The First Ever Off-Shore Wind Farm Financed by Banks...

[editor's note, by Prof. Goose] This is a guest post by Jérôme à Paris from the European Tribune.

I am finally in a position to write about a project that has kept me busy in the past year and a half and that may interest the readers of the Oil Drum...

This Wednesday, a few banks, including mine, signed and disbursed a ground-breaking loan: we put 378 million euros on the table, to build 60 wind turbines in the North Sea, 25 kilometers off the coast of the Netherlands, near Amsterdam. The wind farm, at 120 MW is not the biggest to be built offshore (that title goes to Nysted, built three years ago, which has a capacity of 165 MW), but it is the first-ever offshore wind farm to be financed by banks.

Above is a picture of one of the first piles, built just a few weeks ago. In just over a year, 60 of them will have been planted in the seafloor, have a wind turbine bolted on top, and the farm will start producing electricity - enough to provide power to 125,000 households and to avoid 225,000 tonnes of carbon emissions per year. It will look a lot like this one, North Hoyle, completed in 2004 and which uses the same turbines:

I explained in a diary written almost two years ago what project finance was and how it works, but the principle is simple: you finance a specific asset, and you get repaid only from the revenues generated by that asset, without recourse to the investors that own the project. This is a financing technique that works well for project with well identified assets with high initial investment costs, and strong cash flows after that, like big infrastructure items (toll bridges, pipelines) and energy assets (oil fields, power plants).

Wind farms are quite easy to fund using this project finance mechanism, and it has indeed been done on a wide scale in most Western countries, which have stable regulatory frameworks for renewable energy, i.e. mechanisms that guarantee that renewable energy sources get a high enough price (usually higher than "grey" power, but not always these days with the price increases for gas) for each kWh put on the grid. But so far, offshore windfarms seemed to be scaring banks, for a number of reasons:

  • construction costs are higher than onshore, as you need special boats and equipment to build the turbines, and you need to build a longer cable. The high cost of the cable, which must be borne by the wind farm (as it is built exclusively to connect it to the grid) also means that only larger scale projects make economic sense, thus implying bigger investment outlays;
  • operating costs are also higher, as the marine environment is tougher on parts, and access is similarly more difficult: even minor repairs will require the intervention of a boat and will take more time;
  • more problematic for the banks, operating costs are also more uncertain: there is little track record for offshore operations, and risks are not completely understood, such the long term impact of corrosive salt, and stronger winds, on turbines initially designed for onshore use. Bad weather can prevent access to the farm altogether and mean that even minor technical problems can cost big production losses as repairs are delayed;
  • finally, the issue of the size of the projects (which reach hundreds of millions of euros) has become an issue. Developers can be utilities, but they can be pretty small players; similarly, turbine manufacturers (with the exception of GE and, more recently, Siemens- Bonus) are also relatively small industrial companies. The presence of such small players was not an obstacle in the onshore sector, where the technology is well known, and nimble wind investors proved capable to develop, and these manufacturers to build, the windfarms typically seen onshore, i.e. in the 10-50 MW (or 10-50 million euros) range, and banks were comfortable to support both. For the bigger, longer, more expensive offshore projects, this is no longer the case. How reasonable is it to finance a project costing 400 million but developed by companies with 10 millions euros turnover and built by a company with 50 million euros in annual profits?

The fact that wind is stronger and steadier offshore, and energy production is typically 50% higher per turbine than onshore helps make the case for offshore wind economically more compelling, but does not alleviate the above problems, and both investors and financiers have been reluctant to put money in this sector, despite currently being extraordinarily aggressive for onshore wind assets.

So how did we solve this?

Now, I have to walk a fine line not to reveal any confidential information, so I'll use the press release which is in the public domain, and explain some bits briefly:

The financing structure includes a number of novel features to mitigate the risks associated with the construction and long term operation of wind turbines at sea, including the availability of a contingent facility (jointly with contingent equity provided by ENECO) to cover potential cost overruns or delays, cash sweep mechanisms and specially tailored availability guarantees under the operating contract with Vestas that allow debt service to continue even during periods of lower availability than expected. The project also benefits from a comprehensive, 11-year insurance programme with Delta-Lloyd N.V.

