Four NY offshore projects ask for almost 50% price rise

Four NY offshore projects ask for almost 50% price rise

https://www.windtaskforce.org/profiles/blogs/four-ny-offshore-proje...

By Paul Homewood

 

We already know, some developers have pulled out of offshore wind projects off the US NE coast, as they are not financially viable.

Here is more news on developments off the New York coast:

 

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The developers of four offshore wind farms in New York are seeking average price rises of almost 50% on their offtake agreements.

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The New York State Energy Research and Development Authority (NYSERDA) calculated how the companies’ requested adjustment would impact strike prices, and found the average across all four was 48%.

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The four projects involved are Oersted and Eversource’s 924 MW Sunrise Wind project, and Equinor and BP’s 816 MW Empire Wind 1, 1260 MW Empire Wind 2 and 1230 MW Beacon Wind.

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Sunrise Wind asked its $110.37 price be increased to $139.99, a 27% increase, according to NYSERDA.

Empire Wind 1 asked its $118.38 price be increased to $159.64, a 35% increase

Empire Wind 2 asked its $107.50 price be increased to $177.84, a 66% increase.

Beacon Wind asked its $118.00 price be increased to $190.82, 62% more.

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The four projects combined have an average price rise of 55%.

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The multi-billionaire developers of the four projects are seeking a number of reliefs, including

1) retroactively applying (after the contract was signed) an inflation-adjustment mechanism similar to one included in New York’s recent third offshore wind solicitation, plus

2) interconnection cost adjustments, though the exact specifications differ between the developers.

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According to NYSERDA, including ONLY the inflation adjustment mechanism would increase prices/MWh for the four projects by an average of 31% ON TOP OF THE ABOVE AVERAGE OF 55% 

https://renews.biz/87865/four-ny-offshore-projects-ask-for-almost-5...

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Do we need any further proof that offshore wind is not as cheap as was bandied about by various pro-Wind shills.

If the Media did its job of informing the people, there would be a groundswell of opposition to Offshore wind.

FLOATING Offshore wind, as in the poor state of Maine, would be even more expensive.

APPENDIX

US/UK 66,000 MW OF OFFSHORE WIND BY 2030; AN EXPENSIVE FANTASY  

https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-off...

 

The US government has the fantasy of wanting to build 30,000 MW of offshore by 2030, i.e., just 7 years, but several companies, building projects for Massachusetts, will be allowed to walk away from the signed PPAs, and rebid at much higher prices next year.

 

The UK government has the fantasy of wanting to build 36,000 MW of offshore by 2030, i.e., in just 7 years,

 

That means placing in operation 66,000/7 = 9,428 MW of wind turbines/y, during 2024 through 2030

The continent-based European big wind companies currently have an offshore capacity of about 4,000 MW/y

 

These companies prefer the U.S. market, because Biden’s "Inflation-Reduction-Act” (IRA) has higher subsidies than the UK.

The IRA has “bonus” subsidies for domestic content requirements to create US jobs and US wind infrastructures

 

However, the EU is urging Biden to ignore the domestic content requirements, so Europe would receive “bonus” subsidies to create European jobs to build factories, ports, cranes, specialized ships, etc., for manufacturing and erecting nacelles, towers and rotor blades, to increase EU wind turbine exports to the US, UK, and other markets in future years.

 

The EU has a high-level goal to shame the US, rich in energy and other resources, into the wind/solar/battery blackhole, using UN IPCC scare-mongering about global-warming

 

NOTE: The specialized ships and cranes, almost all owned by European companies, are very expensive and take 3 to 4 years to design and build. They are booked years in advance, with upfront cancellation fees in escrow. Their lack of availability, even at high fees, delays projects, which increases $/installed MW

 

NOTE: The US will have at least a $1.0 trillion trade deficit and about a $2.0 trillion federal budget deficit in 2023. The US is in no position to engage in giveaways.

 

NOTE:

About 7,000 MW of offshore wind bids were awarded by the UK 4th Auction, in 2022

No bids were submitted for the UK 5th Auction, in 2023; European companies protesting low UK subsidies.

