Cost, price, wind & value of wind as wind drops

DailyKOS  …There was a conference on the subject last week in Atlantic City which I attended, and which generated a lot of attention (with over 1,500 attendees) and during which the federal lease for Cape Wind was signed.

While no turbine has been built in the US yet*, there are high hopes that there will be some in the near future, and one of the ways to make that happen faster is to absorb the lessons from the European experience, where close to 2,500 MW have been built already. So here’s my take on what can be usefully learnt.

Part of my series on Wind Power with the usual disclosure that my work (as an independent consultant) is to advise offshore wind projects find debt financing.

….support to be economically attractive to private investors,  offshore wind requires an unusual level of regulatory effort to work:

• first, the economics need to make sense.

  While offshore is more expensive than onshore,   see my article on the cost of wind, the price of wind, the value of wind).

• the biggest obstacle in the US: the instability created by the PTC mechanism, which needs to be extended every year or couple of years, is well documented and has led to under-investment in US factories by manufacturers, who fear that the market will disappear on them every now on them (as is happening – again – this year);

…While many have expressed worries about the fact that the cost of offshore wind has pretty much doubled over the past 5 years, this can be discounted for several reasons:

• prices were driven up by the cost of commodities (steel, in particular, for offshore wind); this applied equally to other technologies, which have seen their prices move in the same direction even more for the same reason;

  
  Source: UKER

Please read full at DailyKOS

PFI – Offshore deals tests banks as wind drops
UK wind speeds have been at 180 year record lows this year – raising concerns about the reliability of wind as an energy source.
With UK wind speeds at 180 year low… Two projects in the embryonic but fast growing offshore wind sector are currently seeking debt finance. The sponsors, large European utilities, want to transfer construction risk on the deals to the banks to keep the financings off their balance sheets. A further test for the financiers is the fact.
Despite the risks, neither scheme has a construction guarantee from the sponsors. And there is plenty of risk on offshore deals…

It’s not windy
The deals are being launched as it has become clear 2010 has been a bad year for UK wind speeds, perhaps the worse since 1821. Wind speeds clearly have a direct impact on energy MW yields from wind.

A recent report from wind consultancy Garrad Hassan said UK wind yields have dropped this year to perhaps a 1 in 15 year event due to stable high pressure. Energy levels from wind dropped 27.8% in the first quarter compared with the average and 18.3% in the second quarter… The much bigger question, however, is for energy planners. Relying on a variable source of energy creates problems in terms of day-to-day security of power supply, particularly if wind accounts a quarter of the country’s power generation by 2030 as planned in the UK.

Read more at Reuters