For some, it's better not to work

Moray East is the first of the (allegedly) supercheap offshore windfarms. When it was awarded its Contract for Difference in 2017, the price agreed, £57.50 per megawatt hour, was said, somewhat naively, to herald a revolution in windfarm costs.

Last year, however, we were able to see how its build costs turned out. At £2.3m per megawatt of capacity, they were on the low side, if not revolutionary, although the site is only 22 km from land, which tends to keep costs down. That said, it is also in quite deep water, which tends to push them up. It therefore looks as though the developers have kept a pretty tight rein on spending.

Moray East is one of the first offshore windfarms to deploy 10 megawatt turbines, so it’s interesting to see how these have performed. Today, I noticed that the windfarm’s generation data for 2022-23, the first full year of operation, are now available, so we can finally check things out.

At first sight, it seems to have been a disaster. Moray East has generated just 2.5 terawatt hours of electricity, which equates to a capacity factor of just 30%. At this level of output, the levelised cost will be in the eyewatering range of £125-200 per megawatt hour. However, this is not the full story, because the windfarm has also spent an astonishing amount of time switched off. According to Renewable Energy Foundation data, its constrained hours were 0.7 terawatt hours. In other words, more than a quarter of the windfarm’s potential output is not being delivered to the grid. We know that CfD contracts ensure windfarms are fully compensated for all this “lost” output, while the grid rules allow them to sell the power anyway if they can divert it to a battery or a flywheel, thus allowing them to be paid twice for the same electricity. For windfarms, being switched off is more profitable than producing power.

If we put the constrained output back into the levelised cost model, then the cost is in the range £86–131, which makes it a rather low-cost windfarm. The problem is that the consumer isn’t paying for power on this basis, but instead on the disastrously expensive “unconstrained only” basis (and even that understates the bill to be paid because of the double-payment issue.

Whatever basis the levelised cost is calculated on, it may still be understated. I’ve previously noted that larger wind turbines are wearing out faster than smaller ones. Because we have very little data on turbines above 6 megawatts, it’s hard to know how fast the output of Moray East’s 10 megawatt beasts will decline. I’m currently assuming, conservatively, that it will be as fast, but no faster, than 5-6 megawatt ones. But all the evidence suggests that we should expect more wear and tear. In which case the costs will be higher still.