Financing offshore wind(jeromeaparis.substack.com)
jeromeaparis.substack.com
Financing offshore wind
https://jeromeaparis.substack.com/p/financing-offshore-wind-part-1
15 comments
Interesting tidbit. According to Part 6 the lifespan of off-shore wind farms is now considered to be between 30-40 years:
"projects in 2011 would typically have assumed a 20 year operational life, but the industry has moved towards 35 years as a standard and some players now even expect that 40 years is achievable"
https://jeromeaparis.substack.com/i/51708558/operations-phas...
"projects in 2011 would typically have assumed a 20 year operational life, but the industry has moved towards 35 years as a standard and some players now even expect that 40 years is achievable"
https://jeromeaparis.substack.com/i/51708558/operations-phas...
Unfortunately folks don't want wind farms disturbing their views, like the current US Global Warming Czar:
https://www.forbes.com/sites/larrybell/2012/04/03/massachuse...
https://www.forbes.com/sites/larrybell/2012/04/03/massachuse...
In the US, a lot of wind farms are getting repowered with bigger turbines, even when they have many more years left on their current equipment. The advances in turbines means more power per turbine, and higher capacity factors.
Though it's hard to imagine much beyond these 15MW offshore beasts, only time will tell what tech improvements we see.
Though it's hard to imagine much beyond these 15MW offshore beasts, only time will tell what tech improvements we see.
It makes a lot of sense to build turbines with a lower expected lifespan while the technology is still rapidly improving. Nobody wants to operate 30 year old 1MW turbines when 15MW turbines are available.
This looks very good and I look forward to reading it more in depth later.
I'm from Rhode Island and my father never stops talking about how horrible the Block Island wind farm is. From what he shows me- he's right. The project provides power substantially above market rate so as much as I like wind it seems like a bad deal for Rhode Island.
I'm from Rhode Island and my father never stops talking about how horrible the Block Island wind farm is. From what he shows me- he's right. The project provides power substantially above market rate so as much as I like wind it seems like a bad deal for Rhode Island.
My understanding is that the Block Island Wind Farm was essentially a pilot program, no?
It's nowhere near the scale of other offshore wind proposals in the US or Europe (NY alone plans to develop 9000MW of capacity in the next 15 years[1], versus the 30MW from Block Island), which makes me think it was more a proof of concept.
[1]: https://www.nyserda.ny.gov/All-Programs/offshore-wind
It's nowhere near the scale of other offshore wind proposals in the US or Europe (NY alone plans to develop 9000MW of capacity in the next 15 years[1], versus the 30MW from Block Island), which makes me think it was more a proof of concept.
[1]: https://www.nyserda.ny.gov/All-Programs/offshore-wind
The series seems to focus mostly on <0.5GW projects. Maybe bigger projects are assembled from those?
IIRC part of the idea behind NY launching so much offshore wind is that it wants to amass enough experience and suppliers doing so to become a natural hub of it in the Northeast.
Experience seems to be crucially important in open-sea construction. There is so much that can go wrong, and so much value in judicious prevention and preparation.
[deleted]
This is an excellent series.
Important: several of the "next installment" links point to the same one, instead, and you have to hand-edit the link to get to the next one.
Something not mentioned that I found surprising was the very large fraction of construction cost consumed by zinc, for corrosion control, vs copper and steel. I guess that for finance purposes, zinc is considered part of the steel. Maybe availability and price of zinc is stable enough not to need separate attention, unlike copper.
Important: several of the "next installment" links point to the same one, instead, and you have to hand-edit the link to get to the next one.
Something not mentioned that I found surprising was the very large fraction of construction cost consumed by zinc, for corrosion control, vs copper and steel. I guess that for finance purposes, zinc is considered part of the steel. Maybe availability and price of zinc is stable enough not to need separate attention, unlike copper.
Part 10 has the whole list: https://jeromeaparis.substack.com/p/financing-offshore-wind-... (or you can just change the number in the URL.)
Report direct link:
https://wfo-global.org/wp-content/uploads/2022/09/WFO_Financ...
https://wfo-global.org/wp-content/uploads/2022/09/WFO_Financ...
The blog seems more readable than that pdf so I've changed the URL above from https://jeromeaparis.substack.com/p/financing-offshore-wind to the first blog post.
Part 2: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 3: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 4: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 5: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
(you're on your own after that)
Part 2: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 3: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 4: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 5: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
(you're on your own after that)
For later entries, you probably want to make your own URLs, because the links in the pages are messed up.
Or, just start here: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Or, just start here: https://jeromeaparis.substack.com/p/financing-offshore-wind-...
Part 1: https://wfo-global.org/financing-offshore-wind-part-1/
> first part of what will be a 10–part series of blog posts,
> first part of what will be a 10–part series of blog posts,
What I find revealing is that the section about the "The offshore wind project cycle" does not cover the dismantling of the installation.
I had once to evaluate the offer of a local project for an (onshore) solar park in Germany. The lease offered was about 4 times the current usual land lease rates for 30 to 40 years with inflation adjustments. The solar park company should be responsible for the complete dismantling of the installation afterwards. In case of an insolvency of the company a bank guarantee would step in.
However, the (inflation adjusted) bank guarantee was only €10,000 per hectare (10,000 m^2), which seemed extremly low to me. This must cover everything from removing the panels and sockets, all the power lines in the ground, the transformer installation on the field, the removal of asphalt roads, etc., etc. I could not find any detailed studies about the likely dismantling costs for solar parks.
Bank guarantee prices are so high that a guarantee of between €30,000 and €50,000 per hectare (depending on the current bank rate) would have eaten up the entire surplus lease.
So if my guess is correct and the actual deconstruction costs are well over €10,000 per hectare, in 30 to 40 years there will be a high incentive for solar park companies to move solar parks that are to be phased out into equivalents to bad banks and threatening insolvency, so that either the land owners need to step in with their private savings after the bank guarantees where used up or the state needs to pay to prevent this from happening.
Does anyone here know of any reputable calculations for the deconstruction costs of solar parks?
I had once to evaluate the offer of a local project for an (onshore) solar park in Germany. The lease offered was about 4 times the current usual land lease rates for 30 to 40 years with inflation adjustments. The solar park company should be responsible for the complete dismantling of the installation afterwards. In case of an insolvency of the company a bank guarantee would step in.