  • Availability of a contingent facility. That means that we have some additional funds available should there be unexpected spending or problems that cause the production (and thus revenue) to be delayed. We rely on fairly standard construction contracts, which have a given price and date, and usually include penalties if commitments are not meant, and I'm certainly not going to give ideas to people that there is more money out there to be spent. There will need to be real problems that are not covered by normal contractual terms, and banks will have a final say on whether any money is provided. But it is fairly unusual for banks to put up such reserves (usually, this is done exclusively by the investors), and we've done it in this case because it gives us additional control over construction and a higher certainty that the project will be built successfully. We've been willing doing this because we have studied the plans and contracts in much detail and are comfortable with the technical challenges, the solutions used to solve them and the backup plans.
  • Cash sweep mechanisms. That simply means that if the project is successful, we get repaid faster, by taking ("sweeping") a portion of the surplus to reimburse the loans. Banks always use more conservative revenue estimates than investors to have a higher certainty that such revenue levels will always be reached - and make it possible for the debt to be paid. If thing go well, of even just as expected, there will be more revenue than the banks plan, and the investors will make a lot more money. So in this case, we have a right to a portion of these extra revenues in the "better-than-the- pessimistic-scenario" cases. That means that it is actually quite likely that we be repaid faster than we expect. We don't earn more, but we take risk over a shorter period, and it does lower the rate of return of the investors (as their own income is delayed by these payments).
  • Availability guarantees. That's the operator, Vestas, guaranteeing that its turbines (which it will be running and maintaining on behalf of the investors) will indeed produce the expected amounts of electricity, and agreeing to pay penalties if the production levels are lower than guaranteed. I cannot go into much detail here, but the general principle here is that these guarantees should not only cover the impact of lower revenues for the investors, but rather for the lenders. So the penalty payments take place for really degraded performance, rather than for slightly degraded performance, in order to ensure that there is still some income in the project even if things go really bad (if things go a little bit bad, we are covered to some extent by the fact that the banks already count on things going less well than normal as their "base case" scenario).
  • Insurance programme. That's fairly simple: you can buy insurance that compensates you if some things that should not go wrong do go wrong. Insurances make money because they charge you a slightly higher fraction of revenues than the probability of that thing happening. Risks like lighting, boat accidents, mechanical failures or weather events are known to insurers and they can quite easily quote prices for such circumstances. In this case, the project has managed to get insurance coverage for a fairly comprehensive set of events, which brings additional comfort to the lenders.

For those of you that know the business, this is all maddeningly vague, I suspect, while those of you that do not know much finance will probably already find it unbelievably complex and mind-numbing. Let's say that this is a compromise between the desire to explain what we did and the confidentiality requirements inherent to this job, and it may be slightly frustrating.

I will say that I am extremely proud of having brought this project to fruition, and I will further say that I consider that I had an instrumental job in getting it done, and I think that this financing will be a reference and a model for future transactions. I also consider myself lucky to work in a sector where I can do some good for the planet and which is fully compatible with the political ideas that I push here.

Thanks PG for crossposting this here. I'll be around in the next couple hours (and later in the day) to answer questions or discuss any other issue as much as I can (subject to the confidentiality rules I have to follow).
Can someone explain to me why those blades seem to be pointing in different directions?  Shouldn't they all be facing together into the wind?  Are they steerable?  Or are they fixed and staggered in direction to average out inconsistant wind patterns?
In this case, I suspect that it is because some of them are not functioning yet. That picture was taken before the windfarm was fully commissioned.

Maintenance would be the usual reason.

Great job Jerome - two questions:

1) what is status/climate of these type of bank financings for large wind in US (offshore)


2) to finance such a project, does the bank/utility do a risk adjusted view of electricity flows based on a certain discrete timeframe? In other words, do the terms of a project get better if the wind fits nicely into an electricity portfolio, adjusted for shortfall risk? Or is it just looked at in MW potential itself, and the other componenets of the affected electricity grid are viewed exogenously?

  1. I'll admit that I'm not following all that closely US projects as we have a team in NY - we get consulted when projects get close to the stage where banks need to take decisions (bidding process to be selected, por apporval process for a mostly or fully negotiated transaction). So far, we have not been consulted, and my bank is one of the leaders on the North american market, so they are presumably following the projects underway.

  2. No, we just want certainty that all kWh produced will be sold, and that they will get a price we can understand. In the US, that means either taking merchant risk, or getting a PPA. After the merchant power plant bloodbath a few years ago, merchant risk has gone out of fashion, and we usually require a PPA for the full volume produced, and with a acceptable price formula (fixed, or merchant with a floor). The management of the intermittancy is passed on to the utility that buys the electricity. In any case, we do not want to have to bear the "balancing costs" that may be imposed on wind projects (udually this is covered through a lower priced PPA by the utility that then manages its own supplies)
You mention PPA (Power Purchase Agreement) for the wind generation, but if a wind facility is able to sign such an agreement, it seems that financing becomes simple and the need for the novel features you mentioned (contingent facility and equity and cash sweeps) are not necessary.

