) Energy cost curbs are impeding Europe’s renewables rollout, Vestas warns

By Paul Homewood

From the FT:




Attempts by the EU to curb high energy prices are leading to a slowdown in the adoption of renewable energy just as the region tries to ramp it up, the chief executive of one of the world’s largest wind turbine manufacturers warned.
“Every indication is that the EU and governments have spent more time in finding taxation methods or trying to limit energy prices, which has actually slowed the process and project accruals,” Henrik Andersen, chief executive of Danish wind turbine manufacturer Vestas, told the Financial Times.
“Now there is an uncertainty of what you can expect to achieve on your electricity pricing. That is actually damaging the speed of renewables being brought on.
“It is not enough to talk about ambitions for increasing renewables,” he added. “The energy crisis is only solved by having real tangible actions, which means you need to speed up your permitting and get more prime energy sources in your grid and in your supply to the consumer.”
European energy ministers in September agreed to limit revenues from wind, solar and nuclear power generation to $180 per megawatt hour as part of their plans to curb the rise in energy prices across Europe, caused by high gas prices.

Andersen’s comments come as Vestas, which had the most installed wind turbines in 2021, trimmed its full-year earnings guidance in the face of supply chain woes and cost inflation.

Financial Times, 2 November 2022

I thought wind power was now supposed to be dirt cheap! If they cannot make a decent profit with prices of $180/MWh (plus assorted subsidies), then clearly they are not cheap as we have been told.

I posted the other day about a new Massachusetts offshore wind farm that is being shelved because it is not viable, despite it having Power Purchase Agreements signed up for $77/MWh, in addition to production tax credits (ie subsidies) of $18/MWh.

At current exchange rates, this equates to £85/MWh.

Yet we have new offshore projects, such as Hornsea Project 3, signed up for CfDs at £37/MWh. It must now be abundantly clear that most of these new projects will never be viable at their contracted prices, not least because of rising interest rates. Either they too will be shelved, or they will simply not take up their CfD options and sell at market price instead.



November 4, 2022 at 05:13AM

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