GWPF Newsletter - World’s First Offshore Wind Farm Retires: A Post-Mortem

GWPF Report Rocks World Bank Meeting

In this newsletter:

1) World’s First Offshore Wind Farm Retires: A Post-Mortem
GWPF Energy, 18 October 2017
 
2) Norway Seeks $9,000 ‘Tesla Tax’ On Electric Cars
The Local Norway, 14 October 2017

 
3) GWPF Report Rocks World Bank Meeting As Africa, U.S. Question Green Energy Policy On Poor
The Zimbabwean, 19 October 2017 
 
4) Rupert Darwall: The World Bank’s Green Betrayal
Quadrant, 18 October 2017 
 
5) James Delingpole: How The World Bank Keeps Poor Nations Poor
The Spectator, 19 October 2017 

Full details:

1) World’s First Offshore Wind Farm Retires: A Post-Mortem
GWPF Energy, 18 October 2017
Michael J Kelly, Department of Engineering, University of Cambridge, United Kingdom

The first-ever offshore wind farm, Vindeby, in Danish waters, is being decommissioned after twenty-five years, DONG Energy has announced. [1] By its nature it was an experiment, and we can now see whether or not is has been a successful alternative to fossil or nuclear-fuelled electricity.


Vindeby Offshore Wind Farm (Photo: Danish Wind Industry Association)

It consisted of eleven turbines, each with a capacity of 0.45 MW, giving a total export capacity for the wind farm of 5 MW. The hub height of each turbine was 37.5 m and blade height 17 m, small by today’s standards. Because of its date of construction, it would have been all but totally reliant on conventional energy for its manufacture and installation. The original stated project cost was £7.16 million in 1991, which is equivalent to approximately £10 million today.[2]

During its lifetime, it delivered 243 GWh to the Danish electricity grid. This means that the actual amount of electricity generated was 22% of that which would have been generated if it had delivered 5 MW all the time for 25 years. In technical terms, it had a load factor of 0.22. From the same source we see the initial expectation was that 3506 houses would be powered annually, with a saving of 7085 tonnes of carbon dioxide per annum.[3] There was no clear indication of Vindeby’s expected lifetime. Since the average household’s annual use of energy in Denmark[4] is 5000 kWh, we can calculate that the windfarm’s anticipated energy output was 438 GWh over its 25-year lifetime. The actual total of 243 GWh was therefore only 55% of that expectation.

The (annual average) spot price for electricity from both the European Energy Exchange and Nordpool quoted over the period 2006–2014 dropped approximately linearly from €50–55/MWh in 2006 to €32–37/MWh in 2014.[5] If we assume that this trend was constant over 1991–2017, we can see that the average wholesale price paid for the Vindeby electricity was of order of €50/MWh. On this basis the revenue of the windfarm was approximately €12 million: perhaps €15 million at today’s prices. This means that the windmill spent 75% of its life paying off the £10 million cost of its construction, and most of the rest paying for maintenance. In terms of effective energy revenue, the return on input cost was close to 1:1. The individual project may have been just profitable, but the project is insufficiently productive as will be seen below.

Other windfarms have performed even worse. Lely, an smaller farm sited off the Netherlands coast, was decommissioned last year.[6] It consisted of four turbines of 0.5 MW capacity, and cost £4.4 million in 1992. One nacelle and blades failed in 2014 because of metal fatigue.[7] It produced 3500 MWh per year, implying a load factor of 20%. At the same €50/MWh as above, it would have earned €4.2 million, less than the initial project cost, let alone the additional cost of any maintenance, by any way of reckoning.[8]

The reader should note that the analysis above assumes that the scrap value of the wind turbines will pay for the decommissioning process, and so does not degrade the ratio any further: presumably the bases will remain in the sea. This assumption has been made explicit for the Cowley Ridge wind farm in Alberta, Canada, for which the actual electricity energy delivered into the Canadian grid is not in the public domain, so this similar exercise cannot be repeated.[9]

For a typical fossil-fuel plant, effective energy revenue return on input cost is of the order of 50:1 if one considers the plant alone and about 15:1 when one includes the cost of the fuel. For a nuclear plant the ratio is more like 70:1, and the fuel is a negligible part of the overall cost. The energy generation and distribution sector makes up approximately 9% of the whole world economy, suggesting that the global energy sector has an energy return ratio of 11:1.[10] It is this high average ratio, buoyed by much higher ratios in certain areas (e.g.15:1 in Europe), that allows our present world economy to function.