Here in the US, the PPAs for wind are getting harder to obtain because of the second point you mentioned - the management of the intermittancy - which has become a burden for the local utility. I took that the structure you described took these burdens and mitigated them through the cash sweep mechanisms and guarantees...did they not?
Does the Vestas guarantee only cover low availability caused by mechanical failures rather than lack of wind?  If so, does the contingent equity cover the risk of intermittancy and the utility's other generation steps in?  do the cash sweep mechanisms true up in times of no wind? or is this site lucky to have a high capacity factor?
Very interesting stuff, would love to learn more and figure how to apply and solve the intermittant issue over the pond here in the US.

This is offshore. These features are there to cover for uncertainty in construction schedule and then on operating budgets - for which there is little track record.

Intermittancy has to be managed outside the project; it's too much of a burden for a single project.

There is never any coverage for lack of wind. We rely on statistical analysis and cover ratios that protect us even if you have a low wind year - that's true onshore as well.


I have a friend with a finance degree who works for the insurance industry and finds interesting places to invest the money.  He has helped finance 2 wind farms in the U.S. via bond issues.  My limited understanding is that there are commercial bonds generated by companies that are underwritten by a variety of insurance and other industries that want return on investment.  The bonds then pay back at a fixed rate of return.  Very nice for insurance companies that want steady returns but don't want to rely on banks or the stock market.  The wind farms themselve were put up by utility companies and they obtained financing via the bonds from a number of entities pooling the money.  The farms were on the order of 150-250 megawatt in the midwest.  These are 150-250 1 megawatt turbines on ridges and wind corridors.

So I think the money is there but maybe not as concentrated as the European banks.

From the E-Connections website on the Q7 windfarm, I found this: "For safety reasons the Ministry of Transport, Public Works and Watermanagement will close off a zone of 500 meters surrounding the wind farm for all ships." Can anyone say whether this closure is permanent or just for construction? Is such a closure a usual occurence for an offshore wind farm?
It will be permanent, I imagine, to avoid collisions at sea. The farm was built outside of shipping lanes, radar areas, birs migratory paths, pipelines; etc..., so that area was not used in anyway. Now it is used and thus has its buffer zone on the maps. In practice it should not change much.
Does this exclude all comercial fishing as well?  What does the opperator pay for the use of the sea area?  I'm curious to know if such developments might be good for the fish stocks.
Horns Rev in Denmark has been good for fish stocks.
Hi Jerome,

I live in Portland, OR and desperately want to get in the business you're in.  I have mostly a marketing/management background and no science.  What can/should I do to try and get my foot in the door?  I have an interview with Invenergy Wind LLC, but other than there doesn't seem to be many positions out here.  Vestas US is located here, but they only hire people with BS and experience.

Any help or advice you could give would be GREATLY appreciated.

ps- great work!!

Hey folks--this is a great article to pass around to reddit, digg,, metafilter, stumbleupon...etc., etc.  Don't forget to do it (the icons are up just under the tags at the beginning of the story.)
PG, are there any specs that break down the 378 million euro cost by labor, concrete, steel, cable, future maintenance, and so on?  I'm curious about the details of why each windmill costs 6,300,000 euros ($ 8 million US).  
from the link given by Jerôme:
The financing includes EUR 219 million, 11-year, non recourse long terms facilities and EUR 160 million short term construction facilities. The long term facilities are fully underwritten by the Mandated Lead Arrangers and EKF, which guarantees EUR 68 million to support the export of Vestas equipment from Denmark.

68 / 60= EUR 1.13 million per wind turbine.
Very roughly:
Foundations, cable, electrical equipment: 50%
Turbines themselves: 35%
Development costs, financing costs, other: 15%

The cable is pretty expensive because the windfarm is more than 25km (15mi) offshore. The financing costs appear huge, but some of it is to fill reserve accounts (i.e. money that stands there and is available in case of big problems) that are given back to the investors when the debt is fully repaid.

