 | Oil price: where next? | The Oil Drum: Europe | The Future of Nuclear Energy: Facts and Fiction - Part I: Nuclear Fission Energy Today |  |
Offshore wind finance: 3 for 3
Posted by Jerome a Paris on July 29, 2009 - 9:22am in The Oil Drum: Europe
Belgian and Dutch investors join EIB and banks in Belwind rescue
(24 Jul 2009)Banks have signed the most important European renewable energy project financing of 2009 so far, after a band of Low Countries investors bought the Belwind offshore wind farm from the failed Econcern group.
The deal, one of the most encouraging pointers so far that the worst of the credit crunch may be easing for clean energy, sees the European Investment Bank agree to lend EUR 300m towards a EUR 482.5m (USD 686.4m), 15-year debt package for Belwind.
The remaining EUR 182.5m of the long-term debt is being provided by [commercial banks]
This is the transaction I have been working on for over a year and a half and, between my bank's bailout, the credit crunch or my client's bankruptcy, it's been a rather stressful process - and an altogether too busy one, as may have attested my lack of presence on the Oil Drum in recent months.
It's the biggest offshore wind farm to be project-financed, it's the first to be financed that way since the credit crisis (and the third only altogether), and it's the first time the European Investment Bank (a multilateral financial institution, and the EU's official tool to finance large projects in and around the zone) is involved in taking project risk in the sector, following the clear push from EU governments over the past year.
filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler filler
Offshore wind finance has been hit particularly hard by the financial crisis, for two separate reasons:
- the closure of debt syndication markets has hit all large projects. Traditionally, large transactions would be negotiated with a small number of banks, which would commit to providing all the debt (what's called underwriting the financing) and then would syndicate the risk, ie share it with a wider group of banks in a second step. This allowed clients to negotiate with a only a few parties, and to have certainty, once the underwriters committed, to have the funds. Now, with little or no syndication capacity, banks will only commit to the amounts that they are willing to keep, as they won't be able to sell down their share afterwards. For large transactions (and offshore wind farms are typically going to cost the better part of a billions euros or more, and debt finance would be expected to cover two thirds or three quarters of that), that means you need to bring together a much larger group of banks before signing the deal. That makes negotiations a lot more complicated, as a lot of parties need to approve any changes, and subject to potential blackmail from banks that know they are indispensable and can dictate their terms;
- the second problem for offshore wind finance is that it is a new sector of activity. While wind project finance is now a mature, well-understood, competitive sector to which many banks participate, it is not the case for offshore: only two transactions had been done so far, and thus the universe of banks with understanding of, let alone familiarity with, the associated risks, is still very small. Now, one of the consequences of the financial crisis is that banks have narrowed their activities - to preferred clients, core countries and strategic sectors, and more generally to well-accepted risks. Offshore wind is not a strategic sector, and it is largely unknown. So few banks are able to deliver commitments, even if key clients are now pushing them in that direction.
So an offshore wind farm financing is basically a big pile of unfamiliar risk that needs to be swallowed in many simultaneous small bites by reluctant banks.
So how did it happen this time, especially given the unauspicious context and the dire situation of some of the key parties?
Quite honestly, I'm still stunned that it actually happened. I took up a big role, by default, in keeping it alive throughout: the client has excellent engineers, had done all the early work and had the permits to a great project, but with no money and management in chaos, it was not really in a position to keep the project alive on its own. I never gave up, but at times the odds seemed overwhelming and it took its toll on my morale and energy.
It's going to take more than a bit of time to stop obsessing about clauses of the financial documentation, or the conflicting conditions imposed by the various parties, and it's going to be hard to forget the past several months, toiling away day and night in desperate efforts, but at least now I can think it was worth it.
A project financing, as I explained in earlier diaries is a stand alone operation that must live without the financial support of its owners once they have put in all the agreed equity. Which means that all the tasks (building it, then operating and maintaining it, and selling the power) must be allocated to the party best able to do them under binding contracts, and the various risks and potential downsides must be similarly allocated clearly to the various parties. Offshore wind farms 'enjoy' particular challenges as they must be built in difficult environment (where do you find a crane able to hoist a 100 ton nacelle 100 meters in the air, and where do you put it when the "ground" you need it to stand on is, well, waves? How do you bring people to make even basic repairs when it's a 4-hour boat trip to get there, and it can only be done when the weather's not too rough? Who carries the burden of lost production in the meantime? etc...). So the job is first, naturally, to understand the risks and find who can best solve them, then agree on a tentative allocation between the parties, as well as a remuneration for each, and then draft detailed contracts to formalise each party's role. The difficult part is that all parties must agree on the same thing at the same time, and to negotiate extraordinarily detailed contracts that must meet the approval of each party's decision bodies, legal departments and various specialised advisors (for technical issues, tax, insurance matters, etc...).
