Wind energy is key to renewable electrical generation. Green energy transformation plans all feature wind energy alongside solar and hydro as a key electrical generator. The rollout of wind energy is proving difficult. Expectations for results are likely to be missed. This is a short look at why the obvious can be hard to accomplish.
EkaLore has previously looked at wind turbine manufacturers and the structure of the global market. The manufacturers are faced with common problems globally. Taken together these factors will make expectations hard to accomplish.
Common problems for wind energy, and especially manufacturers, are global as they are economic at their core. They cut across different governments, geographies, technologies, deployments, and green energy transformation plans. The economics cut across ideologies, religions, political parties, and cultural differences. A common characteristic is the economics are now shown not to care about any of those factors – regardless of how expectations were set.
The single largest threat to wind energy deployment is currently global inflation. Many different cost changes, some large and some small, affect wind deployment.
Transportation and logistics costs of moving structures, turbines, and installation materials are all increasing due to labor, fuels, and global trade conditions.
Financing costs have seen critical failures. Inflating costs require more investment with expectations of higher returns. Rates of return for investors must now meet higher return expectations. Long term assumptions set for prior very-low-interest-rates now meet demands for economic viability with higher real-rates of return, terms with less exposure to change, and different competition for capital. “ESG” (environmental, social, and governance) investments are insufficient in themselves to generate the billions needed for rapid deployment business cases.
Turbine materials and manufacturing costs are climbing. Resins for composites start from petrochemicals. Metals and electrical components are fabricated from materials whose volatile prices point to consistent cost growth. Manufacturing costs for more sophisticated large units see labor and process costs grow.
Total costs of ownership across all phases of deployment are under pressures leading to increases. Operational costs (blade erosion, bearings and gears, software) are eroding margins and payback assumptions. Installation, operations, and maintenance labor are especially short.
Grid attachment and integration is proving expensive. Energy storage systems’ costs for installations capable of protecting wind energy value are needed in billions yet.
Legal, regulatory, and social pressures (Not-in-my-back-yard examples abound) cost money and slow projects
Tax incentives, credits, and preferences can be too complicated (USA), or small (EU, China, India), They are proving insufficient for manufacturing, investors, and operating enterprises.
Wind energy demands changes to fix these cost issues. The sprawling nature of global investors, popular and government policy expectations, and a maturing technology will continue to fail expectations without systemic changes.
For more analysis and notes on wind manufacturers and green energy transformations see http://www.ekalore.com
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