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“Clean Energy”–But At What Cost?

September 21, 2019

By Paul Homewood

 

 

The government and wind lobby (is there a difference?) has been getting excited about the results of the latest CfD auction:

 

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https://www.gov.uk/government/news/clean-energy-to-power-over-seven-million-homes-by-2025-at-record-low-prices

 

(Doesn’t it look dodgy when unrelated bidders come up with exactly the same price?)

As usual, things are not quite as simple as they are presented to us!

For a start, the prices are at 2012 levels, so you can add 13.3% to them, giving us a range of £44.92 and £47.15/MWh. This is only slightly lower than the wholesale price of around £50/MWh.

This all begs the question, of course, of why these offshore projects have not already been started with the intention of selling at market prices, rather than waiting for the CfD auction.

Given that the CfD prices are index linked, they could well be up to £55/MWh by the time the projects are commissioned.

Wholesale prices, of course, may have also risen by then, and this is where the the operators can play the market. If market prices are well above the CfD price by the time of start up, it would make good business sense, (and still be perfectly legal), to simply cancel the CfD contracts, and earn the higher market price on offer. There would be a small penalty to pay, but I suspect they would still be quids in.

On the other hand, the CfD contract offers a guaranteed, index linked price, which is itself very valuable.

Either way, they can keep their options open. By going in at an ultra low auction bid, these operators, who have clearly colluded, have managed to exclude other higher bids, and cornered the market for themselves.

Of course, what the proponents of wind power never mention is the cost of intermittency, as standby capacity has to be paid for.

It is well accepted amongst energy experts that you cannot directly compare costs of wind power with dispatchable sources, such as gas. The proper comparison is between the TOTAL COST of wind power, and the MARGINAL COST of gas power, etc.

The logic is that we still have to pay for the fixed and capital costs of gas generation anyway. Wind power only makes sense if its total cost is less than the marginal cost of gas generation, principally the gas itself.

To achieve that, wind power would probably have to come in below £30/MWh.

But what I really wanted to comment on is this report in the Telegraph from AEP:

 

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Wind has won the argument. The auction prices for offshore projects announced today have blown away the competition.

Four projects on the Dogger Bank – more than 60 miles out into the North Sea, and invisible even to the most outraged Nimby armed with a telescope – will have five gigawatts (GW) of capacity at a strike price ranging from £39.65 to £41.61 per megawatt/hour (MWh) from 2023 to 2024.

A further project off Scotland will come in at similar price levels.

https://www.telegraph.co.uk/business/2019/09/20/rejoice-britains-huge-gamble-offshore-wind-has-hit-jackpot/

 

Gamble? What he fails to mention is the enormous, obscene cost already paid or committed to, in order to get us to this stage. This cost, as we will see, is well over £100bn, and all for what? So that we can eventually have offshore wind coming in at the same price as conventional sources!

 

So let’s take a closer look at these costs.

1) Renewable Obligation Certificates (ROCs)

These were the original method of subsidising renewable energy

In the last financial year, they awarded subsidy payments of £3.3bn to wind power operators, on top of the value of electricity sold.

These payments will increase each year, broadly in line with inflation, and will continue for the life of each project.

Although the system has now been abandoned for new projects, at current rates the subsidy will cost bill payers something in the region of £82.5bn, at current prices and assuming a 25-year life, over the lifetime of the assets.

2) Contracts for Difference (CfDs)

Prior to this latest round, contracts awarded under CfD have totalled 7541 MW, at an average price of £119.40/MWh:

 

Price MW
Beatrice 158.73 664
Burbo 170.03 258
Dudgeon 170.03 402
EA 136.08 714
Hornsea 158.75 1200
Hornsea Project 65.09 1386
Moray 65.09 949
Neart 129.88 448
Triton 84.56 860
Walney 170.03 660
WEIGHTED AV 119.40 7541

https://www.lowcarboncontracts.uk/cfds

 

Given that the current market price is about £50/MWh, this represents a subsidy of £69.40/MWh, index linked for 15 years.

Assuming a capacity utilisation of 40%, producing 26.4 TWh a year, the annual subsidy equals £1.8bn, which is payable for 15 years.

3) Capacity Market

Because of the hopeless intermittency of wind power, the Grid has to pay for standby capacity. This year alone this will cost bill payers £1.0bn, and this is forecast by the OBR to rise to £1.2bn by 2023.