In this case, it took coordinating 6 banks (including a multilateral institutions and two quasi-public bodies), 6 equity investors, 2 large contractors and the bankruptcy administrator of the original developer. At my count, at last 10 different law firms were involved, and last week's final negotiations probably had 50 people present non stop almost day and night. Given the difficult circumstances, each participant was basically indispensable to the deal, they all knew it and all too often were tempted into brinkmanship to get a better seat at the table (always in the name of fitting with internal approvals or following procedures that could not be deviated from).
But it happened. And I like to think that I played a large role in making it happen. I bullied and pushed and pissed off everybody involved, imposed unpleasant compromises on all, while trying to protect the red lines of each party. When there's only a narrow path to survival of the deal, each party needs to focus on its key requirements and move on the rest, and the only way I could see to have a chance to find such key requirements was to be bluntly honest all along - including about one's own must-haves. It worked in the end, somehow.
And so I helped save a windfarm (a collapse of the financing this month would have delayed the project by at least another 2 years, could have caused other bankruptcies amongst the participants and would have led in any case to messy recriminations). I helped give a significant, and much needed, boost to the nascent offshore wind project finance market by bringing about a highly visible precedent (as the article from a specialised project publication quoted above confirms). It brings my bank (much needed) good publicity. It helps, in a small way, to save the planet. I hope it can give "investment banking" its real meaning back.
I'm quite proud. Downright giddy, in fact.
And I very much intend to use that experience to participate to the financing of offshore projects in the US in the very near future.
Extended from the original story on European Tribune and part of my windpower series
Personnel
Editors
Contributors
Peak Oil Primers
Archives
- November 2010 (3)
- October 2010 (6)
- September 2010 (4)
- August 2010 (7)
- July 2010 (6)
- June 2010 (7)
- May 2010 (2)
- April 2010 (8)
- March 2010 (4)
- February 2010 (6)
- January 2010 (3)
- December 2009 (5)
- November 2009 (8)
- October 2009 (12)
- September 2009 (6)
- August 2009 (5)
- July 2009 (11)
- June 2009 (8)
- May 2009 (16)
- April 2009 (10)
- March 2009 (7)
- February 2009 (10)
- January 2009 (15)
- December 2008 (9)
- November 2008 (9)
- October 2008 (9)
- September 2008 (13)
- August 2008 (10)
- July 2008 (14)
- June 2008 (23)
- May 2008 (16)
- April 2008 (12)
- March 2008 (16)
- February 2008 (9)
- January 2008 (13)
- December 2007 (13)
- November 2007 (16)
- October 2007 (22)
- September 2007 (8)
- August 2007 (9)
- July 2007 (16)
- June 2007 (8)
- May 2007 (7)
- April 2007 (7)
- March 2007 (10)
- February 2007 (10)
- January 2007 (12)
- December 2006 (9)
- November 2006 (15)
- October 2006 (4)
- September 2006 (5)
- August 2006 (5)
- July 2006 (9)
- June 2006 (5)
- May 2006 (10)
- April 2006 (9)
- March 2006 (13)
Vital Trivia
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
3 for 3 is a reference to the fact that 3 offshore wind farms were project financed, and I did all three. Given the blogosphere's ongoing interest as to what a "market" is, well, chew on the fact that one could say that *I* am the offshore wind project finance market...
Jerome,
Thanks for sharing your insights about off-shore wind projects.
Could you comment about UK off-shore projects and more generally about financing of on-shore wind in the EU and N America. I noted that a lot of projects are still under construction in US(3,000MW) and in UK(1,800MW) and also in Australia(500MW) was wondering if many projects are starting construction?
great work Jerome and thanks for this post.
i admire your perseverance in a great job and for a worthwhile cause. there's deeply rooted bias against wind, driven by much larger vested interests who overplay the difficulties and downplay the benefits of wind and renewables in general. you're doing more than your share to counter that!
