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The Cost of Renewables: A blip in the narrative

National Review|Andrew Stuttaford|November 13, 2022
Electricity Prices

The idea that wind-power would ever be ‘free’ would be impossible to reconcile with repaying the original investment, turbine maintenance, obsolescence, and so on. ...Meanwhile, Western governments are hardly doing what they can to reduce the cost of traditional sources of energy.


Bloomberg:
 
Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.
 
Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame — at least in part — is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant…
 
While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, technological advances can only go so far. Now the industry needs to charge more so that it can deliver the massive scale-up needed for countries to achieve ambitious climate goals.
 
This shouldn’t come as too much of a surprise. The idea that wind-power would ever be ‘free’ would be impossible to reconcile with repaying the original investment, turbine maintenance, obsolescence, and so on.
 
And on a short-term view:
 
Soaring ... more [truncated due to possible copyright]
     
Bloomberg:
 
Renewable-energy producers have long touted the promise of cheap electricity, an assurance that’s helped them eat into the dominance of fossil fuels. But the pledge has gone too far, according to the world’s biggest wind-turbine maker.
 
Manufacturers such as Vestas Wind Systems A/S are seeing losses pile up as orders collapse at a time when they should be capitalizing on the turmoil in natural-gas markets. To blame — at least in part — is the industry’s insistence that clean electricity can only get cheaper, according to Henrik Andersen, chief executive officer of the Danish wind giant…
 
While wind-power costs have steadily declined, to the point where many people concluded prices would eventually hit zero, technological advances can only go so far. Now the industry needs to charge more so that it can deliver the massive scale-up needed for countries to achieve ambitious climate goals.
 
This shouldn’t come as too much of a surprise. The idea that wind-power would ever be ‘free’ would be impossible to reconcile with repaying the original investment, turbine maintenance, obsolescence, and so on.
 
And on a short-term view:
 
Soaring commodity costs and supply-chain bottlenecks have wiped out profits for much of the wind industry this year. Vestas expects its profit margin to be around -5% in 2022.
 
“The output from the turbine has never been more valuable,” Andersen said. “But we are losing money in manufacturing a turbine.” Vestas has raised prices more than 30% in the past year to help stem losses.
 
While post-pandemic supply chain bottlenecks may be easing, talk of a massive “scale-up” in this sector does not suggest that it will be immune from further supply chain problems or, for that matter, raw material price increases. Meanwhile, Western governments are hardly doing what they can to reduce the cost of traditional sources of energy.
 
If the presence of the faith in the Middle East survives, it will likely be thanks to visionaries from the region rather than to insipid onlookers from Washington.
 
Greenflation, it’s a thing.

Content truncated due to possible copyright. Use source link for full article.


Source:https://www.nationalreview.co…

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