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Allen and Joel are preparing for their trip to a Canadian Renewable Energy Association (CanREA) Electricity Transformation Canada 2023! It’s going to be a busy and cold week. Then they dissect New York’s rejection of offshore wind project price increases, analyze union concerns about layoffs at Siemens Gamesa, and discuss new subsea power cables planned for Italy and Greece. Our Wind Farm of the Week is Fairbanks Wind Park in Michigan, pouring money into a small community and keeping 24,000 homes running.
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Allen Hall: Joel and I will be at the Canadian Renewable Energy Association’s Electricity Transformation Canada, 2023 event. And I had to look up, I haven’t been to Calgary before even though I was a huge fan of the Calgary Flames hockey team for a long time, especially when the, when they won the Stanley cup, that was pretty awesome.
But Calgary is the largest city in Alberta with 1. 4 million people. So Rosemary, is that bigger or smaller than Canberra?
Rosemary Barnes: Bigger. It’s three, three times the size.
Joel Saxum: Calgary is like the Denver of Canada. Right up against the mountains, farms on the other side, good beef and Caesars.
Allen Hall: It’s the cleanest city in the world.
And there’s also 120 languages spoken in the city. That seems like a lot maybe because of the oil. Maybe that’s what it is. There’s people from all over the world to it. But here’s the one I’m really worried about. The highest recorded temperature ever in Calgary was 97 degrees. And we’re gonna be there almost in November.
Pretty close. So if the highest temperature ever was 97, I’m figuring it’s gonna be just slightly above freezing while we’re over there, Joel.
Joel Saxum: Perfect. That’s what I like.
Rosemary Barnes: They have those Chinooks there, right? Where the temperature suddenly swings by like 20, 20 degrees and, or 40, if you’re talking Fahrenheit in just a, an hour or two, doesn’t it?
Allen Hall: Rosemary recommending that I bring shorts and a t shirt and wool mittens.
Moving back to the United States big news out of New York. The New York regulators rejected requests from developers of several. Offshore sites in their bid to add to the PPA prices. And this went through a whole bureaucratic decision making process. But the end of it, there was a vote and they voted to essentially sell everybody, no, we’re not going to adjust our pricing.
And if you want to cancel, go ahead and cancel. So the government governor got involved in this a little bit and said, Oh, we, it. We don’t want you to cancel, we just want it to be more affordable. So the offshore companies that are trying to develop these, we’re not going to negotiate because that would ruin the integrity of the system we have developed.
Here’s what the intent is now. They’re going to, and I can allow them to raise prices. They’re saying, if you want to cancel, you cancel, you have to pay the fees. And then we’re going to go through an accelerated bid process again, with the same developers. To see if they give us some lower prices and I cannot figure out for the life of me why they think they’re gonna get lower prices by rebidding it, they’re gonna get the same prices they had before.
Or higher. Or higher. Yeah. Because you have to pay, they have to pay off the penalty they paid and earn that money back somehow, which is…
Rosemary Barnes: And the cost of everything has gone up in the meantime.
Allen Hall: It looks like New York is totally okay with everybody paying a fine. And reapplying for the same projects because there are, there will be no new projects.
There’s no, no new plots of water to develop a project.
Philip Totaro: And you’ve, the BOEM lease is to a specific entity, so who else are you going to work with? If you’re not going to negotiate, then you’re going to still be working with the same companies anyway, because they’re not going to sell the plot unless they think it’s unviable.
Joel Saxum: Could say Ørsted, could they sell Sunrise? That plot? Is that in the cards?
Philip Totaro: Joel, they could. So just let’s address that first. They could, but the only reason they would do that would be to raise cash. Who’s going to pay him a premium for that plot at this point?
Remember how much, how expensive those plots were in the first place. Who’s going to pay him tens or hundreds of millions of dollars for that in at this time, given the fact that New York is they’ve set these goals for 2030. That they obviously have no intention of meeting with this behavior to not demonstrate a willingness to even negotiate.