Given that all of the current coal capacity will have gone soon after, this figure will undoubtedly rise substantially in years to come, as spare capacity gets tighter:

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https://notalotofpeopleknowthat.wordpress.com/2018/11/01/cost-of-green-subsidies-rises-to-66bn-in-next-5-years/

 

4) Constraint Payments

Because of the innate unpredictability of wind power, there are times when there is too much generation on the system for the grid to absorb. At times like this, the Grid has to pay wind farms to switch off.

Last year this cost bill payers £124m.

However this is the thin end of the wedge. As wind power capacity grows, there will inevitable be many days in the year when there is far too much power available. Independent experts reckon that these constraint payments could soon rise to £1bn a year in the foreseeable future.

 

5) Total Costs

If we add all of this together over the lifetime of the wind power assets, the subsidies amount to:

a) ROCs – 25 years at £3.3bn

b) CfDs – 15 years at £1.8bn

c) Capacity market – £1.2bn a year

d) Constraint payments – £1.0bn a year

This comes to a total of £165 billion, over the 25-year lifetime of wind power assets, either already operational or under contract.

And this is not even counting other, uncosted items, such as investment in new transmission networks, balancing services and so on.

AEP likes to pretend that we would not have got these new low prices for offshore wind , without expending hundreds of billions. However this is Bull. Denmark and other countries have been trying to develop offshore wind for years. Instead of wasting billions doing it ourselves, we should have let them or the Chinese do it themselves, building up technology and economies of scale, and then taken advantage of the results ourselves.

If anybody had suggested ten years ago that we should spend £165 billion in order to develop a new energy source that still cost more than the existing one, they probably would have been regarded as barmy.

Unfortunately the barmy has become normal these days.

49 Comments
  1. It doesn't add up... permalink
    September 21, 2019 11:13 pm

    Constraint payments and heavy subsidies for exports are about to start rising rapidly as capacity increases. The reason is that there will be periods when wind production exceeds demand initially just overnight or at a weekend or holiday when demand is low, especially when you subtract off must run capacity such as nuclear and other capacity you need to ensure that grid stability isn’t lost. As the installed capacity increases, marginal capacity will be effectively increasingly curtailed, unless a (likely highly subsidised) export market can be found for it. From the consumer point of view, that’s the same difference, or worse if export prices are negative (as already happens in Germany at times). Calculations I’ve done show that by the time you have 50GW of wind capacity installed, marginal curtailment would be running at around 50%, doubling the effective cost of power supplied.

    • Mike Parr permalink
      September 24, 2019 8:52 am

      Why not just convert the constrained elec into hydrogen – way to go if you want to de-carb the residential sector.

  2. HotScot permalink
    September 22, 2019 12:04 am

    And we sceptics are accused of burdening our grandchildren with debt?

    This is just unreal!

  3. September 22, 2019 12:20 am

    But the Earth needs more carbon (dioxide) in the atmosphere. When will the dim politicians ever figure out something so simple ?

  4. Gamecock permalink
    September 22, 2019 12:37 am

    Jobs are a COST – NOT A BENEFIT!!!

    • Sheri permalink
      September 22, 2019 1:27 am

      Great point. But politicians are never going to understand that and most workers frankly do not care.

  5. September 22, 2019 1:54 am

    Who will pay for disposal of the wind turbines after their useful lifetime and how much will that increase the cost figures?

    • Sheri permalink
      September 22, 2019 2:49 am

      Our landfill is getting $695,000 for cutting up and burying the blades. Another landfill in Sioux Falls stopped taking the blades, so I have no idea what it will cost in the future. These are almost as popular as radioactive waste.

      I doubt it figures into the cost.