Jerome,
I love your posts on these subjects. I think you are right to be feeling proud. My hero!
Perhaps I missed it, but what is the eventual nameplate capacity of these wind farms going to be?
Keep up the good work.
The first phase, which is the object of this financing, is 165MW. With capacity factor just above 40% (or significantly above, depending on whether you take the conservative "P90" banking case or the commercial "P50" one) you get roughly 550 GWh per annum. A second phase will double that.
Dear Jerome,
Congratulations for this nice success story in difficult circumstances!
If this is not confidential information, can you tell us something more about this offshore project? Where is is located (I guess North Sea)? How many MW in how many windmills?
Thanks! And good luck for your next projects ...
It's in the North Sea, 47km off Zeebrugge. All the Belgian offshore windfarms are just against the maritime border with the Dutch zone - there's a series of sand banks that allow the turbines to be built is shallower waters.
Félicitations Jérôme, it's quite an impressive achievement thanks to your hard work.
I was reading this interesting story in the last IEEE spectrum, apparently Germany has a lot of trouble with their offshore wind farms:
Apparently Germany has a lot of trouble with their offshore wind farms(...)
And apparently the IEEE Spectrum has a lot of trouble with their maps. The country they call "Austria" is in fact the Czech Republic ...
Ah, come on. That surely wasn't a mistake. It all belonged to K+K (Austro-Hungarian Empire) back then anyway. Vienna/Prague/Budapest, three lovely lovely cities, btw...
The German offshore sector has been slow to start, but that's because most of the projects are quite far from shore, for various technical reasons, and thus they need to be larger to cover the cost of the grid connection, and they are tecnically more challenging.
The framework that makes sense for these projects was only put in place in late 2007, and all the projects then rushed to go for turbines at the same time, which created more problems. Then the financial crisis started, making billion euro investments more difficult (even if revenues are not threatened by the crisis).
But construction is now happening this summer, and will grow very quickly in the coming years.
ABB website gives a very recent update on one German offshore
http://www.abb.com/cawp/gad02181/306c726f332f36d3c1257353003b91f0.aspx
Jerome,
If the economy recovers soon,how long do you forsee the current exponential growth trend in wind power lasting?
Or perhaps I should ask how long it CAN last.
Can the problems accociated with integrating so much new wind into the grid be solved as fast as the wind industry expands,or will this bottleneck slow the growth to a crawl after a few more years?
It would seem that with twenty five to fifty percent annual compound growth that all sorts of problems will arise such as the best sites being taken,shortage of slilled personell,etc.
The main feature of this graph is the steady total upward trend. The increase in renewables is not replacing other forms of energy but adding to them. This looks the key factor going forwards - the need to stabilise energy use and then start its reduction back to pre-nuclear levels in the early 70's. Renewables would then be a more significant percentage of the total.
This news item from AWEA giving 2nd quarter figures for wind installed in US
http://www.awea.org/newsroom/releases/AWEA_second_quarter_market_report_...
Total installed for first half of 2009 is 4,000MW, still running ahead of same period last year.
I have been having trouble with Drupal when putting this post up. I ended up adding several lines of the word "filler" to make the post display properly on my screen. I hope the post will display properly on other screens. If there are extra lines of "filler", please ignore them.
It would be possible to "start over" with a new post number, but then we would lose the comments to date.
Congratulations Jerome. I led the first non-recourse facility for cable comms in the UK (GBP175m) back in the days when the sector was bleading edge, mostly hype and a lot of red ink. But I was doing it in good times and we split documentation and syndication up between 2 of 4 lead banks (BONY and Chemical - which dates the transaction quite nicely). So I have some idea about how difficult it must have been to get the transaction across the line. Well done.
What is encouraging is that there was the appetite to do it at all in the current climate. It indicates at least some appreciation for the human energy predicament.
This story can be read both as triumph over adversity or an omen of troubles ahead. It could be argued that the EU consortium represents 'public' financing. If that is the way of the future it may be constrained. Government help can of course take other forms including guarantees, tax credits, quotas and subsidies. However no form of low carbon energy appears to be getting enough investment in the remaining time frame.
The linked article was password protected so it would be interesting to know what was the nameplate output. The capacity factor I presume is way better than onshore; over 50%? Does a feed-in tariff apply? Are electricity retailers obliged to buy all the output?