Because as it’s been indicated before, what does everybody think is going to happen the second go around? The companies requested these increases because it’s a negotiating tactic. They requested something that used to be, 80 and now they’re requesting 190 a megawatt hour. How about you negotiate to find a middle ground?
That makes more sense than going through all this nonsense. They pay the cancellation fee and then they’ve got to bid something that’s 170 a megawatt hour to make up for the fact that they’re paying you, 60, 70, 80 million to cancel in the first place. This is insane. This has gotten absolutely insane.
Rosemary Barnes: I think people have gotten used to the early stages of the energy transition, which was, you can add in as much wind and solar as you want, as you can build. Solar was getting cheaper really fast. And wind energy was also just getting cheaper and including for offshore.
And I think that is, the days of the early energy transition are over. And now we’re not at the point where it doesn’t matter where your, zero emissions, megawatt hour comes from. It does matter whether it’s wind or solar now, because, we’re definitely getting to the point in.
Most most markets that have a lot of renewables, they have enough solar that it’s starting to cause problems. You haven’t, too much solar for the middle of the day and then no renewables at night. And I, I think one, we have to stop getting used to winds, super fast Cost reductions, because it’s not like that anymore.
And I think that we might have even, been tricked into prices falling lower than that, real eventual end point because of competition with China, which is maybe not totally transparent about what its real costs are and to the value of wind is not the same as the value of solar.
If you think that you’re going to get to any sort of a 2030 emissions target with solar alone. And you’re going to find yourself with a very expensive bill for batteries that, you know, in 2029, when you realize that, oh, okay, yeah we’ve got, all of these megawatt hours, but we can only use half of them.
You’re going to find out that wind’s value is a lot more and it’s cheaper than the technologies that you’re going to actually have to replace it with. If you allow all of the, wind developers, all of the wind turbine manufacturers to go bankrupt, we’ll just find ourselves in the same point where we are with battery supply chains.
Where, we all of a sudden realize now what China has been doing since the 90s of, grabbing that whole industry for themselves so no one else knows how to do it. We’re not at that point with wind yet, but we’re just it’s really funny because wind energy was supposed to be the easy part of the energy transition, right?
And then we’ve finally gotten to the point where. We’re saying, okay, now we’re ready to work on the hard parts. We’re going to get our, our battery manufacturing and supply chain in house. And we’re going to start subsidizing really expensive end of the energy transition, things like carbon capture and direct air capture, and I don’t know emissions from cement and green steel, all that really hard stuff for spending heaps and heaps of money on.
But you can’t have an extra dollar or two for the keeping the wind industry happening. It’s crazy, like we’re going full steam ahead on all the hard stuff and just absolutely failing at the easy part of the energy transition. I just think people need to take a longer view and think, why is it necessary that the wind industry, is just just at the mercy of free market economics.
While in every other aspect of the energy transition, we’re happy to, pay for the outcomes that we want for the climate and not just the market. It’s insane to me that people can’t see where this is going to go.
Allen Hall: This goes back, Phil, to that discussion on another podcast where they were breaking down the amount of IRA bill sort of distribution into what renewable.
And the vast majority, like 93 percent was going into electric vehicles and slash batteries for electric vehicles. 93%. The remaining 7 percent was pretty much in solar slash heat pumps that left like a fraction of a fraction going to wind energy. Which is the opposite of what should be happening right now.
As Rosemary is pointing out, the priorities are backwards. When we’re spending billions of dollars, for every billion dollars we throw at something, we could have had a gigawatt of wind. And right now we’re throwing away billions of dollars at projects that have really no impact today when we could be doing something impactful right now in wind.
Rosemary Barnes: Every wind turbine we put, we install now is going to provide clean energy for the future. You’re leveraging all of your, everything else that you electrify, every electric vehicle you put in, every heat pump. Those are going to reduce emissions a lot better if your electricity is cleaner.
And I don’t know, people sometimes they don’t understand that the speed that you reduce emissions matters because it’s the total amount of carbon dioxide in the atmosphere that matters. If we put in a huge bulk of clean energy generation now and reduce emissions quickly, then we buy ourselves a lot of time for the really hard stuff.