If it is going to be very similar to North Hoyle...from what you know, has North Hoyle been a success?
North Hoyle is doing okay. Both are actually successors to Horns Rev, the first large scale offshore windfarm (160 MW - 80 V80 2MW turbines) which "enjoyed" significant problems - Vestas had to bring back all the turbines onshore to replace various parts.

The experience has been learnt, and the new version of the turbine is a lot more marine-eady than the earlier one was.

Above is a picture of one of the first piles, built just a few weeks ago.

I must have stared at that picture for 10 seconds, thinking "That looks like no wind turbine I have ever seen." :-)

Pass that. :)
Its one of the new lightweight turbines, they are a low bat and bird kill style.
It employs state of the art stealth technology!
So this may be a stupid question, but could you elucidate the distinction between "the investors" and the banks?  In my usual understanding, the investors are the folks that put up the money and take the risks; that is, they finance the project and are compensated for their risk with revenue returns.  But it sounds like the banks are filling that role here, so what are the investors doing?
Investors own the project, put up equity, then borrow some of the investment costs (from us) - that pays a fixed interest rate which does not eat in their profits and allows them a higher rate of return as they put up less cahs initially.

We're happy with the lower return because we get the money out first and take less risks than them (the first money the project loese is theirs, not ours).


something I notice time and again and can't seem to figure out:

your project supplies over 1000 homes per MW, a number that is pretty standard for European wind projects

but when I see US numbers, it's standard that 1 MW covers only a third of that

what gives?

I wonder if has anything to do with the larger, less energy efficient homes and appliances in the US? Large empty rooms, air conditioning, poor insulation, giant stoves, fridges, washers, driers, ...
Waste in the US, of course.
Perhaps a less negative explanation is available. Let me suggest that when wind farms are discussed in the US, the nominal availability of 30% used. For example, when the Long Island Offshore Wind Farm is discussed, its output is described as "140MW, enough to power 44,000 homes". This represents the average output of the wind farm over time.

It would seem that the Europeans are overstating the output from their wind farms.
US consumption in 2005: just above 4,000 TWh, or 13,000 kWh per person per year. Europe is just under 10,000 kWh per person per year, I think

A wind MW produces 2,500 MWh per year onshore, 3,500 MWh offshore, i.e. enough for 250 people / 350 people respectively. But that's for total electric consumption.

If you take only household/residential use, it's just above one third of total consumption, which brings us back to our 1,000 people per wind megawatt.

Not sure how many people per household, though.

I see your logic, but I'm not sure if we're talking about the same thing. I believe that the benchmark "1MW per 1000 homes" is used to give Joe Homeowner some context when considering energy issues, with the focus on demand/capacity. It's implied that 100% of the MW would be going to the 1000 houses. I don't believe it's meant to address the total energy picture.

That's the only ratio I've seen and I'll grant you that it's most likely very stale. From my personal experience, my household (consisting of two adults and three children) uses 12,000kWh in a twelve-month period. Averaged over the year, that 1.3kW for my household. So, the number of households per MW should actually be less based on my consumption (770 households per MW) and a 140-MW wind farm would on average serve only 34,000 households.

In reality, sometimes (not much of the time), that 140-MW wind farm will serve over 100,000 homes. Other times (also infrequently), it won't power any homes.
Thanks for the input Jerome,

my thing is when I read differences like that on a consistent basis is I start to think: is the US number based on capacity factor perhaps?

more/less people per household could be, you got a point
it's not as if Europe is renowned for its insulation....

something to check once and for all.


Any thoughts about the proposed floating structures based on oil platforms?

Is this something viable in US waters or would hurricanes destroy the turbines?

Also the piles, are they poured concrete or a jacket with a penetrating metal pile?

Also why don't all the fixed position offshore rigs have these? the structures are there would that not be cheaper?


Jérôme,  Nice Post.  Thanks.

This type of active financing for windpower would seem to put the spike through the heart of the nuclear option Dracula.  With all winds advantages (high EROEI, scalability, reliability, predictability, no decommissioning costs, no terrorist threat, generates income from the get-go) how can nuclear even be considered?

It must also have an impact eventually on ethanol production in the US.  Any farmer given a choice between a problematic ethanol market and a nice, quiet windmill generating royalties for his retirement will choose wind.  He can always sell part of his crop for ethanol, and the windfarm will still pay him royalties!

This type of active financing for windpower would seem to put the spike through the heart of the nuclear option Dracula.  With all winds advantages (high EROEI, scalability, reliability, predictability, no decommissioning costs, no terrorist threat, generates income from the get-go) how can nuclear even be considered?