Thankfully, I think it is the first. The financial crisis really hit at a bad time for the offshore wind sector - cutting the ability of banks to develop the financing market just at the moment the sector is taking off. So getting some semi-public funding (note: at fully commercial conditions: the public entities take the exact same risk as the commercial lenders, with almost identical pricing other than funding costs) is a smart thing to help in the short term (now and in the next couple of years)
I gave the name plate numbers above (165MW, 550 GWh/y)
Jerome,
First of all, congratulations for the effort in putting all the financial pieces together. This is a real achievement these days.
Now, some comments on offshore wind and wind energy in particular.
In a seminar yesterday in El Escorial sponsored by the Universidad Complutense de Madrid, Gonzalo Sáinz de Miera, director of Regulatory Prospective in Iberdrola, talking on “renewable, threats and opportunities, came to say several interesting things, that I would appreciate if you could comment.
Iberdrola is a world class leading company in renewable, specially in wind energy. If owns some 30% of the winds parks in the United States and in Spain is also leading, having Spain over 17,000 MW installed power.
He mentioned the great potential worldwide, but cooled down somehow the prospects for Spain (a windy country) when stating that this country could have a limit of 40 to 50,000 MW of installed power at reasonable, feasible sites. Today, wind energy is 12% of the national electricity in Spain, second in the world in penetration, after Denmark (21%).
This means, that with reference to the present consumption level (another uncertainty, because electricity consumption could decrease by 2009 as much as 8-11% due to the financial crack), the upper limit to penetration in Spain could be in the range of 35% of the national electricity consumption. The costs of installations in lower efficiency fields being a big question mark (they started here at 2,800 nominal hours/year and are now digging for 2,100 or lower.
With respect to offshore, he commented a couple of interesting things: the first, that the investment and O&M costs are typically double than onshore installations. The second that they have to be more cautious, to take advantage of the learning curve and not to repeat experiences like the one of the Horns Rev in Denmark, where they had to replace a big number of machines (¡¡??) as they originally thought they will behave the same than those in onshore (he did not specified the problem, but could it be that the first machine’s nacelles were not pressurized and marine corrosion entered into the internal elements?). I had not heard previously of this.
This raised the question whether the offshore parks where "solutions" per se, or rather forward escapes for countries like Denmark, Germany (and soon Spain), that are reaching the ceiling in onshore feasible wind parks, with the commercial alibi that offshore winds are stronger and more sustained.
Taking into consideration that Spain operates in the peninsula almost like an island from the electric grid point of view (about 280,000 GWh/year), with minimum exchanges with France, Portugal and Morocco, I asked him if Iberdrola had already examined the maximum possible penetration level of wind into the grid, before stability problems could become unmanageable, in the context of a 100% renewables supplies for 2050, as Greenpeace has already proposed in a deep study. Much better example, for this study, than Denmark, that can easily produce as much as they can, thus hiding its national limits, as this small country is fully interconnected to the Central European big consumption electric network.
He mentioned that with already a 12% of the total electricity generated by wind and 1% in solar PV (plus another foreseeable connection of another 1-3% in CSP within three years from now), the Centro de Control de Energías Renovables was having some logistic and management problems in certain moments, both because the tension “holes” (which are very punctual and can be minimized) and also, sometimes, because the base load (nuclear + coal), which have a very difficult regulation based on by-the-minute-demand, is just at the level fo the minimum night consumption. Las year, they had to disconnect wind parks from the grid, several times in considerable amounts (2,800 MW last November), because they could not afford to deliver beyond what was covered by the nuclear+coal base load.
Sáinz emphasized that a bigger penetration will multiply the network management difficulties.
We also discussed in detail solutions for network stabilization, like water pump. Spain has now some 2,5 GW installed power for pump up and consumed last years about 4,678 GWh in pumping up energy in hydro dams. However, he said, this is a limited issue, even Spain is very mountainous country and has over 90% of the big river basins already occupied by dams, going from head to tail in a queue in the main rivers.
Iberdrola is thinking (costs still pending on solution and on who will pay for) to install 3,000 MW of pump up power, but this is still very insufficient to cover the national electricity needs (daily peaks of 40 GWh) and a present hydro generation capacity of about 16,000 MW. The big question mark is who will pay for let us say another 16,000 MW turbines, dam capacities permitting (which is very dubious), plus the pump up additional capacity and water ducts infrastructures in the river basins, to allow to generate by pure hydro t o cover the daily electricity consumption peak in the Greenpeace scenario of 100% renewable, if one or two days, the country is fully clouded and there is no wind.
