The Great ROC Rip Off

A worked costing example for a 4 turbine Industrial Wind Turbine Plant. This is a little rough and ready in places but it is not far off centre.

Factors: 

1. Turbine size 2.5MW
2. Capacity Factor (CF) examples 15% 20%, 25%, 30%
3. Average Trading value of each ROC certificate (1 MW) £50.00 (an under-estimate) See ROC trading last 3 months Here
4. Trading value supply of 1MW/Hr £45 taken as a rough average of NETA buy/sell price 14/07/11 see graph below:

For those who don't know, the Capacity factor is the actual percentage of the boiler plate rating that the turbine really generates. So a CF of 25% on a turbine means it only really (on average) produces a quarter of the turbines supposed rating. The national average last year was 22%

 Electricity generated per year:

15% CF = 8760 x 0.15 x 2.5 x 4 = 13140 MW/hr
20% CF = 8760 x 0.2  x 2.5 x 4 = 17520 MW/hr
25% CF = 8760 x 0.25 x 2.5 x 4 = 21900 MW/hr
30% CF = 8760 x 0.30 x 2.5 x 4 = 26280 MW/hr

Payment for generation at £45 per MW/hr

CF 15% £591300
CF 20% £788400
CF 25% £985500
CF 30% £1182600

ROC Income based on £50 per ROC certificate (1 MW/hr)

15% CF £657000
20% CF £876000
25% CF £1095000
30% CF £1314000

So total annual income per year for each of the above CFs

15%  CF £1,248300
20%  CF £1,664400
25%  CF £2,080500
30%  CF £2,496600

Turbine cost: around £750,000 per MW + £150,000 Installation = £900K per MW installed

So our 4 turbine site costs 2.5 x 4 x £900K = £9M

Maintenance, extended warranty and repair, about £150 per day per turbine all in. Plus rent to the landowner and other sundries. Say £250K per year all in.

Capital loan at 7.5% for £9M = 675K year (diminishing) plus capital repayment 10M/25 = £400K per year.

Initial total annual outlay = 250K + 675K + 400K = £1.325M. diminishing as loan is repaid to around 650K after 25 years..

So, on those figures a CF of 15-16% is just viable. But this is only because of the ROC subsidy.

If you excluded the ROC even a CF of 30% (less than 8% of UK turbines achieve this) is bordering on non viability.

But because of the ROC, anything above about 16% is financially viable - even in the short term. With 15% CF capital repayment could be offset against future profits, so even a dismal 15% CF would be attractive.

All because of the ludicrous generosity of the ROC.

I hope that explains why these things are being built in wholly inappropriate areas. As long as the Capacity Factor is a pathetic 15% or more then the generators are onto a nice little earner, irrespective of the damage they do to local communities in building their white elephants.

This is not going to get any better. Nothing is going to happen next year or even in ten years which will alter the laws of physics so these white elephants can actually contribute without being propped up by massive subsidies from the consumer.

We are stuck with this for 25 years.

But if our little carpet bagger friends have turbines running at last years average of 22% CF then they are raking it in. But only because of the ROC. Without the ROC the things are wholly unviable.

If the ROC was withdrawn tomorrow, I would bet that nigh on every wind turbine in the land would be scrapped within 6 months.

Junk Energy in its "purest" form.