The lesson learned from the considerations discussed above is that wind farms like these early examples could not power a modern economy unless assisted by substantial fossil-fuelled energy.

Interestingly, DONG Energy, which built Vindeby, is proposing the much newer and bigger Hornsea Project One in the North Sea. This wind farm will have 174 turbines, each with a hub height of 113 m, 75 m blades and a nameplate capacity of 7 MW. It is due to be commissioned in 2020.[11] The project capacity is 1218 MW, and it has a current cost estimate of €3.36 billion. No clear statement of expected lifetime has been provided, but DONG has stated that 862,655 homes will be powered annually. Assuming the average per-household electricity use in the UK[12] to be 4000 kWh, this implies a constant generation of 394 MW over the year, which is 32% of capacity, which is probably realistic.

The agreed wholesale price of the Hornsea energy over the next twenty-five years is £140/MWh. Even assuming a very generous load factor of 50%, Hornsea’s lifetime revenue would be about £20 billion, suggesting a ratio of revenue to cost of 6:1 (reduced further by any maintenance costs), still barely half the average value that prevails in the global economy, which is more than 85% fossil-fuel based.

The secret of the fossil fuel success in the world economy is the high calorific value of the fuel. A ton of coal costing £42.50 produces of the order of 2000 kWh of electricity in a new coal-fired power plants (up 30% from older plants). This sells for £400 wholesale, with an energy return on energy invested (EROEI) of 10:1. A therm of natural gas costs £0.40, and produces 30 kWh of electricity, which sells for £6, representing an EROEI of 15:1.  Fuel-less technologies do not have this advantage.

The disappointing results from Vindeby, and the likely results from Hornsea and similar projects must be seen in the context of the increasing wealth of a growing world population. If all the world’s 10.3 billion people alive in 2055 were to lead a European (as opposed to American) style of life, we would need 2.5 times the primary energy as used today. If, say, half of the energy is suddenly produced with an energy return on investment of 5.5:1 (i.e. half the present world average), then for the same investment we would get only 75% of the energy and we would need to cut energy consumption: the first 10% reduction could come by curtailing higher education, international air travel, the internet, advanced medicine and high culture. We could invest proportionately more of our economy in energy production than we do now, but that will still mean a step backward against the trend of the last 200 years of reducing the proportion of the total economy taken by the energy sector.[13]

To avoid this undesirable scenario we would need new forms of energy to match the fossil/nuclear fuel performance.

In this context it is useful to remember that global economic growth is very sensitive to the cost of energy. The energy cost spikes in the mid-1970s and in 2010 form the boundaries between the 5% growth rate of the global economy from 1950–1975, the 3% from 1980–2008, and the 2.5% since 2012. There is a lot at stake in the choice between cheap fossil fuels and expensive renewables.

Full post & references
 
2) Norway Seeks $9,000 ‘Tesla Tax’ On Electric Cars
The Local Norway, 14 October 2017

Norway, a world leader of zero-emission vehicles, on Thursday proposed a “Tesla tax” aimed at cutting a tax advantage granted to large electric cars in a heavily criticised move.



Electric cars, which have hitherto been exempted from heavy taxes imposed on other vehicles, accounted for 20 percent of new registrations in the Nordic country since the beginning of this year, an unprecedented market share in the world.

In a 2018 finance bill presented to the parliament on Thursday, the right-wing minority government suggested removing a one-off tax exemption for new electric cars weighing more than two tonnes.

The proposal was immediately dubbed the “Tesla tax” because it primarily affects the high-end models made by the American manufacturer. Buying a new Tesla X would cost about 70,000 kroner (7,500 euros/$8,800) more.

Justifying the proposed tax measures, Finance Minister Siv Jensen argued that these heavy sedans exhaust the roads as much as gasoline and diesel cars, and that the owners should therefore contribute.

The proposal has sparked a heated debate.

“It’s a tax bomb,” Norwegian Electric Vehicle Association Secretary General Christina Bu told AFP.

“This was unexpected by both the drivers and by the car industry and it sends a bad signal to the Norwegians and the world” for which the nation is often a model in this matter, Bu added.

Full story
 
3) GWPF Report Rocks World Bank Meeting As Africa, U.S. Question Green Energy Policy On Poor
The Zimbabwean, 19 October 2017 

Tensions came to the fore last week when the World Bank held its annual meeting in Washington. Zimbabwe, Nigeria and India all have doubts about a policy they say does little to lift people out of poverty. Their unlikely ally is Donald Trump.