 

Six Items of Interest

 

1) Vattenfall, Sweden, has put on hold 1,400 MW in 2023, and will re-evaluate its entire 4,200 MW zone, because its spreadsheets show a “net revenue shortage” of about 40%, meaning the prices, c/kWh, offered by the UK auctions are about 40% too low. 

https://www.offshorewind.biz/2023/07/20/breaking-vattenfall-stops-d....

 

2) OERSTED, Denmark, sees a $2.6 billion loss on its three US East Cost offshore wind systems, mainly due to high inflation, high interest rates, supply chain constrains and disruptions, and not being awarded “bonus” subsidies of the IRA.

https://www.reuters.com/business/energy/denmarks-orsted-anticipates...

 

3) EU big wind conglomerates want, on average, 40% more, because turnkey capital costs (foundations, turbines, cabling to shore, installation) increased to at least $5,500/installed kW, with bank loan rates at 6.5% in 2023, from $3,500/kW and 3% in 2021

 

4) UK and New York State bureaucrats are grossly uninformed regarding market conditions. They display zero business sense. New York State bureaucrats calculated their estimates of offshore wind contract prices, but when the owners saw those numbers, they said, we need up to 66% more, for our spreadsheets to make business sense.

 

Owners want a return on their investment of at least 10%/y, when bank loans and long-term CDs are 6.5%/y. The 3.5% is about a minimum for all the years of hassles of designing, building, erecting, and paperwork of a project

Below contract prices are after 50% US subsidies. See Items 4 and 6

 

Oersted, Denmark, Sunrise wind, NYS estimate $110.37/MWh, needs $139.99/MWh, a 27% increase

Equinor, Norway, Empire 1 wind, NYS estimate $118.38/MWh, needs $159.64/MWh, a 35% increase

Equinor, Norway, Empire 2 wind, NYS estimate $107.50/MWh, needs $177.84/MWh, a 66% increase

Equinor, Norway, Beacon Wind, NYS estimate $118.00/MWh, needs $190.82/MWh, a 62% increase

https://www.windtaskforce.org/profiles/blogs/liars-lies-exposed-as-...

 

5)

- Lifetime Performance of World’s First Offshore Wind Farm 

https://www.windtaskforce.org/profiles/blogs/lifetime-performance-o...

 

- IRENA prepares glossy offshore wind reports, that 1) ignore industry cost data of offshore wind systems in the UK, 2) overestimates capacity factors, 3) underestimates decreases in output with aging, 4) underestimates O&M/MWh. IRENA is a government-controlled, offshore wind rah-rah site, that cannot be trusted

https://www.windtaskforce.org/profiles/blogs/irena-a-european-renew...

 

6) Bloomberg recently reported, citing figures from Bloomberg-NEF: “The all-in, turnkey capital cost associated with a typical US offshore project, before bonus tax credits of the IRA, has increased by 57% since 2021. The increased costs of materials, energy, components, labor, and supply chain disruptions and constraints (shortage of European-owned specialized ships, etc.,) explain about 40% of that, with 60% due to increased financing costs; borrowing larger amounts/installed kW at higher interest rates

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Comment by Willem Post on October 8, 2023 at 11:15am

BATTERY SYSTEM CAPITAL COSTS, OPERATING COSTS, ENERGY LOSSES, AND AGING

https://www.windtaskforce.org/profiles/blogs/battery-system-capital...

EXCERPT

PART 1

  

Turnkey Capital Cost of Tesla-Megapack Battery Systems

 

Tesla is the world’s largest provider of lithium-ion battery systems, that include front-end power electronics, batteries, back-end power electronics, heating and cooling systems for batteries and enclosures

  

Megapack ratings, MW/MWh, increased from 2021, to 2022, to 2023

Megapack pricing varies due to market conditions

 

2021 pricing for a 10 Megapack system, 4-h delivery, with installation, about $10 million, or $328/kWh

2022 pricing for a 10 Megapack system, 4-h delivery, with installation, about $16 million, or $412/kWh

2023 pricing for a 10 Megapack system, 4-h delivery, with installation, about $19 million, or $487/kWh

 

Tesla Megapacks had a 487/328 = 48.5% price increase from 2021 to 2023

 

Connecting the Megapacks into a system incurs losses, which are represented by the “Tesla design factor”

After applying the factor, the above $/kWh is increased! See URLs and below examples.

 

https://electrek.co/2022/03/21/tesla-hikes-megapack-prices-backlog-...

https://www.tesla.com/megapack/design

1) Example of Turnkey Cost of Large-Scale, Megapack Battery System, 2022 pricing 

 

PG&E, a California utility, placed a battery system in operation at Moss Landing in April 2022

The system consists of 256 Megapacks, rated 182.5 MW/730 MWh, 4-h energy delivery.

Power = 256 Megapacks x 0.770 MW x 0.926, Tesla design factor = 182.5 MW

Energy = 256 Megapacks x 3.070 MWh x 0.929, Tesla design factor = 730 MWh

We assume $1.1 million/Megapack, because of large number of units

 

Estimated supply by Tesla, 256 Megapacks x $1.1 million = $282 million, or $386/kWh

Estimated supply by Ohers, $62/kWh

All-in, turnkey cost about $448/kWh; 2022 pricing

 

The primary purpose of this battery system is to absorb midday solar output bulges, and deliver about 80% of it during the peak demand hours of late afternoon/early evening.

 

Any costs associated with battery systems are charged to ratepayers, taxpayers and added to government debt, i.e., not charged to Owners of solar systems, the grid disturbers.

https://www.10news.com/news/national/pg-es-tesla-megapack-battery-in-san-francisco-now-operational

 

2) Example of Turnkey Cost of Large-Scale, Megapack Battery System, 2023 pricing

 

The system consists of 50 Megapack 2, rated 45.3 MW/181.9 MWh, 4-h energy delivery

Power = 50 Megapacks x 0.979 MW x 0.926, Tesla design factor = 45.3 MW

Energy = 50 Megapacks x 3.916 MWh x 0.929, Tesla design factor = 181.9 MWh

 

Estimate of supply by Tesla, $90 million, or $495/kWh. See URL

Estimate of supply by Others, $14.5 million, or $80/kWh

All-in, turnkey cost about $575/kWh; 2023 pricing

 

https://www.tesla.com/megapack/design

https://cms.zerohedge.com/s3/files/inline-images/2022-03-21_15-28-46.png?itok=lxTa2SlF

https://www.zerohedge.com/commodities/tesla-hikes-megapack-prices-commodity-inflation-soars

 

Fixed Annual Cost of Megapack Battery Systems; 2023 pricing

 

Assume a system rated 45.3 MW/181.9 MWh, and an all-in turnkey cost of $104.5 million, per Example 2

Amortize bank loan for 50% of $104.5 million at 6.0%/y for 15 years, $5.291 million/y

Pay Owner return of 50% of $104.5 million at 9%/y for 15 years, $6.359 million/y (9% due to high inflation)

Lifetime (Bank + Owner) payments 15 x (5.291 + 6.359) = $174.75 million

 

Assume battery daily usage for 15 years at 10%, and losses at 19%

Battery output = 15 y x 365 d/y x 181.9 MWh x 0.1, usage x 1000 kWh/MWh = 99,590,250 kWh delivered to HV grid

 

(Bank + Owner) payments, $174.75 million / 99,590,250 kWh = 175.5 c/kWh

Less 50% subsidies (ITC, depreciation in 5 years, deduction of interest on borrowed funds) is 87.7c/kWh

At 10% usage, publicized cost, 87.7 c/kWh

At 40% usage, publicized cost, 21.9 c/kWh

Excluded costs/kWh: 1) O&M; 2) system aging, 3) system losses from HV grid to HV grid, 4) downtime of some parts of the system, 5) decommissioning in year 15, i.e., disassembly, reprocessing and storing at hazardous waste sites.

NOTE 1: The 40% usage is close to Tesla’s recommendation of 60% usage, i.e., not charging in excess of 80% and not discharging to less than 20%,

Tesla’s recommendation was not heeded be Hornsdale Power Reserve owners.