We buy ourselves time to solve long haul aviation and shipping and. All those, really hard last few percent. So it matters the order that you do things and we’re stuffing it up.
Joel Saxum: All of this, like watching DOE funding come out here in the States, like you watch it’s Oh, today we put 24 million out here and we put 36 million out here and we put 70 million out here and they’re funding projects that are this technology readiness.
Readiness level 3, where we should be putting money into things that are TRL 8 and 9, or like these projects. Hey, if we’ve got a problem with a a PPA agreement or something, you’re like, take some of that 70 million bucks here and let’s get this thing built. That’s the frustrating part.
Allen Hall: We’re building the grid backwards. We’re building demand to use electricity. We’re not actually building the grid to provide electricity. It is opposite. And New York has been on a pathway since the Cuomo administration, the most recent Cuomo administration. Where they’re closing nuclear power plants, which is taking more energy off the grid.
They’re, they really don’t have a lot of wind resources on land. Onshore is not, if you look at the wind maps, New York is not that place. Offshore is a big driver. And solar is not that big of a thing in New York at the moment. It’s growing, of course. But if they’re going to reach some 20, 30 target, they’re going to have to do something really quick.
And either they’re going to, they’re going to, Have blackouts brownouts Intentional brownouts and blackouts or they’re gonna have to change the law that lets them have more natural gas coming in and Making electricity that’s that really where they’re at today And they don’t seem to be willing to make any decision because they’re afraid of the political consequences of it But somebody’s gonna have to make a decision at some point.
This can’t go on forever.
Philip Totaro: In rejecting the opportunity to negotiate these current deals, the folks from NYSERDA came out and said, Oh we’re protecting, New York rate payers, but at the end of the day, this is going to end up costing everybody more and you weren’t really protecting New York rate payers in the first place because you’re delaying something that is going to help alleviate brownouts and, you’re driving up the cost and delaying the opportunity to achieve those 2030 goals. So I don’t know why they’re busy patting themselves on the back for anything and, getting a ton of congratulations from a lot of other people that don’t seem to understand consequences. To decisions like this.
Joel Saxum: You’ll be saving money when you’re don’t have your power on and you’re reading by candlelight.
Rosemary Barnes: I think you can say why, to someone who’s not paying very close attention. It makes sense. It sounds really unfair. We agree to price. And now you’re going back on it. Inflation isn’t that bad, but I just searched on wall street journal, the yeah, NYSE American steel index.
And in 2020, it was. Less than half what it is now. So there’s a doubling and what makes up 80 percent of the mass of a wind turbine, probably more for offshore. Like inflation isn’t even across the board. And I know in Australia, we’re having a big problem with housing construction because there were a lot of projects, there was a housing boom, a construction boom, a lot of people signed on for fixed price contracts.
And then the, so builders were, really busy, had a lot of projects and then, yeah, cost of a lot of building materials doubled. And a lot of builders have gone bankrupt over it. And, you can say, Oh yeah, we had a, we had an agreement for the price of house. I’m going to that, I was going to pay for a house.
It’s a fixed price, so I’m not going to pay any more, but. When your builder goes bankrupt, you still don’t have a house for any price. And you will have to, book in for a new contract with one of the very few builders that are left in business. And based on today’s prices. So you can say, yes.
It’s not fair that you have a fixed price contract and someone goes back on it. But on the other hand, we’re all adults. So you can see what’s the actual consequence of maintaining the hard line that you’re legally entitled to. And I think, yeah, New York’s about to find out.
Joel Saxum: So do you think if you had a really good and or creative legal team?
You could go back and claim COVID as a force majeure for the interest rates going up and your contract falling apart?
Allen Hall: No. You know why? Because I think the Biden administration and the DOE would push back against you nationally.
Philip Totaro: Now, there’s one other aspect of this which hasn’t been mentioned yet, which is, how is New York not culpable in this in the first place, because those contracts were negotiated two, two and a half years ago.
