A year ago, I looked at the acccounts of Moray East, the first of the (allegedly) very cheap offshore windfarms that are supposed to be saving us from the perils of global warming. My review suggested that far from being very cheap, Moray East was in fact on the expensive side, with a likely cost approaching £4 billion, for a windfarm of around nearly 1 GW.
A year on, the windfarm has published another set of accounts, which reveal that in the last 12 months it has burned through another £1 billion – its spend to date is £2.2 billion. However, its website reveals that turbine installation only began in January this year. That means that there is well over a billion pounds of expenditure to come. That being the case, my estimate of the outturn cost remains unchanged at £3.8 billion. That said, there are hints that Moray East is having to do remedial works to protect offshore cables – the notices of operations speak of remedial works, placing rocks over the cables to protect them from scour. That work seems to have continued for the first six months of the year.
With a capital cost of £3.8 billion, and a prospective load factor in its first year of perhaps 47% (i.e. the same as Beatrice, the windfarm next door), we might optimistically expect Moray East to have a levelised cost of £130, which is pretty much typical of recent offshore units.
Which leaves us still with the mystery of why Moray East submitted a bid for a CfD at £57. It has been indexed up to £68 already, but even so, it’s hard to see how they make money in the short term.