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Wind Power – A Few Facts

April 8, 2018

By Paul Homewood

 

 Offshore wind turbines dramatic red sunset

 

Bear with me, as this is a bit of a recap on wind power, to fulfil a couple of objectives.

I sometimes get asked how the subsidy scheme works for renewable energy.

Onshore

Most onshore wind generators (about 85% of capacity) operate under the Renewable Obligation system.

Renewable Obligation certificates (ROCs) are issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate.

The number of certificates per unit of electricity varies by technology, but onshore wind earns on average ROCs worth £47/MWh.

Energy suppliers have an obligation to source a certain proportion of their electricity from renewable sources each year, and therefore need to purchase these certificates to demonstrate that they have met their obligation.

On top of the income from ROCs, wind farms also receive the value of electricity sold, typically about £45/MWh.

 

Smaller generators are paid via the Feed in Tariff scheme (FIT). Rates vary according to the capacity of the unit, but the total subsidy budgeted this year for FITs is £1.5bn. Although this includes solar, anaerobic, CHP and certain hydro projects, a large chunk will go to wind farms.

 

The ROC scheme was ended for new applicants in 2015, although generators already covered will remain so for their lifetime. Several new projects since have successfully applied for subsidies under the Contracts for Difference (CfDs) system, which has replaced ROC.

These schemes will receive a guaranteed price, index linked for 15 years, currently ranging from £88.37/MWh to £91.94/MWh. Given the market price of £45/MWh, this is effectively a subsidy of between £43 and £47/MWh. In other words, a similar amount to the ROC subsidy.

Following the 2015 election, the government has withdrawn onshore wind from further CfD auctions, but there is pressure from the renewable lobby to reverse this decision.

Last year, onshore wind produced 28.7 TWh, at an estimated subsidy of £1.4bn.

 

Offshore

There is currently 7.0 GW of offshore wind capacity, of which 6.3 GW is covered by ROCs. On average, they receive 1.9 ROCs per MWh, worth £90/MWh.

Again this is on top of the market price of £45/MWh, so they receive total income of about £135/MWh.

There is also 0.7 GW of capacity covered by CfDs, which currently pay a guaranteed price of £166.59/MWh.

 

Last year offshore wind generated 20.9 TWh, at an estimated subsidy of £2.0bn.

 

By 2023, there will be  7.5 GW of offshore capacity under CfD contracts, at an average price of £117/MWh. This will cost electricity bill payers an extra £1.8bn in subsidies.

 

Intermittency

Despite these obscene subsidies, wind power is highly variable. Today, for instance, wind power has been virtually non existent, currently amounting to just 171 MW, less than 1% of capacity.

image

https://www.bmreports.com/bmrs/?q=eds/main

This means that standby capacity has to be kept in reserve. By 2020/21, this will be costing £1.3bn in capacity market payments.

 

In all, subsidies for wind power and standby will be costing the country more than £7bn a year, equivalent to about £270 per household.

25 Comments
  1. Joe Public permalink
    April 8, 2018 8:56 pm

    Who can forget your discovery of the Sheringham Shoal shenanigans …

    70% of revenue generated from ROCs; a mere 30% generated from electricity:

  2. Francisco permalink
    April 8, 2018 9:31 pm

    I think you might have missed one thing: Unless I am very mistaken, ‘renewables’ get paid for unit generated whether it is consumed or not.

  3. Bitter@twisted permalink
    April 8, 2018 10:13 pm

    Read and weep.
    Unless you are a subsidy farmer.

  4. April 8, 2018 10:34 pm

    Talking about subsidies ! What can beat the subsidy given to about 50% of Scotland’s pre 2000 construct hydro, some of it over 100 years old, eg. Kinlochleven.

    To date over £1.0 billion has been handed over to three private generating companies for the electricity produced by hydro stations built either pre-war, or pre-privatisation by the North of Scotland Hydro Board, a Statutory Company. Over the next 10 years another £1.0 billion will be handed over.
    Not a penny of this subsidy goes to the people who paid for most of this plant, the pre-privatisation electricity consumers in the Highlands. Who cares? No-one it seems.

    • Jack Broughton permalink
      April 9, 2018 10:12 am

      I wonder who owns these subsidy mines, better than Bitcoins!
      Madness with industrial disaster guaranteed: higher bills and less real jobs is the modern political reality. The service industry will disappear as fast as it grew when manufacture ceases.

    • daveR permalink
      April 9, 2018 1:01 pm

      Thanks Nick. I’ve just emailed local rep Keith Brown asking questions citing the Subsidies paper.

      It’d be great to know how HMP Glenochil’s huge solar array has performed. I suspect there’s been a rollout…

      • daveR permalink
        April 9, 2018 8:04 pm

        I’d hope for a reply. Here’s my message:

        Hi Keith,

        Why does Scottish hydro receive subsidy?

