irish Wind Industry is Becoming a Loss Making Industry

by Owen Martin

This blog's recent analysis of the financial statements of wind companies showed that most of the newer wind farms around Ireland were making losses. One possible explanation for this is that the wind industry suffers from the opposite of economies of scale - diseconomies of scale. Economies of scale are defined as the cost advantages that an organization can achieve by expanding it's production in the long run. Diseconomies of scale occur when the long run average costs of the organization increases. It may happen when an organization grows excessively large. In other words, the diseconomies of scale cause larger organizations to produce goods and services at increased costs. 

There are a number of causes of this but the most relevant to the wind industry is Market Cannibalization. 

Implies a situation when an organization faces competition from its own product. A small organization faces competition from products of other organizations, whereas sometimes large organizations find that their own products are competing with each other.

If we take the wind industry as a whole, each wind farm is competing in the same market and their product is the same (wind energy). Therefore each wind farm unit is competing with each other. This is a particular problem during periods of high wind and low demand, when only a certain percentage of wind can be allowed into the grid. Eirgrid must then decide which wind farms need to shut down or curtail output. It is also a problem at the micro level when turbines are located too close together and each turbine is competing for the same but limited local wind resource (wind wake). 

As more wind farms are built, cannibalization increases at the macro and micro level (among wind farms and individual wind turbines). There must then be an ideal amount of wind capacity, say for example half of average demand which would be around 2,000MW, where cannibalization is very small.  At this point, most if not all wind farms are profitable. Cannibalization increases with each additional wind farm built beyond this point. As all the good locations get used, bigger and more expensive wind turbines are deployed in an effort to increase output, as well as increased numbers of turbines resulting in them being placed ever closer together . However, this increases costs per unit as both the local wind resource and electricity demand remains the same while the cost per turbine increases.  We are now at around 3,000MW of wind and there is evidence that wind farms built since 2010 are making losses so probably the ideal amount of wind is somewhere around that 2,000MW mark. 

http://www.economicsonline.co.uk/

In the case of, for example IT companies, market cannibalization can be planned or unplanned. Apple plan their market cannibalization so that their latest iPhone out-competes the older versions. In this way, they attract both existing customers looking to upgrade their phone and new customers who are looking for a new phone. The sales of the older models decline but the sales of the newer model outstrip past sales of the older models. However, in the case of wind energy in Ireland, the cannibalization is unplanned. It is as a result of over-saturation in a market with limited market share available for each new wind farm unit. 

This is a problem which nobody has really examined and is most peculiar to Ireland since it has a very small grid. Therefore, it really makes no sense to pursue wind energy any further until a full assessment has been carried out and possible solutions like battery storage are trialled. 

ESB - A Financial Perspective

This post will be a longer examination into the financials of electricity generation plant around the country (mainly wind). It will get a bit technical in places but I will do my best to explain terms used. 

ESB is the largest energy company in Ireland and is 95% owned by the Irish State. Last year, it recorded a loss of €31 million after writing down the value of their generating assets by € 276 million. The operating profit before the impairment was € 490m, the lowest profit in the past five years.

Following impairment reviews of the generation assets ESB recognised an exceptional impairment charge of €276 million in relation to Moneypoint (€142 million), Aghada Unit 2 (€69 million), Synergen (€30 million), Poolbeg (€21 million), Marina (€1 million) power stations and €13 million across five wind farms

Moneypoint is a critical piece of infrastructure. Without it, the 400kv lines in the west of Ireland will have insufficient voltage to carry the power eastwards.  The impairment now means that Moneypoint coal power station is practically worthless. However, it must be noted that Moneypoint has been around since the 1980s.

Two of their power stations are to close altogether - Marina and Aghada (steam unit)

Capacity contracts were not accepted for ESB’s open-cycle gas unit at Marina and the conventional steam unit at Aghada and, after many years of excellent performance and service to electricity customers, once I-SEM starts in May, there will be no commercial basis for the continued operation of these units. 

The loss of the steam unit at Aghada will increase emissions from the site as this generator would be more efficient than the open gas cycle turbines built there around the same time in the 1980s (there still remains a separate and very efficient CCGT at Aghada built in 2010).

The published accounts do not show a breakdown of operating profit into fossil fuel / renewables (which seems to be a trend among the large energy companies), which would have been very useful.  But there are indications that the renewables part of their business is not performing as might have been as expected. 

Return on Capital Employed (ROCE) 

The Return on Capital Employed (ROCE) is used as an indicator for the Return on an Investment i.e. how much one pound spent on assets generates in profits. I have calculated it by taking the Operating Profit (profit before interest and tax) and divided by total assets less current liabilities.  The sweet spot seems to be in the 14-17% range and this crops up in successful companies from across different industries. Successful Irish companies like Ryanair, Kingspan, Glanbia and Kerry Gold have ROCEs in the region of 14 - 17%. In the UK, Marks and Spencer's recent report shows an ROCE of 14%. 


