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The Story Behind The Loss Making “Subsidy Free” Solar Farm

December 1, 2020

By Paul Homewood

 

 As the Telegraph reported, Gridserve, who are launching the new EV forecourt, have recently acquired the UK’s first subsidy-free solar farm – the Clayhill Solar Farm in Bedfordshire – to guarantee that all of the energy used at the Braintree Electric Forecourt® comes from net zero-carbon solar power:

 image_thumb[1]

https://notalotofpeopleknowthat.wordpress.com/2020/12/01/britains-first-electric-forecourt-paid-for-by-taxpayers/ 

But there is a back story to Clayhill which needs to be told.

First we need to note that new solar installations have levelled off since subsidies were withdrawn in 2017. In the last two years, only 444MW has been added, just 3% of the total. Almost of this has been small scale stuff, below 50KW.

 image

https://www.gov.uk/government/statistics/solar-photovoltaics-deployment

 

Clearly solar farms are not viable without subsidy. Clayhill, which began operations in 2017, was of course billed as “subsidy free”. But their Annual Accounts reveal that they are actually losing half a million a year:

image

 https://find-and-update.company-information.service.gov.uk/company/08662024/filing-history

 

Annual output is around 7.1 GWh, equating to an average price of £112/MWh. (According to REF, loading is 8.2%). However, it appears that a large chunk of their income is derived from the energy storage side. My guess is that electricity sales generate less than half of the turnover:

image 

 

Clayhill’s holding company Anesco confirm that this storage revenue is largely thanks to continued growth of renewable energy.:

image

https://find-and-update.company-information.service.gov.uk/company/07443091/filing-history

 

And of course it is consumers who have to pay the bill for balancing at the end of the day.

Anesco themselves signed an agreement with EDF in March 2019, which helps to explain why Clayhill’s turnover doubled year-on-year:

image

https://anesco.co.uk/edf-energy/

 

Despite this boost from EDF, Anesco were still desperate to offload generating assets, and concentrate on operating and servicing the assets instead:

image

 

It appears likely that Gridserve picked up the Clayhill Solar Farm on the cheap. It also enables them to have the benefit of a fixed price for power going forward.

Naturally Clayhill cannot supply power directly to Braintree, so the power will be supplied to Gridserve via what is called a Sleeved Power Purchase Agreement (PPA). Urban Grid describe how this works:

 image

https://www.urbangridsolar.com/what-is-a-sleeved-ppa/

 

Crucially sleeving allows the user to still buy power when the solar farm is not available:

image 

 

Although the sleeving arrangement ensures the buyer pays the usual network charges, the utility company may offer cut price fees, as it is acting as a facilitator, merely taking power from Clayhill on a PPA and passing it on to Braintree. Effectively cutting out the middleman.

Such an arrangement makes sense for both parties.

In addition, Clayhill/Gridserve are able to sell the REGOs, the Renewable Energy Guarantees Origin. So-called green energy suppliers often don’t buy in renewable energy, but instead buy bits of paper (REGOs) from renewable generators.

The bottom line to all of this is that solar power may make sense such as this, where Gridserve both own the asset and “buy” its electricity, effectively cutting out the middle man, while at the same time still being able to source all the power it needs from the grid 24/7, whether the solar farm is generating or not.

But all the evidence suggests that the Clayhills of this world cannot make money when left to fend for themselves in the open market, without subsidies and guaranteed sales.

36 Comments
  1. MrGrimNasty permalink
    December 1, 2020 9:52 pm

    The ‘cost’ of the electric forecourt paid by taxpayers, does that include the cost of buying the solar farm? If it does!!!!!!!!!!

  2. December 1, 2020 9:56 pm

    As usual, everything to do with the viability of so-called green energy strains credulity to say the least.

  3. December 1, 2020 9:59 pm

    Stunning.
    There are people out there quite happy to fleece the public of their money.
    Bas****s

    • December 1, 2020 11:47 pm

      But that’s what governments & their crony’s do as a profession…yet we keep voting them into power….& then complain, DUH !

