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Money For Nothing

May 3, 2022

By Paul Homewood

 

From Net Zero Watch:

 

 

 

GB News are currently reporting that new capacity additions to the Contracts for Difference (CfD) subsidy scheme have dried up completely, as windfarms put back their CfD start dates, and sell into the open market instead.

One of the windfarms that has decided to shun its contract is Moray East, a windfarm that regular readers know has been a particular focus of mine, because its very low-priced CfD is far below its underlying costs, which are, in common with the rest of the offshore wind industry, extraordinarily expensive. A year ago, with market prices around the £50/MWh mark, it looked as though it was guaranteed to make losses. But now, market prices having soared to £200 or more, and with its CfD shelved for the time being, it will be making very healthy profits indeed.

There is another interesting angle to Moray East’s performance though. According to the data held by the Renewable Energy Foundation, between October last year and February this year, the windfarm received constraints payments – cash for switching off (or switching down) – equivalent to 414 GWh. Over the same period, it generated 1209 GWh. In other words, it is being constrained off as much as 25% of the time! The cost to you, the consumer, was around £25 million.

From one windfarm. In six months.

It is hard to be polite about such wastefulness.

18 Comments
  1. May 3, 2022 3:37 pm

    Germany has just voted to take renewables levies off domestic energy bills and pay the costs from its exchequer. Could that focus politicians’ minds on where the money is going, and how much?

  2. May 3, 2022 4:11 pm

    I do not think anything will focus our politicians’ minds on matters financial As far as they can see, the golden goose that is the taxpayer will always fund their most idiotic of ideas. It might squawk a little when squeezed but it will always cough up and if not then they’ll just go to their favourite money tree.

    • JBW permalink
      May 3, 2022 8:18 pm

      Bit like Labour Chancellor Denis Healey pledging to “squeeze the rich until the pips squeak”.

  3. GeoffB permalink
    May 3, 2022 4:30 pm

    So the CFD price can be ignored if it is a lot lower than the actual wholesale price, surely the government had it all signed up before the go ahead for the building of the wind farm was given. Another cock up from OFGEM or BEIS methinks. Boris thinks wind energy is cheaper than gas turbines, who is going to tell him?

    • It doesn't add up... permalink
      May 3, 2022 5:38 pm

      I don’t think it was a cock-up.. More a conspiracy.

  4. Ian PRSY permalink
    May 3, 2022 6:18 pm

    Still calls for a windfall tax, but only on oil and gas companies.

  5. robertliddell1 permalink
    May 3, 2022 7:30 pm

    Good case for a windfall tax on these bloodsuckers

  6. Devoncamel permalink
    May 3, 2022 7:51 pm

    I’ve written to my MP objecting to the prospect of more wind turbines in North Devon, where tourism is a vital part of the local economy. The reply is below;

    Selaine Saxby MP Member of Parliament for North Devon
    HOUSE OF COMMONS LONDON SWIA OAA

    22 April 2022

    Our Ref: SS23760

    Re: Wind Turbines

    Thank you for contacting me about onshore wind farms and your strong opinion against them. I would not support any further onshore wind in North Devon unless local constituents were fully behind it.

    Protecting the beauty and local amenity of our North Devon countryside is something I
    consider with the utmost importance. At the same time, I fully appreciate the need to boost our national capacity for renewable energy.

    That is why I welcome new plans to consult on developing local partnerships for a limited number of supportive communities who wish to host new onshore wind infrastructure. New projects which receive strong local backing will be accompanied by benefits, such as lower energy bills, which whilst I understand from your email you are not impressed with, will I am sure be of great benefit to other constituents. In addition, existing onshore wind infrastructure will be improved where updates and replacements are required. I look forward to further details on these announcements.

    Onshore wind is one of the most cost effective electricity generating technologies and already accounts for approximately a quarter of installed renewable capacity in the UK. I fully support these efforts to ensure that our planning system supports and enhances our national efforts to reduce carbon emissions, however please be assured I will keep in mind the opinions of constituents regarding the importance of our local countryside views.