The ROCE for ESB seems to be around 6% historically. The highest I can find was 10% in 2007 when the prices of fossil fuels peaked. It now stands at 4.6% for 2017, which is historically low.  It has dropped every year for the past three years from 6.5% to 6.1% to 4.6%. Low wholesale prices are of course a contributing factor. However, the average wholesale price rose from €41.82 in 2016 to € 47.48 in 2017 so we should have in theory have seen an improved ROCE ratio.

Comparable companies like SSE and E.ON have recently reported ROCE ratios in the region of 10% so ESB's ratio is comparatively low.

Interest Cover

A company needs to have enough profit left over from paying normal business expenses to cover interest payments on their loans. From Investopedia:

The interest coverage ratio is used to determine how easily a company can pay their interest expenses on outstanding debt. The ratio is calculated by dividing a company's earnings before interest and taxes (EBIT) by the company's interest expenses for the same period. The lower the ratio, the more the company is burdened by debt expense. When a company's interest coverage ratio is only 1.5 or lower, its ability to meet interest expenses may be questionable.

ESB in 2016 had a healthy interest cover of 3.5. However, this has dropped below the safety threshold to 1.1 in 2017.


Financial Statements

I will only be taking a look at the Generation part of ESB's business. ESB also have a retail and grid development business. The financial statements for the gas power station and wind farms are published on the CRO website. Only financial reports for 2016 and 2015 are currently available. There was a deterioration in profits in 2016.  Presumably, things got even worse for the company in 2017. 


Gas power

A look at the most recent accounts (2016) of ESB's gas power station in Dublin shows that it was still making good profits despite the low gas prices. Dublin Bay (400MW) made net profits of €28m and €43m in 2016 / 2015. The drop in profits was presumably due to a drop in wholesale prices of 18%. It had very healthy ROCEs of 19% and 29%.  With accumulated profits of €41m by the end of 2016, the power station was doing very well. In 2015, a dividend had been paid out of € 37 million. It proves that the business model for gas generation is still very strong. The power station was built in 2002 so a very strong performance after 13-14 years of operation. 

Of course, it is based in a high demand centre and is generating power to the grid most of the time. I was unable to find financial statements for any other power stations. I presume most of the other ones wouldn't have been as profitable.

Wind power

I looked at the financial statements of nine of ESB's wind farms in the South of Ireland. A total of 175MW of wind generation. 2015 is a good year to begin with as most of the farms had high load factors, equal to or above the national average of 33% (except for one - Derrybrien). All wind farms made an operating profit, however two made net losses, most notably Garvagh Glebe, a 26MW wind farm in Leitrim which made a loss of € 480,000 despite having the highest load factor at 42%. This was because of very high interest payments - which were about 45% of turnover. 

The average ROCE was 6%, in line with the overall average for ESB Group. Another Leitrim wind farm, Blackbanks, had the highest ROCE at 11%. Blackbanks has a smaller 10MW output and interestingly has smaller (0.85kw) turbines than nearby Garvagh which has 2MW turbines, yet the smaller wind farm had double the ROCE of the larger one (remember that ROCE is based on profit before interest). This seems to fly in the face of conventional wisdom that says the bigger the turbine, the bigger the return.

Combined operating profits in 2015 for the nine wind farms was € 9.2m and net profits was € 2.1m. Depending on how you measure it, this gives an operating profit of €52,000 per MW and net profit of €12,000 per MW for 2015. Compare this with the gas power station in Dublin which had an operating profit of € 127,000 per MW and a net profit of € 107,000 per MW in the same year. Gas power was 2.5 times more profitable in 2015 than wind before interest and and nine times more profitable after. Operating profit, however, is the best way to compare the two generation sources as the gas power station had paid off most it's loans by 2016 and so had very low interest payments. Therefore, gas, which has fuel input costs, is two and half times more profitable than wind, which has no fuel input costs (and wind gets priority on the grid). This fact deserves a separate article on it's own but presumably the much higher load factor for gas has a lot to do with it.

By the end of 2015, accumulated profits from all these wind farms was € 14 million. One dividend of € 1.5m was paid out by Mount Eagle wind farm in Kerry. Again, this wind farm has the smaller older style wind turbine. 

In 2016, the average load factor was still decent at 31% but the ROCE had switched to negative. All wind farms made a net loss apart from two. Combined losses for the year were € 5m. Over the two years, combined losses were € 3m. 

