5 ms·

I’m not sure what I need to cite but logically when you’ve paid 1B for a lease up front, you’ll want to recoup that through the money you get paid for the elect

by gehsty 1mo ago

I’m not sure what I need to cite but logically when you’ve paid 1B for a lease up front, you’ll want to recoup that through the money you get paid for the electricity you generate. The project accounting probably includes a return on that similar to CAPEX (could be as high as 10%), so its impact grows every year as well. My feeling is that these projects would require offtake costs so high to be viable that they would not be appealing to the states that awarded the leases. The blockade from trump is a very appealing exit ramp for projects that are dead in the water. You can see in Germany / UK projects awarded with high lease costs failing (Mona already went pop in uk, I imagine any r4 lease not awarded cfd in AR8 will be returned, Total not moving forward with German portfolio…) I’ve worked on debt financed offshore wind projects for the last decade, the whole project viability hinges on devex/capex balanced against offtake and resource.

Supermancho 1mo ago
> the fees paid for the leases for these projects were so high that the projects would not be economically viable in the first place. > I’m not sure what I need to cite but logically when you’ve paid 1B for a lease up front, you’ll want to recoup that through the money you get paid for the electricity you generate. I agree. This is why I take issue with your initial claim. ~6.6tw (aggregate for the 3 sites) -> for $30b (middle range to develop) 1 TWh/year = 1,000,000 MWh/year. That works out to roughly $4.5k of initial capital per MW, initially. Based on a realized electricity price on the eastern seaboard, let's say $100m/tw/yr in profit - roughly $100 per mw/hour, after subsidy, operational cost and based (very conservatively) on a fixed midrange electricity demand. After 4500 hours (just over 6 months of operation) you're in the black. All that being said, if the books were cooked or construction was stalled, there could be outside incentives, but this is incidental to saying something akin to "it's unprofitable on paper" when the math does not bear this out.

by gehsty 1mo ago

Supermancho 1mo ago

> the fees paid for the leases for these projects were so high that the projects would not be economically viable in the first place. > I’m not sure what I need to cite but logically when you’ve paid 1B for a lease up front, you’ll want to recoup that through the money you get paid for the electricity you generate. I agree. This is why I take issue with your initial claim. ~6.6tw (aggregate for the 3 sites) -> for $30b (middle range to develop) 1 TWh/year = 1,000,000 MWh/year. That works out to roughly $4.5k of initial capital per MW, initially. Based on a realized electricity price on the eastern seaboard, let's say $100m/tw/yr in profit - roughly $100 per mw/hour, after subsidy, operational cost and based (very conservatively) on a fixed midrange electricity demand. After 4500 hours (just over 6 months of operation) you're in the black. All that being said, if the books were cooked or construction was stalled, there could be outside incentives, but this is incidental to saying something akin to "it's unprofitable on paper" when the math does not bear this out.