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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?

  • AJ, Did you understand the article I posted Andy? Contracts for difference are ridiculous unless the supplier HAS to supply so much energy. Otherwise they are just a way of prices being uncontrolled in any reasonable way.

    Andy Millar, I seriously object to be called a "Climate Change Denier", as I only object to the suggestion (not even a theory, it is without scientific basis) that ALL climate change is anthropogenic or that anything we do can change it. It is very rude, a political not scientific epithet and unworthy of any kind of professional Engineer. There has now been NO change (possibly a tiny reduction) in average global temperature for the last 8 years (NASA satellite data). So the change in CO2 over that period has clearly had zero effect! WHY? If you cannot answer that you cannot claim the temperature is anything anthropogenic at all.

  • Those people trying to deal with climate change get desperately frustrated by the constantly shifting position of the deniers.  It goes from "climate change isn't happening" to "climate change is natural and nothing to do with humans" to "climate change is mostly natural and only a little bit is due to humans", and then back again at the drop of a hat.

  • What does "deal with climate change" mean Simon? If it is natural (as it always has been) then we need to know precisely and with certainty, again if you lighting a fag causes a temperature change we also must be certain. I know this sounds a bit old fashioned but that is Science as defined by the name. The actual and real answer to your shifting question is that we do not and probably cannot know which if any is correct because the science of climate is completely open to question. Consensus has been used to say that we do by some, but if so why are climate (and for that matter weather) predictions so inaccurate? Being within a degree 3 days later is about as probable as a coin toss, and 40 years or more of modelling is much more inaccurate for future temperatures. ALL the IPCC models have always run much too hot, and still do, yet their answer is to average the results (mathematically totally invalid and moronic) and that is correct, but when this done the answer is still not in any way predictive of next week!

    As I said above the satellite temperature record (probably the most accurate we have as it really does attempt to measure the whole globe at smallish intervals) says there is no warming for 8 years although CO2 levels have increased. Classical thermodynamics also says that "greenhouse" gasses will have very little effect at the known concentrations, so we have some marvelous theories which count any effect multiple times. Water vapour is much the most prevalent Greenhouse gas, yet models cannot cope with anything about clouds because the science is not good and they are far too complex, particularly about when exactly they will form and how much rain will result. Theory says that clouds form on cold fronts and it rains (thermodynamiclly because the atmosphere can hold less water vapour as temperature falls) but observation are much more complex than this principle suggests. There is a strong and complex mechanism which controls CO2 levels, demonstrated by carbonate rocks (limestone) all of which are formed from CO2 which was once in the atmosphere via seas dissolving and precipitating it. Then they add this magic "positive feedback" factor which cannot be observed in laboratory experiments with CO2 at any concentration.

    Unless these questions are addressed then we know nothing important about what the climate will do in the long term future. Anything else is just speculation, usually for political (money!) ends. I present COP27 as the prime and immediate proof of this!

  • The people who own the satellites might say otherwise.

    But regairdless of what you think "classical thermodynamics" says, the climate is broken.  This year in the UK we've had record temperatures.  Again. We get floods and storms and heatwaves and droughts.  We've had winters without even a frost, let alone any snow.

  • The people who own the satellites might say otherwise.

    But regairdless of what you think "classical thermodynamics" says, the climate is broken.  This year in the UK we've had record temperatures.  Again. We get floods and storms and heatwaves and droughts.  We've had winters without even a frost, let alone any snow.

  • No Simon, the people who own the satellites do not say different, only the people with a vested interest in a climate "Emergency". NASA actual data is not easily available to the general public, but is there. It is politically inconvenient, that is all. I am very disappointed that you read the Guardian and listen to the BBC propaganda without studying the other sources, the most easily accesses being "Watts up with that" on the web. The whole idea of the severe weather being climate driven is simply childish, again the Data says different. Look at the number of hurricanes for the last 100 years per year, and the number is actually falling! They are definitely a heat driven phenomenon, but there are less! You need to be very aware too that much of the data presented is not true, all manner of tweeks are applied, for example the 1930's were uncharacteristically hot in the UK and USA. This is often covered up by a process officially called homogenisation, many temperature graphs show nothing!

    I would also remind you that NONE of the last 40 years worth of dire warnings has come to anything, they were ALL lies, and the actual weather rather nicely correlates with our orbital position related to the Sun and large planets, which is cyclic on various very long periods, and also solar activity (sun spot numbers) which as you know has a vast difference on an 11 year cycle and seriously affects radio propagation via changes in our ionosphere.

    What do you think of the claims being made at COP27 for vast sums of money for alleged damage to third world countries? How much should we charge them for the technology development since the Industrial Revolution, or perhaps we should simply take it away and let them find it all out themselves? No medicine, mechanical agriculture, oil, gas, telecommunications, television and radio, machines of all kinds, vehicles, etc. All this cost the "developed countries" a great deal of money and labour over a very long period. Essentially it is provided free of development cost and time to the developing countries!

    The science says that we are likely to have a relatively cold Winter in the UK, the Arctic ice is about 4 weeks ahead of normal, and the Polar Bears are already dangerous to associated communities. Just so you know, it was said that there would be an ice-free North Pole by 2000, there is really an increasing amount of ice, very strange that, must be the increasing temperature!

  • We've had record high temperatures, floods, droughts and storms.  What more do you want?

  • What you're bearing witness to Simon is MSM exaggerated alarmism.

    The climate is changing as it does naturally. The 1.5 degree increase started after the little ice age 300 years ago and  well before we started to industrialise. FACT...

    Climate science has been hijacked by the UN and its so called scientists at the IPCC for there own agenda of enriching themselves and Maurice Strongs vision of deindustrilising Western democracy. Looks to me today that the master plan is working. We are all doomed if this carries on much longer.