      • Adam Gallon permalink
        December 2, 2020 6:56 am

        We have no viable alternatives & the vast majority of the electorate believe the “Renewables are the cheapest source of power” cant.

  4. Ben Vorlich permalink
    December 1, 2020 10:16 pm

    Interesting item, slightly off topic but worth a read.

    Teachers risk delivering a ‘quasi-religious morality tale’ if they give lessons on climate change without a ‘grounding in science’ Ofsted chief Amanda Spielman warns

    Climate change should be taught with grounding in science, Ofsted chief said
    Amanda Spielman said it was important for students to make rational decisions
    Her comments came as she spoke at launch of Ofsted’s annual report today

    https://www.dailymail.co.uk/news/article-9006007/Teachers-risk-delivering-quasi-religious-morality-tale.html

    • Mack permalink
      December 1, 2020 10:51 pm

      That’s Amanda Spielman on the ‘naughty’ list then.

    • Nancy & John Hultquist permalink
      December 2, 2020 12:55 am

      quasi-religious

      I beg her pardon. Quasi-religious is similar to “a little bit pregnant.”

    • MrGrimNasty permalink
      December 2, 2020 10:10 am

      I already mentioned the Ofsted head story doing the rounds on the other thread, and noted that the BBC makes no mention of her ‘climate’ remarks in its coverage.

    • December 2, 2020 11:17 am

      I have a GCSE Biology revision text, Section 5 is “Humans and the Environment”, part 1: there are too many humans, part 2: the greenhouse effect, part 3: climate change, part 4: air pollution, part 5: sustainable development, part 6: conservation and recycling.

      Green Party manifesto yes, biology no.

      • It doesn't add up... permalink
        December 2, 2020 6:36 pm

        Once upon a time human biology taught the functions of the bodily organs and basic chemistry cycles for transport of oxygen, storage of energy, etc.

  5. Joe Public permalink
    December 1, 2020 11:43 pm

    Good detective work, Paul.

  6. December 2, 2020 2:04 am

    Oh, what a tangled web we weave, when first we practice to deceive!

    • December 2, 2020 2:20 am

      A long and sordid history of deception

      https://wp.me/pTN8Y-1Yn

      • Ariane permalink
        December 5, 2020 10:33 am

        Chaamjamal, as usual an excellent chronology. 1995 was the year Ben Santer of IPCC fame delivered his computer model of a human fingerprint causing global warming. (See Bernie Lewin’s Searching for the Catastrophe Signal.)

      • December 5, 2020 11:57 am

        Thank you Ariane for your kind comment and those little gems of history

  7. Gamecock permalink
    December 2, 2020 2:09 am

    ‘Clearly solar farms are not viable without subsidy.’

    They aren’t viable with subsidy. They produce power a few hours a day. People need electricity all hours of the day.

    • NeilC permalink
      December 2, 2020 3:58 am

      Precisely, UK average sunshine hours is 4.0 per day, what about the other 20 hours. I hope they build a Travel Lodge to stay in overnight!!

      • December 2, 2020 7:57 am

        and where will the power for that come from? Maybe all the guests can sit around freezing in candle light holding hands singing Kumbaya but no…those candles produce the satanic “poisonous” CO2….so as I was saying they can sit around in the dark…

      • Gerry, England permalink
        December 2, 2020 12:13 pm

        I am wondering if the City of London will only expect workers to be there where the sun shines on their Dorset farm. At all other times it will be work from home.

  8. December 2, 2020 6:34 am

    I’m confused by the mention of ‘energy storage’: “However, it appears that a large chunk of their income is derived from the energy storage side.”

    Does this mean they have massive batteries for when the Clayhill Solar Farm is not producing (like, 20 hours a day)?

    • Adam Gallon permalink
      December 2, 2020 6:59 am

      Yes, they do have massive batteries, without those, the economics would be even more dire.

      • December 2, 2020 7:58 am

        I wonder what happens when one of those things fails and catches fire……

      • December 2, 2020 12:09 pm

        pardonmeforbreathing says: “I wonder what happens when one of those things fails and catches fire……”

        No more solar farm?

