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The True Cost of Wind Power

Wind power is often sold to us as the ‘cheapest’ option. With the current fossil fuel prices that may be the case, but is the quoted strike price of £40 per kWh really valid?


The wind turbine manufacturers appear to be struggling:

Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame -- at least in part -- is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant.

Vestas expects its profit margin to be around -5% in 2022.

“The output from the turbine has never been more valuable,” Andersen said. “But we are losing money in manufacturing a turbine.” Vestas has raised prices more than 30% in the past year to help stem losses.


New installations no longer seem to be viable at the agreed prices:

A major offshore wind project in the Massachusetts pipeline “is no longer viable and would not be able to move forward” under the terms of contracts filed in May. Both developers behind the state’s next two offshore wind projects are asking state regulators to pause review of the contracts for one month amid price increases, supply shortages and interest rate hikes.

Utility executives working with assistance from the Baker administration last year chose Avangrid’s roughly 1,200-megawatt Commonwealth Wind project and a 400 MW project from Mayflower Wind in the third round of offshore wind procurement to continue the state’s pursuit of establishing cleaner offshore wind power. Contracts, or power purchase agreements (PPAs), for the projects were filed with the Department of Public Utilities in May.


I have previously looked at the viability of the Dogger Bank Wind Farm. This is all taken from the official Dogger Bank website:

The project is designed in three similar phases but I will just look at one phase:


Installed capacity 1.2 GW

Expected annual output 6 TWh

Cost £3 Billion

Strike price £40 per MWh.

Expected Service life not mentioned.

Nameplate output 1.2 x 8760 GWh per year =  10 512 GWh per year = 10.5 TWh per year.

An expected annual output of 6 TWh gives a capacity factor of 57%. Is this realistic?

What will they earn at the strike  price?

6 TWh at £40 per MWh  = £240 Million per year.

Straight payback of £3 Billion in 12.5 years.


So with no costs for maintenance, no interest or dividends paid and a very optimistic capacity factor there is a 12.5 year payback on an asset with a 20-25 year lifespan (no one really knows). That is simply not a valid business model. A more realistic strike price is £80-100 per MWh which takes you into the NPP range.

How much of the low strike price has simply been gambling on higher electricity prices and then taking the market rate?

Does anyone have any more encouraging figures?

  • The important point Andy is that the "wind or solar" supplier has no contract to supply, and anyone else has no contract to take any power they wish to supply. The "game" of the market and pricing is largely political, the game rules being different for each type of supply. Would you play cards for money with rules like that, which electricity suppliers are forced to do? My wind contact is part of a Company which is currently making vast profits on windy days because there is a very limited other source of power. On calm days the power price rockets up because of shortage of fuel, and they make even more money for less electricity!

    We have been endlessly told that "renewables based power is cheap" but this has never been true. It is time that the wind and solar suppliers had to contract a power 24/7, and therefore pay for the backup equipment, batteries or whatever. This would immediately make the cost of renewables very clear, and probably stop investment dead.

  • Look here:

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