Of course, this is not a problem for Iberdrola, who has not the dreams of Greenpeace and is planning to back up the potential gaps with combined cycle gas plants, which were installed in the last years and now have spare capacity, with the decrease in electricity consumption.
Besides, we will have to carefully analyze the minimum stream levels as per the laws (Portugal has also to say something in this respect, as most of the Spanish river ends in Portugal) and the environmental consequences of continuous pump up (recirculating water creates also big problems for river life, mud deposits and water oxygenation).
As I do not believe very much in inertial wheels, or supercapacitors to store certain amounts of electric energy, nor I do believe in hybrids or in millions of electric cars with lithium-ion batteries being used as energy buffers, I am still wondering whether the Greenpeace dream of 100% renewable for 2050 is just a dream or what.
Just talking on electricity in Spain, a leading country in renewable, not in satisfying the primary energy consumption with renewable, as also Greenpeace is dreaming in a couple of studies.
Bests.
Pedro from Madrid
Hola Pedro,
Thanks for your interesting comments. What is the situation for small-scale PV in Spain? I haven't been in Spain much in the past few years, but I don't remember seeing much in the way of e.g., roof top systems, although it seems Spain would be perfect for those, particularly on the flat roof of apartment buildings in the cities. My impression is that air conditioning is becoming more common and would be well-matched by PV-generated electricity.
Hi,
If you refer with "small scale to rooftop installations, certainly there is no much. Spain is about 30% more interesting than Germany in any solar PV installation, be that rooftop or on the ground.
We have developed here much more on the ground (about 2.2% only rooftop; the rest, on the ground). The reason is both regulatory and space (in Spain land is (was) much cheaper and avilable than in Germany and legislation allowed to install on the ground.
Last year we installed more than 2,5 GW in Spain, being the total now approaching to the 4 GWp of installed power, most of it (over 99%) with in fed in tariffs.
2009 and 2010 will see a limit (due to the financial crash and the limitations of government budget) to 500 MW each year, with a new regulation promoting much more rooftop installations (still at 32-34 cEuro/kWh, while installaitons on the ground are going lower every quarter and are now at 29 cEuro/kWh. After 2010, the horizon is dark and cloudy.
Rooftop installation not always generate more. In Spain, ownership of apartments ins mostly individually owned and it is very difficult, as per the present laws the use of a common roof (most of people lives packed in apartment blocks) if any of the individual owners, co-owning the roof, does not want, for instance the others to set up an installation in the common property.
Shadows of other buildings in urban areas are always much more problematic than in on the ground installations that can choose fields in flat, extense areas with no shadows. Connectivity and access for O&M purposes is more difficult in roofs with about 50 kW installations than on the ground on 20 MW installations. And O&M is sometimes close to 10% of the annual income.
Using PV systems to refrigerate with A/C systems will be considered here, at least in my humble opinion, like feeding pigs with daisyflowers.
Bests.
Pedro from Madrid
It should be a law that AC is powered by adequate PV on the same building. That is of course both expensive and inefficient. I see the new Prius car will cool itself parked out in the sun. Building powered cooling could massively shave summer electrical peaks.
Pedro, there's a lot of substance in your post! Thanks. Let me respond/react to a few items:
That seems realistic unless new interconnections with France are built (and a couple are - now that the decisions has been taken to bury them all the way, there will be less local opposition, which was the ain obstacle)
Investment is a bit under double the cost; O&M is more than double (but will go down faster, I'd say). Against that, the capacity factor is at least 50% higher.
Horns Rev, the very fist industrial size offshore wind farm (160MW built in 2002) did have a few well publicized problems, including indeed corrosion due to some poor quality joints, which eventually led to all the gearboxes to be replaced, a somewhat costly endeavor. But it was a semi-experimental project, and it certainly played its role in flagging technical issues for the industry. All offshore turbines are indeed pressurized now, for instance.
This is the natural solution, and (i) it costs very little (the plants have capacity, as you note) and (ii) it has a very small carbon emissions cost, as these plants do not need to be used that much to cover the gaps in wind availability. Wind provides MWh, and gas provides MW and demand (two different services).