  9. Chaswarnertoo permalink
    December 2, 2020 9:00 am

    Wait for the snow.

    • December 2, 2020 9:16 am

      That would be this Friday, 4th Dec. Sleet at least.

  10. Roger permalink
    December 2, 2020 9:09 am

    Surely if renewable energy is so wonderful there should be a direct connection from the solar farm to the re-charging station – so it is totally reliant on solar energy. If the sun doesn’t shine the EVs won’t be re-charged …………………. but are the owners brave enough to put their money where their mouths are ??

  11. jack broughton permalink
    December 2, 2020 9:32 am

    I’m no accountant, but how could a business with turn-over of £800 k expect to survive with admin costs of £667 k? I suppose that this is because they are a financial services company with few assets. A subsidised business with little financial awareness it seems.

  12. Lez permalink
    December 2, 2020 12:01 pm

    A bit off topic, but more rubbish from today’s DT.
    https://www.telegraph.co.uk/environment/2020/12/01/paris-climate-goals-within-reach-recent-net-zero-pledges-analysis/

  13. Gerry, England permalink
    December 2, 2020 12:27 pm

    The City believes it’s deal could be one other authorities could use bearing in mind the failure of those schemes such as Nottingham’s. The solar farm doesn’t exist but Voltalia will use the deal to get cash to build a 95000 panel farm with a CAPACITY of 49.9 MW which if it could ever provide it would only provide power for HALF of the buildings and yet save £3m in energy costs.

    In one of those interesting programmes on UKTV or Quest or Channel 5 (yes, you are correct – I can’t remember) it featured the power generation for the City and allowed the presenter to visit the location at Smithfield Market where the gas fired generating plant is located. He also followed the pipes in the market car park that provide the district heating for the Barbican and other City buildings. So if you shut down the plant you lose the heating as well. sounds like a good plan, but then they are only shooting for NET zero by 2040 as opposed to a real zero.

  14. CheshireRed permalink
    December 2, 2020 3:41 pm

    Hideously complex and expensive, designed to fleece the public (while pretending to do the exact opposite) and enriching a few elites.

    There’s absolutely nothing new here whatsoever.

  15. JimW permalink
    December 2, 2020 3:58 pm

    In reality Edf have bought an option for the trading portfolio and lumped Clayhill with the depreciating asset. EdF have a ‘virtual’ bit of green balancing kit. I presume they have screwed Clayhill or there was not much point in them doing it.
    I have to admit it was the sort of thing our team used to do all the time, only on a little bigger scale.

  16. JCalvertN(UK) permalink
    December 2, 2020 5:16 pm

    We live on an island at 55 degrees north. At best (midsummer) the sun comes in at 77 degrees – and even then only at midday. In winter it is practically dark the whole time.

    And then there is the weather. Great Britain has been notorious for its gloomy weather for over two millennia! Sunshine hours are 1,632.6 per year (out of a possible 4383 = 37%)

    How can any sane person think that solar power anywhere on GB is a good investment?

  17. It doesn't add up... permalink
    December 2, 2020 7:38 pm

    Interesting article on the physical Clayhill installation here:

    https://www.solarpowerportal.co.uk/blogs/inside_clay_hill_the_uks_first_subsidy_free_solar_farm

    So they have an almost free grid connection for their 10MW PV and 6MW of battery (MWh unspecified, but probably similar) – they will still have to pay use of network charges, but not for the capital investment for the grid connection. They mention the potential for income from providing frequency response (but they do not appear specifically in the new Dynamic Containment market tenders, which are paying £17/MW/hour), and the Capacity Mechanism – which is now no good for small batteries that offer insufficient duration, as they have been heavily derated and even excluded:

    https://www.energy-storage.news/news/uk-government-seeks-to-slam-shut-battery-storage-capacity-market-loophole

    This article also discusses some of the revenue stacking:

    https://www.current-news.co.uk/news/anescos-batteries-perform-for-the-first-time-in-the-balancing-mechanism-via-limejumps-virtual-power-plant

    The thing is that these ancillary revenues may be a feast while the grid is constrained with particular problems, but when the capacity for solving them catches up revenues collapse.

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