Where were the permits to build the project, because had they issued them almost immediately after that was negotiated instead of having this overly oppressive regulatory process and environmental review process, then guess what? Those projects would already be steel in the water and, about to flip the switch just like they are with Vineyard Wind and South Fork.
I’m unclear as to why, again, the officials and regulatory folks in New York are busy patting themselves on the back like they did everybody a giant favor here. They are culpable in this and then refusing to negotiate is outrageous. It’s just outrageous.
Allen Hall: If you’re in Iowa and you’re a wind producer in Iowa right now, you are just licking your chops knowing that New York is going to have to come groveling to you for electricity pretty soon.
So the more electricity that’s coming out of the Midwest. That’s where it’s gonna come from. Where are they gonna get it from? They’re gonna get it from Canada, which is what they do right now, right? Where are they gonna go? They’re gonna have to go somewhere besides New York. That’s what they’re designing this system to do.
Gonna have to pull energy from somewhere else.
Joel Saxum: Yeah, at the same time, they’re throwing away jobs. That’s what they’re doing.
Allen Hall: Yeah, those good paying union jobs. You just toss them out the window. No, no word on that when that happened, right? I just don’t understand it. It’s a level of frustration that I don’t think I’ve seen before in wind and you can feel it throughout the industry like this is really bad.
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Ørsted’s about to put up 100 million guarantee that it will build New Jersey’s first offshore wind farm by the end of 2025. Now, Ocean Wind One it’s, is the one project that looks like it’s going to happen off the East coast at the moment. The project must be commercially operational by 2024, right?
If not,
Ørsted forfeits the whole 100 million. This is a big deal, right? So what happened was New Jersey was taking all the federal incentive tax credits for themselves. They said Ørsted doesn’t need it. We’ll just keep it. We’re politicians. Why don’t we just appropriate it to ourselves? Which is what they did.
And Ørsted said wait a minute. We’re going to authorize PPA prices accordingly. Because they were planning on that money. So now they flipped the switch and New Jersey is saying and they actually passed some legislation about this. You can keep the federal money, but you have to get the project running.
So that’s a swap. I think the money bill was around 40 million coming from the Fed. That was an early estimate because I don’t think those numbers are locked in yet. So at the end of the day, they ended up paying 60 million more. But, there was previously Ørsted said Ocean Wind 1 was going to be delayed till 2026 and that it could, in theory, abandon the project.
In this little swap, it looks like Ørsted is going to go ahead and move that project. Now, I wonder also, Phil, if this has something to do with New York, that. Because New York is not going to do any projects that maybe New Jersey is going to be smart and start selling electricity to New York and that the more projects they develop on the New Jersey side, where the lines come into New Jersey, they could take all the lines from all those bike lanes.
Byte sites run them into New Jersey and just start selling energy to New York and keep their proceeds, right? That seems like a really good plan by New Jersey at the moment
Philip Totaro: I have no further comment on that other than that is exactly what you should do in Light of the completely nonsensical and inexplicable actions by the New York regulators that’s a good move.
The question the question is this project actually going to get built on time, because as you said, the reason Ørsted wanted to delay to 2026 was because, commodity cost increases, turbine price increases and even some of the other ancillary things associated with EPC contracting, vessel availability, etc.
All those prices have gone up. The question is, can Ørsted actually build this by… The end of 2024. I’m hoping. I’m not necessarily convinced, but I’m hoping.
Allen Hall: If all the other projects go silent, that means there’s ships available, that means turbine prices would have to drop, that every, everything, all of a sudden all the obstacles, all of a sudden are gone.
Joel Saxum: It’s a gamble.
Allen Hall: It’s like Atlantic City, right? You can put your money down and see what happens. But it’s a better gamble now that New York’s not going to develop anything.
Philip Totaro: We’ll see, because nothing was locked in for New York yet either. A lot of the turbine supply contracts hadn’t been finalized because there wasn’t FID.
So we’re at a point where, yes, going back to the original premise, this is a good thing for New Jersey. It’s also potentially a good thing for New York, if New Jersey builds these projects and has extra power, that they can, do an offtake agreement with New York. The question is this timeline something that Ørsted is actually, do they believe in it, or were they forced into, yes, we’ll give you this tax credit, but you’re gonna money back, but you’re still gonna have to guarantee more than that tax credit money.