WASHINGTON DC – More than half-a-century after it was opened by the Queen Mother in 1960, Kariba is still the world’s biggest dam by volume.

Straddling the Zambezi, it stretches back 220 kilometres from the wall, with a catchment area the size of France.

But if Kariba was built today, the World Bank wouldn’t fund it. Same with the Three Gorges Dam in China, oil wells in Saudi or the coal-fired power stations that account for 60 per cent of Africa’s kilowatts.

At the bank’s annual summit last week, hosted by its president Dr Jim Yong Kim, these policies loomed into focus as more than 11,500 delegates, including six from Zimbabwe, converged on Washington.

Where else might you find Donald Trump and Robert Mugabe on the same side, along with India, China, Australia, Ghana, Nigeria and a clutch of others calling for change?

Conventional energy has fallen out of vogue and some say the bank has been hijacked by an army of lobbyists who want to shut down anything not powered by wind or sunshine.

In 2013 the bank adopted an outright ban on funding for coal except where there was no alternative. Thus far, the sole exception has been a power plant in Kosovo.

The World Bank’s mission is to end poverty using aid and loans, mostly for poor nations.  Critics say it is now following such a narrow agenda – with billions tied up in green projects – there’s a danger of losing the plot.

Based on its mammoth contribution to the bank, America is the biggest stakeholder, with more shares than any other country and, as a result, more votes.

Dr Kim spoke optimistically about increased funding, but Donald Trump had a different view.

INEFFECTIVE

Mr Trump, who has suspended his country from both the Paris climate accord and, last week, UNESCO, is a long-time critic of the bank and the billions it spends. He wants projects to be measured and costed like a private company, with the board held accountable when things go wrong. For now, no matter what happens, it’s rare for anyone in to be criticised, let alone fired.

Trump didn’t even bother to voice his verdict. Instead his finance minister, Steve Mnuchin issued a written statement saying there’d be no rise in the US contribution because, “existing capital is not allocated effectively”.

The ledger, he said, needed to be trimmed with less going to rich countries. Trump has criticised loans to China saying the focus should be on the poor.

And, while reviewing that, said Mr Mnuchin, they should cut “the Executive Board budget” of salaries, expenses and pensions for the army of bureaucrats who run the bank.

There was worse to come. Halfway through the summit, a London think-tank published a report in which the bank’s former head of research suggested the entire institution be shut down.

The document, distributed at the meeting, was produced by the Global Warming Policy Foundation with examples of how, in their view, the poor are losing out.

Titled, “The Anti-Development Bank,” the paper was authored by economist Rupert Darwall, one-time advisor to the UK treasury.

But it wasn’t the text that stung so much as some of the quotes. Indian government minister Piyush Goyal, for example, could have been speaking for Zimbabwe or any developing country when he said, ‘The people of India want a certain way of life. They want jobs for their children, schools and colleges, hospitals with uninterrupted power.”

Solar, he complained, only worked when the sun is shining.

“We need a very large amount of baseload power and this can only come from coal.

‘They’re saying to us, we’re sorry but you Indians can only have power for eight hours a day. The rest of the time you must live in darkness’.

More than 300,000,000 Indians are not on the grid, a hot topic at elections.

In Zimbabwe, half the power comes from dams, all built in the Rhodesian era. The rest is from coal, or imported from South Africa where Eskom uses coal for 93 per cent of its output. […]

But the frustration of many in Africa might be summed up by Nigerian finance minister, Kemi Adeosun.

“We want to build a coal power plant,” Mrs Adeosun said.

“However, we are being blocked from doing so, because it is not green.”
“This is not fair because they have an entire western industrialisation that was built on coal-fired energy,” she said.

“This is the competitive advantage that was used to develop Europe, yet now that Nigeria wants to do it, they say it’s not green, so we cannot. They suggest that we use solar and wind, which is more expensive.”
Does Africa need to do more for itself?

Yes, she says. “But we must also make sure the playing field is level.” […]

Ironically, at one point the World Bank conference had a black-out. The lights flickered, went off to a collective gasp, and came on again.

Charles Boamah from the African Development Bank who was speaking at the time broke into laughter.

“Well you know there are 600 million in Africa who don’t have access to electricity,” he said.

