15

In this 2015 Financial Times article, Warren Buffett talks about a onshore wind farms and their profitability.

“For example, on wind energy, we get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

Similar to this question except about money rather than an energy payback, I would like to ask if the cost of building and maintaining a wind farm could be paid for and later become profitable from selling the energy at market rates.

A recent Bloomberg article suggests it might now be true for offshore wind farms.

Without subsidies, do wind farms produce a profit in their lifetime?

  • 2
    Please quote an example of the claim that you doubt. Windmills have been used for centuries, profitably. Wind turbines are easy to justify in rural areas with no other power supplies [citation-needed]. The claim made that offshore wind farms have been, until now, subsidised, which is not the same as unprofitable over their lifetime. – Oddthinking May 15 '17 at 9:55
  • 1
    Profitable without subsidies and produced without subsidies are two different things. I.e. the quote doesn't seem to support your claim for it. – Brythan May 15 '17 at 11:02
  • 3
    @daniel: We are here to try to sort out which public claims and beliefs are true and which are false. We aren't here to answer any old speculation. So, we need a notable claim. You haven't come up with one that matches the title. The question in the title seems rather vague. It depends. – Oddthinking May 15 '17 at 14:09
  • 1
    What @Oddthinking is refering to is the core of skeptics.se question acceptability: you can't just pop a question out of your head or from hearsay. You have to prove notability of your claim. This means getting a claim that is circulating on social media or one that [can be proven that] a lot of people believe is true. You are just asking something you made up based on another question, thus not notable – Mindwin May 15 '17 at 14:55
  • 3
    Is Buffet saying it's not profitable, or not profitable at the levels/rates of return and growth that warrant inclusion into a Berkshire-Hathaway portfolio? – PoloHoleSet May 16 '17 at 17:16
1

The answer depends on you definition of subsidies, the energy market and country. As you second link is about Germany my answer will be also about Germany.

If we use a very broad definition of subsidies:

...in addition to direct state aid and tax benefits, other forms of subsidies that are not a part of state budgets are included here, such as the value of allowances from emissions trading, provisions set aside for nuclear power, and feed-in tariffs for renewables.

Then this study from 2012 suggest that all main forms of energy production (except natural gas) are subsidised (see figure 4). Moreover, if you take the external costs which are not fully internalized in account (i.e. health costs due to air pollution, global heating etc.) then wind energy was among the cheapest form of electrical energy production methods in 2012 (see figure 5). As the prices for wind-turbines have fallen this only got better. But, if wind power becomes a major source in our wind energy market you have to take into account that there are cost in regulating this unsteady supply of electrical energy (with for example power-to-gas) and you have to add this to your production price.

If you want to have an answer to the question Can a company construct and run a wind farm and sell its energy at the Strombörse (the "stock market" for electricity) in Germany now and make a profit without any (very) direct subsidies (i.e. getting extra money for every kilowatthour sold)?* then an answer could be:
At least the company ENBW (one of the mayor German electrical energy companies) believes this is possible: http://www.offshorewind.biz/2017/04/13/enbw-wins-construction-of-900mw-german-owf-by-bidding-eur-0-per-mwh/

* (I do not consider this a very meaningful question, except you want to run a wind farm yourself).

  • I haven't heard of power-to-gas until now, but pumped hydro looks to have double the efficiency for the round trip (80% efficiency vs 40%) – daniel May 23 '17 at 11:38
  • 1
    You cannot not build any more Hydro storage in Germany. For going 100% renewable, you need to store a lot of energy (like 1 week of electrical energy production now it is only like one 1h). On heindl-energy.com/why-store-energy.html you can find some info (and also some other possible solution). As we can use the natural gas infrastucture as a storage, this would be a very cheap solution. Additionally we could store energy in Norway via sea cable.... – Cashman May 23 '17 at 12:03
  • Also I think that second link is talking about the same offshore wind my question was. 1,500MW in 2025 by EnBW. So is your answer: no electrical plants can make a profit in their lifetime without subsidies? – daniel May 23 '17 at 12:05
  • that could be true since its a government utility and all, it would be tough to show that highways make a profit. – daniel May 23 '17 at 12:07
  • 1
    The problem is that their former economical model, i.e. buying energy when its cheap (with coal plants this was at night) and then selling it at very high prices at normally noon does not work any more (as solar electricity flattens that peak). – Cashman May 23 '17 at 13:41

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .