I think that’s a glib dismissal without any analysis of the financials that motivate the investment being profitable in the first place.

You're not crazy. I think sometimes software people forget that perfectly happy industries sometimes have single digit operating margin.

Are you doing a Jordan Peterson bit? The one where someone asks him "Do you believe in" and he says "Well what is the meaning of do, and what do you mean by you? And what is believe?"

I really am insulted by the analogy. All I said is that painting a 3% drop as trivial and not worth thinking about is completely ignoring that that could be the entire profit margin for the wind mill installation in the first place and thus the financing and capital investment math could have been done incorrectly and push the profitability negative. Pretty sure I presented a clear description of what my issue with such a glib dismissal is.

The difference between a wind farm being barely barely profitable and barely barely losing money doesn't really matter when we're building these in bulk.

So you make up the losses on volume? That’s not how math works.

Lol, you'll money on every MW, but make it up on volume.

I find people who advocate for renewable energy projects are almost always the same people who argue in favor of energy subsidies, too. Perhaps they know something about energy economics, the rest of us don't...

No, I'm saying that lots of different projects will have different levels of profitability and if one or two flip over that magic line it doesn't really matter. The difference between 83 wind farms built in a year being profitable and 87 being profitable, with the 4 that changed being basically breakeven either way, is not very meaningful.

Especially because a more realistic answer is it'll be profitable either way but it'll change whether the return is higher than AAA bonds or not. It's not important. It only affects very marginal projects.

In the capitalist environment it does. At least if we do not want state intervention. In general money does not get invested in known unprofitable ventures. There might be bets on profitability. But profit is always expected.

A couple farms that barely make profit are already going to be unattractive to investors. It really doesn't make much difference to future investment. There's not a massive sea change between 1% profit and 2% loss, they both suck. Investors are going to focus on the higher profit farms no matter what, ones that would still be positive if they lose 3%.

Other things can go right or wrong and change the numbers by a couple percent. That risk is pretty normal. It's not something wild.

And any farm that's already running or even half-built is still going to be finished and maintained and make as much power as it can. Once you already spent a big percent of the budget you're not getting it back, and the ROI on the remaining spending is very high.

The challenge is that your neighbor building a wind farm next to you changes your profitability. That uncertainty isn't priced in. I think you're really assuming someone here is saying "stop building wind farms" vs "this is a problem investors in the space will need to account for as this scales up more"

I don't disagree with your description of the problem in this comment. But the OP was perfectly fine if it's just something "to account for" on the scale of 3%.

Your strong dismissal of OP, and talking about how it "could be the entire profit margin", made it sound a lot more serious than it is, and that's why I disagreed with how you were commenting earlier and posted a counterargument.

This is exactly it. Especially for the UK offshore projects where sites were auctioned off: All bidders knew that a competitive bid had to aim for an ROI only slightly above market rates, given that risk was very low. This means that 1 percent on production will easily turn into 10 or 20 percent on profit.

Source: worked on CAPEX and yield estimates for major player operating in this sector for a decade.

Did they factor in the risk that a site upwind of them could be auctioned later basically turning their project unprofitable? If you bid higher ignoring this risk and later lose money, maybe they should have bid a little less

This isn't a Best Buy. Offshore wind is very expensive compared to land-based wind and operators can struggle to turn a profit. 3.28% is indeed likely very significant.

I do not understand HN's pathological obsession with trying to "gotcha" news media titles for being "clickbait" especially given the "Software (version number)" posts and edgy titles to corporate and personal blogs that are everywhere here.

Most climate change advocates naively believe that because an energy resource in renewable it must be infinite too. Simple energy balance over a given area will show how much extraction of wind energy will reduce available energy downstream.

Moreover, the economics of offshore wind farms is often commingled with state enterprises and various subsidy schemes, which makes them uneconomical even in the best of times, so a 2% capacity reduction coupled with inevitable maintenance and repair costs escalations might make many wind farms uneconomical.

Onshore wind farms are much more economical but the best locations such as Texas, Oklahoma and New Mexico already have been developed.

"climate change advocate", in contrast to some "climate change opponent"?

Yeah, this sounds like someone who doesn't realize that climate change is a real effect driven by CO2 emissions, regardless of the precise economics of renewable energy.

An Advocate/activist is someone who puts politics and policy ahead of science and economics, and it isn't limited to climate change either.

For example, it was gay advocacy/activists not heath sciences professionals who made sure more money was spent on Aids/HIV than all childhood diseases combined.

You're right, solar energy isn't infinite, there's merely orders of magnitudes more available than necessary to power the globe.

Their assumptions are worse than that. They assume constant global rate of renewable energy production but average global wind speeds aren't constant, they appear to be slowing down. This is called "global stilling". It is often blamed on climate change, which (it is now claimed) both speeds up and slows down the wind simultaneously, although the rapid construction of wind farms and urban buildings might also be related.

https://projects.research-and-innovation.ec.europa.eu/en/hor...

I don’t know what a climate change advocate is: someone who believes in physics? But in general nobody believes that resources are infinite. We just have a lot of offshore wind area, onshore wind area, and space to fit solar panels. Not infinite, but enough to massively increase humanity’s access to energy sources and put us back on the growth path we were on before fossil fuels caused us to stagnate.

I think the point is that with thin margins and capital costs, 1.6% (compounded over decades) could be a large chunk of your profit.

TFA discusses this:

> To justify their investment and make a profit, "it's very important for a developer to be able to project that the wind farm will produce a given amount of electricity for 25 or 30 years", the typical lifespan of a wind farm, he says. Even a relatively small, unexpected reduction in that energy output can upset this investment calculation and make the wind farm not financially viable, Finserås says.

If wakes losses have been known for years as asserted by the piece, I'd argue it's the fault of the operator and investors building a farm downwind (or potentially) of another. The only thing I can think of is if regulatory or zoning changes caused underlying assumptions of wake loss to change.

It's like setting up a low margin Italian restaurant with none nearby and a few months later another Italian restaurant sets up taking your revenue, tough luck then

> 1.6% (compounded over decades) could be a large chunk of your profit.

I don't understand what you're saying here. The 1.6% compounding was part of the plan from the first rough draft. The 3% is not compounding.