Tim Probert, Power Engineering International.
At long last, the London Array offshore wind farm is going ahead. After several months of speculation that it might be canned, E.ON, Dong Energy and Masdar have confirmed that work on the first phase of the gargantuan 1 GW project will commence this summer.
The 630 MW, 175 x 3.6 MW Siemens wind turbine first phase will cost the three investors €2.2bn ($3bn), or €349,206 ($476,840) per MW.This sounds remarkably good value, when you consider a good rule of thumb for any power plant is $1,000,000 per MW.
Of course, the huge size of London Array brings into play some pretty hefty economies of scale. And for the developers, government subsidies of up to €82.88/MWh will ease the pain of a three-way €2.2bn investment.
A back-of-an-envelope calculation shows that, assuming a capacity factor of 30 per cent, phase one of the wind farm would generate 1.65 TWh a year, earning an annual €145m in Renewable Obligation Certificate subsidies from the UK government. Disregarding the revenues from selling on the power generated from London Array, the project would pay for itself within 15 years from the subsidy alone.
This represents great value for the developers but perhaps not for the end-users, who will ultimately foot the bill.
My advice? Buy a wooly jumper.
June 19th, 2009 at 4:01 AM
Your calculation is our by a factor of 10 - the unit cost is €3,492,063 ($4,768,400) per MW which is almost five times your “good value” rule of thumb.
This high capital cost is partly why the developers only chose to proceed once the Government had announced it would increase the subsidy available through the Renewable Obligation mechanism in the Budget on 22 April (after considerable lobbying), granting 2 ROCs instead of 1.5 per MWh generated, despite this “banding” only having come into effect on 1 April.
June 19th, 2009 at 5:24 AM
Qutie right, Nikhil. My calculator ran out of noughts!