Scroby Sands Lights the Fuse of the Decommissioning Timebomb
Provision for decommissioning one offshore wind turbine is six times the rate for the other 29 turbines.
Introduction
Regular readers will recall the article form last year highlighting the Offshore Wind Decommissioning Timebomb. That article highlighted that although most offshore windfarms are creating paper provisions neither they nor their parent companies are accumulating ring-fenced cash to fund decommissioning at the end of life. That analysis was based on wind farm companies’ own estimates of decommissioning liabilities. Now new data published by Scroby Sands windfarms indicates that estimates of the decommissioning costs are likely way too low, the bomb is much bigger than we thought and has the fuse has just been lit.
Scroby Sands Wind Farm
Scroby Sands is a relatively small 60MW offshore wind farm off the cost of Great Yarmouth. It originally consisted of 30 x 2MW turbines and was commissioned in 2004. It was originally built by a subsidiary of E.ON UK but is now owned by German energy group RWE. RWE is the company that won the lion’s share of offshore wind contracts in the recent AR7 auction. In 2023, one of the turbines caught fire (see Figure 1) and RWE has decided to decommission that single turbine.
The accounts up to 31 December 2024 for Scroby Sands were published at the end of 2025 and they show the wind farm is losing money, with pre-tax losses rising to £4.7m, up from £2.8m the year before. Revenue is down due to a reduction in average power prices and costs are up due to higher maintenance costs. According to the Ofgem Renewable Energy Register, Scroby Sands earned Renewable Obligation Certificates (ROCs) worth £9.78m in 2024, or nearly 48% of total revenue. Without subsidy, the gross profit of £1.94m would have plunged to a loss of £7.85m. ROC subsidies are supposed to last for 20 years, yet despite being commissioned in 2004, Scroby Sands was still receiving certificates in 2025. It cannot be long before the subsidies run out, calling into question the economic viability of the wind farm.
Scroby Sands Decommissioning Costs
In common with other offshore windfarms, Scroby Sands details the expected costs of decommissioning, see Figure 2.
RWE reports the present value of decommissioning the remaining 29 turbines as £44.2m. They use a discount rate of 4.75% and expect to decommission the main windfarm in 2030. Unwinding the discount means they expect gross cash costs of £58.4m in 2030 for 29 turbines. This works out at £2m per turbine or about £1m per MW of capacity. Remarkably, they have recorded a £2.5m reduction in the expected cost of decommissioning.
RWE also disclose the expected cost of decommissioning the single T06 turbine that caught fire. The costs have risen by nearly £6m from last year’s £7.2m to £13.2m including the £0.2m already spent, or £6.6m per MW. The remaining expenses are supposed to incurred during 2025, so are undiscounted.
RWE expect us to believe that the decommissioning cost per turbine is going to fall more than six-fold from £13.2m in 2025 to £2m in 2030. It is reasonable to expect some economies of scale, but a six-fold decrease in costs is surely beyond the realms of credibility. We might wonder why the auditors Deloitte signed off on these fantasy numbers.
Impact on Overall Decommissioning Costs
The analysis of the 2024 accounts of other offshore windfarms in the article linked above calculated that the average cash cost provision for decommissioning was about £293m per GW or £0.3m per MW of capacity. At the time there was about 16GW of installed capacity giving a gross decommissioning liability of about £4.7bn. The cash cost provision for the remaining 29 turbines at Scroby Sands is more than three times that level at around £1m per MW. This would give a total liability of over £15bn for the whole offshore wind fleet. The single turbine decommissioning cost is more than six times that. Now of course, there will be some economies of scale for Scroby and for larger windfarms, but it is becoming increasingly obvious that actual offshore wind decommissioning costs are likely to be far higher than is currently estimated.
Many windfarms are not reserving ring-fenced cash to cover this liability and as has been shown in other articles (see here, here and here), the finances of many of the windfarm owners are increasingly shaky. This analysis is confirmed by a recent Government response to an FOI request about decommissioning liabilities. The full response can be found on the link below:
Figure 3 shows a summary of the data released by DESNZ. We should note the data only includes windfarms under the remit of DESNZ. Windfarms that were consented or operational before June 2006 and under the remit of the Crown Estate and windfarms located in Scottish waters are under the remit of the Scottish Government.
DESNZ record total decommissioning liabilities of £2,680m for the windfarms in their scope of operation.
£1,254m or 46.8% of this is covered by letters of credit, bonds or bank guarantees. However, we do not know the term of these instruments or whether they will still be valid when the decommissioning liabilities become due. On the face of it, the value of the turbines and future cashflows when the wind farm is at the end of its life will be below the decommissioning liability, so it is questionable whether there will be sufficient assets to act as security for a bank at the end of life.
£572m or 21.3% of the total is proposed to be met by parent company guarantees. DESNZ says:
“Parent Company Guarantees are not normally accepted by DESNZ as a form of financial guarantee. Where these have been proposed, DESNZ are working with developers to find acceptable solutions.”
This data only covers windfarms that have reached “mid-life” so one has to wonder how long it will take to find these acceptable solutions.
A further £432m or 16.1% of the total liability is to be met be accrual funds. However, of the accounts examined these accruals are simply paper entries in the accounts that reduce overall asset values. They are certainly not cash that can be used to pay for decommissioning.
Just £112.5m or 4.2% of the total liability is held as hard cash. The remaining £310.1m or 11.6% of the total is a combination the other types of guarantee.
