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Axed windfarm puts govt subsidy levels in spotlight

The cancellation of one of the world’s largest planned offshore windfarms has highlighted the costs of next-generation turbine technology and the need for financial certainty, the renewables industry has warned.

German energy firm RWE yesterday announced it was pulling the plug on the 1.2GW Atlantic Array scheme that would have seen 240 turbines built off the north Devon coast, after deciding the technical challenges involved were too great in current market conditions.

A spokesperson for industry body Renewables UK said no other projects proposed for the UK’s third round of offshore windfarm development were in imminent danger but the cancellation came against a backdrop of mixed government messages about renewable energy and the slow progress of energy market reform.

‘If money was no consideration there might have been a way of using this site in its current state, but the economic realities are that it would be far too expensive to do so at the moment,’ Robert Norris told The Engineer.

The UK currently has around 3.7GW of offshore wind capacity producing an estimated 8.9TWh of electricity a year. The third round of offshore development could add a further 33GW of capacity if all proposed projects go ahead.

However, most of the Round 3 sites are much further out to sea, often in deeper waters and harsher conditions, and so are likely to require more advanced technology than that currently deployed.

A trial site of one such technology – floating turbines – will be built off the coast of Aberdeenshire following an agreement between the Crown Estate and Norwegian firm Statoil announced on Monday.

But there are worries within the industry that the subsidised energy “strike price” due to be offered to new offshore projects under the energy market reform bill currently passing through Parliament – £155/MWh in 2014/15 falling gradually to £135/MWh in 2018/19 – will not be sufficient to support all planned developments.

The Crown Estate’s head of offshore wind, Huub den Rooijen, said that the nature of the Round 3 projects meant further cancellations were likely but this would actually benefit the industry.

‘Paradoxically, this is a positive development because it provides greater clarity to key stakeholders such as supply chain and consenting bodies, and brings greater focus to the investment opportunities,’ he said in a statement.

RWE insisted its decision to cancel the Atlantic Array related to the particular combination of challenges at the site – including the type of bedrock and the strength of tidal currents – and that the firm remains committed to its other UK offshore wind projects.

The company, which has debts of around €33m (£28m), has pulled out of a number of projects across its portfolio including renewable, nuclear and fossil-fuel schemes in the last few years in what appears to be a consolidation of its business.

RWE’s UK renewables spokesperson Stephen Thomas said the economics of government subsidies were a factor in the cancellation but the company had not been pushed by an uncertain investment market and policy environment for offshore wind.

‘Even if we had people falling over themselves to invest ­– and we haven’t got that far with the project because it’s still in planning – if you go back to the costs, to the technology required, it’s just not feasible or economically viable right now.’

He added: ‘We’ve got much more favourable projects that are much less technically challenging so let’s focus our time and energy and resources on those project.’

Industry analyst Ronan Murphy, senior editor of VB Research, said that while the official line was that the cancellation was a one-off, it was never a positive sign to see such a large project abandoned.

He added that the uncertainty created by the slow progress of the Energy Bill had a wider effect than just discouraging investment in wind farms directly.

‘Part of the way to surmount technical difficulties is to have a thriving supply chain in place and you cannot have that when uncertainty exists in the sector.’

Readers' comments (12)

  • This is a symptom of RWE's weakness rather than anything fundamental to the industry.

    This project still represents a very good long-term investment prospect with the much higher wind speeds and thus greater generating capacity available in this west coast development.

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  • This article states that 3.7Gw of offshore wind capacity delivers 8.9Twh of electricity per year. Assuming they are there 24/7 (and ignoring shut downs) this gives 8,760 hours for generation whereas 8,900/3.7 is only 2,618 hours at "full blast" - an overall delivery to capacity efficiency of 27.5%. I am well aware that the wind does not always blow, even off shore, but is this normal for the industry? What is this number for all the other generators over a representative time (eg including maintenance shutdowns, nuclear refuelling etc) and what does this tell us? It is not my field, I just couldn't help myself!