Well, for one thing, nukes can operate 24/7, 365 days a year, without regard to weather. Wind power can be very intermittent. Wind farms also occupy a great deal of physical space (which is why putting them offshore is a good idea). As noted above, the largest offshore wind farm built thus far only outputs 165 MW (when wind is favorable) - compare that to about 1000 MW for a mid-sized nuke.

None of this is to say that I oppose wind farms. Actually, I think they are an excellent idea. Just the fact that they can be constructed in about a year is a major plus, especially when compared to a typical 5-year construction period of a nuke plant.

So yes, three cheers for wind farms - I hope we build more of them. But I still don't think they eliminate the need for nukes or some other form of base electric power generation. It's never a good idea to put all your eggs in one basket.

A couple of caveats:

  • I'm not sure anyone builds nuke plants in 5 years, even the Finns are 18 months behind (the French, maybe).  7-10 years is more realistic (including planning and planning appeals)

  • nukes don't operatre 365/24, at best maybe 90% of that.  The UK National Grid does not give a nuclear plant a capacity credit of anything like 90% (more like 70%).

  In fact, if you take into account periodic downtime (perhaps as much as 6 months every 7 years) they can operate a lot less than that.  I'm not sure, but I don't think most nukes can operate and refuel at the same time?  Similarly they don't always operate at full capacity.  The long run average operating performance of nuclear power plants has not been good, although the top quartile has been excellent (things you don't think of: during recent heat waves, EDF has had to shut down its nukes because of shortages of cooling water).

I am the son of a nuclear power plant builder (the programme crashed, leaving the Ontario taxpayer with a $30bn stranded debt).  So I am not inherently anti nuke.

But we should never believe claims nuclear power is 'cheap' (item: UK nuclear decontamination liability, present value of future liability, is £70bn aka USD120bn, and 8/9 UK reactors are running at reduced capacity due to cracking).  Decontamination and waste disposal alone means that nuclear power is not cheap.

What we can say about nuclear power (and why I favour it, to an extent) is that it is ideal for baseload, and with a realistic charge for CO2 (the Stern Report suggests £85/tonne CO2 ie £200/tonne for Carbon), it is competitive (just not cheap).

I use a figure of 8 cents/ kwhr as the long run cost of nuclear power.  MIT's 2003 study had a much lower figure (but was using the 2002 gas price as a comparator, which of course is half the prevalent gas price now), but I don't think that has ever proven out in real life, nor do I think it ever will in a US/UK political and safety environment.  I can think of reasons it might fall to 7 cents (economies of scale).

Capacity factors for nuclear plants in the USA, including maintenance downtime, have been 85-90% on average.

There has been major improvement due to learning better management, and technology.

The problem I have with that is that we are extrapolating the performance now to the performance of the entire technology over its life cycle.

Historically, it has never met that-- far from.  My point that a 90% LF this year, may not be a 90% LF over the whole lifetime (if the plant is shut down for 6 months for maintenance, say).

Nor would it be applicable to a 3rd Generation design, until they have significant operating experience (the first, the Finnish one, isn't even running yet).

I accept that we build and run nukes better than we did at the time of Three Mile Island (I hope so!).  But the Ontario Hydro debacles were actually in the late 80s, so maybe learning wasn't that widespread.  Japan's cracking problems have emerged subsequently.  And the British Energy problems are now (albeit on reactors completed in the late 70s/ early 80s).

These are complex pieces of machinery, operating in high stress environments, that we are running for 40+ years, so inevitably they degrade, and sometimes in unpredictable ways.

My overall take is that nuclear is no nirvana-- it's neither cheap nor perfectly reliable.  Neither is wind, but wind could be 20% of electricity consumption (more if we get cleverer about storage technology).  Only a handful of countries are likely to have nuclear sectors, long run, larger than that.  

Which doesn't mean we shouldn't have nuclear, particularly in the 'coal heavy' power generation countries (US, UK, China, India, Poland etc.).   Let's just be realistic about the cost of power from that source.

Nuclear has downtime, but most of it is planned downtime.  The capacity factor for nuclear has a higher quality than the capacity factor for intermittent sources like wind or solar.
But not a 90% Capacity Factor.  Not anything like, as far as I can gather.

Wind runs on a Load Factor of 28% (latest UK onshore data for plants running the full year DUKES data from the DTI).  The National Grid awards it a Capacity Factor of 20%.

