The Alternative Green Energy Thread

JKenH

UK grid operator paying millions for lack of offshore wind transmission capacity

A spokesperson for the National Grid Electricity System Operator, which manages electricity supply and demand in the UK, said that it “operates the system in the most cost-effective way for the consumer, keeping capital costs as low as possible”.

“Like many system operators across the world we make constraint payments when it is more economical to temporarily reduce wind output, for example, than build expensive new infrastructure.

“We constantly analyse constraint costs versus the building of new assets and are working with industry to reduce the impact of network constraints whilst building a greener system."

https://www.power-technology.com/news/uk-grid-paying-millions-lack-of-offshore-wind-transmission-capacity/

This and the preceding story (together with Britishvolt and other omnishambles) show that while making (some of) the right noises, the government is failing to develop a practical green strategy that might actually benefit the country. 

markin

The uk will never replace the oil profits with wind profits will it? Well maybe in 50 years, The kwh price would have to be very low to bring energy intensive jobs back to the uk, Aren't all the farms in Crown waters so go to the king and not the Government?

If we aren't making them, Or owning them, it will not be helping to fill the uk budget and help the GDP.

70sbudgie

markin said:

The uk will never replace the oil profits with wind profits will it? Well maybe in 50 years, The kwh price would have to be very low to bring energy intensive jobs back to the uk, Aren't all the farms in Crown waters so go to the king and not the Government?

If we aren't making them, Or owning them, it will not be helping to fill the uk budget and help the GDP.

A couple points:
The Crown estate is just the landowner for the offshore wind, so it doesn't receive all the profit from the windfarms that is earned by the companies that lease the land from them.
The latest financial reports (2021-2022) show that the Crown Estate revenue was about £312M, the Sovereign Grant was about £86M. The rest, £226M did go to the Government.

https://www.thecrownestate.co.uk/en-gb/media-and-insights/news/the-crown-estate-announces-3127-million-net-revenue-profit-for-202122/

https://www.royal.uk/financial-reports-2021-22

I suspect you are correct that wind profits will never match oil profis, but you also have to think about who those profits go to - usually multi national companies, not Governments.

JKenH

I have noticed recently that the price of Greencoat UK Wind has been slipping and wondered how f this was another opportunity to buy cheaply as I believed it to be when I bought in October last year. However this article from Watt-Logic suggests that wind farm profitability may be under some pressure for some time. (Warning: this is 
a long read).

Time to accept that wind farm costs are not falling

https://watt-logic.com/2023/06/14/wind-farm-costs/

Exiled_Tyke

So what if wind farm costs are not falling? The simple fact is that they do supply cheap electricity. The fact that government has failed to get the economic model and the grid infrastructure sorted should not be blamed on the technology itself. The more wind farms we build then the more pressure there will be on government to get the grid and storage problem sorted.   

Reading this I'm suspicious of the motives of the author. All around the world wind is providing more electricity than it ever has done and we need more of this.  The writer appears to be looking for headlines to create negativity towards a much needed resource, summed up by this quote. "Of course, I am not personally in favour of a race to build more wind. "  

As for Greeencoat? Well I'm not inclined to start a whole investigation into its share price but there are many factors which could be responsible and the market as a whole is pretty volatile at the moment particularly in the smaller companies sector.  I view holding shares in green technologies more as 'doing the right thing' rather than expecting a short-medium term return.  These are still developing areas and there are still lots of lessons to return.  That said Greencoat does have a pretty generous dividend policy. 

JSHarris

When looking at UK onshore wind and the lacklustre level of growth, a comparison with Ukraine is interesting: https://www.theguardian.com/environment/2023/may/28/ukraine-built-more-onshore-wind-turbines-last-year-than-england 

"Ukraine has completed more onshore wind turbines than England since it was occupied by Russian soldiers – despite the UK government’s promise to relax restrictions on onshore windfarms.

Only two onshore wind turbines have been installed in England since Russia invaded Ukraine in February last year, generating 1 megawatt (MW) of electricity in the Staffordshire village of Keele.

Ukraine’s Tyligulska wind power plant, meanwhile, the first to be built in a conflict zone, has begun generating enough clean electricity to power about 200,000 homes just 60 miles from the frontline in the southern region of Mykolaiv, with 19 turbines providing an installed capacity of 114MW."

JKenH

Exiled_Tyke said:

So what if wind farm costs are not falling? The simple fact is that they do supply cheap electricity. The fact that government has failed to get the economic model and the grid infrastructure sorted should not be blamed on the technology itself. The more wind farms we build then the more pressure there will be on government to get the grid and storage problem sorted.   

