Bleak Future of Offshore Turbines
Soaring inflation, rising energy costs and global temperatures have demolished any vision of achieving electricity generation of 70 % through renewable energy sources by the 2030’s whether in the US or EU. Vested stakeholders within the US and EU underestimated the market of offshore turbines being rudely jolted by these factors and merely resorting to the phrase ” going renewable by the end of the current decade” is not enough. Transition to renewables from fossil fuels is costly and the public will have to bear the financial burden and turbine manufacturers continue pleading for tax breaks and more subsidies.
Renewable Energy not affordable but exorbitant
The entire supply chain of offshore turbines was disrupted primarily because of the efficiency of wind turbines in regards to the overall cost of manufacturing these gigantic sized turbines towering 260 m above sea level such as the GE Haliade X turbine installed by Voltaire. Despite huge investments into these mammoth sized spinning turbines they require an incredible amount of material such as steel compelling turbine manufactures to raise prices. Aggressive wind farm developers have pocketed billions in subsidies however the wind power industry has been raised on a shaky foundation of subsidies.In the offshore perspective, in order to ensure a seamless process offshore turbines are installed on top of specialized vessels along with a team of specialists on standby in case of malfunctions. Warranty issues financially complicate matters as these gigantic sized spinning blades under perform and invariably faulty turbines returned to their makers incurring additional transportation costs . Wind and in particular off-shore wind is not affordable and its cost is growing. If ambitious targets are to be met policy-makers need to forego the narrative that renewables are cheap. Additional subsidies will have to be paid for by the public through higher taxes or higher energy bills.Contracts signed for offshore wind may incur losses until the governments raise tariffs to $80-$100 per MWh and not maintain at $30-$40.
China’s Subsidies-Tussle with US
Ever since the buildup of turbines commenced post Covid-19 projects have been drying up with meagre investments in offshore wind projects within Europe particularly in 2022. Decisions of US regulators in rejecting requests by reputed European firms such as Orsted , Equinor and BP to charge customers more demonstrated a trust defect with wind developers from European firms which explains scarcity of investments in wind projects. Compounding matters the European Union (EU) launched an investigation into China’s use of subsidies in order to promote its turbine manufacturers. The sinister motive behind these investigations appears to be to retard China’s dominance in offshore wind projects and discreetly tap into the functionality of China’s entire supply chain in regards to wind projects. Over the last 5 years turbine producers incurred $7 billion in losses with $5 billion incurred in 2022 therefore in retaliation EU appears to be targeting China which is consistent with the history of tariffs imposed by EU on Chinese. Wind turbine manufacturers have been losing around 8% on every turbine sold .EU has already imposed tariffs on Chinese glass fibre fabrics used in wind turbine blades.
IGOs in Scalding Waters
Reputable Intergovernmental Organisations (IGOs) including the EU and UN will eventually have to re evaluate the future of renewable projects as the world combats global warming. The EU and UN have been preaching the vision of zero emissions by 2040 and the UN prescribed SDGs in regards to clean energy and protection of marine life while the EU emphasised the importance of a greener Europe through usage of renewables. Soaring energy costs have put IGOs in an unenviable position but incidents such as the linking of beached whales with that of wind projects cannot be brushed away as pro environmentalist groups along with conservative medias rack up pressure for mothballing of wind projects . Benefits of wind projects would have brushed aside incidences of beached whales but this is not happening. The EU and UN’s vision of achieving Zero Greenhouse Gas Emission may never materialise as fossil fuels remain indispensable unless a radical technological revolution takes place leading to significantly reduced costs of renewables. Specialised vessels along with equipped sophisticated machineries remain ” Energy Intensive ” as the materials required for equipping steel for turbines would require the input of non renewable resources. This is illustrated by the amount of fuel required to transport floating wind turbines through specialised vessels which is energy consuming in nature. The IGOs should re strategise policies in the backdrop of cleaner energies and consider transitioning away from coal to natural gas with the goal being to reduce human carbon footprint by 30-50%.
Ukraine Conflict & Offshore Turbines & Realities
As highlighted by a seminar organised by UNCTAD on “Policy Advocacy for SEZs, a tripartite dialogue” fiscal, monetary, regulatory, trade and administrative issues warrant an appraisal by recognising renewable energy such as solar and wind resources as having very low energy density.In other words to deliver the same output of energy machines occupy ten times more land and more machinery to harvest and distribute an equal amount of energy. This results in more energy-intensive mining, transportation ,refining and building of more energy-consuming vessels to transport solids instead of fluids. Unfortunately all such processes require fossil inputs. Mining is feasible in areas where mineral concentrations are ten times higher than in today’s operating mines such as the deep sea.
Authored by Nadir Mumtaz
Credit/references
Leave A Comment