Through this hundred million dollar guarantee. And, should you even miss by, one second, into 2025, like we get to keep everything.
Joel Saxum: I think the scary, one of the scary things here is, could be, is with all these other New York Byte auction projects being either delayed, canceled, but not reaching final investment decision, FID, like Phil was talking about, is the ancillary services build out.
What happens to that? What happens to the people that have been ramping up to build ships and ramping up to build, the subsea cables, and we’re talking rock dumps and ports and all these other things. What if all of those go you know what? We’re not willing to take the risk to throw our capital out there.
So everything else gets slowed up and all of a sudden you have one project being built and then they’re looking for services. We were banking on there being a plethora of them available to support us. But all of a sudden now the Crowley’s of the world and the other ports and stuff, and they just they put a hard stop on it.
That would be a catastrophic for the offshore wind sector.
Allen Hall: Yeah, but upper New Jersey, right? The Northern New Jersey is a huge port already, right? There, there’s a lot of. Ships coming in and out of there and patrolling and products and who knows what else is coming through there So there New Jersey weirdly is set up for all this traffic they don’t have to worry about it, Northern New Jersey is very industrial.
If you’ve ever been to Newark airport, you’ll see it. So it’s not shocking. I do think it’s the realm of all the NFL teams in New York, they all are in New Jersey. And pretty soon all the power is going to be coming from New Jersey too.
The unions at Siemens Gamesa announced they will begin mobilizations due to fears of a new quote unquote restructuring at the company. Obviously Siemens Gamesa is facing heavy losses. And they’ve been trying, the unions have been trying to have meetings with management, and the management keeps pushing the meetings off or cancelling the meetings, so the unions are starting to get really concerned about this because they feel like there’s going to be some significant layoffs, and the, obviously the union workers are putting pressure on the unions to try to find out what’s going on.
This all seems to be coming to a head in November. So it sounds the company is saying, we’re going to be able to discuss these things. Closer to the end of November, which is going to be after all the financial statements are made, the middle of November Siemens Gamesa is expected to close with about a four and a half billion euro loss and has turned down roughly a billion euros in contracts in the last quarter.
So they are really slowing down on commitments going forward. So even if they magically could get the ship righted, they don’t have any orders. Which again I don’t understand the lack of orders at the moment. So something bigger is playing. And I think the union is starting to sniff it out that they see factory closure coming up.
Not sure why that they can’t get any answers at the moment, because it seems like it’s, there should be in talks, right? And Europe’s a lot different than the United States. And even the United States has some baseline rules. You just can’t lay off everybody without giving some heads up. I assume Europe has even.
Harder requirements, longer requirements. So is this another risk for Siemens Gamesa, or at this point does it matter? It thinks you’re so bad that whatever happens with the unions is going to happen with the unions and they’re just going to move on? What’s the status here?
Philip Totaro: The short answer is yes the bloodletting that is almost inevitable is going to impact everybody.
The thing though with unions in Europe is that there is mandatory, and it’s usually a minimum of 60 days. But normally unions do between four months and six months worth of notice if layoffs are going to happen. So they’re, they normally have ample time to anticipate what’s coming, but it almost seems like this is inevitable given the direction that things are going.
I, we’ve talked about it off air a little bit, but the fact of the matter is, I wouldn’t be surprised if there’s a Siemens Gamesa Renewable Energy Division. I, because this I think that’s maybe the only way they dig themselves out of the hole that they put themselves in and then kept digging themselves deeper into.
Allen Hall: Does that mean they would want to separate the Siemens Gamesa off again? It is a standalone thing, an entity at the moment, it’s tied to Siemens Energy, but would Siemens AG create a partition between the companies such that Siemens AG doesn’t get drawn into it? It’s. It’s a reorganization, right?
