Say what you will about wind turbines, the steampunk wing of our glorious renewable future, their most dramatic failures have an epic quality about them — the toppling, the crumpling, the buckling, the bits and pieces flying through the air.
I don’t know if that happened when a blade failed recently at an offshore facility in the North Sea (sometimes the “failing” can just be cracking) but as Energy Voice explained, it was the third failure of a GE Vernova blade that has been reported recently.
The failure occurred Thursday morning on an installed GE Vernova turbine at the Dogger Bank wind farm off the northeast coast of England, according to a notice on the project website. No one was injured and the cause is under investigation. A GE Vernova representative confirmed Thursday’s incident in an emailed statement.
The same facility in May suffered a failed blade on a different GE Vernova turbine, with the project developers saying the circumstances appeared to be isolated to that particular blade.
A month ago, a blade fell from a GE Vernova turbine off the US East Coast, with shards washing ashore on the island of Nantucket, closing beaches. Public outrage has added to the problems already facing the industry as rising interest rates and supply-chain woes plague projects.
You can see a picture that shows what the damage looked like at the facility off Massachusetts here.
Meanwhile, Gordon Hughes, writing in the Wall Street Journal, asks why New York will be paying so much for the wind-powered electricity generated by two large wind farms, Empire Wind 1 and Sunrise Wind, off the coast of Long Island:
The projects are expected to begin in 2026 and 2027, with power delivered to Brooklyn (Empire) and Long Island (Sunrise). The state will pay $155 and $146 per megawatt-hour, respectively. These prices are steep, at least four times the average grid cost paid over the past year. New Yorkers should be asking why.
States agree to pay wind-power operators—known as the “offtake price”—based on a project’s “break-even cost,” the estimated bill for building and operating the wind farm over its useful life. That is undoubtedly part of the problem. The offshore wind business off the East Coast is in turmoil. Operators have canceled projects from Massachusetts to Maryland that were due to be constructed in the next four years. Some have been delayed, while others have renegotiated their contracts at prices 30% to 50% higher than originally promised.
Hughes looks at two estimates showing widely divergent estimates of the break-even cost for these projects. The relevant number is the number after factoring in tax credits. “Every offshore wind farm,” he writes, “expects to take advantage of investment or production tax credits under the Inflation Reduction Act.” Thank you, taxpayers!
After factoring in those tax credits, the U.S. Energy Information Administration arrives at a break-even of cost of $101 per megawatt-hour, well below what the state will be paying. Lazard, an investment bank, came out with lower estimates still, suggesting $53-$79/MWh after tax credits.
The owner-operators of the two farms — Equinor for Empire and Orsted for Sunrise — are two of the top five global wind-farm investors and operators. They presumably know what they are doing, have access to attractively priced capital, good supply chains, and so on.
But have Lazard and the EIA been too optimistic? Perhaps. Hughes notes that “both assume much lower capital and annual operating costs for U.S. projects than the actual costs for large offshore wind farms in the North Sea. European supply chains and firms are far more developed than in the U.S., which would mean higher prices for projects in the states.”
Hughes instead assumes actual European capital and operating costs. If those are in the ballpark (that too may be too optimistic), these projects will be exceptionally profitable. Meanwhile, as noted above, the electricity they generate will be priced far above what New York is currently paying. The average wholesale value of power in New York from July 2023 to June 2024 was $36/MWh, rather lower (even allowing for some inflation) than the $146-155/MWh that will be paid to the wind farm operators.
The good news is that they will be a less reliable source of supply than that which preceded them.
That’s not good news?
Oh yes, Equinor and Orsted will each receive a $3 billion subsidy from taxpayers.
In the last week, there has been a lot of talk from Democrats about greedflation, a convenient myth. They might want to turn their attention to greenflation, which is not, and indeed to any evidence of “gouging,” another of their supposed concerns, in this area.
Hughes explains that these deals were renegotiated contracts:
New York in 2022 agreed to an offtake price of $107.50 per megawatt-hour for Empire Wind 1. There was a second phase of the project, Empire Wind 2, that Equinor canceled because of higher-than-anticipated costs. The company threatened to cancel Empire Wind 1 unless the state renegotiated its offtake price. Orsted followed the same playbook for Sunrise.
It’s true that inflation and higher interest rates made a nonsense of the assumptions underpinning many earlier bids in this sector, but Equinor and Orsted will also have known that New York will have been under political pressure to get those turbines (intermittently) running. There’s a green transition under way! We must win the “race” to net zero! There are offshore wind targets to be met!
Central planning is what it is. Industrial policy is what it is.