They added Megapacks to offset rapid aging of the original system and to increase the rating of the expanded system.

http://www.windtaskforce.org/profiles/blogs/the-hornsdale-power-res...

NOTE 2: Aerial photos of large-scale battery systems with many Megapacks, show many items of equipment, other than the Tesla supply, such as step-down/step-up transformers, switchgear, connections to the grid, land, access roads, fencing, security, site lighting, i.e., the cost of the Tesla supply is only one part of the battery system cost at a site.

NOTE 3: Battery system turnkey capital costs and electricity storage costs likely will be much higher in 2023 and future years, than in 2021 and earlier years, due to: 1) increased inflation rates, 2) increased interest rates, 3) supply chain disruptions, which delay projects and increase costs, 4) increased energy prices, such as of oil, gas, coal, electricity, etc., 5) increased materials prices, such as of tungsten, cobalt, lithium, copper, manganese, etc., 6) increased labor rates.

  

NOTE 4: World cobalt production was 142,000 and 170,000 metric ton, in 2020 and 2021, respectively, of which the Democratic Republic of the Congo was 120,000 metric ton in 2021.

 

https://www.kitco.com/news/2022-02-02/Global-cobalt-production-hits...

https://www.wilsoncenter.org/blog-post/drc-mining-industry-child-la...

Comment by Dan McKay on October 7, 2023 at 10:56am

natural gas-fired plants, without government interference, consistently priced at $30.00 per megawatt-hour Wind is 5 times the price not including subsidies!

 

Maine as Third World Country:

CMP Transmission Rate Skyrockets 19.6% Due to Wind Power

 

Click here to read how the Maine ratepayer has been sold down the river by the Angus King cabal.

Maine Center For Public Interest Reporting – Three Part Series: A CRITICAL LOOK AT MAINE’S WIND ACT

******** IF LINKS BELOW DON'T WORK, GOOGLE THEM*********

(excerpts) From Part 1 – On Maine’s Wind Law “Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine if the law’s goals were met." . – Maine Center for Public Interest Reporting, August 2010 https://www.pinetreewatchdog.org/wind-power-bandwagon-hits-bumps-in-the-road-3/From Part 2 – On Wind and Oil Yet using wind energy doesn’t lower dependence on imported foreign oil. That’s because the majority of imported oil in Maine is used for heating and transportation. And switching our dependence from foreign oil to Maine-produced electricity isn’t likely to happen very soon, says Bartlett. “Right now, people can’t switch to electric cars and heating – if they did, we’d be in trouble.” So was one of the fundamental premises of the task force false, or at least misleading?" https://www.pinetreewatchdog.org/wind-swept-task-force-set-the-rules/From Part 3 – On Wind-Required New Transmission Lines Finally, the building of enormous, high-voltage transmission lines that the regional electricity system operator says are required to move substantial amounts of wind power to markets south of Maine was never even discussed by the task force – an omission that Mills said will come to haunt the state.“If you try to put 2,500 or 3,000 megawatts in northern or eastern Maine – oh, my god, try to build the transmission!” said Mills. “It’s not just the towers, it’s the lines – that’s when I begin to think that the goal is a little farfetched.” https://www.pinetreewatchdog.org/flaws-in-bill-like-skating-with-dull-skates/

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Sign up today and lend your voice and presence to the steadily rising tide that will soon sweep the scourge of useless and wretched turbines from our beloved Maine countryside. For many of us, our little pieces of paradise have been hard won. Did the carpetbaggers think they could simply steal them from us?

We have the facts on our side. We have the truth on our side. All we need now is YOU.

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Hannah Pingree on the Maine expedited wind law

Hannah Pingree - Director of Maine's Office of Innovation and the Future

"Once the committee passed the wind energy bill on to the full House and Senate, lawmakers there didn’t even debate it. They passed it unanimously and with no discussion. House Majority Leader Hannah Pingree, a Democrat from North Haven, says legislators probably didn’t know how many turbines would be constructed in Maine."

https://pinetreewatch.org/wind-power-bandwagon-hits-bumps-in-the-road-3/

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