Contracts for Difference Subsidies On The Rise Again
By Paul Homewood
The renewable lobby were quick to brag that the Contracts for Difference scheme was paying back money to energy users last year, when market prices of electricity spiked. But they have remained strangely silent since, now that market prices have fallen back, with the result that the subsidy conveyor belt is now running again.
In Q1 this year, subsidies for wind and solar power via CfDs totted up to £222 million, which will filter through on to our bills in months to come. Although onshore wind and solar still show negative subsidies of £9 million, offshore wind, which makes up 92% of the generation, gobbled up a subsidy of £231 million, with an average strike price of £166/MWh, compared to a market price of £120/MWh.
In reality, the subsidy is much bigger than the official figures say. The Emissions Trading Scheme adds £31/MWh to market prices, by artificially increasing the cost of gas generation. The real, underlying market price is therefore about £89/MWh, meaning that the real subsidy under CfD is £167 million higher than shown.
CfDs of course are just the tip of the iceberg, as far as subsidies go. The Renewable Obligation scheme will hand renewable generators about £6.8 billion this year, about 12% higher than last year thanks to indexation.
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NOT A LOT OF PEOPLE KNOW THAT 
Nothing it seems can get in the way of the Net Zero zealotry. Left to market forces how many renewable schemes would have been built? Anyone familiar with the popular north Devon tourist route, along the A39 between Barnstaple and Bideford, will have noticed the new mass of solar panels carpeting over pleasant green fields. Someone is on a nice little earner at bill payers’ expense. I wonder if the local MP supports the trashing of north Devon’s landscape.
Shocking. It seems there’s never a grey cloud in this organised extortion. While at the same time quality of life plummets.
Not just the trashing of the landscape .
The cost to taxpayers can be very high as well .https://www.dailymail.co.uk/news/article-11018797/Councils-gamble-green-energy-scheme-run-tycoon-leaves-taxpayers-facing-loss-200million.html
The solar energy schemes never make enough to pay for themselves , so everybody finishes up paying a load more money for something that is not reliable and never produces enough energy when it is needed .
I objected strongly to the proposed solar “farm”. There are too many “green” councillors who haven’t a clue.
Ask your local MP and Councillors, don’t just moan.
They will all want your vote in the next 18 months, so will be feeling vulnerable.
I am certain that the planners and councils who approve these schemes do not have a clue as to how bad solar panels are for supplying the grid and that their contribution to CO2 emission reduction is negligible.
That seems to be true of other countries also.
It seems as if the Conservative Government have no idea of moral responsibility. As long as their fat-cat friends continue to make £millions through subsidies they seem happy. A reckoning is long overdue.
Past time for this net zero nonsense to be dumped, it’s making paupers of us all (ie. us users). Just Google who are pocketing these eyewatering sums.
OFGEM have recently announced the ROC cash out price for 2023/34 at £59.01/MWh. The real value of an ROC will be somewhat higher because there is almost always a shortfall of generation. With the top up from recycle value it could end up being £65/MWh. But at £60/MWh it leaves offshore wind getting £108=120/MWh in subsidy on top of market price, with Hywind floating offshore wind getting £210/MWh in subsidy.
https://www.ofgem.gov.uk/publications/renewables-obligation-ro-buy-out-price-mutualisation-threshold-and-mutualisation-ceilings-2023-24
In addition the REGO market has jumped significantly. The right to claim you are being supplied with 100% renewable energy now costs around €7 or £6/MWh which is of course added to your bill.
I will try to update my chart of volume weighted wind prices to include some estimate for April, but the LCCC are only reporting up to 2nd April at the moment which might give a biassed picture, depending on how windy it was or wasn’t.
Is there an equivalent LCCC dataset for ROCs.
OFGEM provide data on ROCs and REGOs claimed. There is an ROCs spreadsheet produced by BEIS which breaks down the generation and ROCs awarded in each band and technology which is more convenient for summarising.
Getting at the data for the value of ROCs and REGOs is more of a pain. Recycle values on ROCs are only settled many months after the end of the financial year. REGO markets are not at all transparent in the UK, but there is some indication from European prices at auction.
