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Latest CfD Auction–Offshore Wind Only Double Market Price

September 11, 2017

By Paul Homewood

 

Harrabin still does not get it:

 

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Energy from offshore wind in the UK will be cheaper than electricity from new nuclear power for the first time.

The cost of subsidies for new offshore wind farms has halved since the last 2015 auction for clean energy projects

Two firms said they were willing to build offshore wind farms for a subsidy of £57.50 per megawatt hour for 2022-23.

This compares with the new Hinkley Point C nuclear plant securing subsidies of £92.50 per megawatt hour.

Nuclear firms said the UK still needed a mix of low-carbon energy, especially for when wind power was not available.

http://www.bbc.co.uk/news/business-41220948

 

Comparing intermittent wind power with a reliable, dispatchable source, such as nuclear, is meaningless, as we still need to pay for the latter to serve as back up capacity.

 

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https://www.gov.uk/government/publications/contracts-for-difference-cfd-second-allocation-round-results

 

The above Strike Prices are at 2012 prices, meaning that at current prices the Triton Knoll project will cost £81/MWh, nearly double the market price of £45/MWh

 

Assuming market prices remain the same, the three offshore wind projects alone will earn £269 million a year in subsidies, paid for by electricity bill payers (based on the developers’ seemingly optimistic output assumptions).

 

Harrabin has made much of the fact that offshore wind prices have come down so much in the last few years. This however raises the question of why the government was prepared to pay so much over the odds in the first place. For instance, the initial set of projects signed off by Ed Davey without an auction four years ago are costing up to £161/MWh.

It is claimed that costs have come down due to the learning curve, but even if true, why should the UK be the guinea pig?

In their rush to get renewable capacity built, the coalition government have wasted billions of pounds.

It is estimated that these new projects will supply just 2% of the UK’s total electricity.

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36 Comments
  1. Curious George permalink
    September 11, 2017 2:35 pm

    Is this the “wind and solar are free” Roger Harrabin?

  2. September 11, 2017 3:24 pm

    It was exactly the same when Ed (Mr Potato) Davey introduced the Feed-in Tariffs in 2010. He couldn’t wait until costs fell. The subsidised price for electricity from solarPV was as high as £486/MWh for wind it was as high as £411/MWh and for hydro it was as high as £241/MWh. Davey got knighted for his services to the troughers. The Queen should have used the sword more effectively.

  3. NeilC permalink
    September 11, 2017 3:42 pm

    Someone should ask Harribin if he want to use his mobile phone, laptop, television, kettle, cooker and another hundred item whenever he wants. Because if he does, and the wind ain’t blowing and the sun ain’t shining, he won’t be able to.

    Simple but thicko just doesn’t get it.

  4. Ben Vorlich permalink
    September 11, 2017 4:00 pm

    As there’s been no mention of gas in any of the BBC News broadcasts featuring Harrabin I assume that gas is still the least expensive way of generating electricity without any subsidy being involved.

    Is it just me or does anyone else think Harrabin looks a bit of a wide-boy since his make over?

    • September 11, 2017 10:41 pm

      Gas went up 43% in Electricity generation in the UK last year, whilst offshore wind fell 5.8%. Can’t find that reported by Harrabin….

  5. CheshireRed permalink
    September 11, 2017 4:14 pm

    In my mind the costs of ALL back-up should be included in the ‘renewables’ equation. Why shouldn’t it be when without back-up ‘renewables’ wouldn’t be remotely viable? That means wind + nuclear + gas + bio + STOR = the true cost of ‘renewable wind’. Meanwhile…
    Nuclear only = true cost of nuclear.
    Gas only = true cost of gas.
    Coal only = true cost of coal.
    None of the above need backing up from wind, solar, Bio or STOR. Amazing.

    • September 11, 2017 6:53 pm

      Nuclear doesn’t really work as back-up. Containers of fuel rods can’t be switched on and off every few hours – or at least it’s not recommended 😦

      • markl permalink
        September 11, 2017 8:29 pm

        It doesn’t need to be switched on/off. Excess steam can be wasted at minimal economic loss. (not quite that simple but close)

      • Joe Public permalink
        September 12, 2017 9:29 am

        “Can Nuclear Power Be Flexible?
        Laurent POURET + William J. NUTTALL
        Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK
        EPRG Draft Working Paper – prepublication text – please do not cite or circulate without the approval of the authors.” [Undated, but contains some 2015 data]

        This paper raises the issue of whether nuclear power can play a flexible role within an electricity system. It does not deal with the issue of whether nuclear power should play such a role, but it does examine why in most cases it does not. We introduce the basics of nuclear physics and reactor designs sufficient to cover the technical issues of relevance. We then identify the key technical issues that must be tackled in order to load-follow with nuclear power. We assess the flexibility and load-following ability of current and future promising reactors. We confirm that modern Generation III and III+ are technically capable of flexible operation. To explain why nuclear power is almost exclusively used as baseload generation, we look at power market economics. As a result, we conclude that despite some technical abilities, nuclear power plants are preferentially used for baseload generation for economic reasons and will continue to be used in this way for the foreseeable future.

        http://www.templar.co.uk/downloads/0203_Pouret_Nuttall.pdf

      • Paolo permalink
        September 12, 2017 1:59 pm

        Of course some nuclear designs can flex. Would you get on a submarine with no throttle ?