        There has been – and will continue under current legislation – about a £Billion of taxpayers subsidies awarded to companies simply for appearing ‘green’.

        I’m not sure you’re aware of this iniquity: broadly put, hydro companies have systematically reduced generating capability in order to best pick up subsidies. In effect, we allow legislated corporate shafting.

        I attach a doc illustrating the deliberate downrating of Scottish hydrog eneration capability. It doesn’t need expertise to rapidly realise there’s a significant problem here.

        What are we going to do about it?

        Thank you for consideration

        Dave Comrie (Alva).

      • April 9, 2018 9:00 pm

        Dave
        You will get a standard reply repeating the Justification that SSE itself gave to the Scottish Government in defence of its actions. See SSE’s press releases each time they refurbished a station.
        It will even point out that after the plants were refurbished that were producing more electricity. No admission that refurbishment of plant is the owner’s own responsibility, and certainly no admission that it was valuable hydro CAPACITY that was lost.

  5. April 8, 2018 11:15 pm

    Reblogged this on WeatherAction News and commented:
    Throughout the land we have nothing but subsidy farms, mostly lying idle pilfering from the public purse.

  6. markl permalink
    April 9, 2018 2:24 am

    “Most onshore wind generators (about 85% of capacity)” is this an accurate statement or am I misunderstanding it? No wind…. as in NO WIND …. farm operates at 85% of capacity for more than a minuscule period of its’ life.

    • April 9, 2018 5:28 am

      You are misunderstanding it. 85% of the total installed capacity is subsidised under the RO scheme and 15% of the total installed capacity is subsidised under the FiT scheme.

    • April 9, 2018 9:04 am

      I meant that “85% of wind capacity” is covered by ROCs, not that they run at “85% of capacity”

  7. April 9, 2018 5:02 am

    Paul,

    You have not covered constraint payments, are these not still in operation?

    Is another hidden cost that wind farms don’t contribute to the additional costs required to reinforce the transmission system?

    The other cost we may have to face (because governments have ruled out decommissioning bonds) is cleaning up at end of life.

  8. mothcatcher permalink
    April 9, 2018 5:34 am

    Paul – thanks for this accounting.

    Leaving out the additional costs of standby generation, seems you could sum it up by saying that power from onshore wind costs us 2 x that of conventional generation, and offshore costs us 3 x

    And nobody in high office even blinks.

  9. Nigel S permalink
    April 9, 2018 7:22 am

    A possible glimpse of sanity through the gloom is the local Greens opposing a proposed 900 acre solar farm. Their election agent was very pro at the initial consultation and described me as a lunatic for saying I would prefer nuclear (only a slight wind-up!).

    https://www.kentlive.news/news/kent-news/everything-know-plans-huge-solar-1423044

    (100,000 homes and ‘no new subsidies’ is the usual nonsense of course.)

    The best part is that he is a director of a solar farm at Iwade.

  10. April 9, 2018 8:03 am

    The New Zealand wind industry in cahoots with the govt relies on fraud to accomplish its goals.
    http://newzealandjusticeandpolitics.weebly.com/

  11. Harry Passfield permalink
    April 9, 2018 9:06 am

    Thanks for this post, Paul. Bookmarked for future reference.

  12. April 9, 2018 9:10 am

    Don’t forget folks, these billions we are all paying for are justified as we exalt ourselves as the virtuous UK , showing the world how to cut CO2 emissions. It only they’d listen!

  13. J Risner permalink
    April 9, 2018 7:11 pm

    All technologies take a while to get started, the great thing is that the price of renewable generation is plummeting and that’s only because of the subsidies and the investment.

    http://www.wired.co.uk/article/onshore-wind-solar-cheaper-energy

    You’ve also got to consider the un-counted costs of fossil power, serious health issues, climate change, rising sea levels… these things have real costs that we as taxpayers will be picking up…

    • April 9, 2018 8:30 pm

      In one simple word – RUBBISH

      But I’ll give you a chance to prove all of this. Just tell me why the UK climate is any worse than it was in the 19thC. Should be pretty easy eh?

  14. It doesn't add up... permalink
    April 9, 2018 10:00 pm

    You haven’t covered the extra grid costs for connecting up all the far flung wind farms: several billions on new transmission such as Beauly-Denny and the new subsea link into England from Scotland (and indeed to keep the lights on there on windless days with Longannet shut down), subsea links to the Dogger Bank etc.

    • April 10, 2018 3:23 pm

      Who is keeping your lights on when the wind does not blow and the sun does not shine. You seem to get an awful lot of electricity from France and the Netherlands, as well as from Scotland.

  15. April 15, 2018 9:18 pm

    Reblogged this on Climate Collections.

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