The fact that the private sector is putting profitability ahead of growth is a measure of how companies active in wind power rate its prospects.

There is a message contained in this bit of news (not the first of its kind, incidentally) reported by Bloomberg:

An offshore wind auction in Germany ended without a single bid, showing that zero-subsidy contracts aren’t in demand with investors.

The Federal Network Agency didn’t receive any bids for two areas in the North Sea, the German offshore wind group BWO said in a statement Wednesday. . . .

The failed auction is the latest setback in Europe for offshore wind, which has seen its growth prospects slashed by precipitously rising costs in recent years. As developers prioritize profitability over growth, governments increasingly need to provide subsidies to stimulate investment.

Translation: The economics of wind power were based on the assumptions of the last decade (low inflation and artificially low interest rates). Neither has proved, so to speak, sustainable. What a surprise.

And the fact that the private sector is (as the report’s authors put it) putting profitability ahead of growth is a measure of how companies active in wind power rate its prospects. If wind power companies were sufficiently confident that going for growth now would generate sufficient additional profits to justify the cost and risk, they would do so (and, if necessary, they could look to investors for additional capital), but they do not.

To argue that governments “need” to fill the investment gap is to imitate the thinking of  Soviet five-year planners set on meeting the quota regardless of any underlying industrial logic, thinking that ought, after countless failures, to have no place outside a madhouse. Then again, that is why it finds a natural home in the offices of those who dream up climate policy.

Bloomberg relates that the current investment slowdown is:

a reversal from recent years, when offshore wind farm developers in the North Sea were ready to invest without government backing, including in Germany. Two years ago, BP Plc and TotalEnergies SE agreed to pay billions of euros for the right to develop major projects.

But today, BP is pulling back from renewable power as it focuses on the profit-driving fossil fuel business, while Total undertakes a strategic review of its offshore wind business in Germany.

I wonder why that might be.