However, the (inflation adjusted) bank guarantee was only €10,000 per hectare (10,000 m^2), which seemed extremly low to me. This must cover everything from removing the panels and sockets, all the power lines in the ground, the transformer installation on the field, the removal of asphalt roads, etc., etc. I could not find any detailed studies about the likely dismantling costs for solar parks.
Bank guarantee prices are so high that a guarantee of between €30,000 and €50,000 per hectare (depending on the current bank rate) would have eaten up the entire surplus lease.
So if my guess is correct and the actual deconstruction costs are well over €10,000 per hectare, in 30 to 40 years there will be a high incentive for solar park companies to move solar parks that are to be phased out into equivalents to bad banks and threatening insolvency, so that either the land owners need to step in with their private savings after the bank guarantees where used up or the state needs to pay to prevent this from happening.
Does anyone here know of any reputable calculations for the deconstruction costs of solar parks?
Demolition costs are easy to estimate if you can just bulldoze and landfill everything.
The problem will come if you can do that today but not in 40 years.
The problem will come if you can do that today but not in 40 years.
Even if this were legally possible in 40 years, if the field were not restored to its current state, but only bulldozed, it would lose most of its current value, which would mean a decrease of about €30,000 to €40,000 per hectare. It is good soil, without many stones and drainaged. However, according to current German and EU regulations, the solar modules must be recycled (and not just disposed of), the wires in the ground must be removed and the surface restored.
But why not just uograde the panels?
We will still need to harvest Wind/solar energy in 40 and probably in 400 years. The land, permissions and transmission are already in place.
We will still need to harvest Wind/solar energy in 40 and probably in 400 years. The land, permissions and transmission are already in place.
This might be a possible scenario, but currently the permits are limited and there is no guarantee that they will be renewed in the exact same form. There is already a lot of resistance against the destruction of the landscape and the withdrawal of farmland from food production. Economic considerations could lead to a shift in the production of solar energy from Europe to where it can be done more efficiently. (Marocco is already very active in this respect.) Other forms of energy production could gain in importance because they provide more continuous energy: geothermal energy in the near and fusion in the distant future. Therefore, I think, it is not unlikely that not all, but perhaps a lot of solar parks might be deconstruct after their projected service life of 30 to 40 years.
There is absolutely no need to remove land from food production to put solar on it. The crops do better with protection from full (particularly afternoon) sun, you use less water, the panels run more efficiently, and the landowner gets two revenue streams that operate on different schedules.
So, agree, dedicated solar farms might be a dead end.
Geothermal is a minor player because it is quite expensive to build and operate, kind of like a nuke, albeit without the poison-a-whole-region risk.
Fusion will never produce so much as one kWh of commercial power.
So, agree, dedicated solar farms might be a dead end.
Geothermal is a minor player because it is quite expensive to build and operate, kind of like a nuke, albeit without the poison-a-whole-region risk.
Fusion will never produce so much as one kWh of commercial power.
Currently they put already sheep on many solar farms here in the region. I do not know how much additional revenue you get from it, but no one here would otherwise keep sheep on such good arable land. So yes, there is some potential for food production on solar farms, but it is limited. Of course, no one knows exactly where it will all go in 40 years. The hard fact is that no investor bets on further use and leases for, say, 100 years. It is the farmers leasing their land for 40 years on whom the risk is passed with an unsufficiant compensation.
Personally, I think that the state should bear the costs for the complete dismantling of the installations and finance it through an upfront levy on the operation of the solar parks.
Personally, I think that the state should bear the costs for the complete dismantling of the installations and finance it through an upfront levy on the operation of the solar parks.
> potential for food production on solar farms ... is limited.
Food production in dual-use farms is really not limited in any way. Besides siting in existing pastureland, solar may easily be deployed in cropland in rows spaced to leave plenty of room between for farm equipment.
The key is that, with dual land use, there is no need for or value in cramming panels closely together. There is an absolute over-abundance of both pasture and cropland suitable for dual use, and panels work better when widely-spaced. Farmers welcome an extra revenue stream that costs them no yield or extra "inputs", delivers year-round, and cuts evaporative water loss.
The simplest way to deploy for dual use in farmland is to erect bifacial panels vertically in fence-rows running north-south, to pick up morning and afternoon sun.
Few crops can use more than a few hours' direct sunlight in a day, if that much. Most plants prepare overnight a stock of material to process in sunshine; once that stock is used up, any further sun exposure is only endured. Shade is a valuable and sometimes necessary commodity on a farm.
Some varieties of pepper yield 3x under partial shade. Most crops benefit less, but most over 1x. Even wheat delivers 0.9x, with the extra revenue and reduced water loss more than making up the difference. Some crops need physical protection, such as against hail and torrential rain, that solar panels can provide.
Most cropland yields revenue only in a pulse once or (sometimes) twice a year. A steady income year-round, even in fallow fields, makes management of the farm much easier.
A source of difficulty, in some places, is a mesh of land-use restrictions incompatible with installing solar. These restrictions are being eased in many places.
Food production in dual-use farms is really not limited in any way. Besides siting in existing pastureland, solar may easily be deployed in cropland in rows spaced to leave plenty of room between for farm equipment.
The key is that, with dual land use, there is no need for or value in cramming panels closely together. There is an absolute over-abundance of both pasture and cropland suitable for dual use, and panels work better when widely-spaced. Farmers welcome an extra revenue stream that costs them no yield or extra "inputs", delivers year-round, and cuts evaporative water loss.
The simplest way to deploy for dual use in farmland is to erect bifacial panels vertically in fence-rows running north-south, to pick up morning and afternoon sun.
Few crops can use more than a few hours' direct sunlight in a day, if that much. Most plants prepare overnight a stock of material to process in sunshine; once that stock is used up, any further sun exposure is only endured. Shade is a valuable and sometimes necessary commodity on a farm.
Some varieties of pepper yield 3x under partial shade. Most crops benefit less, but most over 1x. Even wheat delivers 0.9x, with the extra revenue and reduced water loss more than making up the difference. Some crops need physical protection, such as against hail and torrential rain, that solar panels can provide.
Most cropland yields revenue only in a pulse once or (sometimes) twice a year. A steady income year-round, even in fallow fields, makes management of the farm much easier.