  6. September 11, 2017 4:33 pm

    I just managed to miss Cardinal Harrabin’s spin and lies on Radio4’s PM; the radio remains intact.

    • September 11, 2017 4:59 pm

      I switched it off when it stated that Harrabin had had “a moment”, apparently he is on cloud nine, this is a tipping-point, floating wind farms, electric cars, hurricanes will end, etc.

      The BBC has an environmental activist masquerading as a journalist, commenting on power generation, and sees nothing wrong with that. Sadly I can only stop paying the BBC once, so my tipping point is long gone.

      • Gerry, England permalink
        September 12, 2017 12:35 pm

        Sadly too many people still think the BBC has value to really hurt them by defunding their left wing lies.

  7. Richard111 permalink
    September 11, 2017 4:46 pm

    Seems like a British company is planning to manufacture molten salt nuclear reactors.

    http://moltexenergy.com

    Hope it works out as this is the future and is also an incredible export opportunity.

    • Gamecock permalink
      September 11, 2017 6:15 pm

      What is it you think molten salt is going to do that’s so wonderful?

    • September 11, 2017 10:43 pm

      It’s a good idea in principle but Moltex totally buy into climate alarmism about CO2 and even sell their product as designed to work with the unreliables.

      • September 12, 2017 2:59 pm

        Mark:

        Whatever one’s views the prospect of safe energy as cheap as coal is well worth support. I trust you have looked in some detail at the Moltecenergy site. Seems it is much more than a mere concept.

      • Gamecock permalink
        September 12, 2017 6:03 pm

        Til it’s running commercially, it IS a mere concept.

  8. paulmaunders permalink
    September 11, 2017 5:54 pm

    I think the assumption that nuclear will be needed in our future energy mix as a backup is now questionable. With the right policies, decentralised storage such as powerwall-style batteries, electric cars and even home appliances such as fridge, freezers could be used to balance the supply & demand in the grid. The wind blows fairly consistently throughout the year peaking each day along with our energy demand. Hinkley C requires 60% higher subsidy over a far longer contract period (£92.50/MWh for 35 years vs £57.50 for 15 years).

    • soas permalink
      September 12, 2017 12:38 pm

      “The wind blows fairly consistently throughout the year peaking each day along with our energy demand.” Completely false.. http://www.gridwatch.templar.co.uk/

    • Gerry, England permalink
      September 12, 2017 12:39 pm

      ‘fairly consistently’ doesn’t happen during still cold winter high pressure. Ask the Germans how they got on with their wind power last winter. Or check out the problems in Australia with their failing electricity supply. None of what you suggest are required since CO2 causes no problem so coal and gas are all we need.

  9. Gamecock permalink
    September 11, 2017 6:12 pm

    Government regulates the crap out of nuclear, driving the cost up 20X, then proclaims their favored source is cheaper.

  10. Mark Hodgson permalink
    September 11, 2017 6:23 pm

    Thank you Paul.

  11. It doesn't add up... permalink
    September 11, 2017 7:46 pm

    No Swansea Bay?

    • Gerry, England permalink
      September 12, 2017 12:37 pm

      That hare-brained scheme makes even Hinckley look cheap!

  12. BLACK PEARL permalink
    September 11, 2017 7:47 pm

    The whole media system is riddled like wood worm with brainwashed environmentalist types.
    Today Sky giving George Monbiot a free slot to promote his new book (Must have connections to ‘Top People’)
    Even the Pope today telling Climate Change Deniers will be judged by history.
    Its the 21st century …. we don’t need another Holy inquisition

    • daveR permalink
      September 11, 2017 9:32 pm

      BBC Radio Scotland’s news programmes were in full-flow mode this afternoon. First up was a recapitulation of Hawking’s ‘humans have three decades to colonise space otherwise we as a species will auto-exterminate’, followed by, ‘… so when will President Trump admit that climate change is making hurricanes much worse?’, and an interview with a ClientEarth spokesbody relating how they’d ‘uncovered’ that vehicular emissions adjacent schools was, in effect, ‘killing our children’.

      ‘ClientEarth’ is an interesting set up – ‘environmental lawyers’ (apparently, tho no successes to date…) – counting Coldplay as ‘patrons’ and Brian Eno as a ‘group trustee’. Surely Coxie-boy’s in there too?