Thanks, Jerome, for your answers, which align very much with my thoughts.
With respect to the upper limits of wind power in Spain, certainly a better networking will help. The interconnection with France has been long claimed by Spaniards, with a lot of oppostion from the other side and I am not quite certain that all of it was purely ecological, which can be solved with buried lines (about three times the cost than aerial lines), but perhaps also political reasons.
Now, when Sarkozy opened up the bottle of the Solar Mediterranean Plan one year ago, to install some 20 GW of CSP in Northern Africa to supply mostly to Southern Europe and Germans have joined the team with an even more ambitious plan of 200 GW (Desertec), it is becoming crystal clear that we all need long haul interconnections (most likely HVDC power lines) And Spain and Italy have to be necessarily linked with Northern Africa and subsequently, Spain and Italy have to be linked with France and Germany.
But on the other hand, if we consider that France is 78% nuclear in its electricity and that nuclear (at least in Spain) is a very poor system to regulate demand, it has to be studied if these extra connections France-Spain will be of much help to stabilize the intermitent systems in Spain, when reaching certina penetration levels a la Greenpeace style.
Precisely, the nuclear lobby here and in France is selling the idea that France is "selling" electricty to Spain (which is only partially true, because it is just a positive balance of less than 2% of our national consumption and we export 5% to Portugal and Morocco). Additionally, France usually sells very cheap energy by night (because the problem of lack of regulation to accompany the night consumption valleys) and sometimes import electricity, from its neighbouring countries, in the peak daytime hours, at much higher prices (at least, before the crisis). And presumably, when we will need stabilization for our intermitent systems (most frequently in the night valleys of consumption), the French network usually badly needs to export what is not consumed there by night with the non stop nuclear plants.
In any case, it was a pleasure to see that we are all being forced to think global, once for all.
Bests
Pedro from Madrid
Buried high tension lines are absolutely not more ecological then overhead lines!
Building pylons give spot disturbances of the ground while digging trenches give line disturbance. The difference is not absolute since overhead lines can have a bare grounding wire run in the ground along the pylons but such a wire do not require the much deeper, wider and lined trench of an isulated high tension cable.
It is practice forbidden to run high tension cables thru sensitive mountain areas in Sweden but it can be ok to run high tension overhead lines thru them since that only is a visual disturbance that do not harm the ecological systems.
The higher cost of ground cable is also an indicator of higher environmental load. The trivial difference is that the overhead lines only require some higly enginered pieces of glass as insulation while the ground cable requires a thick plastic or paper and oil insulator.
The overhead line is incementally maintained, broken insulators are replaced, worn cabels can be replaced, if some of the pylons rust they can be replaced and the line can even be upgraded if the pylons are found to be too weak. If a only a part of a grund cable is faulty it needs to be replaced in sections or all of it and it is also expensive to splice since there are high technical demands on the insulation.
This is also important for repairs after faults. The overhead line is more exposed and more likely to get harmed by weather or sabotage but it is much easier to repair after a fault. This means that you need more sets of buried cables then overhead lines to lower the risk of long disturbances in the electricity supply.
This set of trade offs change with the size of the power line, it is better to bury the line when it is too small to be able to resist a hurricane. When the voltage is lover the insulation dont need the be as extreme and the cost for it is lower and the installation is simpler making buried cable less costly to maintain then overhead lines.
My point is that Greenpeace style Greens should like pylons if the goal is to provide the human benefit with the minimum load on our environmnet, but that is not their objective...
Isn't France with all its nukes a net electricity exporter? If so this tends to block any Spanish attempt to export wind power to the rest of Europe.
Its easy to export electricity thru a net electricity exporter as long as there are enough power lines. It happens very often on the Nordpol market.
I read that just recently with hot weather and nuclear stations forbidden to return cooling water to rivers above a certain temperature, that France was forced to close down some of its reactors for a while and buy electricity from the UK. That made me laugh!
Hi Jerome
You are probably all over this, but I found it very interesting. It talks about ROI's on investment in fast and load shifting storage for wind (and solar).
http://seekingalpha.com/article/149644-energy-storage-on-the-smart-grid-...
