Agree, absurd assumptions by regulators, low 40% realistic and probably optimistic for future projects as best locations taken. The article is very helpful as the common renewables assumptions are that it’s all about capital—but these are very significant operating costs.
Is the deprecation also equivalent to the financing costs of the initial build? So the costs here are only ongoing Opex?
On the permasubsidy, I think you are right to be warry, but fundamentally any mostly Capitol heavy / negligible marginal cost generation system will canobalize its strict 'energy market' value down way below what's needed to pay for its own replacement, let alone 'enough' for decarbonisation.
I propose a more substantial restructure of the market approach in here:
Hi - yes - costs here are only ongoing cash operating costs (or at least my best proxy for it by adding up COGS and admin costs and then removing depreciation)
Im unsure if the depreciation is equivalent to the financial costs of the initial build - certainly on a cumulative basis the depreciation charges should add up the the capital cost of building the wind farm (For what its worth, most of the wind farms I looked at use straight line depreciation over a c. 20-27 year range)
I prefer to try and think about the economics on a cash basis where I can, just because it makes more sense in my head - i.e. say 3 years of really chunky capital outflows when building the wind farm (which is in my post on capital costs) and then a longer stream of more day to day cash expenses.
On your second point, I'm not nearly as knowledgeable as yourself, but intuitively I agree with your argument and the points in the thread - on a purely market based system there will be a point at which correlated intermittent production eats itself (absent a miracle in cheap long term storage etc)
Thanks very much indeed for posting the link - will take me a bit of time to get my head around the latter half of it fully, as I haven't done much work on market structures yet - but it sounds like reading about other systems like the GA would be a great place to start!
The biggest battle with offshore wind is getting technical staff out to the towers to undertake routine inspections of which the gearbox and yaw control machines is big requirement. There are a lot more direct drive nacelles available now but tend to be lower output so find use in onshore. So for the more recent sites less towers bigger machines should be dramatically improving operating costs but the economics are plain diabolical for older sites at 40-50k/MW and they will be unviable without a ROC would be my take.
Permasubsidy it is. I can’t understand this as so many commentators stand up and say renewables are the cheapest form of electricity generation. In what other world does the cheapest form of supply need a subsidy?
Agree, absurd assumptions by regulators, low 40% realistic and probably optimistic for future projects as best locations taken. The article is very helpful as the common renewables assumptions are that it’s all about capital—but these are very significant operating costs.
Absurd load factor assumption by DESNZ, in real world it has never been above low 40s, sometimes mid, 65% assumption is lunacy
Is the deprecation also equivalent to the financing costs of the initial build? So the costs here are only ongoing Opex?
On the permasubsidy, I think you are right to be warry, but fundamentally any mostly Capitol heavy / negligible marginal cost generation system will canobalize its strict 'energy market' value down way below what's needed to pay for its own replacement, let alone 'enough' for decarbonisation.
I propose a more substantial restructure of the market approach in here:
https://bsky.app/profile/ember42.bsky.social/post/3kdcmdj7dtp2x
Hi - yes - costs here are only ongoing cash operating costs (or at least my best proxy for it by adding up COGS and admin costs and then removing depreciation)
Im unsure if the depreciation is equivalent to the financial costs of the initial build - certainly on a cumulative basis the depreciation charges should add up the the capital cost of building the wind farm (For what its worth, most of the wind farms I looked at use straight line depreciation over a c. 20-27 year range)
I prefer to try and think about the economics on a cash basis where I can, just because it makes more sense in my head - i.e. say 3 years of really chunky capital outflows when building the wind farm (which is in my post on capital costs) and then a longer stream of more day to day cash expenses.
On your second point, I'm not nearly as knowledgeable as yourself, but intuitively I agree with your argument and the points in the thread - on a purely market based system there will be a point at which correlated intermittent production eats itself (absent a miracle in cheap long term storage etc)
Thanks very much indeed for posting the link - will take me a bit of time to get my head around the latter half of it fully, as I haven't done much work on market structures yet - but it sounds like reading about other systems like the GA would be a great place to start!
Much appreciated,
Ed
The biggest battle with offshore wind is getting technical staff out to the towers to undertake routine inspections of which the gearbox and yaw control machines is big requirement. There are a lot more direct drive nacelles available now but tend to be lower output so find use in onshore. So for the more recent sites less towers bigger machines should be dramatically improving operating costs but the economics are plain diabolical for older sites at 40-50k/MW and they will be unviable without a ROC would be my take.
.
Permasubsidy it is. I can’t understand this as so many commentators stand up and say renewables are the cheapest form of electricity generation. In what other world does the cheapest form of supply need a subsidy?