      All this from a collective half hour’s listening. ‘Never mind the bandwidth – feel the propaganda… ‘.

  13. September 11, 2017 10:39 pm

    If the price of energy is coming down – for any technology, including wind – that’s great. Energy is the industry that powers every other industry so we want it as low as possible. But this is very misleading (as usual from the BBC), a few comments in addition to Paul’s ones (which are spot on):

    1. The guaranteed subsidy from the government to offshore wind providers has reduced ~50%, not the price to the end consumer. The minimum “floor” is lower – the actual price on bills could well be the same.

    2. As only new offshore wind projects get this lower subsidy, existing subsidies continue with most wind farms scheduled for 3 parliaments worth of lifetime – at least 15 years (so as Paul notes, £160MWh+)

    3. Every single offshore wind farm in the entire UK only generated 1,876 Megawatt (MW) of electricity in 2016, despite an installed offshore wind capacity of ~5,350 MW. So it is about 35% efficient. Nuclear is 90%, Gas around 60%-75%. This inefficiency is why just one large offshore wind farm needs 130,000+ acres of “the environment” (compared to 1,000 acres for Nuclear or Gas).

    4. UK electricity generation in 2016 was 38,740 MW – offshore wind was 4.8%. For comparison that is still half that of coal (9%), X4 less than Nuclear (21%), and X9 less than gas (42%).

    5. Ah, isn’t wind on a steep upward curve and the “future”? Not really: UK offshore wind generation fell by 5.8% in 2016 compared to 2015. This trend was also replicated in Germany and across Europe. It may well fall further with lower subsidies. Gas grew by 43%, so frack, baby, frack?

    6. All wind has to be backed up by hydrocarbons, hydro and Nuclear, as it is intermittent and non-dispatchable. As Paul has shown before, on many occasions supply via wind is <5% or basically zero while demand is the same. This is borne out all over the world – for the "future" see Germany, which has added massive amounts of wind but still needs 100% back-up, largely from other sources (less clean lignite coal and biomass mostly). And these UK subsidy prices don't count the cost to reduced efficiency on coal/gas/ for having to ramp down/up on-demand, or extra "capacity payments" to be on standby when the wind isn't blowing, or the cost of "smart" grid upgrades and additional interconnectors.

    7. No battery technology exists to store the energy from wind for any significant period of time to fix the "when the wind doesn't blow" problem. Claims are made about the future but those are speculative claims, not demonstrated.

    8. The government does not give any generation subsidies (in the properly defined terms) to the hydrocarbon industries (coal, oil, gas). Zero. Any subsidy is still higher than zero.

    9. Making & sustaining wind turbines, especially offshore is not automatically “clean” or “sustainable” – mining for the rare earths in China & the Congo produces about 1,000 tonnes of toxic sludge per MW. Making the concrete, cement, and carbon-fibre blades needs hydrocarbon fuels. Installing and maintaining them needs hydrocarbons for the ships and helicopters. They run out in 15 years or so.

    10. The UK Green Party has been making a big deal of this on Twitter, failing to mention they are in favour of nationalising all energy (2017 Manifesto, page 10), a fairly radical form of subsidy. They and many environmental activists are also in favour of higher energy prices to punish the emission of Carbon Dioxide, the key food source of all plant life (so, all life) on earth. So their trumpeting of lower subsidies is disingenuous.

  14. September 12, 2017 6:12 am

    ‘World’s biggest’ wind farm secures Yorkshire coast contract.” More BBC propaganda for wind power.

    http://www.bbc.co.uk/news/uk-england-41228969

    • September 12, 2017 7:15 am

      “The importance of offshore wind in the UK’s energy mix is now beyond doubt.”

      This will add about 480MW per year to the grid. So, about one large gas-fired power station. It would take offshore wind from 4.8% of UK Electricity mix to about 6%.

      “Long-term and highly-skilled jobs are being created across the North of England”

      About 300-400 jobs once construction is complete.

      • Gerry, England permalink
        September 12, 2017 12:42 pm

        No mention of how many real unsubsidized jobs the higher cost of electricity will destroy, of course.

      • Gamecock permalink
        September 13, 2017 11:30 pm

        Jobs are a cost, not a benefit.

  15. September 12, 2017 11:52 am

    Times headline ” Record-breaking wind farm will cut cost of green energy”

    Explanation
    Hornsea1 gets £140/MWh in FIT
    Hornsea2 piggy backs same infrastructure so able to bid £57.50 on its Contract For Difference

    • Gerry, England permalink
      September 12, 2017 12:43 pm

      With a compliant inept legacy media and a disinterested public they can get away with this.

  16. BLACK PEARL permalink
    September 12, 2017 8:23 pm

    Wonder what Crown Estates cut is of all the offshore wind-wheels ????

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