A source of difficulty, in some places, is a mesh of land-use restrictions incompatible with installing solar. These restrictions are being eased in many places.
Upfront or continuing - a portion upfront that is invested in bonds or whatever, and a per annum or per kWh levy toward dismantling. If the plant runs longer than expected the extra dismantling fees can be used for the next plant or something.
Agreed. My formulation was too brief. We should have a combination of upfront and annual payments into a distmanteling fund that works like an insurance.
Probably the assumption is that you will upgrade the panels at radically reduced prices, re-using the wiring and support. Then, the cost is for insurance against the site being no longer viable. And, probably, the cabling has high scrap value.
The future of solar is in mixed use, where the land continues doing whatever it was already doing, just with added revenue on a very different schedule. This easiest on pasture, but offers most value on reservoirs and canals.
In a rational market it would be impossible to get financing for single-use solar farms. Instead, ignorant investors love them, particularly when sited in the worst choice of place, deserts.
(Deserts are lousy because they are hot and dusty, cutting both output and panel life, and typically far from users requiring transmission line construction. And, the land produces no other revenue, so must be secured whole.)
The future of solar is in mixed use, where the land continues doing whatever it was already doing, just with added revenue on a very different schedule. This easiest on pasture, but offers most value on reservoirs and canals.
In a rational market it would be impossible to get financing for single-use solar farms. Instead, ignorant investors love them, particularly when sited in the worst choice of place, deserts.
(Deserts are lousy because they are hot and dusty, cutting both output and panel life, and typically far from users requiring transmission line construction. And, the land produces no other revenue, so must be secured whole.)
I've come across this blog a few times in the past month, and it's excellent.
I've just read this series, and yes for it at least "excellent" is the right word. From this one series I learnt a lot about how bankers, insurance agencies and engineers collaborate to delivery large novel projects.
Or at least how the Europeans do it. It's involves a remarkable amount of cooperation and trust building, among many parties, and it delivered. I had no idea it was so complex. I guess it's done in much the same way in the rest of the OECD.
Societies (and ergo countries) that can't pull that off must be at a huge disadvantage compared to those who can. So much so, that it seems likely it explains the entire difference between OECD levels of affluence, and societies on the brink in other parts of the world.
Or at least how the Europeans do it. It's involves a remarkable amount of cooperation and trust building, among many parties, and it delivered. I had no idea it was so complex. I guess it's done in much the same way in the rest of the OECD.
Societies (and ergo countries) that can't pull that off must be at a huge disadvantage compared to those who can. So much so, that it seems likely it explains the entire difference between OECD levels of affluence, and societies on the brink in other parts of the world.
Jérôme used to hang out on The Oil Drum, back in the Peak Oil days (2006?), and explain the financing of wind power there.
I'd say he knows his onions.
I'd say he knows his onions.
[deleted]
Tiny nitpick on an otherwise good article: IJmuiden is spelled with both a capital I and J in Dutch since it’s a digraph[1]. This also is an good example why user interfaces should be careful to override the user’s capitalization of names.
[1] https://en.m.wikipedia.org/wiki/IJ_(digraph)
[1] https://en.m.wikipedia.org/wiki/IJ_(digraph)
Tiny nitpick... Irrelevant nitpick is what I would call it and it's not correct. It has nothing to do with ij being a digraph, the following are also digraphs au, ou, ei, eu,... in Dutch. You don't write AU or OU at the beginning of a sentence or in a name.
>"projects in 2011 would typically have assumed a 20 year operational life, but the industry has moved towards 35 years as a standard and some players now even expect that 40 years is achievable"
I wonder how does the real lifetime look like, especially in cold seas where the blades have to deal not with just salty water droplets hitting their tips at very high speeds, but ice too. I've seen a video few years ago that said the blade lifetime in reality is shockingly worse than the estimates due to delamination, composite deterioration etc. As a proof they showed videos taken from air showing large amount of those blades being buried in the soil by huge bulldozers that looked very tiny in comparison to the size of the mountain of blades they were burying. I'm really curious if they resolved the problem by now.
I wonder how does the real lifetime look like, especially in cold seas where the blades have to deal not with just salty water droplets hitting their tips at very high speeds, but ice too. I've seen a video few years ago that said the blade lifetime in reality is shockingly worse than the estimates due to delamination, composite deterioration etc. As a proof they showed videos taken from air showing large amount of those blades being buried in the soil by huge bulldozers that looked very tiny in comparison to the size of the mountain of blades they were burying. I'm really curious if they resolved the problem by now.
The solution is simply ongoing inspections and repair of such damagen when it's found, before it becomes so bad the whole blade has to be replaced:
https://www.fullcirclewindservices.com/wind-turbine-blade-re...
https://www.fullcirclewindservices.com/wind-turbine-blade-re...
One of the problems is that its so dependent on government policy its difficult to predict. Eg right now France caps its electricity prices so power generators aren't making the profits they would in a free market. Also who knows what will happen down the road when cheaper renewables or nuclear comes online.
Why would cheaper nuclear come online anytime the next 2 decades? Serious question, is there any indication that this is likely to happen?
More nuclear, sure, maybe even small reactors sometime 2030, but much cheaper?
Small reactors might start to get economy of scale in manufacture, but operators would see the opposite result, either the same attention needed for much less power, or the same power but many times the work. Nukes' operation is a minority cost only by comparison to monstrous capital cost. It is way more than for, e.g., coal, fuel aside.
The manufacturer might instrument it heavily, and take up remote and semi-automated management of the whole fleet, but that also raises total cost vs. big reactors.
It is impossible for mature tech to keep up where the competition's cost falls at a relentlessly exponential pace. Reactors are, unavoidably, about massive steel and concrete, plumbing, valves, pumps, and steam turbines, none of those getting cheaper.
The manufacturer might instrument it heavily, and take up remote and semi-automated management of the whole fleet, but that also raises total cost vs. big reactors.
It is impossible for mature tech to keep up where the competition's cost falls at a relentlessly exponential pace. Reactors are, unavoidably, about massive steel and concrete, plumbing, valves, pumps, and steam turbines, none of those getting cheaper.
If anything nuclear keeps increasing in cost while renewables keep getting cheaper:
https://en.wikipedia.org/wiki/Cost_of_electricity_by_source#...
https://en.wikipedia.org/wiki/Cost_of_electricity_by_source#...