That’s what it smells like is coming as reorganization and drawing this out. I don’t think you’d have to sell that. I think that it’s this goes back to to the discussion that was on the podcast that Rosemary was on about peak wind and sort of the frustration when I was listening to this and I thought Rosemary did an excellent job on that podcast, by the way that if Europe is serious about producing wind turbines, this is the time, this is exactly that time where the countries in the EU, the greater EU is going to have to do something. So either they’re going to open the door to China and let China bring in turbines at a lower cost, or more likely stand up some of these companies with a bankroll to let them produce turbines, which I do think is almost inevitable at this point.
And you can’t do that with just one, with a handful of manufacturers, you’re going to need a Siemens Gamesa as a big part of that distribution.
Joel Saxum: But so here’s the back to your question too, Allen why have they made the decision to stop selling? So in my mind, I would think, okay, maybe we know we have a problem with this particular model or design.
Let’s hold off on that one, maybe. How about we start selling some of the other ones or start pushing some more of these orders on other things? Doesn’t that seem to make sense? Because how are you going to dig yourself out if you have no order book?
Allen Hall: One of your biggest cashflow outputs is employees always is.
So if you’re trying to provide six months, nine months of unemployment, which I, or maybe a year’s worth of unemployment, which I’m almost would. going to happen here for factory workers, where are you going to get the cash to do that? What you do is you start laying off white collar workers where you don’t have that requirement, generally speaking, and then you can manage the union problem at the same time.
So my guess is that the higher paid. Salespeople are usually the first to go if they’re trying to reorganize. That’s why when Phil says reorganization bankruptcy, it smells right, not saying we are right, but that’s what it smells like. Cause that’s the way the trend happens.
When you look at it, the a market cap of basically 10 billion, and you’re looking at four and a half billion in losses, 50 percent in losses versus your market cap, you got to do something extreme.
Unions getting bad feelings about this, rightfully they should be not sleeping right.
Yeah, it’s a shame because you have developed a good factory system, they’ve had some, what sounds like, more basic, almost engineering problems. I don’t want to lay this on the feet of engineering, but it’s starting, the word out in the industry is it sounds like it’s some engineering issues, and Siemens, Kamesis kind of admitted it, saying they didn’t test enough.
Yeah, the factory workers are in the pinch, right? They’re always the one that’s going to get hammered here long term. And if you have a standing factory, you hate to close it for the length of time, because as we found out the United States a year or two ago, when you shutter a plant for a couple of months, not everybody comes back.
You’re only getting like 30 percent of the people to come back at the moment. And this is which, what are you going to do it? And then you’re really in a pinch. I just don’t see anything happy happen coming out of this unless the EU. And then local governments start stepping in to right this ship.
Joel Saxum: I think that we’ll maybe listen back to some of these podcast episodes here in November when they released this report, where they’re supposed to outline what their issues are.
Allen Hall: My comparison is Bombardier Aerospace, which is based up in Montreal, basically Quebec, Montreal. When they ran into difficulty financially, the province, the Quebec province threw a billion dollars into that pie to keep that company running. And they did for a number of years. Too big to fail. It was so many jobs.
It was so many jobs. Yeah. Exactly. Joel, you nailed it right on the head. It’s such a big industry and it has such great potential. You really can’t lose it right now.
Joel Saxum: And you’re talking energy security. That’s the hashtag there, right? That’s the buzzword energy security for everybody, especially when you’ve got the EU saying, Hey, we’re going to look into probes, even into these Chinese manufacturers.
And one of your largest manufacturers that’s right. Mainland Europe is failing. They’ve got to do something or may have to do something.
Allen Hall: Yeah. And with the recent events in the middle East and everything happening in Northern Europe at the same time, you would have to say this goes beyond trying to have stable industry, this becomes national security.
And once they switch that thought process into national security, which Rosemary’s raised a couple of times Hey, this is beyond saving the planet’s CO2, which is great. We should do that too. But now we come switch phases here into more serious nature, which thing lands into the laps of the politicians to do something and it’s got to happen.
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Italy and Greece are planning a new one gigawatt high voltage DC subsea power cable to increase interconnection and share renewable energy. That sounds terrific. The almost 800 million project is called. GR.ITA, Greece, Italy, number two.
