Hornsea and the ocean of offshore windfarm subsidies
This week we got the first full-year operating results for one of Britain’s biggest windfarms. Beatrice has been built in the Moray Firth at a cost approaching £2 billion, and seems to be doing quite well, achieving a load factor of around 48%.
However, the details of the accounts show what a financial basketcase it really is. It turns out that a whopping £280 million of its income – 75% of the total – came in the form of subsidies, as this excerpt shows:
Without this bung from consumers, it would have lost £100 million or so last year.
The subsidy is of course an ongoing payment, so electricity bill payers are going to have to continue to cough up on the same scale far into the future. In just seven years’ time they will have paid the developers enough to cover the cost of building the windfarm.
The figure of £281 million – over a quarter of a billion pounds – got me to thinking about some of the other offshore windfarms coming on stream in the next few years. Take Hornsea 1 for example, slated to start production next year. It is more than twice the size of Beatrice, and its subsidy agreement is worth just a few pennies more per megawatt hour. Moreover, it uses the same size of turbines, and although it is sited much further south, it is much further from land, so it might be reasonable to expect similar performance.
If that’s correct then we can estimate how much its annual subsidy is going to be worth. £628 million pounds per year. That’s right – more than half a billion pounds per year.
Nice work if you can get it.