  6. Lena Main permalink
    September 22, 2019 3:26 am

    How this scam got started :
    – Between the mid to late 70s and the mid to late 90s there was a short term spike in global temperatures. During this same period CO2 emissions were also increasing rapidly.
    – Some Scientists speculated that the two (CO2 emissions and global temperature) could be related. Assuming that the two phenomena formed a causal relationship some scientists created mathematical models showing that the global temperatures would continue to escalate as the World’s CO2 emissions accelerated. They named this the “Hockey Stick Graph”. Smart Scientists knew that you never extrapolate short term trends over long periods. They knew that the the proposed models were bogus.
    – Some leftist activists (Al Gore, UN, the media, Hollywood,…) recognized an opportunity. They would come up with the “solution” to “Global Warming”. Tax the engine of the economy. Energy. Then let leftist Politicians and Bureaucrats determine where the money would be spent. Much of it goes to their cronies, “redistribution” to poorer Countries and other leftist agenda items that have nothing to do with “Climate Change”.
    – The leftists decided to scare people into submitting to their agenda. They predicted things like the melting of the Arctic ice sheet, the melting of all of the Greenland glaciers, extinction for Polar Bears, 20′ rise in sea levels with the inundation of coastal areas like Florida and New York City. The North American continent was supposed to become a desert and tropical storms were supposed to get more frequent.
    – During the next 20+ years (1999 to 2019), the actual temperatures did not match the predicted temperatures. Their models were flawed. The temperatures were moderating. None of the doom and gloom predicted happened.
    – Too many people were far too invested in “Global Warming” to let it go just because the “science” was flawed. They became desperate. Instead of admitting that they were wrong, they doubled down with more scare tactics.
    – They started to manipulate the data to fit the flawed models and refused to share their raw data. Probably because the raw data would prove their subterfuge.
    – They started to use disinformation like “97% of all Scientists agree”, “It is settled Science”, “Deniers are dumb people who don’t understand Science”.
    – They used their Alinsky tactics of demonizing anyone who disagreed with them. If Scientists wanted to keep their jobs, they had to keep their mouths shut.
    – They used little children to do their bidding by scaring them with the “world is ending” histrionics.

    The leftists have one last chance to pull this off to grab power over the Western economies before the truth is made obvious. They are running a massive propaganda campaign right now to get what they want.

    • Ariane permalink
      September 22, 2019 9:55 am

      Lena, just about it in a nut shell. However, the extreme Right also had and continues to have a strong influence. Extreme Right: who want to reduce populations, destroy industry and prosperity (except for their own), make everyone vegetarian, do their bidding …Bit like Hitler. The Left have been the deluded, brainwashed infantiles.

  7. Graeme No.3 permalink
    September 22, 2019 4:50 am

    The lowest cost corresponds to $A73 per MWh, which is very close to the cost of electricity out of the 2 (government owned) black coal-fired generators in Queensland.
    Curiously they have been accused of price gouging, which they have been doing although they have had hundreds of millions of State government debt dumped onto them to be repaid while maintaining dividends to the State government. Since the cost of electricity has shot up in Australia thanks to the introduction of “cheap” renewables, the temptation to rip off other States was too much for the debt ridden (Labor) State government.
    Meanwhile Tasmania has had another failure of the Basslink interconnector, and is unable to get “cheap renewables” from Victoria, so the cost of their electricity has plummeted by over 40% to around $A40 or £22 a MWh. When repaired two potential wind farms want another interconnector along with that (at government expence) so they can send electricity (unwanted in Tasmania) to Victoria, thus leading to another brown coal station shutting down and more frequent blackouts. There is some public resistance.

  8. September 22, 2019 5:24 am

    Ofgem and the rest make it quite difficult to discover the scale of the subsidies and I had missed the fact that the RO scheme applies to existing wind generators both on and offshore.

    Similarly, coal-fired technology is still the cheapest even allowing for the punitive carbon tax imposed by the EU. Few would know to ask what happens after Brexit –

    https://www.forbes.com/sites/davekeating/2019/09/09/uk-to-impose-carbon-tax-after-no-deal-brexit/#5347f3ab3ab5

    There is something afoot in the US regarding ‘Coal FIRST’ and if the researchers come up with a carbon zero solution it would really put the cat among the pigeons. Also, the concept of small modular highly efficient coal generators makes a lot of sense for struggling third world countries.

    • September 22, 2019 9:43 am

      I get all of the numbers here for RO:

      https://www.gov.uk/government/statistics/energy-trends-section-6-renewables

      • It doesn't add up... permalink
        September 22, 2019 10:22 am

        The current price for an RO is over £50/MWh by the time you add in the ROs not purchased by failing retailers. Offshore projects entitled to them get 1.9 or 2 ROs per MWh.

        I noted that the government chose to report the production of these projects in”homes” without stating their current assumption for what a “home” is. It is of course a downward ratcheting figure so that if actual production falls short of forecast this will be masked. I tried to complain with a request for data in GWh per year.

      • A C Osborn permalink
        September 22, 2019 10:39 am

        Paul, do not forget that the price for Gas & Coal both include the £18+/Mwh of CARBON TAX.
        It is an unfair playing field all around, especially when you include no backup costs for wind & solar, no grid extension costs and on top of that they get gauranteed “first take” from the Grid.

        A classic example of how to destroy a pefectly good working system.

