The Crown Estate’s decision to invest a chunk of the UK’s money in an as yet unbuilt wind turbine of unusual size (MPS, May issue, page 55) ought to be giving all concerned pause for thought. The official line is that the purchase of Clipper’s prototype of its giant 7.5 MW, 175 metre high Britannia unit will provide a stimulus for the development of that highly desirable property, a large scale turbine suitable for deployment far offshore, and provide the Estate, which wants to be able to identify with its leaseholders, with first hand experience of the kinds of operational problems and issues that arise when wind turbines, in particular giant turbines, are sited in such locations.
It is, then, going to run the turbine itself. The questions that naturally arise are – why does the Estate want a wind turbine, given that it is not an operator, or a developer, or even a speculative investor? And why this particular turbine? And finally, why on earth does the Estate, essentially a portfolio management agency, want this kind of experience at all? It is not yet a rational voluntary pursuit for a grown-up organisation, as Vestas could testify.
Part of the answer lies in the Crown Estate’s status, which is unique and confusing but boils down to this. It manages, on behalf of the government through an independent board, land that was once the property of the Crown, including the shoreline, and the seabed out to the territorial limit. Windfarm operators are therefore its leasehold tenants, and it wants to know first hand how those tenants are getting on – what kind of risks they face when applying for licences, the speed of the process, and the challenges of construction and ownership down to the detail of how obtainable and effective is specialised equipment such as crane barges.
One might reasonably ask if owning a single turbine is going to provide much useful experience, a question on which the Estate is non-commital. It is reasonable to speculate therefore that the Estate has grander designs in mind. But if it wishes in time to become a significant operator on its own account, as events suggest, it is keeping that ambition closely guarded.
The Estate is indeed reticent about many of the natural questions, saying only that it wishes to stimulate the development of large turbines suitable for offshore wind, and that it wishes to understand the problems for operators associated with such systems. But they do not foresee any great perils at sea, no abandonment of the long term ideal of huge offshore farms, even if others apparently do – Royal Dutch Shell, for instance, which has announced its intention to sell its stake in London Array. And it doesn’t worry him at all, says Rob Hastings, director of marine operations at the Crown Estate, that Shell wants to pull out of the Array project. “The industry is [now] robust enough to cope with these comings and goings” he says.
In any case he does not concede that the deal is a speculation. Crown Estate has bought the Britannia, specifying its fully developed and operational condition, at what Rob Hastings calls a ‘market price’. That means of course that it isn’t a bargain, which a first-off can be, given the promotional advantages to the maker. But a guess could be made from the industry average of around US$1000 per kW installed if you buy in bulk, more if you buy one at a time.
Nor does it have any particular reason for buying the Britannia, rather than some other large turbine, except that Clipper have made a good case and have in theory at least the kind of unit that would offer the form of experience that the Estate wants.
Where the Britannia I will ultimately be sited remains to be seen, if the turbine itself is ever seen. And that is not a cast iron certainty. It cannot at any rate be considered an especially good moment to buy the heavily scaled-up version of a turbine that is currently suffering serious component problems, and is made by a company that has yet to turn a profit. But whether the Estate is right or wrong it is undoubtedly in good company. It is by no means the only agency to be convinced by Clipper’s prognosis. At the same moment that Clipper announced its sale of Britannia I to the Crown Estate, its considerable operating losses and its technical problems, it was also announcing that JP?Morgan Chase had invested 150 million dollars in Clipper shares, buying 12.3 % of the company. That is solid faith, although it is just possible that it is the kind of solid faith generated more by the pragmatism of an Intel chip than by religious conviction. The shares were bought near last summer’s low point of 460p, following two profit warnings, when just last June they had soared from the 2005 issue price of around 200p to 916p, and those are the kinds of numbers that when they occur in a booming market sector make investment house computers very bullish, not to say intoxicated.
But there is more. NaREC, one of the world’s foremost renewables testing facilities, is to take part in the development and testing as part of an investment by the UK’s Northeast Regional Development Agency. Clipper’s order book is strong, and includes BP’s purchase of 120 Liberty machines, for delivery in 2009, as part of a complicated deal that involves a share purchase by BP, a wind farm joint venture agreement and provisional forward bookings. And, in September 2007, the Clipper product’s ‘unparalleled levels of efficiency, reliability and reduced cost of energy’ were rewarded with a commendation from the US?DoE.
One assumes that the same kind of rationale is firing the enthusiasm of the Crown Estate, which, not being primarily an investment organisation has never before put its money into anything speculative, for this wholly new venture. And they could, of course, have hit pay dirt. Maybe Clipper is right, and the component problems that have caused dozens of their Liberty machines to be sent back in disgrace are merely temporary troubles with no long term implications. Maybe turbines with simpler generators and more complicated gearboxes are the way to go. Maybe this particular large turbine is The One, the one that will solve the deep water problem and the CO2 problem at a stroke. Still, there are a lot of ‘ifs’ in there. On behalf of the UK taxpayer, who is more accustomed to being landed with a De Lorean than a De Beers, I’d prefer to reserve judgement.
One might also wonder about the perhaps unconscious irony in the naming of Clipper’s turbine models. The name Liberty is a potent symbol, embodied in the Liberty Bell, of the infant USA’s fight for independence from Britain, aka Britannia, 235 years ago.
The technology associated with wind farms, including the development of gearless turbine generators, will be among the topics dicussed at our Future Power conference to held in London, 4-5 November 2008.Go to modernpowersystems.com/futurepower
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