Cheaper renewables might be a risk... Well, even more wind might be.. because the price for electricity will be low for all wind farms when the wind is blowing.
It seems like there might be a lot of debt here exposed to a risk that the prices for electricity drop when it's windy.
It seems like there might be a lot of debt here exposed to a risk that the prices for electricity drop when it's windy.
Renewables, anyway.
"on the basis of ongoing market prices, without any medium term revenue stabilisation mechanism."
This looks clever when market price is 50 per MWh, but when Putin decides to cut off the cheap gas you were using to make a lot of electricity and the market price rises to 500 per MWh, suddenly revenue stabilisation looks very different.
The UK has a bunch of wind farms which are quite old (up to about 30 years), and so even if they were subsidised when built the subsidy has expired but the wind farm is still there and still making electricity (typical design life is 25 years, in most cases as lifespan approaches the owners want to build a taller wind farm). However today the market price they're selling electricity for is far higher, as much as ten times. Newer wind farms have a Contract for Difference as revenue stabilisation, with the actual price they're paid fixed (a "strike price") and of course those strike prices are far lower than today's gas shortage market prices.
So there's pressure for government to agree that old wind farms get a CfD, with a price lower than today's market price but higher, perhaps much higher than future market prices, since now stabilisation is supporting a different government policy (don't let voters starve or freeze to death) rather than the original one (subsidise "green" energy solutions)
The irony is that if a previous UK government had built more wind power in the early 2000s, using more subsidies, that would actually save money today, even though it would have outraged fiscal conservatives at the time who imagined it would never pay off.
This looks clever when market price is 50 per MWh, but when Putin decides to cut off the cheap gas you were using to make a lot of electricity and the market price rises to 500 per MWh, suddenly revenue stabilisation looks very different.
The UK has a bunch of wind farms which are quite old (up to about 30 years), and so even if they were subsidised when built the subsidy has expired but the wind farm is still there and still making electricity (typical design life is 25 years, in most cases as lifespan approaches the owners want to build a taller wind farm). However today the market price they're selling electricity for is far higher, as much as ten times. Newer wind farms have a Contract for Difference as revenue stabilisation, with the actual price they're paid fixed (a "strike price") and of course those strike prices are far lower than today's gas shortage market prices.
So there's pressure for government to agree that old wind farms get a CfD, with a price lower than today's market price but higher, perhaps much higher than future market prices, since now stabilisation is supporting a different government policy (don't let voters starve or freeze to death) rather than the original one (subsidise "green" energy solutions)
The irony is that if a previous UK government had built more wind power in the early 2000s, using more subsidies, that would actually save money today, even though it would have outraged fiscal conservatives at the time who imagined it would never pay off.
> The irony is that if a previous UK government had built more wind power in the early 2000s, using more subsidies, that would actually save money today, even though it would have outraged fiscal conservatives at the time who imagined it would never pay off.
Most self-proclaimed fiscal conservatives I cone across don't seem to grasp the difference between spending and investment.
When they do understand investment, they want to attract private capital at a cost of 5% yoy, when government could borrow money at 0.1% yoy (Uk Hincley C debacle)
Most self-proclaimed fiscal conservatives I cone across don't seem to grasp the difference between spending and investment.
When they do understand investment, they want to attract private capital at a cost of 5% yoy, when government could borrow money at 0.1% yoy (Uk Hincley C debacle)
Hah. There's actually an interesting UK-specific quirk that the comment you're replying to has missed: if a previous UK government had built more wind power in the 2000s using more subsidies that wouldn't actually save us money, because those subsidies weren't structured as CfDs. They were just outright direct subsidy payments on top of the market price of electricity which is set by the most expensive generator needed to fil demand (usually gas). So building more back then could actually have lead to higher power bills even though they should be cheaper.
Newer wind farms don't have this problem only because we ended up with a big-C Conservative government that restructured the subsidies for new projects sometime around the 2013-2016 period as CfDs at prices which are now substantially lower than the market cost of electricity. That government is generally portrayed as pretty much the archtypical example of pro-austerity, anti-green, anti-investment "fiscal conservatives" who let corporations benefit at our expense. From the news reporting you'd think that they were the ones which structured deals in ways that let energy producers get undeserved windfall profits. The media even let Ed Milliband, who was actually in charge of energy when the opposition Labour party were last in power, blame them for the fact that these windfall profits are happening without challenging him on his own role in those contracts.
Newer wind farms don't have this problem only because we ended up with a big-C Conservative government that restructured the subsidies for new projects sometime around the 2013-2016 period as CfDs at prices which are now substantially lower than the market cost of electricity. That government is generally portrayed as pretty much the archtypical example of pro-austerity, anti-green, anti-investment "fiscal conservatives" who let corporations benefit at our expense. From the news reporting you'd think that they were the ones which structured deals in ways that let energy producers get undeserved windfall profits. The media even let Ed Milliband, who was actually in charge of energy when the opposition Labour party were last in power, blame them for the fact that these windfall profits are happening without challenging him on his own role in those contracts.
> that wouldn't actually save us money, because those subsidies weren't structured as CfDs.
Ah, maybe I wasn't clear, I'm not thinking about generators who get subsidised, I'm thinking about the effect of the generation landscape on market prices. Even when there aren't enough wind generators to mean we don't need to buy any gas having more wind allows us to get better prices for the gas generation we need.
Right now there's about 7GW of wind power online and about 15GW of gas turbines. Lets ignore for now the fact we're just selling most of the wind power to our neighbours, that's 7GW which could otherwise have been supplied by the gas turbines. 7GW worth of higher gas turbine price bids were ignored because (of course) bids for wind power are basically zero.
What if it was 15GW of wind and 7GW of gas? The auction still hinges on a gas price, but now it's not the cheapest 15GW of gas, it's the cheapest 7GW of gas. If I built my gas turbine station on expensive land and thus I want higher prices to recoup my mortgage costs, I need to choose, take a loss with a lower bid or risk bidding too high and getting nothing until next auction ? Overall the effect is lower prices with more wind generation.
I agree that CfDs are the right mechanism by the way, and it shouldn't be tricky to find me talking about that long before gas prices shot up, and even before COVID, although you might not find it before Putin stole Crimea because I don't think I knew how this worked back then.
