Wind Taken Out of Government's Plans - NAMA for Wind Beckons

by Owen Martin

All Island Wind (in green) Vs Demand (in red) for the past two months - above and below graphs

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 :

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. 

There is now around 4,500MW of wind installed on the island of Ireland, enough capacity to meet almost all summertime demand. However, as can be seen in the graphs above, wind has had a dire performance with a capacity factor of about 13% over the past two months. In other words, they've only performed at 13% of potential output. Historically, they have a capacity factor of 27% in Ireland. Most, if not all, wind farms will be making large losses. The longer this calm weather continues, the closer we get to a bailout for wind, or as Colm McCarthy put it, a NAMA for wind.

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. 

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 ?