Nukes don't run entirely planned downtime.  They have unplanned downtime, and lots of it (thinking for example the current British Energy mess*).  You have to look at the whole life of the reactor (ie 40 years+) not just the record at maturity.

History says we should be sceptical of outlandish performance claims for nuclear power.  And claims of very low cost of power.

There is an operating learning effect which has led to big improvements in load factors for reactors but the Third Generation reactors on the boards won't have the benefit of those (at first).

And there are systemic effects:

  • during the French heatwave, EDF had to shut down some units (not enough cooling water)

  • if you have a common design of reactor (thus lowering per unit construction costs) then if something goes wrong, you could wind up having to shut down the whole reactor fleet (design flaw).  You have raised your vulnerability to systemic failure.

8/9 reactors are running at reduced capacity due to cracks.  We could argue this is unique to the Advanced Gas Reactor technology *but the Japanese discovered cracks in theirs, CANDU in Canada has obviously been a series of maintenance nightmares (leading to absolute shutdown), both US PWR and BWR have had serious issues.
The 1000 MW for a nuclear is for one unit only (and now units are hitting 1200-1500MW), and a plant might have three units (and possibly expandable to even more).  That's
the right comparison to a wind farm.

Of course it's expensive, but right there a 3000 MW nuclear plant is equal to eighteen of the currently largest offshore wind farms (assuming 165MW).

It is unfortunate but the laws of physics are what they are and wishing otherwise is futile.

Nuclear isn't the "dracula" which must be slain---the monster is coal.  

Nuclear competes with coal and gas for the "real" generating load.   Wind, so far, is just an extra, but with good potential.  

In real reality, opposing nuclear results in more coal, not eighteen times more wind.  

In practice I think that wind and nuclear must be pursued with maximum vigor in all the places they are each feasible, as global climate change is so important to slow down.

There I agree with you ie about the problem of coal, and the necessity of both nuclear and wind.  I also think we will get to Carbon Sequestration (because neither wind nor nuclear can fill the gap).

1000MW offshore wind stations are well on the way: the London Array is stalled due to planning (not the site itself but the local council objects to the transformer at the point where the cable comes onshore) but will be of that scale.

It's easy to miss how fast wind is scaling up.  The sector is in exponential growth.  The UK took 14 years to build its first GW of capacity, and 14 months to build its second.

 Yes in the US there are distortions around the expiry of tax subsidies in 2008, but the reality is that across the world, wind is coming very fast.

Hello,  Yes, three cheers for wind for sure.  I would consider nuclear, but only as some package deal, that, say, eliminated coal plants.  As for it being available 24/7, here are some stories from Oct 28th that reflect not-so-well on the nuclear reliability issue.  

Nuclear problems may boost UK energy costs /
Hinkley Point power station 'may never open again' /
Hunterston nuclear station's cracks 'a threat to safety' /
Think-tank raps Blair over nuclear policies /
UK nuclear cleanup to cost $122 billion /
What is the best solution to dispose of Britain's nuclear waste?

If you go to their nuclear news page you can link to them there.

Wind will need base power generation for its intermittent properties, but we need to build a lot more windmills before we get to that point.  By then we may have figured out some methods to deal with that problem.

How can we finance nuclear decommissioning if the lifetime plans for nuclear sites are running beyond 2100 ?  

UK nuclear cleanup to cost $122 billion
"The latest version of our lifetime plans -- which detail the commercial operations, decommissioning and clean up programmes of our 20 sites -- now show a total cost of 64.8 billion pounds, a net increase of 2.1 billion pounds," it said in a statement.

Agency raises estimated cost of nuclear clean-up
Current plans called for the costs to be spread over up to 120 years in the case of Sellafield, he said. "Our belief is we should accelerate many of those processes. We believe that in accelerating we will also bring down the cost," he said.
"The key assumption at the moment in all of our baselines is that the repository (the underground dump) opens its doors in 2040 for intermediate level waste and 2075 for high level waste and spent fuel," NDA Engineering Director Richard Waite said.

Here is a link detailing some of the problems in integrating wind power into a power grid:

The gist of the issue is that there is an expectation that when you flick the light switch on (or have the furnace turn on because the house is getting too cold) the expectation is that the power will be there. Unfortunately, wind is an intermittent power resource. There are times when wind power will not produce enough power to meet the system demand and times when it will produce more than the system needs.

It can only be used in conjunction with other sources of power such as nuclear, hydro, or coal that balance the wind generation's low output periods and in conjunction with extensive energy storage capability.