“Maybe they’re trying to tell us something.”

Full story
 
4) Rupert Darwall: The World Bank’s Green Betrayal
Quadrant, 18 October 2017 

When Barack Obama appointed Jim Yong Kim as the institution's president, the emphasis switched from lifting the world's poor out of poverty to prioritising 'environmental sustainability', not least by banning Third World investment in cheap, reliable power sources

For evidence that wind and solar energy wind and solar push up energy costs, wreak havoc on the investment needed to keep the lights on and compromise grid security, look no further than South Australia. The state has faced crippling black-outs, spiralling energy bills and fleeing businesses. Rich countries that have already built their grids can throw money at the problems created by weather dependent wind and solar. Poor countries that are still building out their grids don’t have that luxury. Why, then, would anyone think it sensible to push these expensive, flawed technologies down the throats of vulnerable developing countries?

Cheap, universal access to reliable grid power is the single most powerful boost to economic development and improving the lives of the world’s poor. The World Bank’s mission is to free the world of poverty. Yet under its current president, Dr. Jim Yong Kim, appointed by President Obama in 2012, the World Bank abandoned its core development mission and now prioritises environmental sustainability over poverty reduction. In 2013, it adopted anti-coal funding policies, effectively blocking investment in what, for many developing nations, is likely to be the cheapest and most reliable generating capacity. The World Bank’s near categoric refusal to finance coal-fired capacity is worsened by it favouring high-cost, unreliable wind and solar technologies.

The World Bank justifies doing this in order to cut global emissions of greenhouse gases. But poor people in developing countries consume very little power.

Their per capita consumption of coal can be measured in kilograms and pounds (in the case of Bangladesh, in ounces). The World Bank admits that the incremental greenhouse gas emissions from extending access to the grid to the world’s poor “will not make a material difference.” That being the case, the World Bank’s anti-coal/pro-renewable policy is morally and economically indefensible. For those genuinely worried by the prospect of anthropogenic global warming, enabling the energy-starved in the world’s developing nations is genuinely not a problem.

The World Bank’s own analysis also highlights the extra costs caused by the variability of wind and solar output and the extra grid infrastructure they need. In spite of this analysis, the World Bank decided to from a “unique partnership” with the then UN Secretary-General Ban Ki-moon in the 2011 Sustainable Energy For All initiative (SE4ALL). This set an arbitrary target of doubling renewables’ contribution to the global energy mix by 2030. Mr. Ban’s own numbers show why the World Bank made a colossal blunder: According to Mr. Ban, universal energy access has a price tag of $50bn a year. Renewable energy costs $500bn a year and a further $500bn a year for energy efficiency. To any objective analyst, these numbers should have settled the matter.

In giving its support to Mr. Ban’s aim of doubling renewables’ share in the energy mix, the World Bank went much further than the UN General Assembly, which in a March 2013 resolution noted that renewable technologies had yet to achieve economic viability. The UN’s 2030 Sustainable Development Goals, agreed in September 2015, also watered down SE4ALL’s renewable energy target. When the governments of the world finalised the text of the December 2015 Paris Agreement, they removed references to renewable energy from the draft circulated by the French conference president.

Leaders in the developing world blast the West’s apparent hypocrisy in denying them the energy that made them rich. The West’s industrialisation was built on coal, notes Nigeria’s finance minster, Mrs. Kemi Adeosun. Yet when Africa wants to use coal, the developed world says, “you have to use solar and the wind which are the most expensive.” There’s a similar story in Asia. At last month’s ASEAN+3 meeting in Manila, energy ministers affirmed the need to achieve energy security with economic efficiency and environmental sustainability before going on to recognise that “coal continues to be a major fuel source in the region.”  The communiqué calls for continued public financial support for new coal-fired power stations and promoting of the newest clean coal technologies, including high efficiency coal-fired generation.

The World Bank’s self-imposed embargo on coal financing has opened up the field to rivals like China’s Asian Infrastructure Investment Bank. Australia is also an investor in the AIIB. Responding to pressure from the Turnbull government, its lending guidelines allow it to support the latest generation of highly efficient, low emission coal fired power stations. As the world’s largest coal exporter, Australian mining jobs are on the line. So is the welfare of the world’s poor. It is irresponsible for a multilateral development bank to push high-cost, operationally defective technologies onto nations which will retard development and make electrification vastly more expensive.

