Authored by Bill Blain via MorningPorridge.com,

Let’s consider Wind Power.

If you believe in Wind-power then don’t – whatever you do – read The Costs of Offshore Wind Power: Blindness and Insight. Although it was written way back in Sept 2020, the report might make you quite unhappy about the current direction and prospects for the Green Economy. The authors describe how costs are escalating rather than declining as promised. Operating and maintenance costs have risen even faster than they were anticipated to fall! Gas prices will look impossibly cheap compared to renewables if the true facts are ever revealed.

How about this for a quote from the report:

“This leads to the prospect of what is not so much a car crash as a motorway pile up in the fog of ignorance.”

The report suggests the narrative that “Wind power is getting cheaper and more efficient all the time” is complete nonsense. The majority of the 350 odd UK wind farms will need a bail out. The government’s approach to green power completely underestimates the long terms O&M costs and drop-off which means most wind projects are massively overpriced, and we’re still years away from carbon neutral.

If author Professor Gordon Hughes is correct – and I see no reason not to believe him – then the UK will be in serious crisis over it carbon neutral green energy costs. The knock on in terms of future decarbonisation efforts will be huge, it will change the maths for a “green hydrogen” powered future, and change the pricing and timing outlook for gas and even coal-fired power.

I’ve done my own digging, and wind investments just don’t perform like promised in the fancy brochures.

If you maintain a very traditional windmill very, very carefully it might last a couple of hundred years. If you build them quick out of plastics, keep them light and pump them out vast numbers, then you are going to spend lots of time and money maintaining them… Checking and replacing bearings gets more and more difficult the bigger they get. You need to check for hairline stress fractures on the blades. Because of the rotational movement, they put additional pressure on the foundations and sink into the bottom. And all these things get much, much more difficult if you stick the thing in the middle of the English Channel, North Sea or Atlantic approaches where salt-water literally eats them.

The brutal reality is off-shore wind is far less efficient than promised and requires much more expensive maintenance. They break down, sink into their foundations and don’t generate anything like the power expected. For all the due-diligence, they simply won’t ever make any money unless the price at which they sell energy is dramatically increased – at which point they make zero sense.

This will feel very familiar to many investors who’ve seen all the blithe assumption about O&M costs on all kinds of technological green marvels fail to meet expectations. Biowaste generators, Biomass, thermal pellets – you name it, and the rosy assumptions failed to materialise because the difficulties in making them work and keeping them working were glossed over by the promoters.

Most of the smart money already knew that about renewables and is deeply sceptical. The not-so-smart money still laps the deals up! Sadly, renewables is likely to become another charming but flawed investment thesis. I am no stranger to investment madness… three times I’ve invested in Airships and lost my dosh every time…

The problem is: we really do need to address climate change… which means energy prices have to rise to keep the inefficient windfarms working… meaning a less efficient economy.

And its not just renewables that are attracting big bids because someone else is assumed to have done the work to check they work. There are a host of other Green assumptions that are unlikely to stand up to rigorous testing. Whatever you believe about recycling Lithium batteries, its challenging. They are toxic to mine, toxic to process and toxic to dispose of. As the surveys now show, if you diligently use your EV for 300k miles it will achieve carbon neutrality – as long as you don’t worry about how the electricity is made or how the batteries will be recycled.