Net zero is a very stupid idea and anyone who believes in it should stop exhaling CO2 right now. With help, if needed…
A company in Welwyn Garden City has applied for planning permission to cover a vast area of productive farmland between Welwyn Garden City and Ayot St Lawrence with solar panels. This was where Bernard Shaw lived and the surrounding country is beautiful – typical of the idyllic settings normally chosen by socialists for their dwelling.
I can’t have been paying attention. Where is the summary for inexpert householders to read that states the uplift to the cost of power which is attributable to the subsidies for the wind and solar power industries and the cost to the public of the operating inefficiencies and stimuli for these sources.
I suggest that the average reader of the Sun and the Daily Mirror would find the subtleties of the CfD regimes impenetrable. In spite of patient coaching by Paul and other learned Commentators the complexities are not remembered 3 days after I have read of them.
You could not have a more receptive audience than today’s outraged utility payers so could we have a short text which explains by what extent solar power falls short of installed capacity — something like 16% , I recall? Similarly for wind farms and the outrageous situation where the grid cannot take the output from Scottish fields to England.
Could we be told by what amount the cost of our electricity exceeds the wholesale price plus ‘conventional’ profit as caused by the past machinations of the government and the generating companies?
We might then be able to write to our local newspapers –and MPs – in terms that they will understand.
As an aside I saw recently that Gridwatch was showing that we were importing as much as 20% of our electricity from the continent. I wonder what we were paying for that.
Less than what our own generators wanted to charge us because of the rigged system even on days of high wind production we are busily paying for it to be constrained off the system driving up the system price and we are still importing. What happened to us being the Saudi Arabia of wind.
It won’t be the market price.
I recently did a few very simple sums on the Drax subsidy racket. The owners have trousered about £1.5bn over two years, which assuming a UK population of 70m works out approx £21 per individual.
The easy way to do this is to look at the cost of the entire system and then use that to calculate the cost per unit. We can model the cost without renewables pretty easily at various gas prices as we know what balancing costs were before renewables. If we then add up generation, subsidies, taxes, CfD costs (when above the gas price equivalent), and so on, we will see a substantial increase in cost. We need a half decent modeller but it’s not too hard to do. Indeed we should be able to produce an “unaltered” cost which is how cheap we could have had the system if we had simply built CCGT and left it alone.
I have created an Excel file from demand and wind data for 2022 downloaded from the Gridwatch website to calculate the excess installed wind power and storage capacity required (using hydrogen or battery for storage) to guarantee supply matches demand without the use of fossil fuels. For hydrogen storage, 200 GW or 6.75 times the average demand of 30 GW of installed wind power is required plus the storage of 1 million tons of hydrogen (14.3 TWhrs). For battery, 4.5 times more than average demand is required, 135 GW, and 30 TWhrs of battery needed at an estimated cost of £11 trillion. If anyone wants to see and check out my calculation please email me at jbxcagwnz@gmail.com.
Good work JB, an email is on its way. The subject will be Pie in the Sky.
Such spreadsheets don’t need to be very complex, although you will have over 100,000 rows at 5 minute resolution. So long as you remembered to convert MW to MWh by dividing by 12, and remember to allow for the energy used in electrolysis before it gets added to the hydrogen store, and then the loss on conversion of hydrogen back to electricity when the store is drawn down. You may need to do some data curation to deal with glitches in the data.
There are different approaches to handling the store itself. You can either let its size be a variable, calculated by comparing its maximum fill less the minimum (which may be negative unless you start at a high enough positive value), or you can limit its size, with surplus power going to curtailment when the store is full: it is useful to record the curtailment in a separate column. Making such a system arithmetically feasible calls for substantial extra capacity to cover the curtailed volume that can’t be stored. You need to ensure that the store remains adequate to avoid demand curtailment. In either case you must beware of borrowing energy from the store from its opening level and not repaying it by year end: goal seek or solver for a zero difference in start and end storage level can help ensure that.