In 2016, interest cover went from positive to negative. Average interest cover over the two years was 1.09, which falls short of the recommended baseline of 1.5. The ROCE would need to rise to at least 10% to reach a safe interest cover and to 15-16% to reach an ideal one.

The worse performing wind farms were the larger ones built in 2010 and 2011. The larger 2MW turbines on average cost 4.5 times more than the smaller older models for 2.3 times the capacity.  In fact, these newer wind farms had high accumulated losses by the end of 2016 of € 6m and some had notes in their accounts stating that they were dependent on financial support from ESB group, which indicates that the higher output from their bigger turbines was not enough to compensate for the additional associated costs.

Two dividends were paid out, € 1m from Mount Eagle and € 1.5m from Blackbanks, both older wind farms with smaller 0.850KW turbines. They were both in good financial health by the end of 2016. 

In total, ESB group had loans outstanding of €170 million to all nine wind farms by the end of the year. 

In 2017, total impairments for wind farms was € 13 million. In Northern Ireland, the value of a wind farm in Tyrone had been written down by nearly €5m :

A review of the Hunters Hill 20 MW wind farm in Co. Tyrone, Northern Ireland was undertaken at year end. An impairment loss of €4.9 million has been recognised in the income statement in respect of this wind farm. This impairment has arisen as a result of a reduction in load factor.

ESB Networks division were also investing heavily in the grid infrastructure required to support renewables :

The focus of the 2017 investment in the transmission network was on continuing the reinforcement of the system to facilitate the connection of new renewable electricity generation. 

Capital investment in the networks businesses continued in 2017 with €644 million (74% of total capital investment) invested in the networks infrastructure in ROI and Northern Ireland (NI)

Conclusion

ESB's traditional generation model in Ireland has changed from investment in reliable power generation to renewables. However, there are signs that things have not turned out quite as planned with wind energy, in particular the newer and more costly wind farms have built up considerable losses. In essence, the older profit making gas generation fleet is subsidizing the newer loss making renewable generation. The older and smaller wind farms may well be benefiting from better sites, but it could also be the case that the smaller 1MW technology is more efficient. These smaller wind farms have by and large turned out to be good investments.  The same cannot be said for the more recent wind investments.

There are still gains to be made from conventional baseload generation. As the grid becomes increasingly unstable in the future, there will be gains to be made for ESB in building fast acting fossil fuel generators that can be switched on quickly. If Moneypoint is converted to gas, it will certainly be profitable like Dublin Bay, but will leave ESB (and Ireland) increasingly dependent on gas lines from the UK which may not be as dependable in the future. 

Wholesale prices are recovering so we should be seeing better profits for ESB. Investing in large loss making wind farms may be negating some of the benefits from higher wholesale prices. Other benefits from investing in wind farms such as carbon credits are no longer financially lucrative as the carbon price has fallen too low. ESB's investment in wind energy should be reviewed.

ESB Financial Report for 2017 : https://esb.ie/docs/default-source/investor-relations-documents/annual-report-and-financial-statements-2017-single-pages.pdf?sfvrsn=dae93bf0_2

Brookfield Renewables Sale Part 2

Canadian company Brookfield Renewables sold two wind farms to Greencoat Renewables last week - Knockacummer and Killhill. I took a look at Knockacummer in my last post. This time I will examine Killhill.  Things don't look any better from a financial point of view.

Killhill is outside Cashel in Co.Tipperary. It has sixteen Enercon 2.0 MW turbines and was commissioned in 2014. The latest accounts show operating profits for 2015 and 2016 but a net loss for both years after interest is accounted for. In fact, since it came into operation, it made a loss every single year  and now has accumulated losses of nearly € 900,000. It had net current liabilities of €3.2m and was completely dependent on financial support from Brookfield, the parent company, to meet it's debts. There were about €37m of loans outstanding by the end of 2016. 

Im speculating, but it could be that the banks will be paid out of the sale proceeds leaving the company completely financed by equity under Greencoat. This could account for the apparently large, but undisclosed, sale price of both wind farms. 

Canadian Company Sell a Loss Making Wind Farm for a Profit to State Backed Investors

A wind farm sold for a profit in the region of €7 million last year made a net loss of € 4 million in the latest accounts filed with the companies office for 2016.

The wind farm, Knockacummer, in Cork, has a capacity of 87.5MW, was commissioned in 2013 and has thirty five 2.5MW turbines. It was sold by Canadian company Brookfield Renewables.

It paid interest of € 12m (at 7.5%) in 2016, which was 54% of it's turnover. The interest was higher than it's operating profit which turned the profit into a net loss. It also made a net loss in 2015. 

At 31st December 2016, it was carrying Accumulated Losses of € 5.7m.