Thanks SailDog, great link. Here's one to Lithium-air batteries from Japan's AIST; could be a game changer...
http://www.greencarcongress.com/2009/07/aist-lithium-20090727.html
The weakness of chemical batteries is they cannot be charged as fast as they can be discharged. Ultracaps can do this but have low energy density (unless EEstor's claims are realized). What I see with storage systems is that utilities will run coal plants at full power 24/7 instead of buying more expensive wind power. The result is even more fossil carbon released.
Jerome,
Thank you for your perseverance on these projects. It shows what a determined individual can accomplish despite very difficult circumstances.
How long can offshore wind really expect to be sustainable? 15 years? 30 years? I read Jerome's post and wonder:
How are we going to be able to maintain these wind turbines and the associated transmission lines when oil is in lesser supply? I would assume they will need parts replaced every five years (at least), to remain operational.
Gail -
"How are we going to be able to maintain these wind turbines and the associated transmission lines when oil is in lesser supply?"
I would say, relatively easily.
It is demonstrably true that the amount of fossil fuel that would be used over the operating life of a wind farm is but a tiny fraction of the fossil fuel used over the operating life of either a coal-fired or gas fired power plant of equivalent average output. And don't forget that both coal-fired and gas-fired power plants also have routine maintenance needs and that those needs also require the use of fossil fuels just as in the case of a wind turbine (and probably even more so).
Our oil and gas isn't going to run out all at once. But as it does, its use will become increasingly prioritized, either via price or by force. The military, police, and essential public services will get first crack. So, it would be reasonable to assume that when things get really squeezed, one of those high priority uses of fossil fuel would be the routine maintenance of electrical power generating facilities, be they coal, gas, nuclear, or wind.
I am hardly a cheerleader for wind power and I do recognize its many limitations, but I also think it has an important albeit limited role in our future energy supply mix.
As I have said repeatedly (or maybe more accurately, ad nauseam), if one is worried about the inability to maintain complex high-tech electrical power generating systems, then wind power should be at or near the bottom of one's worry list, because it is uncomplicated and low-tech in comparison to coal-fired and gas-fired power plants, and, obviously, nuclear power plants.
Joule,
Your point that conventional plants need maintainence needs to be emphasized.
In my wandering days I worked in power plants as a maintainence mechanic.Shutdowns for regular maintainence are common as ants at picnics,and most of the work invariably involves not the generators themselves but the boilers,turbines and associated equipment not even used by wind farms.
The public doesn't hear about this because the power stays on.
I am of the firm opinion that once wind farms are a mature industry thier maintainence requirements will compare very favorably indeed with conventional power plants.
oldfarmermac -
Right on!
I too have spent some time in conventional power plants (mainly with regard to my involvement with a firm that provided water treatment equipment). As I am sure you know, these are huge and high complex systems, very prone to all sorts of problems. In terms of complexity, compared to a large coal-fired power plant, a wind farm is a child's wagon.
The only reason our power plants appear to be running smoothly and reliably is due to never-ending and very expensive maintenance efforts. This is also generally true of oil refineries and large chemical plants ... and when you get right down to it, almost anything of any significance that man has built, all of which is in a constant battle against the relentless tendency for things to revert to the original natural state they were in, or a process that some people rather loosely (and often incorrectly) call, 'entropy'.
Gail, this is not really a issue of energy input, it's just that this equipment used to be rare, because there was not much demand for it - you just need to build a few specially designed vessels and cranes and the problem will be solved (and this is indeed being done right now) - and once these vessels are there, they'll be available for a long time.
As to the maintenance, it's ainly a question of risk allocation for the parties (who loses money if a turbine has a technical problem and the technicians cannot go repair it right away because of the weather) more than anything else. It's contractually important, but not peak-oil sensitive - mainly, it's a question of proper planning and organisation of work.
Here's the reddit & digg links for this post (we appreciate your helping us spread our work around, both in this post and any of our other work...):
http://www.reddit.com/r/reddit.com/comments/95oap/offshore_wind_finance_...
http://www.reddit.com/r/Economics/comments/95oaj/offshore_wind_finance_3...
http://www.reddit.com/r/energy/comments/95oak/offshore_wind_finance_3_fo...
http://www.reddit.com/r/environment/comments/95oal/offshore_wind_finance...
