One failed turbine at Scroby Sands exposes the scale of the cost of decommissioning offshore wind farms. And there’s precious little cash being set aside to cover it. A thread (1/n)
Scroby Sands is a relatively small 60MW offshore windfarm. In 2023 one of the 30 turbines caught fire and owner RWE has decided to decommission that single turbine (2/n)
In the accounts up to end 2024, we can see the wind farm is losing money, with pre-tax losses of £4.7m, despite earning ROC subsidies worth £9.8m, or nearly 48% of revenue (3/n)
RWE calculates the present value of decommissioning the whole wind farm (remaining 29 turbines) at £44.2m, or a cash cost of ~£58m in 2030 after unwinding the discount, or about £1m per MW of capacity (4/n)
However, they also expect the cost of decommissioning the single failed turbine at £13.2m (including £0.2m already spent), or about £6.6m/MW (5/n)
It is reasonable to expect some economies of scale when decommissioning the whole windfarm, but a six-fold decrease in costs is surely beyond the realms of credibility (6/n)
Examination of a big sample of offshore wind farms last year showed decommissioning estimates of about £0.3m/MW across the fleet. About a third of the overall £1m/MW Scroby Sands provision and much lower than the single turbine £6.6m/MW (7/n)
A response to an FOI request reveals that very little of the future decommissioning liability covered by DESNZ is being reserved as ring-fenced cash. 21% is covered by parent company guarantees that are supposed to be not acceptable to DESNZ (8/n)
The finances of these windfarms and their owners are looking increasingly shaky, especially as there is talk of ending ROCs early and cutting carbon taxes which will reduce revenue for ROC-funded windfarms (9/n)
The decommissioning cost of a single turbine in the Scroby Sands windfarm has lit the fuse on the offshore wind decommissioning timebomb. Time the Government tightens the rules on decommissioning liabilities or there's a risk the bill will fall on the taxpayer (10/n)
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