Complaints from its customers and the arrival of a powerful competitor show how badly adrift the World Bank has become under Dr Kim’s leadership. The World Bank should not be the plaything of eco-fundamentalists and renewable energy lobbyists. At this week’s annual meeting of the World Bank, the United States is seeking to rein in the World Bank so it focuses on its mission to alleviate world poverty by helping countries access and use fossil fuels more efficiently.

It is up to the World Bank’s shareholders to rescue the World Bank from itself by requiring it to desist from its inhumane and senseless attempt to try to save the planet on the backs of the world’s poor. The World Bank’s mission is straightforward. It is to alleviate poverty. The sooner it reverts to its true mission, the sooner all the world’s poor can realise the dream of cheap, reliable power.

Rupert Darwall is the author of The Anti-Development Bank: The World Bank’s Regressive Energy Policies published this week by the Global Warming Policy Foundation


5) James Delingpole: How The World Bank Keeps Poor Nations Poor
The Spectator, 19 October 2017 

Its policy of eco-imperialism forces renewables on a reluctant but largely helpless developing world



What is the point of the World Bank? You probably think of it, if at all, as a benign institution, a kind of giant, multilateral aid agency, whose job it is to bring liquidity to developing nations and help them grow out of poverty.

Until not so long ago, that was indeed its function. Created alongside the International Monetary Fund at the 1944 Bretton Woods Conference, the bank did sterling work in its early years helping countries like France recover from the war; and later, giving mostly third world countries the vital seed money needed to help attract investors to risky capital projects. Its multiplier effect on investment can be extraordinary.

In 2013, the World Bank gave Kosovo $40 million towards building a lignite power station. This sent out the positive signal needed to encourage the private sector to complete the funding with another $1,960 million.

Amazing. Except that’s not what the World Bank does now. It won’t fund any more coal-fired power stations because they are not clean and green. Instead, it wants developing nations to embrace intermittent, unreliable and wildly expensive renewables like wind and solar as part of a mission — outlined by former UN Secretary General Ban Ki-moon — to ‘defeat poverty and save the planet’. In fact, it will achieve neither of those goals. […]

Here is Nigeria’s Minister of Finance, Kemi Adeosun: ‘We want to build a coal power plant because we are a country blessed with coal, yet we have a power problem. So it doesn’t take a genius to work out that it will make sense to build a coal power plant. However, we are being blocked because it is not green. This is not fair, because they have an entire western industrialisation that was built on coal-fired energy.”

She’s dead right it’s not fair. The UN is forever banging on about global injustice and admits that wealth redistribution is among its sustainable development goals. Yet at the same time, its policy of eco-imperialism forces renewables on a reluctant but largely helpless developing world — the surest way of guaranteeing that the world’s poorest nations stay that way.

There are 1.2 billion people without access to electricity and 2.7 billion without modern cooking facilities. Household air pollution from solid fuels is estimated to have killed 3.5 million people in 2010. The cost of blackouts and brownouts in sub-Saharan Africa is, in some cases, in excess of 5 per cent of GDP.

Unlike developed nations, these countries do not need their consciences salved by bat-chomping bird-slicing eco-crucifixes. They need energy that works.

According to the UN’s figures, the cost of universal energy access is just $50 billion a year. But that’s if it comes from fossil fuel. If you insist on using renewables, the bill is at least ten times greater. Not only are renewables more materials-intensive — a kilo of steel in a gas turbine ends up producing 1,000 times more energy than it does in a wind turbine — but they require a massively more complex and expensive grid system, which developing nations can ill afford.

How did this madness happen? It began in 1995 when an Australian-American lawyer and investment banker called James Wolfensohn was appointed as the World Bank’s president. This arch-globalist was a protégé of arguably the most sinister and influential figure in the history of the green movement, the late Canadian billionaire Maurice Strong. […]

This deterioration has accelerated under its current president, Dr Jim Young Kim, an appointment of President Obama’s. As Rupert Darwell notes in an excoriating report published by the Global Warming Policy Foundation, his policy of putting ‘environmental sustainability over poverty reduction’ is inhumane. There is no economic case, let alone a moral one, for pushing ‘high-cost, operationally defective technologies on to nations where they will retard development and make electrification vastly more expensive’.

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The London-based Global Warming Policy Forum is a world leading think tank on global warming policy issues. The GWPF newsletter is prepared by Director Dr Benny Peiser - for more information, please visit the website at www.thegwpf.com.