OK you can have gast urbines on a truck/lorry but what’s the biggest power you can get ?
cos greeny RCH with the help of PR agency Carbon Pants has won an IPSO judgement against Telegraph’s Robert Tombs
.. https://twitter.com/RaveCozensHardy/status/1646559233817575447
Her words “Tombs wrote a statement that said “a gas – turbine generator small enough to go on the back of a lorry
will produce the same electricity, faster and more reliably,
than 10 off shore wind turbines the size of the Eiffel Tower”.
The generator was a Trent SGT-A65TR:”
I found this article about the SGT-A45 MOBILE power station says
“Siemens also introduced its other units in portfolio, the bigger SGT-A65TR aeroderivative”
(55MW Trent 60)
https://techcabal.com/2017/11/01/siemens-launches-fast-power-solutions/
“The Siemens SGT-A65 (formerly Industrial Trent 60)
is a 50-55 MW three-shaft, axial flow, aeroderivative industrial 50/60 Hz gas turbine based on the Rolls-Royce Trent 800 high-bypass turbofan aircraft engine developed for the Boeing 777”
http://fi-powerweb.com/Engine/Industrial/Trent-60-MT30.html
Another article a FT8 MOBILEPAC gas power station 30MW fits in an Antonov aircraft
One trailers contains the gas turbine, electric generator, exhaust collector, diffuser, and engine lube oil systems, and start package
Second trailer carries switchgear etc.
https://www.power-eng.com/gas/mobile-gas-turbines-quick-and-reliable-emergency-power-for-those-in-need/
Here’s an article about the now operational Keadby2
A rather large trailer takes the 840MW turbine 2 miles
https://www.sse.com/news-and-views/2020/05/world-leading-keadby-2-turbine-arrives-in-north-lincolnshire/
what do 10 turbines generate ? Anyone
8.5MW turbines are in use. so that’s 85MW
at a typical 40% capacity factor that’s 34MW average generation
Wind turbines the size of the Eiffel Tower would be 10MW+ each. So ten of them would be 100MW or more capacity, which is more than the SGT-A65 gas turbine.
This story really shows how important it is to get your facts straight. Tombs was no doubt using rhetoric to make a point. But what happens then is that every single word will be dissected. If they can find just one little fault it will be used to demolish your whole argument (in their eyes).
Normal people are used to making some exaggerations to make a general point. But these people are not normal. They do not seem to understand it at all.
kzbkzb A 10MW wind turbine doesn’t output 10MW it generally averages to 4MW at a capacity factor of 40%
So 10 output 40MW on average
so can be beaten by a truck based generator
BTW where have 10MW turbines actually already been installed in the UK ?
I doubt anyone will build turbines 330m tall – the base height of the Eiffel Tower, since expanded by the TV aerial. The largest so far is 260m (the Halide-X 14.5+MW) and that already incurs considerable construction problems and maybe stretches the limits of mechanical wear beyond what is economic.
As with so much to do with renewables, I think the idea about the Eiffel Tower comes from an exaggerated press release:
The world’s largest wind turbine will be available from 2021, standing close to the height of buildings like the Eiffel Tower and Chrysler building at 260m.
It’s at least 70 metres short.
Stewgreen: granted you also have to take into account the capacity factors. But I did say you have to be absolutely precise to avoid the kind of dissection that I was warning about.
The gas turbine is not capable of generating the same power as the wind turbines, when they are operating under optimum conditions. It could be argued that Tombs was saying the gas turbine would produce as much instantaneous power.
Yes I am being cheeky by saying the turbines will never produce 100MW
.. but basically they won’t do it consistently
Tombs apparently said “a gas – turbine generator small enough to go on the back of a lorry
will produce the same electricity, faster and more reliably,
than 10 off shore wind turbines the size of the Eiffel Tower”
there is a problem there cos you can’t compare unreliable workers with reliable workers
The unreliables do not produce the SAME energy as gas over time
He should have said that 10 wind turbines don’t beat a gas power station.