And it received approval for public consultation. It’ll include about a 150 mile subsea cable and two let me rephrase that, it will include two 150 mile subsea cables between the two countries. And when you, because it’s HVDC, once it gets on land, they got to convert it back to AC so they can distribute it in the grid.
This is not the first time that Greece and Italy have done this. This will actually be the second cable connecting the two countries together. There’s a 500 megawatt cable that was put in place in 2002. And Rosemary, you’ve been doing a lot of research on these HVDC connector cables. It does seem like they’re becoming more and more popular.
Rosemary Barnes: Yeah, definitely. One big reason is that as we add variable renewable sources to electricity grids, then you want to connect, large geographic areas. Obviously if you’re connecting east to west, then, and you’ve got a lot of solar in both regions, then you can effectively extend the the hours of daylight in your grid by connecting some east to west distance.
I don’t know if there’s a time difference between Italy and Greece, I guess it’s not so far. Would you say like 200 and something kilometer cable? Maybe you’re going to get an extra half hour or hour, which can make a difference, to be able to allow, for example, Italy’s afternoon sun to power Greece’s evening, perhaps.
And then there’s also, connecting diverse wind resources as well. If it’s, windy in Greece, it’s not necessarily windy in Italy. So it allows you to, overbuild your renewables a lot more than what you could make use of in your own little country. And even if you don’t get, really different renewable.
Generation profiles between the two places, you are probably going to get some sort of difference in the in the loads, if you’ve got different working hours. Or just different cultural behaviors as well. And yeah, so I guess that’s primarily the reason there’s heaps of them all over Europe and this one is, it’s pretty short compared to what we’re up to now.
I think the longest one is still 700 and something kilometers between Norway and the UK. And then there’s really a lot of longer cables in in planning at the moment. So yeah, the most out there one is probably what’s it called? X links that connects Morocco to the UK. I’m personally skeptical if that’s ever going to going to end up operational because I just think.
Like engineering wise, definitely possible, although it is, yeah, it’s a long circuitous route that they’re planning to take between Morocco and the UK. But I think more than technical problems yeah, HVDC cable projects are largely driven by politics and yeah, trading between countries and how friendly countries are, how much they trust each other, how similar their cultures are.
Yeah, because it’s really got to be a very strong cooperation between two countries.
Joel Saxum: If I remember right Rosemary, didn’t we talk about one of these that was between the UK and northern France and it paid for itself in two years? Even though the capital cost is really high.
Rosemary Barnes: Yeah. They put one, the owner of the Euro tunnel used a lot of that infrastructure to run a cable.
So it was really cheap to make because they didn’t have to do a lot of yeah, digging and I dunno, a lot of work on expensive ships to get that down there. And if you have to tease through the financial statements to figure out what’s going on, because it does look like they’ve tried really hard to make it look less profitable than it is and shove some of the some of the revenue onto other assets that are owned by the same company.
But it basically looks like it would have paid for itself in in terms of the term, in terms of the revenue that it generated would have been more than what it cost in a year. And it’s hard to imagine their costs to operate it being that high. Yeah pretty appealing, but not every project is going to be like that.
I think in early interconnectors, if there aren’t many interconnectors around, then you can do much better from the price arbitrage available. You can imagine if you’ve got prices much higher in the UK than in Europe, and you’re the only one that can sell electricity between those two places, then you’ve got a lot more chance to clean up.
Then if there’s, 10 interconnectors, then obviously that’s going to bring. Bring the profit margins down a little bit. And then in Australia, we’re also looking at some interconnectors. There’s a really famous one that is being planned between Northern Australia and Singapore by Indonesia, the Sun Cable.
That one, yeah, he’s a really. Interesting and long term project will also, probably it’s not that certain that one will succeed either, though I am definitely rooting for it. But one that is probably likely to go ahead is to connect the island of Tasmania at the south to the mainland of Australia.
They already have a small interconnector there, but… They’re trying to add another one. It’s called Marinus Link, that project. And basically Tasmania is already fully renewable from just their hydro, but they want to be able to add more wind, develop their wind industry more, for example, but they’re unable to at the moment because.