Ah, maybe I wasn't clear, I'm not thinking about generators who get subsidised, I'm thinking about the effect of the generation landscape on market prices. Even when there aren't enough wind generators to mean we don't need to buy any gas having more wind allows us to get better prices for the gas generation we need.
Right now there's about 7GW of wind power online and about 15GW of gas turbines. Lets ignore for now the fact we're just selling most of the wind power to our neighbours, that's 7GW which could otherwise have been supplied by the gas turbines. 7GW worth of higher gas turbine price bids were ignored because (of course) bids for wind power are basically zero.
What if it was 15GW of wind and 7GW of gas? The auction still hinges on a gas price, but now it's not the cheapest 15GW of gas, it's the cheapest 7GW of gas. If I built my gas turbine station on expensive land and thus I want higher prices to recoup my mortgage costs, I need to choose, take a loss with a lower bid or risk bidding too high and getting nothing until next auction ? Overall the effect is lower prices with more wind generation.
I agree that CfDs are the right mechanism by the way, and it shouldn't be tricky to find me talking about that long before gas prices shot up, and even before COVID, although you might not find it before Putin stole Crimea because I don't think I knew how this worked back then.
In other words, "fiscal conservatives'" chief desire is to move government money into private pockets at maximum rate in exchange for little or no value.
"Fiscal responsibility" is just their smokescreen. They certainly understand the difference between spending and investment. They just want to own the investment part, while government does the spending part.
"Fiscal responsibility" is just their smokescreen. They certainly understand the difference between spending and investment. They just want to own the investment part, while government does the spending part.
Isn’t private capital the opposite of government spending?
Not when it starts out as government spending, sluicing wholesale into a gaping, capacious private-capital pocket.
We see this most frequently in military contracts, although NASA and public-works projects often oblige; most particularly nuke plants, of late. Public works and NASA innovate by sluicing to an impressively wide array of smaller yet still gaping pockets.
We see this most frequently in military contracts, although NASA and public-works projects often oblige; most particularly nuke plants, of late. Public works and NASA innovate by sluicing to an impressively wide array of smaller yet still gaping pockets.
But that’s basically what is being praised as “investment” here.
The question is whether government spending is good, or whether we should let private capital fund it? (If private capital will fund it, but will then want to profit off of it.) The argument was that it would make sense to spend government money in that case.
The question is whether government spending is good, or whether we should let private capital fund it? (If private capital will fund it, but will then want to profit off of it.) The argument was that it would make sense to spend government money in that case.
The current blog author has a series of in-depth articles on the current European energy crisis which really dig into this, random highlights:
France is not quite ready to accept that nuclear is not the future, so will be subsidizing it for a while rather than building as much renewables as would be ideal for cheaper, more stable energy:
https://jeromeaparis.substack.com/p/edfs-woes-are-a-bigger-l...
> Today, we face a new situation where it’s not just new nuclear which is no longer competitive, but even the much needed refurbishment of the existing nuclear plants in France (“le grand carénage“) is not likely to be cheaper than building new renewable capacity. EDF recently estimated that, after all planned renovations for the 2014-2025 period, the 50-year average real cost of its electricity would be 55 EUR/MWh. In contrast, the recent tenders for offshore wind have yielded a strike of 44 EUR/MWh. These prices directly threaten the industrial strategy of EDF which has tried to keep as much as possible of its nuclear fleet running. There is little awareness of that reality in France.
What Germany really did wrong with their energy market:
https://jeromeaparis.substack.com/p/how-messed-up-was-german...
Basically, right-wingers moaning about "subsidies", just at the critical time Germany should have been pushing ahead with offshore wind and costing the country a lot of money as a result as they would have been running by now.
France is not quite ready to accept that nuclear is not the future, so will be subsidizing it for a while rather than building as much renewables as would be ideal for cheaper, more stable energy:
https://jeromeaparis.substack.com/p/edfs-woes-are-a-bigger-l...
> Today, we face a new situation where it’s not just new nuclear which is no longer competitive, but even the much needed refurbishment of the existing nuclear plants in France (“le grand carénage“) is not likely to be cheaper than building new renewable capacity. EDF recently estimated that, after all planned renovations for the 2014-2025 period, the 50-year average real cost of its electricity would be 55 EUR/MWh. In contrast, the recent tenders for offshore wind have yielded a strike of 44 EUR/MWh. These prices directly threaten the industrial strategy of EDF which has tried to keep as much as possible of its nuclear fleet running. There is little awareness of that reality in France.
What Germany really did wrong with their energy market:
https://jeromeaparis.substack.com/p/how-messed-up-was-german...
Basically, right-wingers moaning about "subsidies", just at the critical time Germany should have been pushing ahead with offshore wind and costing the country a lot of money as a result as they would have been running by now.
Thank you for the second link. Really good view to which parts of the now annoyingly popular decrying of German energy choices maybe actually were subpar, which were the right ones, and which even unlocked the cheap renewables for everyone worldwide.
> the 50-year average real cost of its electricity would be 55 EUR/MWh. In contrast, the recent tenders for offshore wind have yielded a strike of 44 EUR/MWh.
As they say on child toys, battery not included.
As they say on child toys, battery not included.
Yes, neither nuclear nor offshore wind exactly match the demand profile so some kind of storage/demand-response/complementary generation assets etc. is required.
Offshore wind does peak in winter along with European demand, nuclear similarly schedules its maintenance and refueling for the summer which helps but both will almost certainly overproduce relative to current demand during the night on a predictable daily schedule if rolled out to any great extent so lithium batteries (in EVs or otherwise) do a lot to integrate their power over the short term as well as the TOU rates France has used for decades to make the most of nuclear power.
> EDF advises “The Heures Pleines option will suit you especially if you want to take advantage of price per kWh at the most advantageous to the day (ie 8 hours daily peak)”. Basically if you have a night-storage electric water heater, or storage radiators, then you would be best to choose this option, which provides off peak electricity rates to heat your appliances. See peak and off-peak rates on the EDF website.
Offshore wind does peak in winter along with European demand, nuclear similarly schedules its maintenance and refueling for the summer which helps but both will almost certainly overproduce relative to current demand during the night on a predictable daily schedule if rolled out to any great extent so lithium batteries (in EVs or otherwise) do a lot to integrate their power over the short term as well as the TOU rates France has used for decades to make the most of nuclear power.