This is why storage is so important (very underrated, in my view). If you have a large enough buffer the intermittency becomes a non-issue. The big question is whether you can make large enough buffers at anything approaching viable costs. The good news is there are many very different approaches to large-scale energy storage (pumped hydro, compressed air, flow batteries, liquid nitrogen, hydrogen, flywheels) and if any one of them succeeds it will massively change the picture in favor of renewables. The bad news is each of those approaches presently suffers from one or more of several fatal flaws (low energy density, low power density, low charge-discharge efficiency, high cost per unit of capacity, siting issues). In any case, I think storage is the "ugly duckling" of the energy industry at the moment; it has amazing potential.
There have been a number of posts and threads on this topic.

The gist of it is this.  The UK National Grid runs on a '1 hour fixed gate' principle.  For power at 9pm for 30 minutes, producers bid into the electricity pool by 8pm (the fixed gate).

On that basis, given the predictability of UK wind patterns, it is estimated the UK grid can take a 20% contribution from wind.  The UK at peak is about 60GW of demand (v. Ontario 32-35GW, for scaling, and California about 50GW).

There is a reserve implication.  The National Grid says that 25GW of wind capacity will displace 5GW of other capacity (with capacity credits running down from 90% for combined cycle gas turbines, down to about 70% nuclear, to 20% for wind).  That will be a cost the UK power market will have to bear (but half the cost of power from a CCGT is the gas fuel cost, so if you are not running the CCGT, you do not incur that cost).

There is some Danish data which suggests this is too optimistic (West Denmark has the highest wind density in the world, and exports and imports power from Scandinavia and Germany).  However there are some reasons to think the UK and Denmark are not exactly similar in this regard.

as good a place as any to discuss the wind power question.

The western USA and UK have some of (the?) best onshore windpower resources in the world.  Offshore there are equivalent opportunities.  It would seem to be absolutely foolish to squander a massive free resource, which is there for the taking.

All it takes is wind (reliable and strong), land (open) and technology.  The first two are already there, the last has made huge strides in the last 20 years, to the point where it is competitive with other forms of electricity generation (fully costed, including carbon emission) which are themselves highly subsidised.

In fact in some places (Ireland) wind is competitive with gas turbine without subsidy.

Jerome - great post.

So lets get the first thing straight - you work for a bank?

When I sold up my geochemistry business in 2001 I spent a long time looking into getting involved with wind projects - not an easy thing to do as an outsider, lacking credibility and capital.

I have since been on a journey has that lead me here.  Doubts I have had about the Energy Return or EROEI for wind are now receding and my focus is now shifting towards ensuring that energy produced can be efficiently used by deploying a  range of balancing and storing strategies.

Where I live (Aberdeen) we have a long, shallow water coastline and I would very much like to see a long line of wind turbines stretching from Peterhead to St Andrews.

Our government here in Scotland are dead keen on renewables but do not seem to have any coherent plan as to how their ambition may be realised.  It is easy to publicise the weaknesses of renewable energy and a sceptical public can pounce on those wekanesses to bolster arguments against its expansion.  So I firmly believe that having an engineering strategy that demostrates how wind can deliver stable energy and drastically reduce CO2 will be imporatnt for winning over an increasingly obstructive, ignorant minority public view.

Cry Wolf (TOD UK contributor)
aka Euan Mearns BSc PhD

Re: wind intermittancy and EROEI. See:

There was a recent posting here of a very recent paper by Cutler Cleveland that confirmed the 20 to 25x EROEI.


Murray - you shoud try clicking on my link EROEI for wind.
I finally got my November issue of QST and there's a good article on powering a radio repeater site by wind, with solar to top up the batts when it's calm, and the batts to run things when it's calm and cloudy lol.

I look at these big hummahs though and I just think of bigger and better statues to keep the Easter Island Way Of Life going.

Big wind is such an elegant technology, though, that the analogy is inappropriate.

You have very smart materials technology, relatively few moving parts, massive parallel redundancy, low environmental impact.

Even as the moving parts wear out, the towers might last for decades, so a less capable society could still make use of them with more primitive types of windmills.

A nuclear power plant comes closer to what you are thinking about.  Complex, requiring a very sophisticated and elaborate set of safeguards, personnel and rules.  A long term liability stretching out into the centuries.  A lengthy and complex fuel supply chain and waste disposal system.

mjacobspaj - "The gist of the issue is that there is an expectation that when you flick the light switch on (or have the furnace turn on because the house is getting too cold) the expectation is that the power will be there."