They’ve just got nothing to do with that electricity. Yeah. So the idea is to use Tassie’s hydro a bit more strategically so that it could be like the battery of Australia. So when, mainland Australia is short on renewables, then Tassie will send us over hydro electricity. And then the opposite is when, we’ve got more renewables on the mainland than we know what to do with.
We’ll use that to pump some water back up a hill in Tasmania. So yeah, and that one, whilst yeah, it sounds really great and probably is quite a good, quite cost effective in terms of what else you would have to do to get that amount of energy storage. It isn’t something that’s just going to pay for itself by energy arbitrage between Tasmania and Victoria, which is the two states that it’s connecting.
So there, I think they’re still trying to work out the final the final details of the cost structure, how they’re going to finance that project. But I think it is likely to go ahead.
Philip Totaro: That sounds like the solution to New York’s problem. Let’s build an interconnector from Tasmania to New York. It’d be cheaper.
It does beg the question why they don’t have an interconnector from, Texas Earcot to any, everywhere else in the country to be able to do some of this, offsetting of negative pricing that they see in Earcot. They just approved the Greenbelt Express in Missouri.
Rosemary Barnes: Yeah. And add some security next time that. Texas is frozen while the rest of the country is not. It’s the obvious solution that has a cultural answer, I would suspect.
Allen Hall: They want you to move to Texas is what they want you to do. And they’re going to, they’re going to be able to do that because the energy prices are so low.
That’s why Tesla built a factory there, or more than one factory there. That’s why SpaceX is making launches out of there. It’s exactly why they’re there. It’s, the energy’s cheaper.
Joel Saxum: Yeah, Governor Abbott says, and they just won a big sweepstakes basically in the hydrogen hub funding as well. So that’s Governor Abbott, he says always, Texas is open for business.
Allen Hall: And they’re gonna have a Formula One race there again next year, in Austin.
Joel Saxum: Yeah, I wish I was there.
Allen Hall: We’re gonna be going to Canada. How do we manage that, Joel?
Joel Saxum: Why are we going the wrong way?
Allen Hall: Why are we going to Canada?
Joel Saxum: So our wind farm of the week is Fairbanks Wind Park, which is in the UP of Michigan, right on the northern coast of Lake Michigan, as I’m currently sitting in northern Wisconsin watching the beautiful fall colors turn.
I wanted to focus on the closest wind farm to me that is experiencing the same transformation while supporting the energy transition. So the wind farm Fairbanks wind park is owned by Michigan based DTE energy. It’s got 21 Siemens SG 3. 4, one 32s. And those turbines actually on this site looked like they’ve suffered some teething issues.
There’s several delays where it was offline this past summer. We’ve got some fantastic data about this wind farm from Intelstor. So thank you, Phil. The project was originally constructed by Heritage Sustainable Energy, DTE, Ford, and GM are power offtakers with a PPA price of 53. hour. During construction, the project created 200 construction jobs and it sits to create 24, 000 or power for 24, 000 plus Michigan homes.
The project is a 12 month rolling average capacity factor of a little over 31%. It’s been commissioned in 2021. They’ve got a long term contract with SGRE for service. The project actually has a pretty high O& M cost, 70, around 73, 000 per turbine per year. And that’s an actual number reported from DTE.
The project is slated to break even on CapEx invested in 2038, which is 17 years from commissioning date. And after that, they’ll make an DTE has an additional 46 million in net profit planned for it. So kudos to the techs braving the elements and maintaining this wind farm up on the northern coast of Lake Michigan for DTE.
Fairbanks Wind Park, you are the wind farm of the week.
Allen Hall: That’s going to do it for this week’s Uptime Wind Energy Podcast. Thanks for listening. Please give us a five star rating on your podcast platform and subscribe in the show notes below to Uptime Tech News, our weekly newsletter. And check out Rosemary’s YouTube channel, Engineering with Rosie.
And we’ll see you here next week on the Uptime Wind Energy Podcast.