It's outstanding loans stood at €145m at end of 2016. €3.8m of which was written off by Brookfield during the year. The company was financed by loans from Brookfield, which in turn was financed by external loans. 

The buyer was Greencoat Renewables. Last year, the Irish State, through ISIF and AIB, acquired a 33% stake in the company. Which could potentially rise to 49%. 

Greencoat also bought another loss making wind farm, Lisdowney, last month. 

One has to question as to why the Irish State is helping to purchase loss making wind farms. Are we looking at another NAMA in the making ?

Are wind farms financially viable into the future ?

Loss making wind farm sells for € 22 million

Lisdowney wind farm in Co.Kilkenny is quite small at 9MW but it sold for a whopping 22.5 million last week to Greencoat Renewables. Although the company is solvent, the published accounts show it made a loss in 2017 of € 262,000 and € 59,000 the previous year. The accumulated losses now stand at €374,000. “This acquisition is in line with our strategy of acquiring high-quality wind farms in the Republic of Ireland, ” said Greencoat Capital.

There are signs that the days of lucrative profits for wind farm companies may be over. Gaelectric, one of the largest renewable companies in the country, are winding down and laying off staff. Windfarms owned by SSE Airtricity are also in financial difficulties. According to published accounts, Gartnaneane wind farm in Cavan and Meentycat in Donegal are both insolvent i.e. unable to pay their debts as they fall due. The financial statements state that both companies "are dependent on ongoing financial support from a fellow group company". Airtricity claims to provide 100% green energy to Irish homes, although quite how it separates the green electrons from the gas and coal generated electrons in the grid remains a mystery. 

The National Development Plan for 2040 states that ESB, Bord na Mona and Coillte are currently planning to invest in renewable energy technologies. These companies have about 15% of the overall operational wind farm fleet in the State. They plan to continue to invest, predominantly in wind generation, over the coming years.  

Derrybrien wind farm, one of the largest in Ireland, and owned by ESB made losses last year. Should these state run companies still be investing in unprofitable ventures ?

Liam Halligan points out in the Spectator that the era of easy money may be over and that it's no bad thing. Is there a big crunch on the way for wind farm companies ?

Ultra-low rates have also kept thousands of ‘zombie’ companies alive, so we have firms able only to pay debt-interest rather than clear actual debts. Around a quarter of a million struggling UK firms are in this situation, kept on life support by unnaturally low rates. Unable to invest and expand, they tie up resources that should be channelled into healthier firms. This helps to explain the low productivity and wages that have cursed the UK economy in the past ten years.

Wind Farm that caused huge landslide makes losses for ESB

Photo : Irish Examiner

The Commission claims also that the construction of the wind farm required the destruction of large areas of coniferous forest amounting to 263 hectares.

 The Commission adds that, after the landslide which occurred on 16 October 2003 and the consequent ecological disaster, when the mass of peat which was dislodged from an area under development for the wind farm polluted the Owendalulleegh river, causing the death of about 50 000 fish and lasting damage to the fish spawning beds, Ireland carried out no fresh environmental impact assessment of this construction before the resumption of work on the site by the developer in 2004 [European Court Ruling 2008].

The construction of Derrybrien wind farm in 2003 caused a huge landslide resulting in the ecological disaster described above by the European Courts of Justice. Ten years later, Ireland still has not complied with their ruling and the EU are now seeking to impose fines on Ireland of €2 million.  

The wind farm was the largest in Europe at the time with 70 vestas turbines (of 0.85MW each) giving a total output of 59.5MW. It began operation in 2006. Ten years later in 2016, the accounts show that the wind farm was making a loss of €2.3 million. Turnover dropped by 25% to €5m and operating costs increased by 17% to €6.3m from 2015.  The company is owned by ESB and €20m in loans are still outstanding to them. It cost €64m to build. 

The above graph compares the load factor (actual output / maximum output) for Derrybrien and the national average as published by Eirgrid since 2010. The load factor has dropped significantly in the past two years to 23% in 2016, which was less than the national average of 28%. Not great for a wind farm located in the windy west of Ireland.  It could be that these particular wind turbines lose capacity over time. The first indication of a loss in capacity occurred in 2015 after eight years of operation. The national average was high at 33% whilst Derrybrien had a load factor 20% less at 26%. 

A loss of wind turbine capacity means higher maintenance costs and this is reflected in the accounts where operating costs have increased to €6.3m from €5.4m in 2016.   

The obvious question that needs to be asked about all this is are the massive environmental impact of wind farms built in such delicate areas worth it ? Whilst ESB will probably absorb  these losses who finally pays ? ESB is 95% owned by the Government. 

National Load Factors - Page 24 here.

Load factors for Derrybrien wind farm for 2015 and 2016 as per published accounts, other years were estimated based on annual turnovers.