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  • This is the capacity factor provided by DECC. Here are some numbers on capacity factors for different generation types from the US National Renewable Energy Laboratory. Note 27% is listed as the minimum capacity factor for offshore wind, suggesting the UK could do better.

    natural gas combustion turbines — Minimum: 10%; Median: 80%; Maximum: 93%
    natural gas combined cycle — Minimum: 40%; Median: 84.6%; Maximum: 93%
    coal, pulverized & scrubbed — Minimum: 80%; Median: 84.6%; Maximum: 93%
    nuclear — Minimum: 85%; Median: 90%; Maximum: 90.24%
    biopower — Minimum: 75%; Median: 84%; Maximum: 85%
    hydropower — Minimum: 35%; Median: 50%; Maximum: 93.2%
    enhanced geothermal — Minimum: 80%; Median: 90%; Maximum: 95%
    solar PV – Minimum: 16%; Median: 21%; Maximum: 28%
    offshore wind – Minimum: 27%; Median: 43%; Maximum: 54%
    onshore wind – Minimum: 24%; Median: 40.35%; Maximum: 50.6%

  • Thanks for the swift reply 'Ed' - lots of food for thought in those figures.

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  • One white elephant cancelled, then. If common sense and pragmatism are going to come to the fore, hoperfully HS2 is next !

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  • The excessive costs promulgated by RWE as the reasons for terminating the Atlantic Array project could be significantly reduced by the application of more innovative technology. Such solutions exist and with the right support can be brought to bear in a relatively short time-scale to provide realistic and highly competitive power from offshore wind without the need for planning blight and visual disturbance to our beautiful countryside.

    The answer lies with a new approach to offshore development using lower cost self-installing structures with none of the astronomical costs associated with offshore construction and its associated risks, weather delays, ultra-expensive specialised shipping and long-duration construction. The use of the type of technology we have developed where 90% of the fabrication and assembly is conducted in-shore at dockside facilities will result in costs comparative or lower than other available energy sources providing for a meaningful contribution to the future energy mix that will be necessary to fulfill our future requirement at a sensible cost.

    Ocean Resource have developed such a “float-out-and-sink” foundation system for offshore wind turbine based on proven technologies it has successfully developed for offshore oil and gas production. The system, called SeaBreeze, offers inshore fabrication (re-invigorating our defunct shipyards and docks), simple installation using proven technologies (and hence no massive spends on foreign-based specialised shipping) and a quicker return on investment in that power can be generated almost as soon as the “plug-and-play” systems are installed (current technologies usually requires two years to deploy and commission).

    We believe our technology has direct relevance to this unfortunate announcement by RWE and we consider that ours and other similar technology should be fully supported. Whilst financial support is often difficult to obtain, surely it is in the offshore wind developers' interest to encourage the development of such systems as ours thus making their investments more profitable and more likely to proceed.

    To summarise - the answer is staring them in the face! Use some innovation even if it looks risky now. Risk a little gain a lot!

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  • RWE's point is that the new technology needed increases the costs because it's largely unproven.

  • I'm surprised "Anonymous" has even Heard of e-mails since he belongs under a rock with all the other LUDDITES !!
    We NEED Alternative forms of Energy Production We Cannot rely on any ONE Source whether it be Coal, Gas, Oil Wood, Bio-Mass, Nuclear, Hydro-, Wave, Wind, Tidal or Anything ELSE !! We need them ALL !! Each has a part to play !

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  • So the total produced by wind is 8.9Twh per year.
    What are the losses between point of generation and point odf use. How much of this electricity is actually delivered to users?

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  • What we really need are power stations that will deliver a low cost reliable and predictable supply when needed.

    Wind, solar and wave power cannot do this. We do not need them or the huge subsidies that go with them and, in effect, rob the poor to subsidise the rich.

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  • Perhaps the latest progress on *floating* WTs has given RWE pause: they might be waiting to see whether these prove cheaper or otherwise better than the technology they originally had in mind.

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  • The following paragraph in the above article caught my attention

    "RWE insisted its decision to cancel the Atlantic Array related to the particular combination of challenges at the site – including the type of bedrock and the strength of tidal currents – and that the firm remains committed to its other UK offshore wind projects."

    The "strength of tidal currents" is the key point. Why are we focussing so much attention on wind power when we have such a regular and reliale source of power waiting to be harnessed without the visual problems of wind turbines?

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