Vindeby, The World’s First Offshore Wind Farm Retires: A Post-Mortem

World’s First Offshore Wind Farm Retires: A Post-Mortem. M J Kelly, Department of Engineering, University of Cambridge, United Kingdom. Date: 18/10/17
https://www.thegwpf.com/worlds-first-offshore-wind-farm-retires-a-post-mortem/



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.

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.

Notes
[1] http://www.dongenergy.com/en/media/newsroom/news/articles/the-worlds-first-offshore-wind-farm-is-retiring

[2] http://www.4coffshore.com/windfarms/vindeby-denmark-dk06.html

[3] http://www.dongenergy.com/en/media/newsroom/news/articles/the-worlds-first-offshore-wind-farm-is-retiring

[4] http://orbit.dtu.dk/files/4203486/ICT_ECEEE_2009_paper.pdf

[5] http://www.pfbach.dk/firma_pfb/pfb_decreasing_wholesale_prices_2015_11_11.pdf

[6] http://www.4coffshore.com/windfarms/lely-netherlands-nl27.html

[7] http://www.offshorewind.biz/2016/12/07/lely-wind-farm-fully-decommissioned-video/

[8] http://www.caddet-re.org/assets/no61.pdf

[9] http://www.power-eng.com/articles/2016/05/transalta-shuts-cowley-ridge-wind-farm-in-alberta-may-repower-it.html

[10] http://www.thegwpf.com/michael-kelly-a-challenge-for-renewable-energies/

[11] http://www.4coffshore.com/windfarms/hornsea-project-one-united-kingdom-uk81.html

[12] https://www.statista.com/statistics/517845/average-electricity-consumption-uk/

[13] Until the industrial revolution, the UK economy operated on an energy return investment of 2:1: see C. W. King, J P Maxwell and A Donovan, ‘Comparing world economic and net energy metrics, Part I: Single Technology and Commercial Perspective’ Energies 2015: 12949-74. The 2:1 ratio applies in some parts of Africa today: when half the economy is spent providing food and fuel, it leaves little over for other activities.