Offshore wind decommissioning could cost UK £3.6bn

Posted: October 12, 2019 by tallbloke in Taxpayer, wind
Offshore wind farm [image credit: Wikipedia]

According to Wind Power Offshore, UK Decommissioning of 37 offshore wind farms in various stages of development in UK waters could cost the taxpayer between £1.28 billion (€1.44 billion) and £3.64 billion (€4.12 billion), a new report has revealed.

Developers and owners are liable to cover the costs, which are believed to be less than 1% of levelised cost of energy (LCOE), according to a study carried out for the Department for Businesses, Energy and Industrial Strategy (BEIS).

But if they are unable to organise and fund decommissioning, BEIS, seabed landlord the Crown Estate and the Scottish government could pick up the bill.

Consultants at Arup defined decommissioning’ as inter-array cables being disconnected and their ends being buried, wind turbines being dismantled and transferred to shore, and foundations being cut below the seabed, and the top section removed and returned to land.

BEIS is the ‘executioner of last resort’ if a project’s developer or owner cannot fund decommissioning, Arup explained in its report, ‘Cost estimation and liabilities in decommissioning offshore wind installations’.

Full story

Comments
  1. It doesn't add up... says:

    Time for government to do what they did to the oil industry. Levy a decommissioning tax, repayable against actual decommissioning expense: in the oil industry, it was PRT that was used (and the government welshed on the deal by dropping the rate when it started having to repay). It’s also one way to recoup the lavish margins that some of these projects have been granted. Renewables have been producing an EBIT of close to 50%:

    https://www.ofgem.gov.uk/data-portal/wholesale-market-indicators#thumbchart-c3398018863517791-n95206

    The sweetheart deals accord them the right to compensation if government levies additional taxes, but that might not apply to a tax that was repayable in the future.

  2. ivan says:

    If the owners can’t afford the decommissioning then all their assets should be claimed no matter where they are hidden around the world.

    Another point, who were the idiots that didn’t insist that decommissioning costs were deposited in an escrow account before building commenced? If that had been done there wouldn’t be this problem now.

    I suspect the panic has started because these units may only have a 10 or 12 year life.

  3. SMueller says:

    https://www.gov.uk/government/publications/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy/nuclear-provision-explaining-the-cost-of-cleaning-up-britains-nuclear-legacy

    Nuclear Provision: the cost of cleaning up Britain’s historic nuclear sites
    “In recognition of this uncertainty, the NDA publishes a range of estimates that could potentially be realistic. Based on the best data now available, different assumptions could produce figures somewhere between between £99 billion and £232 billion.
    In fact, even these estimates will be subject to variation depending on emerging technological developments, as well as political changes and global economics.
    When publishing its accounts, the NDA is however required to provide a single figure. In line with other public bodies that fund activities over many decades, the provision must be discounted to a ‘today’ value using rates laid down by HM Treasury and linked to government borrowing costs (adjusted for inflation).
    This results in a discounted provision of £131 billion.”

  4. stpaulchuck says:

    “… if a project’s developer or owner cannot fund decommissioning”

    If the project developer just happens to (*cough* *cough*) go out of business before that day and/or the owner does not (and never did) have the assets, then gee, golly, the taxpayers will have to pick up the bill for billions to take down and dispose of these gigantic insanities. Oh shock and surprise.

    I long for just a short period of honest government where the people who planned all this were sent to prison and all their personal assets seized. Including the perps in the government that allowed it.

  5. Bob Koss says:

    If they do ever decommission them, they’ll likely do a shoddy job of it with fishing nets constantly getting snagged on the remains.

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