RWE Atlantic Array to gain GBP169m in Windfall Profits

I have worked in management accounts in manufacturing industry for over 25 years. In that time I have learnt that audit controls are imposed to stop the potential for fraud, by eliminating any scope for fraud. In Britain climate change arena, conflicts of interest are huge, but not considered important. This is an example of why truly independent oversight is required.

In July there was ministerial sign-off of a proposed to change the Renewables Obligation (RO) with respect to offshore wind power. Assuming that this proposal is enacted and the Atlantic Array gets the green light, I calculate will give a £169m (US$262m) windfall profit to the scheme in the first ten years of operation.

The numbers behind this are eye-watering.

The revenue from a wind farm is from selling the electricity produced to the grid. This is currently 4.7p per kwh. I will assume that this will remain constant for until 2025. This might be a heroic assumption given that under current policies Britain will be producing far less electricity than demanded, but it is beside the point of this posting. What is relevant is the subsidy from electricity bills. The RO currently gives renewables a subsidy of £41.38 per megawatt hour. This is the rate for onshore wind. However, to encourage offshore wind power, this currently attracts a factor of 2.0 times the standard rate. In 2009 this was planned to reduce to 1.5 times the standard rate from 2014*. The new proposals are to give a more gradual and delayed decrease to 1.9 in 2015/16 and 1.8 in 2016/17. I have assumed that this will continue until the 1.5 level is reached.

In Germany the average output from the wind farms is just 16.3%. However, Britain is somewhat more exposed, especially the Bristol Channel. It is reasonable to assume to that average output will be 25% of capacity. Then I have assumed that RWE will choose to build the maximum proposed capacity of 1390MW. The lower end is 1000MW.

Calculations over a 10 year period are

The difference will mean an extra £168,572,951 windfall for RWE.

There is however a potential flaw in my analysis. If the Renewables Obligation works like the solar panels for houses, then the rate is fixed at the time of application. In other words, a scheme coming on stream in 2015 would now attract 2.0 ROC, instead of 1.5 for every year for 10 years.

If my analysis is correct, the difference will mean an extra £684,633,697 windfall for RWE over a 10 year period. That is $1.07 bn dollars. This from (the largest) of a number of similar projects.

Stop the blighting of Lundy & North Devon by RWE’s Atlantic Array

Please act to help stop a major act of vandalism to the British Coastline. Visit the Slay the Array site by 31st of August to find out how to help.

I have just returned from a holiday in North Devon, including a day trip to Lundy Island. Here I learnt about a mega wind farm proposed for the Bristol Channel by energy giant RWE. This is an area of outstanding coastal beauty, attracting millions of tourists annually to the area.

Proposed are 188 to 278 turbines, of either 180 or 220 metres (590 or 722 feet) in height, located as near as 13km (8 miles) from Lundy and 14km (9 miles) from the North Devon Coast.

Compare this with the second highest point on Lundy. The small building in the photograph is Tibbetts, 128 metres (420 feet) above sea level.

Or compare in height to some London skyscrapers.

Tower 42 (formerly the Natwest Tower) is 183m

The Gherkin (30 St Mary’s Axe) is 180m

One Canada Square, Canary Wharf is 235m

In Manchester, the tallest building is the Beetham Tower at just 169m tall, whilst the older Blackpool Tower, that dominates the resort’s skyline, is a mere 158 metres.

Another comparison is to the Skegness wind farm. Here there are just 57 134 metre-high turbines located 5km from shore. It has blighted the outlook from the beach level at Skegness. This picture I took at Easter of this year, on a very grey day. Better pictures are available here. The pictures do not fully recreate the visual impact, as the eye is drawn to the turning blades – or in the case of Skegness the difference between those blades that were turning, and the large number which were not.

Yet Skegness is a declining resort, not noted for its scenery. It does not have high cliffs from which to look out at a distant coastline. There is no equivalent of Butter Hill at Countisbury or the cliff tops of Lundy where you can survey the coastline of Wales. Should this Atlantic Bristol Channel Array go ahead, the eye will be drawn instead to the turning mega turbines, as the scenery.