Conclusions
The decommissioning cost of a single turbine in the Scroby Sands windfarm has lit the fuse on the offshore wind decommissioning timebomb. Total decommissioning liabilities are likely much higher than is currently estimated. Moreover, the reliance of Scroby Sands on subsidies to be economically viable demonstrates the asset life assumed for these windfarms is likely too long. When the subsidies run out, many will become uneconomic far earlier than is assumed. This would be made much worse if the Tories form the next government because they have pledged to end ROCs early and remove carbon taxes from wholesale electricity prices which will reduce the market price of the power produced.
The ‘guarantees’ in place to cover decommissioning liabilities appear to be shaky with significant amounts pledged as paper accruals or parental guarantees that are not supposed to be accepted by DESNZ. Even the letters of credit and bank guarantees can be called into question.
If these companies go bankrupt, there is a significant risk the taxpayer will have to pick up the tab. The Government should tighten the rules surrounding funding offshore wind liabilities. Companies that hold stakes in these windfarms should be forced to create ring-fenced cash pools that grow to cover the full liability before the subsidies run out and the decommissioning timebomb explodes.
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Congratulations David on another great post exposing the pointless madness of the economy-wrecking Net Zero endeavour which the electorate-disenfranchising Uniparty has foist upon us. Please indulge this quite long comment on the same theme but at a deeper level.
For many years I’ve struggled to comprehend why UK politicians of all stripes have pursued policies which are so harmful to the interests of ordinary people. The anti-Trump mainstream media misrepresents and disparages almost everything President Trump says and does (e.g. the disgraceful obviously-deliberate BBC mis-splicing of what he said on J6), but by following independent pro-Trump US commentators I am now more certain than ever that these unfathomable oppressions are all about kowtowing to the globalist/Deep-State drive for “globalisation”. See for example here https://www.youtube.com/watch?v=Brs4aXOvdxg and here https://www.youtube.com/watch?v=RcRVlR0oIWw&t=30s.
The spanner in the works for globalists is that President Trump told the assembled WEF at Davos that “globalisation has failed” and that the USA is now pursuing a completely different “America First” policy to “Make America Great Again”. He abhors how globalisation has enriched the financial ‘elites’ at the expense of ordinary people (Wall Street versus Main Street), exporting jobs abroad, deindustrialising at home, hollowing out whole communities and leaving the entire country exposed to insecurity and decline. Needless to say, exactly the same disaster has unfolded here in the UK, as I laid out here https://metatron.substack.com/p/dissecting-scotlands-economy-wrecking.
President Trump is striving to reverse this regression with his tariff policies which are now creating massive inwards investment in home-grown USA manufacturing industry with well-paid jobs. He has also withdrawn from many unaccountable globalist bodies to free the USA from the tyrannies of Net Zero, Agenda 2030, uncontrolled mass immigration and other harmful polices all emanating from the Deep State imposition of globalisation. Who can argue that this approach to limit the power of the globalists is not benign and long-overdue?
This has led me to belatedly realise that although Margaret Thatcher did a great job of turning the country around in the 1980s (at that time the UK was the economic “sick man” of Europe), she only moved it towards becoming a non-industrial service economy. Could she instead have done what Trump is doing now? Probably not due to the intransigence of the unions who were hell bent on anti-capitalist revolution and also due to the national sovereignty constraints of being at that time a member the undemocratic EU. Whole industries have since been decimated in the pursuit of profits and the endgame of elite-controlled globalisation.
Joining the dots, I believe this is why the Deep State-subservient UK Uniparty is so unfathomably intent on pursuing the economy-wrecking globalist policy of Net Zero when they must know that it won’t make the slightest difference to the global climate. These puppet politicians have shown for many years that they don’t care a jot about ordinary people, they only care about conspiring with their Deep State overlords to achieve the hidden-in-plain-sight goal of authoritarian one-world governance (“You will own nothing and you will be happy”) and their dystopian UN Agenda 2030 (so obviously oppressive that they never dare to even mention it).
This is why they all are so desperate to censor freedom of speech and to electronically shackle the populace with Digital Ids (as during the Covid “malarkey”). Just last week the EU endorsed the UN’s dystopian “Declaration on Information Integrity on Climate Change”, leading the way to censorship of honestly-expressed scepticism on the climate change hoax, see here https://www.climateskeptic.org/p/facts-flee-as-the-eu-prepares-to.
This comes on top of France’s X headquarters being raided by police and Spain’s prime minister Pedro Sánchez launching a “coalition of the digitally willing” aimed at regulating social media, using child protection as a very obvious pretext for imposing their tyranny.
These globalist puppets really are in a panic and it’s all because President Trump has upset the globalist applecart, for which we should all be very grateful as explained here https://www.youtube.com/watch?v=-6HIPI2g8DA.
The accounts you referenced above have some interesting other nuggets:
It seems decommissioning provision never included for onshore works!!
T06 caught fire after it had been recommissioned following component exchange due to a fault. Sounds like an insurance claim to me but not mentioned.
Component exchange is pretty excessive for asset without much life left in it. During 2024, 2 generators, 6 gearboxes and 8 blade bearings were exchanged across 8 turbines compared to 7 generators, 7 gearboxes and 6 transformers being exchanged across 8 turbines in 2023. For a coal fired station yits almost unheard of to change transformers at this vintage, an alternator might need a rewind if it developed an earth fault. They of course didn't have gearboxes but I imagine bearings would have been routinely upgraded. This leads to high O&M costs being charged.
I was also amused to see in the Great Yarmouth referenced environmental statement that several turbines have become in accessible by boat as sand as shoaled since turbines were installed so they need to use a walker vessell to get to them!
Not sure how they have such a big asset value in vehicles maybe it includes boats.