    Thank you again for taking the time to contact me.
    Yours sincerely

    Selaine Saxby MP for North Devon

    • May 4, 2022 8:31 am

      Onshore wind is one of the most cost effective electricity generating technologies

      Yes, for the private company that owns it, not the public who uses it.

      Ask your MP why, if wind is so cost effective, it has to be paid to turn off, why it has priority of sales, why it is paid the same as all generators anyway for the electricity it does care to turn in, why so many wind farms are on the end of enormously long cables with all the ancillary costs that entails, how grid stability is to be achieved – are we going to have batteries and/or synchronous condensers as have been approved to be built in Scotland at great parasitic cost only necessary because of the invasion of intermittent generators, oh and in what form the necessary long-duration full power back up to wind generation is going to take for the inevitable extended lulls? And on the matter of constraint payments you could ask whether these are going to rise inexorably as the installed capacity of wind does? It would also be worth pointing out that by implication your MP supports the destruction of protected birds.

      And that’s before we get into who the beneficial owner of some of these wind farms actually is, i.e. to whom we are sending all this dosh.

  7. StephenP permalink
    May 3, 2022 8:16 pm

    According to Gridwatch the contribution of wind toward demand for electricity for the past 9 days has been about 3%.
    What income have the wind farms been getting during this period?

  8. Philip Mulholland permalink
    May 3, 2022 9:13 pm

    Dire Straits – Money For Nothing

    That ain’t workin’ that’s the way you do it.

    • May 4, 2022 8:32 am

      It’s easier to move colour TVs these days.

      • May 4, 2022 11:43 am

        🤣🤣

      • It doesn't add up... permalink
        May 4, 2022 4:17 pm

        Those 65″ models look a bit unwieldy to me…

  9. Mikehig permalink
    May 3, 2022 9:50 pm

    When that wind farm was constrained off, it would be interesting to know what price per MWh was used to calculate the compensation.
    Common sense says it should have been the CfD price but, as the contract had not been initialised, might the market price have been used?

    • It doesn't add up... permalink
      May 4, 2022 12:43 am

      Wind farms can bid to be constrained. The market clears at whatever becomes the marginal bid needed to achieve the desired amount of constraint. Any wind farm that can make money even at a lower bid has no incentive to bid significantly below the market clearing price. Consider the following wind farms, each of say a nominal 1GW capacity:

      Farm A has an ROC subsidy worth £50/MWh (onshore wind)
      Farm B has an ROC subsidy of £100/MWh (offshore wind)
      Farm C has a CFD priced at £150/MWh (offshore wind)
      Farm D has an ROC subsidy of £175/MWh (floating offshore wind)
      Farm E is on market prices, having not exercised its CFD.

      If the market price is £10/MWh, then A will be better constraining if it is paid anything over £60/MWh to do so, and E will be better off constraining at anything over £10/MWh in payment. However, E can safely bid £59/MWh to constrain, knowing it will win over A. If the total needed to be constrained is 2GW, then they both can benefit by charging £60/MWh. However, if high winds last all night, and keep prices below zero for six hours or more, then Farm C will be in the same position as Farm E: competing to be paid to constrain. But so long as the constraint is more than 2GW they can both bid at Farm A’s breakeven pricing: effectively they too get the ROC subsidy. If the necessary constraint volume is even higher then Farm B will come into the reckoning. Farm C only comes into account in prolongued periods of negative market prices, and otherwise gets its strike price if the market price is positive, or strike price less the negative price if prices are negative, and Farm D continues to get its ROC subsidy on the market price. The result is that the most costly wind farms stay producing.

      If the market price drops to say minus £60/MWh (we have seen prices like that), then Farm A no longer has an incentive to produce, and farm B would need to be paid just over £40/MWh to curtail. So that becomes the price the others can charge to curtail, even though production is not economic for them anyway.

      • Mikehig permalink
        May 4, 2022 10:34 pm

        Thanks Idau.
        I think I understand but don’t test me!

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