The past month saw record low levels of wind energy adding to the woes of an already financially struggling wind industry. The month of June was comparable to the winters of 2009 and 2010 which also saw very low winds, the difference being that back then the temperatures were very low. These long periods of near non existent wind not only undermine the Government's wind plans, but also seriously undermine the viability of wind storage. This was Gaelectric's plan, to expand into storage, until they went into liquidation. Their remaining wind farm assets have not attracted a buyer over six months later.
Electricity Bills to Rise
With the recent news that electricity prices are set to rise because of rising wholesale prices, consumers may begin to ask questions as to why wind has not reduced the wholesale price as was promised by all the experts when the Government were preparing their wind energy plans. It is a sobering fact that Ireland's electricity market is still subject to the vagaries of worldwide fossil fuel prices despite having 3,000MW of wind farms, enough capacity to meet 85% of total electricity demand on a summers day or over half of demand on a winters day.
Ten years after the banking crash, Ireland still has no independent organisation that can review Government policy independently, instead we have plenty of "think-tanks" that rubber stamp policy, including the same ones that supported the wild west lending policies during the boom. The ordinary consumers are the ones paying the cost.
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.
Gaelectric, one of the largest wind and renewable energy companies in Ireland, is winding down. Staff numbers have been slashed from 100 to 20. In 2016, the company sold part of its wind farms to a Chinese Nuclear firm. The proceeds were used to pay off their debt of €350 million. A second sale to the same Chinese company fell through last year which has triggered the wind down. Shareholders are only expected to be repaid a portion of the funds they put in. The Chinese firm expected Ireland to commit to a new renewable fixed tariff scheme, which has still not materialized.
The accounts show a profit in 2017, but when gain on disposal of € 105m is discounted, there was a trading loss of € 44m. Cost of sales and admin expenses totaled € 50m exceeding sales of € 38m. Loan interest trebled to € 31m since 2016.