> EDF advises “The Heures Pleines option will suit you especially if you want to take advantage of price per kWh at the most advantageous to the day (ie 8 hours daily peak)”. Basically if you have a night-storage electric water heater, or storage radiators, then you would be best to choose this option, which provides off peak electricity rates to heat your appliances. See peak and off-peak rates on the EDF website.
> Yes, neither nuclear nor offshore wind exactly match the demand profile so some kind of storage/demand-response/complementary generation assets etc. is required.
Nuclear doesn't require storage, it can adapt to evolving demand [1]. I really don't know why people keep repeating that specific misinformation.
> as well as the TOU rates France has used for decades to make the most of nuclear power.
These contracts (heures creuses) are a legacy of the past, they are designed to be uncompetitive compared to the default rate.
[1]: https://www.oecd-nea.org/nea-news/2011/29-2/nea-news-29-2-lo...
Nuclear doesn't require storage, it can adapt to evolving demand [1]. I really don't know why people keep repeating that specific misinformation.
> as well as the TOU rates France has used for decades to make the most of nuclear power.
These contracts (heures creuses) are a legacy of the past, they are designed to be uncompetitive compared to the default rate.
[1]: https://www.oecd-nea.org/nea-news/2011/29-2/nea-news-29-2-lo...
I'm talking about an economically viable system, not a theoretical one where money doesn't matter.
That's why France is at 75% nuclear and uses hydro and gas to fill in and exports power regularly (at least they did when their nuclear plants were all running).
You can theoretically go 100% wind if you just build enough of it. No one is doing that because there are better, cheaper options by complementing it with other zero carbon options including storage and transmission.
That's why France is at 75% nuclear and uses hydro and gas to fill in and exports power regularly (at least they did when their nuclear plants were all running).
You can theoretically go 100% wind if you just build enough of it. No one is doing that because there are better, cheaper options by complementing it with other zero carbon options including storage and transmission.
> I'm talking about an economically viable system, not a theoretical one where money doesn't matter.
Dude, I just gave you an article written by EDF engineers to provide feedback on how plants actually work, it's not a theoretical analysis. Nuclear plants don't depend on alternative sources, and they don't need to export, simply because they regulate their output based on demand.
> No one is doing that because there are better, cheaper options by complementing it with other zero carbon options including storage and transmission.
Currently, no one is running a country-level grid on renewables alone using storage and transmission. The backup is, so far, always a high-carbon power source.
Dude, I just gave you an article written by EDF engineers to provide feedback on how plants actually work, it's not a theoretical analysis. Nuclear plants don't depend on alternative sources, and they don't need to export, simply because they regulate their output based on demand.
> No one is doing that because there are better, cheaper options by complementing it with other zero carbon options including storage and transmission.
Currently, no one is running a country-level grid on renewables alone using storage and transmission. The backup is, so far, always a high-carbon power source.
Yes, and your document notes this reality too:
> The economic consequences of load-following are mainly related to the reduction of the load factor. In the case of nuclear energy, fuel costs represent a small fraction of the electricity generating cost, especially compared to fossile sources. Thus, oper- ating at higher load factors is profitable for nuclear power plants as they cannot make savings on fuel costs while not producing electricity.
Coal and nuclear are bad at this, that's why they are traditionally "baseload" and other techs are used to complement their strengths and weaknesses to get an economic total grid system.
> The economic consequences of load-following are mainly related to the reduction of the load factor. In the case of nuclear energy, fuel costs represent a small fraction of the electricity generating cost, especially compared to fossile sources. Thus, oper- ating at higher load factors is profitable for nuclear power plants as they cannot make savings on fuel costs while not producing electricity.
Coal and nuclear are bad at this, that's why they are traditionally "baseload" and other techs are used to complement their strengths and weaknesses to get an economic total grid system.
How is that related to your original claim that:
> neither nuclear nor offshore wind exactly match the demand profile so some kind of storage/demand-response/complementary generation assets etc. is required.
There is no requirement to adapt demand for nuclear, and even though the availability of zero-cost storage could theoretically improve nuclear's cost-effectiveness, in reality, the cost of storage is greater than potential gains from running nuclear 24/7.
> that's why they are traditionally "baseload"
The article I provided states, quote:
> Nuclear power plants in France and Germany operate in load-following mode. They participate in the primary and secondary frequency control, and some units follow a variable load programme with one or two large power changes per day.
Right after the snippet you quoted, the following sentence is written:
> In France, the impact of load-following on the average unit capacity factor is sometimes estimated at about 1.2%.
Maybe you should stop making partial quotes to support repeating lies?
> neither nuclear nor offshore wind exactly match the demand profile so some kind of storage/demand-response/complementary generation assets etc. is required.
There is no requirement to adapt demand for nuclear, and even though the availability of zero-cost storage could theoretically improve nuclear's cost-effectiveness, in reality, the cost of storage is greater than potential gains from running nuclear 24/7.
> that's why they are traditionally "baseload"
The article I provided states, quote:
> Nuclear power plants in France and Germany operate in load-following mode. They participate in the primary and secondary frequency control, and some units follow a variable load programme with one or two large power changes per day.
Right after the snippet you quoted, the following sentence is written:
> In France, the impact of load-following on the average unit capacity factor is sometimes estimated at about 1.2%.
Maybe you should stop making partial quotes to support repeating lies?
Your paper says that nuclear has some limited load following abilities. I know that is true and never intended to imply it didn't.
You appear to be claiming this means that no storage/batteries are required for nuclear grids, but they are for renewables.
This is as true for nuclear as it is for renewables. If you build enough to cover the peakiest peaks then you never have to use any storage.
It would be an interesting math exercise to see whether a stupidly all nuclear grid or a stupidly all renewable grid would cost more. I'd suggest renewables would very easily win this battle, but I've not seen anyone do the numbers, because both are stupidly expensive things to do and no one has any plans to do either for real.
What people with actual nuclear on their grids have done traditionally is:
Differing rates to encourage the demand to match nuclear production better.
Storage, generally pumped hydro which uses nuclear electricity when it is cheap and then releases it later during spikes.
Export/import to neighbours (some of whom may use it for pumped hydro, like Switzerland does with French nuclear)
Have other elements on the grid, like France's 15% gas plants, or hydro to fill in the gaps.
