28 April 2022

Is wind power really the solution to our green energy needs?

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Like many concepts created with good intentions, the Environmental, Social and Governance (ESG) label is causing as many problems as it solves.

Across the world’s investment desks, fund managers struggle to comprehend International Sustainability Standards, fill in IFSR Climate-related Disclosures, EFRAG Climate Standard reporting, and other stuff that induces narcolepsy. Occasionally, if they are lucky, they even find time to address the impact of inflation and war on the investment portfolios they now can’t run due to the regulatory and reporting burden put upon them.

Fear not. Help is at hand. A whole new nomenklatura of ESG experts and consultants have emerged, ready to feast upon the regulatory opportunity. They will do an intimate examination of investment committee minutes, study deal analytics in fine detail, and cross-reference them to reporting standards. At the end of a very expensive process they will pronounce: ‘You need to invest more in renewable energy… I suggest a course of wind power.’

That’s the prescription for curing what ails the global environment. Long-term, I expect it’s about as likely to work as a course of medieval leeches. The reality of wind power is that it is a miserable business.

GE Renewable Energy recently posted a widening first-quarter loss on the back of slowing offshore wind sales in the US and rising materials costs. Vestas, one of the largest Original Equipment Manufacturers is trying to hike its prices by 20% as inflation bites. A few weeks ago, Siemens Gamesa, the Siemens part-owned manufacturer of some of the largest offshore wind structures, gave its third profit warning in less than a year, saw its stock tumble, and warned of rising costs and supply chain issues. The company is struggling to buy out minority shareholders and refocus the business.

Meanwhile, the latest 11 MW wind turbines are 225 meters tall with 200-meter rotors. They require a super-ship to transport them around the globe to the site.

Wind farms have a variety of issues. As they get larger so they can produce the amounts of ‘clean’ renewable power we anxiously desire, they get harder and harder to build, transport and install. They are complicated to dispose of. Although you can recycle the steel and electrical stuff, the blades were built to last, and they probably will, as landfill.

We also don’t have nearly as much data as we should. Nothing is transparent about performance and maintenance. Early wind farm turbines are being replaced with bigger, more ‘efficient’ models well before their expected end-of-service dates. There is probably a compromise to achieve the most-efficient size for a wind turbine. This would optimise the high carbon costs of its construction, installation, maintenance and disposal against its long-term energy production. However, at the moment, the wind industry isn’t interested in small. It’s all about bigger and (apparently) better.

The struggles of wind turbine makers sound counterintuitive. WindEurope says Europe could be carbon neutral by 2030 if we just installed more of them. When everyone wants renewable energy, surely wind farms must be making off like a butcher’s dog with the sausages? After all, we keep getting told that wind farms are the global climate change solution. They will save the planet, and everyone wants to invest in them because it will enable owners to boast about how ethically green their investment policies are.

What if they aren’t the solution?

I am not a climate change sceptic, and I want clean, renewable power. But I want renewable energy that makes sense. That means energy sources that are long-term efficient, and won’t prove a massive disappointment in terms of how little carbon they save over their life cycle. I’m a massive sceptic on lithium battery solutions and would prefer to see more investment in hydro, thermal and tidal power. I support nuclear.

I can’t help but think wind farms have become a distorted racket. I can’t help but wonder if there is a parallel to the 1830s when canals were the preferred transport infrastructure solution. At the same time, the much more efficient and ultimately successful railways were dismissed as too fast and dangerous.

Wind is hardly new. The ancient Egyptians were using windmills 7,000 years ago. Its tech that can only go so far. There is a time and place for them and an efficiency curve where less might be more.

After going over the higher-than-expected maintenance costs and lower-than-forecast energy sales, I reached my epiphany on wind. We’ve all seen spectacular videos of collapsing windfarms. I first raised the maintenance and cost issues of windfarms, and the difficulties of smoothing their intermittent supply to national grids many years ago. I highlighted information showing large wind farms not only affect the wind speed and that wind speeds are reducing. It’s called friction. It’s actually become quite challenging to find information on current failure rates, and just how much wind farms are underperforming in terms of energy delivery. We need transparency, not renewable hype. There still isn’t enough transparency about their life cycle total carbon cost either.

I would love to be proved wrong about wind farms. I am not a full-time wind power analyst, I am just a concerned party – admittedly an increasingly sceptical one. I know enough to worry.

The number one reason wind turbines fail is because of cracks in the turbine blades caused by the fibres in the glass or carbon debonding, or gel-coat cracks letting in water. Apparently, there are around 4,000 fails per year.

A few years ago, I was shown drone technology that can detect hairline cracks before they become critical, but the only answer is to shut down (feather) the turbine and wait for a replacement slot. That’s a problem when the industry is working flat out (but still unprofitably), especially at sea where all the available boats are booked to install new turbines. Such feathering is a massive lost generation issue and can damage the other parts of the turbine.

Generators fail less often, but operating in low and high winds can cause bearings to seize while high and low temperatures (as experienced up mountains or out to sea) can cause expansion of the joints, causing excessive vibration. Often, I am told, the only solution is a complete rebuild. Generators need regular maintenance which isn’t easy in stormy places like the North Sea on a 200m high rig.

The third source of failure are gearboxes. They are designed for a 20-year service life, but apparently, few make it that long. Anything out at sea rots.

Yet despite all these issues, wind gets the focus. We need to spend as much energy investigating other forms of renewable power. Unlike wind, the tide is utterly reliable. Hydro energy is also reliable. And so is geothermal, but none of these sources attracts a fraction of the resources being squandered on wind farms.

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Bill Blain is market strategist and head of alternative assets at Shard Capital. He writes a daily market commentary called The Morning Porridge (www.morningporridge.com).

Columns are the author's own opinion and do not necessarily reflect the views of CapX.