      • September 22, 2019 2:29 pm

        Thanks paul, Whether it’s the complexity of the payments, lack of transparency or both, it leaves the MSM free to hoodwink the public eg

        https://www.theguardian.com/environment/2019/jan/23/uk-has-biggest-fossil-fuel-subsidies-in-the-eu-finds-commission

  9. September 22, 2019 5:42 am

    I believe that there is a good argument to leave fossil fuels in the ground because they are our most important resource. However, it’s crazy to invest so much into renewable technologies that are not yet fully matured. The league table below is quite revealing with regard to those countries that have been early adopters of large scale renewables.

    https://www.globalpetrolprices.com/electricity_prices/

    • Steve permalink
      September 22, 2019 7:01 am

      I don’t believe that real prices suddenly reduced by two thirds. The Dutch were the first to put offshore out to genuine competitive tender and got much lower prices. Decc had adopted a negotiated price with the companies able to pull the wool over ignorant green unqualified civil servants and politicians. The costs that they have lumbered customers with for 20 years are a scandal. The omission of the carbon tax in the comparison is also a con. The government could use the missing money to subsidse other generation or insulation. It’s false accounting.

    • Phoenix44 permalink
      September 22, 2019 10:14 am

      So we don’t use our most important resource? That’s like leaving out your best player in a Workd Cip semi-final so hes not tired for the final and then getting beaten.

    • dave permalink
      September 22, 2019 10:19 am

      “…fossil fuels … most important resource…”

      After air, water, sunshine,…

      To an economist, human ingenuity is the most important resource But only if applied in the right direction.

  10. Iain Reid permalink
    September 22, 2019 8:32 am

    Paul,

    did you notice the statement in that Telgraph article where Mr Evans Prichard quotes an availability figure of sixty per cent of capacity!

    I sent a letter to the Telegraph highlighting some of the rather glossed over negatives to the story such as the nonsense of storage and the other matter of the technical problems of large wind input to the grid such as reduced system inertia and short circuit capacity.

  11. richardw permalink
    September 22, 2019 8:40 am

    I remember reading a piece a while ago about an offshore wind farm deal being struck at a similarly low CfD. At that time the speculation was that it was a ‘landgrab;’ and would never happen at that price as the operator would (deliberately?) go bust and force the govt to agree a higher strike price. Whether or not this is true, it does appear that wind is now significantly cheaper than it was which doesn’t correlate to any technical advances that I’m aware of. I’m now confused.

    • Phoenix44 permalink
      September 22, 2019 10:19 am

      I don’t really see that. If you go bust, someone can buy the assets at the price that makes them a return based on their revenue, same as with any other business. Provided the operating costs are covered by that revenue, it stays in operation and the investors lose their investment. I can’t believe the agreed prices don’t cover operating costs.

  12. Oliver King permalink
    September 22, 2019 8:46 am

    Paul, if you believe there’s price collusion going on then shouldn’t they be reported to the Competition Comission?

    • It doesn't add up... permalink
      September 22, 2019 10:34 am

      Another possibility is that tender prices were revealed to some participants by someone in BEIS. It is surely no coincidence that these figures agree to the third decimal place even across different technologies.

      • Alex permalink
        September 26, 2019 10:01 am

        You have misunderstood how the scheme works. All the bidders get the same clearing price, similar to the capacity market mechanism. So the bids themselves will have been different, most under the 39/41 prices, but they all get the ‘last cleared’ project bid price – which is the 39 and 41 for the different delivery years.

  13. Athelstan. permalink
    September 22, 2019 8:53 am

    AEP pleading for boondoggles and making his usual extraordinary assumptions printed in Saturday’s DT’s Business pages entitled

    “Offshore wind power blows away rivals”

    No link – paywalled but I thought you might like a look Paul.

    • September 22, 2019 8:34 pm

      CPI 2012-2019 is 17% and 21% on RPI.

  14. September 22, 2019 9:27 am

    Reblogged this on Climate- Science.press.

  15. September 22, 2019 9:40 am

    Reblogged this on Wolsten.

  16. GeoffB permalink
    September 22, 2019 10:02 am

    Here is my Telegraph comment on the AEP article….I would also add…..

    If you say that something seems too good to be true, you are suspicious of it because it seems better than you had expected, and you think there may something wrong with it that you have not noticed

    TELEGRAPH COMMENT
    Still intermittent….The strike price is unbelievably low, analysis indicates that it will not be possible to get a decent return return on capital.