And in the future people will do the exact same things, except they'll use wind and solar instead of nuclear because they are much cheaper. And they'll use more lithium batteries, again because those are cheaper now. And the gas they burn will transition to hydrogen.
You should read the article I linked to, it has lots of details about how the French are in denial about this incoming reality from a Frenchman with an easily found track record on supporting nuclear and commenting on the energy industry. As he says, they are having problems now, because they were mostly correct for so long in the past, and that makes it harder for them to cope with being wrong now.
You appear to be claiming this means that no storage/batteries are required for nuclear grids, but they are for renewables.
This is as true for nuclear as it is for renewables. If you build enough to cover the peakiest peaks then you never have to use any storage.
It would be an interesting math exercise to see whether a stupidly all nuclear grid or a stupidly all renewable grid would cost more. I'd suggest renewables would very easily win this battle, but I've not seen anyone do the numbers, because both are stupidly expensive things to do and no one has any plans to do either for real.
What people with actual nuclear on their grids have done traditionally is:
Differing rates to encourage the demand to match nuclear production better.
Storage, generally pumped hydro which uses nuclear electricity when it is cheap and then releases it later during spikes.
Export/import to neighbours (some of whom may use it for pumped hydro, like Switzerland does with French nuclear)
Have other elements on the grid, like France's 15% gas plants, or hydro to fill in the gaps.
And in the future people will do the exact same things, except they'll use wind and solar instead of nuclear because they are much cheaper. And they'll use more lithium batteries, again because those are cheaper now. And the gas they burn will transition to hydrogen.
You should read the article I linked to, it has lots of details about how the French are in denial about this incoming reality from a Frenchman with an easily found track record on supporting nuclear and commenting on the energy industry. As he says, they are having problems now, because they were mostly correct for so long in the past, and that makes it harder for them to cope with being wrong now.
> Your paper says that nuclear has some limited load following abilities.
Load following requirements aren't determined by the plant operator, they're determined by the grid operator, and they're the same for every controllable output source. So far, nuclear plants fully comply with the european grid requirements.
> You appear to be claiming this means that no storage/batteries are required for nuclear grids
Well, yes, that's what I'm saying, and that's what the article says.
> It would be an interesting math exercise
It's not an interesting math exercise, it's the very nature of the problem. You keep ignoring that just because it is convenient to pretend a 55€/MWh nuclear plant is equivalent to a 44€/installed MWh wind farm.
In reality, building wind farms or PV farms create external dependencies. These dependencies are absorbed without too much of a cost when your grid massively depends on gas.
The rest of your message simply denies this reality because it doesn't align with your belief.
> it has lots of details about how the French are in denial about this incoming reality
IDK what you think the article says. It talks about the failure from political leadership to provide certainty about the future of power in France, and, as a consequence, the fact that nothing has been done in the last two decades to prepare our future production means. It's been well known for a while now, and the crisis means the penny had dropped for everyone at the time the article was written.
It is completely unrelated to nuclear plants ; had we had gas plants instead, our politicians would have made the same mistake.
Load following requirements aren't determined by the plant operator, they're determined by the grid operator, and they're the same for every controllable output source. So far, nuclear plants fully comply with the european grid requirements.
> You appear to be claiming this means that no storage/batteries are required for nuclear grids
Well, yes, that's what I'm saying, and that's what the article says.
> It would be an interesting math exercise
It's not an interesting math exercise, it's the very nature of the problem. You keep ignoring that just because it is convenient to pretend a 55€/MWh nuclear plant is equivalent to a 44€/installed MWh wind farm.
In reality, building wind farms or PV farms create external dependencies. These dependencies are absorbed without too much of a cost when your grid massively depends on gas.
The rest of your message simply denies this reality because it doesn't align with your belief.
> it has lots of details about how the French are in denial about this incoming reality
IDK what you think the article says. It talks about the failure from political leadership to provide certainty about the future of power in France, and, as a consequence, the fact that nothing has been done in the last two decades to prepare our future production means. It's been well known for a while now, and the crisis means the penny had dropped for everyone at the time the article was written.
It is completely unrelated to nuclear plants ; had we had gas plants instead, our politicians would have made the same mistake.
> Well, yes, that's what I'm saying, and that's what the article says.
No, it doesn't. They'd love to be able to say that. The reason they don't say it loudly and clearly is because it's not true.
So they have to say lots of things that kind of sound a bit like that if you are not paying attention, because it would be really good for them if it was true. But it's not.
France is going to struggle to keep 50% of their power nuclear even with a will to try. So in many ways it does not matter.
But so many people say it as a way to, falsely, impugn renewables that I'm standing on the principle. What you claim is true is not true. The document does not claim it, and if it did it would be lying.
No, it doesn't. They'd love to be able to say that. The reason they don't say it loudly and clearly is because it's not true.
So they have to say lots of things that kind of sound a bit like that if you are not paying attention, because it would be really good for them if it was true. But it's not.
France is going to struggle to keep 50% of their power nuclear even with a will to try. So in many ways it does not matter.
But so many people say it as a way to, falsely, impugn renewables that I'm standing on the principle. What you claim is true is not true. The document does not claim it, and if it did it would be lying.
It is probable that wind isn't getting those highest rates. As it is in some cases the cause for high prices. When it is windy it is windy over substantial area and thus they produce lot. Meaning that there is lot of power to sell at market at any rate. Thus driving the price at the moment down.
We don't have enough wind for that to be an issue, the price is still set by the marginal cost of gas as we never produce enough wind to not need gas https://grid.iamkate.com/
If we had twice as much wind power this might start to be an issue.
If we had twice as much wind power this might start to be an issue.
Another idea:
1. Build turbines
2. Stick Bitcoin miners in them (or the off-shore substation?)
3. Disconnect Bitcoin miners when export cable is complete
4. Repeat
5. Save the world
1. Build turbines
2. Stick Bitcoin miners in them (or the off-shore substation?)
3. Disconnect Bitcoin miners when export cable is complete
4. Repeat
5. Save the world
This has already been happening for a while with cheap hydro electricity from Siberia, if I understand the situation correctly. Did anyone perform a comparison of Bitcoin vs batteries vs new electricity lines yet, is it a viable replacement under certain conditions?