The true gist of the problem is that our expectations may cost us the earth, literally.  Additionally this is only true of rich western nations - something like 70% of the worlds population do not have this expectation because it is unaffordable or unobtainable.

The solution is not more nukes but a program to do the following:

  1.  Try to convince a lot of people to switch on light globes less - reduce energy use.

  2.  When you switch on a light make sure that it is energy efficient.  Insulate homes so they do not need to turn the furnace on as much or at all in some new super insulated houses

  3.  Diversify renewables into wind, solar , tidal/wave and others so there is much less chance that there are no renewables available.

  4.  Replace fossil fuel transport with electric transport (PHEV and BEV) that can store massive amounts of energy that can be re-supplied to the grid when there is no renewable power available.  This also solves the main problem that web site is about - Peak Oil.

Isn't this better than just building a whole heap of nuclear power plants for someone to blow up, or blow you up with the products?
I would love to build a windmill, especially now that I see several residential models available.  The average wind speed, however is around 4 mph, with the spring and winter closer to 5 mph, which makes the idea one more of aesthetics more than pragmatics.  Nevertheless, it is often extremely windy, especially in winter.  Looking at the efficiency graphs, I see that they peak at a certain wind speed, then fall off.  My question is wether it would be better having peak efficiency to take advantage of the handful of 30 mph days a month, or at the lower, but more numerous days of lower wind?
A big part of the problem is that the power in the wind is proportional to the CUBE of the wind speed. Thus, the energy available from the more numerous days of low wind is quite low compared to the sum over the fewer windier days.
Off grid, optimize for low speed, maximum days with generation (minimizes battery storage).  On grid, maximize annual output, .


Since we are on the topic of wind, in the days before the REA in the 1930's many of the farms in mid America had wind generators, most built by Aeromotor. It would be interesting to find out what sort of experience people had using these wind generators as they were completely away from the power grid.
I'd like to point out again that Isotruss / Pyramatrix is a damn interesting material to build wind turbines with.

Particularly offshore, as the density of carbon fiber is only 60-75% higher than the water it displaces, giving a net strength:weight ratio ratio about 19x that of a steel tower for the portions underwater, as opposed to 9x for the portions above water.

I picture an isotruss tower being assembled on-ship from modular components, attaching a turbine with composite blades, having the tower matrix filled with soya-based expanding foam, having a ballast go on the bottom, being attached by steel cable to seafloor anchors, and being deployed as a deepwater floater.   Which doesn't rust. Which is invulnerable to hurricanes and lightning.  At less than a tenth the weight of a steel /reinforced concrete equivalent.  Out of sight of the coastline on the far reaches of the continental shelf.

What do you think of the MIT floating platform??
"The true gist of the problem is that our expectations may cost us the earth, literally.  Additionally this is only true of rich western nations - something like 70% of the worlds population do not have this expectation because it is unaffordable or unobtainable."

And THAT is why I think these are just bigger better statues for the Non-Negotiable Easter Island Lifestyle.

On the farm, with a windmill, people knew how much they were using and how much work it took them to keep it working, keep the batts charged, and all that. It's like keeping a cow. This large windmill system is the same thing we have now - a teat in the wall and milk - or power - better damn well come out, who cares how, since there's no direct relationship, people really won't care if the planet is trashed in the process.

Except that the Easter Island statues consumed resources unsustainably, while windmills produce resources and do it sustainably.

Windmills only make the world a better place.  To find a symbol of waste, or arrogant resource consumption, you have to look elsewhere.

That's only true to the extent that a windmill doesn't consume resources that you could use on something else more efficient.

I would bet wind power is a bad bet v. installing energy efficient lightbulbs or insulating homes.

(in the same way that a Tar Sands plant is a bad bet v. driving a more efficient car).

In practice, of course, we need both activities (energy conservation and renewable energy sources) to offset our more carbon intensive ones (like burning coal).

A second benefit of wind is that it is a diversifying energy investment: its fuel is free (not correlated with any other fuel price) and the major cost driver is interest rates.

Since we can't predict the oil, gas, coal, uranium price 20 years from now, a source which isn't dependent on those is a good diversifier.

In modern portfolio theory, one of the few (only?) 'free wins' is diversification: it gives you the same return for less risk (volatility of outcome), or conversely a higher return for the same risk.