With unrelibles you always need backup om standby
The flawed electricity market is a factor in this scam.
https://www.thegwpf.org/publications/power-systems-expert-calls-for-a-new-electricity-market/
The government is also calling for a new electricity market. See REMA. It’s an excuse to find different ways to try to subsidise their favourite unicorns while taxing fossil fuels. Needless to say there are a lot of vested interests trying to argue for ways of doing it that feather bed their own positions, including National Grid, the renewables lobby, the battery lobby, green hydrogen etc.
Much of the argument is not being publicly debated, and the government quangos are totally out of their depth, save National Grid which is trying to fix it to maximise the importance of grid solutions which enhance its profits, to the detriment of consumers.
I read your paper. You make lots of good points. But I fear we need a modern Sir Walter Marshall to be the Grand Vizier and benevolent dictator of the system, and I doubt any such can be found today with the requisite political clout. The real problem of course is that the political mandate is Net Zero perverse, with Ed Miliband’s 2010 Energy Act placing green interests above consumer interests and the national interest, cemented by the provisions of the Climate Change Act. If we get to change the political mandate to supporting consumers (including industry) and national economic interest then there are probably several ways of proceeding that work. But the change in politics must come first.
I’d want to see some brainstorming and competing ideas, particularly looking at not getting too tied into one answer as technology and resource availability changes, and with a view to creating a long term system that can adapt and provide resiliency. Low long run cost has to factor in uncertainty including in geopolitics. For many years the French did well out of their big push to nuclear, but it has left them with a need to reinvest over a relatively short timeframe to deal with simultaneously aging plants. Now they are saddled with an unworkable EPR nuclear design and a lack of willingness to look for things that work.
Idau: Quite agree about the EPR but the French are nearly 10 years into a major programme (the “Grand Carenage”) of refurbishments and upgrades of the existing fleet. They are spending around €50bn – roughly €1bn per reactor – which will modernise the plants and extend their working lives by 10 – 20 years.
The market price is £89/MWh but shat would the price be without all the interference in the market, i.e. what is the base price CCGT requires to produce an acceptable return? I believe I’ve seen levelled costs of around £45/MWh? The interesting analysis would be to look at how cheap we could make our bills if we simply built the cheapest generation. I’m betting each household would have saved thousands of pounds over the last decade or so in total.
Phoenix , for over 10 years before 2021 the grid price was around £25 per MWh .And all of the generators managed with that .
But in 2021 there was a huge increase in carbon taxes under the ETS , which led to the base price for all fossil fuel generation going up by over double .
The cost of CCGT plant is below £1bn per GW. We can estimate a capital charge at about 6% of the capital cost p.a., or £60m/GW/annum against a 40 year life. That’s £13.70/MWh at a 50% capacity factor (demand runs at an average capacity factor of about 60% of peak demand, so 50% allows for some baseload or wind balancing). Add in other costs for workforce, maintenance, water, business rates etc. Then add double the cost of input gas in £/MWh. Then add green taxes.
Keadby 2 is a new 893MW power station now operating
It cost £350m to build
Building at an existing site certainly will save a bunch of costs in grid connections (both gas and electricity). Still, that’s impressively low, and more the sort of figure you might expect for OCGT which has much lower efficiency.
Just an add/on for the cost of CCGT .https://dailysceptic.org/2022/08/29/the-fantasy-world-of-renewable-energy/
Shows that before 2020 the cost of CCGT was below £25 per MWh.
You can’t compare apples to oranges
You can’t comoare proper Electricity sources
with ones like solar and wind which only de;iver when they feel like it
So you shouldn’t compare the fave value prices of the two different things
Sorry I’m losing track here. How many unworkable schemes has the government got on the go now ?
“Implausible Climate Goals For a Non-Existent Emissions Crisis, Steve Milloy”
I have updated the CFD element of my price charts: the April data only reflect the first few days, so are liable to change.
I think the government knows that AR5 will be a failure, so now they are looking at different backdoor ways to subsidise renewables.
https://www.current-news.co.uk/uk-government-considers-reforms-to-contracts-for-difference-scheme/
All in code for now, but the intention is clear.