Offshore wind is interesting to compare to tidal power and wave power. Tidal projects seem to go OK, while wave power companies as a rule go bankrupt without ever finishing a utility-scale installation.
Looking at failed wave-power startups, I find some common features:
Tidal has underwater turbines with expensive generators inside, duplicated, but it is anyway protected from surface insults. Are tidal projects mainly government sponsored?
It strikes me that the sweet spot for wave power would be a system where moving parts are under the surface and protected from breaking waves, where any needed mechanical parts are extremely simple and reliable, and where any expensive, fragile or high-maintenance parts are onshore and indoors.
Thus, I would have high hopes for a system anchored sub-surface that pushes air or water through a culvert/plenum to a turbine in a regular building on-shore. A single plenum, turbine, and generator could serve a whole fleet of energy-collection units out in the water. Closed-loop air, or at least dry air sourced from on shore, is appealing vs. moving sea water or sea air through a turbine, which turbines don't like so much.
Thus, I like
https://m.youtube.com/watch?v=m6MJpiUEKaU
and
https://m.youtube.com/watch?v=yfSAN-2pz9w
although I would want the turbine part moved onshore and shared. The latter is uniquely interesting as it takes advantage of not just waves' vertical motion, but their horizontal progression. The V shape is interesting as it takes energy from a wide front of the wave.
This one
https://m.youtube.com/watch?v=4ehT-ZTHFGg
is getting hype lately, but checks all the loser boxes.
Looking at failed wave-power startups, I find some common features:
- surface-level equipment exposed to breaking waves,
- complicated mechanical parts,
- electrical equipment on or under water,
- expensive parts (turbine, generator) duplicated for each unit
- a heavy, expensive to build bunker.
Tidal has underwater turbines with expensive generators inside, duplicated, but it is anyway protected from surface insults. Are tidal projects mainly government sponsored?
It strikes me that the sweet spot for wave power would be a system where moving parts are under the surface and protected from breaking waves, where any needed mechanical parts are extremely simple and reliable, and where any expensive, fragile or high-maintenance parts are onshore and indoors.
Thus, I would have high hopes for a system anchored sub-surface that pushes air or water through a culvert/plenum to a turbine in a regular building on-shore. A single plenum, turbine, and generator could serve a whole fleet of energy-collection units out in the water. Closed-loop air, or at least dry air sourced from on shore, is appealing vs. moving sea water or sea air through a turbine, which turbines don't like so much.
Thus, I like
https://m.youtube.com/watch?v=m6MJpiUEKaU
and
https://m.youtube.com/watch?v=yfSAN-2pz9w
although I would want the turbine part moved onshore and shared. The latter is uniquely interesting as it takes advantage of not just waves' vertical motion, but their horizontal progression. The V shape is interesting as it takes energy from a wide front of the wave.
This one
https://m.youtube.com/watch?v=4ehT-ZTHFGg
is getting hype lately, but checks all the loser boxes.
I live in Tasmania, and was certain one of your YouTube links would be to Wave Swell Energy / UniWave200. I helped build this - no affiliation, just happened to be in a place at a time whereby I participated in a small way.
Thanks, I hadn't seen 4ehT-ZTHFGg - posted only 6 days ago.
Thanks, I hadn't seen 4ehT-ZTHFGg - posted only 6 days ago.
They could improve that by losing the turbines, and connecting a bunch of units to a common plenum driving a single turbine on shore. They could use two plenums, one with overpressure and another with vacuum, and connect the turbine between those.
It would still expose a bunker to surface waves, but anyway it has no exterior moving parts. I am surprised they did not shape it to avoid absorbing direct strikes on the outside -- something more dolphin-shaped.
It says something when a random passersby can suggest major design improvements on a few minutes' acquaintance, but it is a common feature of almost all proposed renewable energy generation and storage technologies.
The incentive structure for proposals and grants seems to enforce extreme overcomplication in order to seem "novel". There seems to be no space for simplicity.
It would still expose a bunker to surface waves, but anyway it has no exterior moving parts. I am surprised they did not shape it to avoid absorbing direct strikes on the outside -- something more dolphin-shaped.
It says something when a random passersby can suggest major design improvements on a few minutes' acquaintance, but it is a common feature of almost all proposed renewable energy generation and storage technologies.
The incentive structure for proposals and grants seems to enforce extreme overcomplication in order to seem "novel". There seems to be no space for simplicity.
Indeed.
I'd be interested if Wave Swell Energy have any plans to develop the idea more along the lines you've described, now they've somewhat proven the concept, or if they're planning on sticking with the current design, which would seem to have only niche use in remote areas that are underserved by grid supply, and suffer poor wind / solar viability for at least some part of the year. So probably nowhere.
I'd be interested if Wave Swell Energy have any plans to develop the idea more along the lines you've described, now they've somewhat proven the concept, or if they're planning on sticking with the current design, which would seem to have only niche use in remote areas that are underserved by grid supply, and suffer poor wind / solar viability for at least some part of the year. So probably nowhere.
An interesting attempt is Minesto. Being able to utilize a similar propeller seal as regular ships. The question deployment and retrieval.
No affiation, but a former colleague works there.
https://minesto.com/
No affiation, but a former colleague works there.
https://minesto.com/
Very interesting: only one moving part, aside perhaps from steering surfaces. Or is it passively stable? This sidesteps Makani Power's absurd complexity, able to use buoyancy for loft, instead of needing to be a self-piloting powered craft. It would be good if the figure-8 path could be a natural result of tether and vehicle geometry.
I wonder if the tether could carry air to establish positive pressure in the vehicle body, against leaks. Buoyancy from the sea floor should provide all the pressure needed.
I wonder if the tether could carry air to establish positive pressure in the vehicle body, against leaks. Buoyancy from the sea floor should provide all the pressure needed.
It seems the key is non-recourse debt which is a great way to align the goals of the financiers with the owners.
[deleted]
> "Unfortunately, it quickly appeared that offshore wind was quite different from offshore oil & gas – serial construction rather than large bespoke structures, a capped revenue structure that means that cost discipline is a lot more important than simply getting things done (in oil & gas, the cashflows from a producing well are such that it is almost always worth it to spend more to get things done faster; in offshore wind, this is not the case)"
These are the kind of details that make the reader think, "This person knows what they're talking about, read more of their stuff."