    The secret is constraints payments when the operator gets paid compensation if the grid cannot take the power, this is more than double the strike price. These latest wind farms are off Scotland and the grid connection is not capable of transferring all the power to England. The installed capacity of wind will exceed the night time grid load. So the constraints payments are going to make the money for the operators. PAID NOT TO PRODUCE.

    There is another problem of grid stability, which is going to come out when ofgem publish the report on the recent power cuts. In fact the ex chairman of National Grid has stated no more wind farms should be built.

    Incidentally they were supposed to be made in Scotland but the project was sold by Sturgeon to EOn, who are making all the infrastructure in Indonesia. It is just going to be a temporary assembly operation.

    • Alex permalink
      September 26, 2019 10:02 am

      What analysis suggests it is not possible to get a decent return on capital?

  17. Phoenix44 permalink
    September 22, 2019 10:11 am

    And once again we have the stupid. 8,000 jobs created costs me more. I have to pay for those 8,000 people whereas before I didn’t have to pay for them. And I now doubt get those 8,000 people maki g stuff I don’t already have, so I lose out there too.

    The jobs make me poorer. Utterly stupid stupidity on stupid steroids.

  18. Emma Richey permalink
    September 22, 2019 4:54 pm

    I wondered why we were being bombarded with so much misinformation about renewables and thanks to this site I now know why. So pleased to have found it! It is terrifying how Ambrose Evans-Pritchard is allowed to label anyone who really cares about the environment as nimbys. I expect he lives in London, far away from the reality of living near wind turbines. LFN and infrasound from large onshore turbines is perceptible 50 miles from source. The ones being installed offshore are even larger, there are more of them and sound travels over water at greater distances, so those living along shores which face wind turbines will be affected. 60 miles is not enough. Governments know this, but as we all know, it is not about people or even the environment it is all about money. Subsidies will still be paid by the consumer for 25 years or more. Why on earth is a Daily Telegraph journalist allowed to print such piffle.

  19. swan101 permalink
    September 22, 2019 5:28 pm

    Reblogged this on ECO-ENERGY DATABASE.

  20. September 22, 2019 10:01 pm

    The Telegraph prints different points of view (unlike BBC) and a recent article discussed the prices from AR2 (before the latest AR3 figures)

    “Electricity bills could double to bail out new wind farms”, report claims

    https://www.telegraph.co.uk/news/2019/07/27/electricity-bills-could-double-bail-new-wind-farms-report-claims/

    https://www.thegwpf.org/british-public-faces-huge-electricity-price-rises-to-bail-out-wind-farms/

  21. richardw permalink
    September 22, 2019 10:50 pm

    Are the constraint payments published anywhere so a full view of the subsidies attracted by wind farms could be formed? Also, do the constraint payments for the low strike price farms match those for farms with higher strike prices? Having only half the story makes it difficult to communicate the reality to those who may wish to believe the government PR.

    Still confused!

  22. September 23, 2019 12:29 am

    Paul, You may wish to move this to comments for the original post..

    Comments to the original post ‘ Michael Mann Refuses to Produce Data, Loses Case
    AUGUST 26, 2019″, are closed but I stumbled across this –

    Desmog is touting it as a win which it isn’t because they neglect to report on Mann’s inability (delays) to produce evidence and that Mann has to pay all the costs.

    From Desmog – 21/09/19

    “In 2011, Mann filed a defamation claim in a British Columbia court against the Frontier Center for Public Policy (FCPP), a Canadian think-tank, and Tim Ball, a former geography professor, after Ball suggested in an interview that Mann should be imprisoned. In June, the FCPP settled with Mann and apologized for its characterization of his work. Last month, after Ball’s lawyers cited their client’s poor health and lack of standing, the court dismissed the case, after which Mann took to Twitter to counter climate-denial sites that spun the dismissal”

    I checked on Wikipedia and found –

    “The lawsuit against Tim Ball was dismissed on Aug 22, 2019 and court costs were awarded to Ball. The actual defamation claims were not judged, but instead the case was dismissed due to inexcusable delay by Mann’s legal team.[62]”

    The transcript of the case brought by Mann against Tim Ball is here –

    https://www.bccourts.ca/jdb-txt/sc/19/15/2019BCSC1580.htm

    The claim, “In June, the FCPP settled with Mann and apologized for its characterization of his work.” is about a separate case brought by Mann against FCPP and there may be court documents?