Find us on twitter:
http://twitter.com/theoildrum
http://friendfeed.com/theoildrum
Find us on facebook and linkedin as well:
http://www.facebook.com/group.php?gid=14778313964
http://www.linkedin.com/groups?gid=138274&trk=hb_side_g
Thanks again. Feel free to submit things yourself using the share this button on our articles as well to places like stumbleupon or other link farms yourself--we appreciate it!
I like to show you a graph that I compiled a while ago and hear your opinion:
Jerome à Pais is an investor, he works in the world of economic growth. Of course he is delighted to see wind-energy growing, because otherwise he would have to think about some different occupation, something that will create something - e.g. food... But its not so intellectually challenging.
In my opinion, wind-energy and solar as well are a complete waste of energy and ressources. If there is one thing to understand about fossil fuel depletion, it would be that this has nothing to do with renewable energy. These are two completely different things. It is only logic, that on a finite surface, wind power has to saturate and stop at one point (what I showed in my graph). This is a natural law, which is in complete disagreement with the grow-theory of modern finance. And all this "new" technology is completely dependent on financing by economic growth.
And Jerome has already gotten the point: investment in wind-energy suffered largely from the crisis, because it is a gadget with a very large "elasticity". We cannot pull ourselves out of the sh... and wind-energy and solar and all the other gadgets will not pay our debt. This is so obvious but Jerome gets congratulations for his efforts from readers, who are already a long time here on this site.
-Snomm
I am on the same page as you Snomm - and your "Wind-Hubbert" will kick in one light breezy day - although I feel your platau is comming a little too fast.
But your general concept of differentiating 'good old fossils' from 'all sorts of renewables' is the single most IMPORTANT UNDERSTADING modern man can do .... to be able to prepare for the continuation (!) , whatever that means. WE -the world - indeed use 1000's of years worth of "energy-production /readymade fossils" PER EVERY SINGLE YEAR NOW - unfortunately almost no one grasp it's ramifications
Your logic may well refute the 'perpetual growth' myths in economics, but not the growth of wind and solar powered options, which have a great deal of growing they can do before they reach such barriers.
Those are sources of energy that make good sense to tap into. I think wind has the danger of being more disruptive if implemented on a massive scale, while solar heat and PV can simply take up roof-space and not necessarily worsen our global footprint, while with energy production, it would clearly be cleaner in many ways.
Please explain with a little more detail why you think this would be a 'complete waste of resources'..
Thanks
Bob
Jokuhl
This is not explained in three words and my english is not that good to do it here. I am already writing an article about that, it will be published in german on www.oelschock.de. If you are interested to be notified, you can leave a message at admin at oelschock point de.
-Snomm
Thanks, SNOMM
If you think of it, please make mention of your article here on one of the daily Drumbeats, as well. My German is pretty minor, but there are a number of German Posters who might be interested in helping to interpret and respond to your article. That claim is certainly going to be provocative, and I would think worthy of some discussion.
Alles Beste,
Bob
Why not use horses. See Horses vs Car at my blog.
Because based on how much work a horse can do per unit of fuel input is lower than that of internal combustion engines. A car sitting in the garage can go for years without fuel but still can go to work when needed. If you stop feeding a horse he will be dead and permanently useless within a few weeks.
But a horse is 1 horsepower mechanical engine, plus a mobile hay based ethanol plant.
A 235hp car running 1 hr a day is the equivalent of 10 horses working 1 hr a day, and manufacturing fertilizer,"just enough ethanol to run the horse" ,psychotherapist, etc rest of the day.
And did you just convert the energy in the tank of gas, or did you figure out how much energy it took to get there.
Link was munged.
Horses vs Car
I think that assumes that you can work horses on grass and hay only. Shetland ponies maybe, most other breeds will need grain if worked daily.
Well, you deserve to be giddy! I'm not relieved, though, that you didn't mention the need for lasting solutions to the energy problem and how these breakthroughs are only stop gap measures.
We need time for people to realize it, but we should also be mentioning the real need to cap our environmental impacts once and for all. The usual way natural systems avoid our dilemma is "inscrutable", you might say. They casually grow exponentially and something inside switches to maturation development *before* they loose control of their choices and, so doing, amazingly reach climax at the prime of their lives with no environmental conflict!!
Could we learn from how nature manages that trick? Our path is anything but like that now, right? Isn't our path still to push growth to the point where our multiplying impacts cause us to lose control of everything? Your project relieves some of the consequences, temporarily, buying us some time. Don't we need to be mentioning what we should be using that time for?