Reading this I'm suspicious of the motives of the author. All around the world wind is providing more electricity than it ever has done and we need more of this.  The writer appears to be looking for headlines to create negativity towards a much needed resource, summed up by this quote. "Of course, I am not personally in favour of a race to build more wind. "  

As for Greeencoat? Well I'm not inclined to start a whole investigation into its share price but there are many factors which could be responsible and the market as a whole is pretty volatile at the moment particularly in the smaller companies sector.  I view holding shares in green technologies more as 'doing the right thing' rather than expecting a short-medium term return.  These are still developing areas and there are still lots of lessons to return.  That said Greencoat does have a pretty generous dividend policy. 

Responses below to the (bold) points you have raised.

So what if wind farm costs are not falling?

Quite simply the laws of economics will come into play. Most (if not all) significant investments in wind farms are undertaken under CfD contracts. The CfD prices submitted were based on falling costs arising from the deployment of ever larger turbines. These are not materialising. The prices to supply under these are effectively fixed. If the costs are seen as likely to have increased above the agreed supply price it may not be economic to either build or operate the wind farms and the projects may not go ahead. This is already being threatened. 

Reading this I'm suspicious of the motives of the author. All around the world wind is providing more electricity than it ever has done and we need more of this.  The writer appears to be looking for headlines to create negativity towards a much needed resource, summed up by this quote. "Of course, I am not personally in favour of a race to build more wind. "  

As I have pointed out in previous posts many articles that appear on this forum may appear biased to someone or other. Might not the author of the RENEW article posted today on the G & E issues perhaps be pursuing an agenda? They, I suspect, would like to see more onshore wind turbines. There should be no problem with someone arguing for more RE and nor should there be a problem with someone else putting a reasoned case questioning it?

Kathryn Porter is well known for questioning an over-dependence on wind because of the intermittency issues. She is a well respected commentator on the energy industry. It is unlikely that the BBC would have invited her on to the today programme yesterday if she wasn’t. You might not approve of what she has to say but that doesn’t mean it shouldn’t be said. 

That said Greencoat does have a pretty generous dividend policy. 

That can certainly be an attraction with the current yield at 5.5%. I am sitting on quite a few shares of various companies where the dividends are very attractive. Unfortunately this is not always a good sign. The dividend yield is often high because although a company may have strong earnings (meaning they can afford to pay dividends now) yet the market is less optimistic about future prospects (and hence their ability to maintain the dividend) so the share price is falling. Vodafone is a good example of this currently paying 10.6% because its share price has fallen 41% over the last year. 

Greencoat’s net asset value has risen by about 10% over the last year while over the same period the shares have moved from trading at a small premium to a discount approaching 15% (an all time low). The shares currently therefore look good value on a historical basis so I was thinking of taking a punt as I did in October when the share price was low but wanted to look into it a bit further. I am wondering if there is something more fundamental going on suggesting caution. I don’t know the answer. It could be that the market sees operating cost pressures in the future impacting on profits. The article I posted would support this thesis but there may far more to it. 

I can’t imagine anyone taking any notice of my ramblings but just in case I would state this is not intended as financial advice. DYOR.

JKenH

The near-infinite energy source that could win Britain’s net zero race

At United Downs, a stone’s throw from many of the old mines, a pioneering project run by Geothermal Engineering is drawing heat from granite rocks that lie more than three miles below the surface.

It does this by pumping out water warmed to 200 degrees celsius to power a heat exchanger, before being pumped back down again to a shallower well.

From next year, the scheme will provide heat and power to 3,800 homes near Truro, as well as the Royal Cornwall Hospital, local schools and a leisure centre, after receiving £22m in funding from the Government.

https://www.telegraph.co.uk/business/2023/06/20/can-deep-geothermal-energy-help-to-solve-britains-net-zero/

QrizB

JKenH said:

I have noticed recently that the price of Greencoat UK Wind has been slipping and wondered how f this was another opportunity to buy cheaply as I believed it to be when I bought in October last year. However this article from Watt-Logic suggests that wind farm profitability may be under some pressure for some time.

I hold Greencoat UK Wind shares.

I think the reason for the price slipping is simply economics. When interest rates were low, a 5% yield was quite attractive. With higher interest rates, 5% is less attractive. We can expect the price to fall until the dividend yield is back to an attractive level.

Other dividend-yielding shares have also seen falls.

(It's a similar reason to why gilts prices fall when interest rates rise.)

JKenH

Some of what is said in the article below already appeared in my earlier post but there are a couple of interesting quotes from a representative at Renewable UK industry group about the cost pressures facing the ioffshore wind industry.

How the UK offshore wind industry ran out of puff

“The current situation can be described as a perfect storm for the industry,” comments Ana Musat, the Executive Director for Policy at the RenewableUK industry group.

According to Muscat from RenewableUK, there’s still room for adjustments to the AR5 strike price, which she contends should be twice its current rate for offshore wind.

“Developers need the assurance that prices can increase if necessary to reflect economic circumstances,” she adds.

“If the Government’s indicators are that prices can only decrease, then I believe this will diminish confidence in the long run.”

https://www.share-talk.com/how-the-uk-offshore-wind-industry-ran-out-of-puff/