    There is (even) a third and fourth ongoing case brought by Mann against ‘CEI and ‘National Review’ that Mann is likely to lose because amazingly 24 of the MSM have sided against him

    https://www.theepochtimes.com/24-media-organizations-oppose-defamation-suit-waged-by-climate-scientist_2810374.html

    https://cei.org/sites/default/files/Reporters%20Committee%20et%20al.%20letter%20on%20rehearing%20en%20banc.pdf

    See also –

    https://www.motherjones.com/environment/2019/06/a-scientist-took-climate-change-deniers-to-court-and-wrested-an-apology-from-them/

    Mann may come to further regret resorting to the courts to defend his ‘hockey stick’

  23. jack broughton permalink
    September 23, 2019 7:20 pm

    I note that DRAX are planning to build an open cycle gas turbine near Swansea. The project is to generate 299 MWe for about 1500 hours / year (as no-doubt uncharged support to the unreliables). The cited cost is £ 90 m, but they have decided on a single heavy-duty engine rather than aero-derivatives, which means that there will be little UK content apart form the local building works, as the UK no longer makes this type of gas turbine. This scheme ought to have been based on higher-efficiency Trent engines which start faster and are more easily maintained, apart form giving work to a UK company.

    Clean energy is a pseudonym for de-industrialising the UK.

    • It doesn't add up... permalink
      September 25, 2019 3:45 pm

      They’re building another one in Bedfordshire. It seems that they and others are concluding that these are the sorts of stations that make sense as renewables penetration increases.low average utilisation, but good margins when the wind doesn’t blow. I’m not sure that politicians have really understood yet that it would be next to impossible to eliminate gas from the generation portfolio.

  24. Ivan permalink
    September 24, 2019 11:01 am

    The reason that various wind schemes have exactly the same CfD price has nothing to do with collusion, it is simply the way that the auction works. It is like IPOs of shares, where a strike price is established and everyone pays, or earns, the same strike price. Another common terminology to describe this is that it is a pay-as-cleared auction rather than a pay-as-bid auction.

    The reason that there is more than one strike price is that there are separate categories in the auction resulting in more than one strike price.

    Pay-as-cleared is a common and good way of organising an auction of this kind – I refer you to any modern text book on auctions if you are interested. Auction theory, like statistics, is a rather counter-intuitive discipline, and I’m not going to be able to give you a layman’s explanation of why this is good in a paragraph or two. But it is a theory that demonstrably works.

    You can read the details of the CfD auction strike price determination methodology here.
    https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/765690/Admin_Strike_Prices_Methodology_AR3.pdf

    • September 24, 2019 11:51 am

      These are the “Administrative Strike Prices”, which set the maximum price allowed. They have nothing to do with the actual bids

      • Ivan permalink
        September 25, 2019 12:05 pm

        Sorry, wrong document. I was misled because the first paragraph of the document says “The auction is held on a pay-as-clear basis…”, but it then explains only the maximum price mechanism, as you correctly say.

        This is the official document setting out the auction process, but is close to impossible to understand. This is what I was trying to avoid referring.
        https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/799074/Allocation_Round_3_Allocation_Framework__2019.pdf

        This one gives an overview, but only gives slightly more detail than “it is a pay-as-clear mechanism”. See para 2.10.
        https://www.lowcarboncontracts.uk/sites/default/files/publications/Contracts%20for%20Difference%20-%20Generator%20Guide%20Feb%202019.pdf

      • September 25, 2019 1:46 pm

        In simple terms, it works on the basis of a pot of money to be allocated. Lowest bids obviously take out the first of the money in the pot, calculated on capacity.

        The next highest take out the next tranche, and so on until the pot is exhausted.

      • It doesn't add up... permalink
        September 25, 2019 3:54 pm

        The pot depletion is deemed to be zero because they are assuming that market reference prices will be higher. I’ve put in a query to BEIS as to how they calculated the market reference prices.

        If the awarded price reflects the marginal winning bid in each segment, it implies that the other successful bids were lower still. How much lower is an interesting question. I’ve not yet ploughed through the 600+ pages of the latest CFD terms to spot what tricks and outs there may be.

  25. September 24, 2019 1:02 pm

    Reblogged this on ajmarciniak.

  26. September 24, 2019 3:41 pm

    And when you want to discuss those numbers with renewable advocates they will be in your face that wind and solar are cheapest now and that everything else is doomed. I always take the obvious stab namely congratulating them for their great developments and tat all those subsidies sure can be taken away now as they are cheapest anyhow and don’t need it anymore. This usually earns me some name-calling and wild-eyed comments. When my smaller son was 1 and I took his favorite toy away, he reacted in a similar manner. Only, he did not wreck peoples lives with his fits and tantrums.

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