Skip to content

The great renewables ripoff

May 27, 2022

By Paul Homewood


From Net Zero Watch:



Back in March, the Energy and Climate Information Unit, a think tank funded by green billionaires, made a great deal of noise about so-called “negative subsidies” paid out under the Contracts for Difference Scheme. With market prices for electricity having soared, generators in the scheme found that they were having to pay back large sums of money into the scheme, rather than taking money from it as they normally do.

The sums involved are not insignificant. The net repayment into the scheme was £133 million in the final quarter of 2021, and the ECIU declared, somewhat breathlessly, that consumers have benefited to the tune of £660million by April 2023.

One small (well, rather large actually) problem with this claim was that the beneficiaries of these repayments were actually the electricity suppliers. That’s because the CfD scheme only dictates that the money gets that far: there is no mechanism in the legislation to return it to consumers. Essentially the scheme relies on market forces to bring prices down, but with the electricity supply market in dire financial straits, that isn’t going to happen any time soon. So consumers end up being ripped off.

But that’s not the only problem. At the start of April, the annual uplift to CfD prices kicked in, and a princely 7% or so was handed out across the board. The price increase has two components. The first is an indexation adjustment, which is another ripoff of consumers because only a very small percentage of a windfarm’s costs are subject to inflation. The second is an adjustment for increased grid charges. Since the increase is mostly down to the ever-expanding presence of windfarms on the grid, this is essentially a transfer of costs from guilty to the innocent. Another rip-off in other words.

The CfD strike price uplift was enough to wipe out negative subsidies for a few weeks. After that, there was a sudden collapse in gas prices, and therefore electricity market prices. While one might have hoped that this would filter through to consumers, this is certainly not the case in the CfD scheme, where the low prices meant that consumers were back to handing money over to windfarms. Old-fashioned subsidies have been running at £1-6 million per day to windfarms for a few weeks now. So yes, consumers are being ripped off again.

The ECIU’s £660 million figure, earned between October 2021 and April 2023 means an average daily rate of (minus) £1.1 million. The expectation would therefore have been that by now we should be at around £70 million of repayments. Instead of that, we are at £10 million, and in a few days time the cumulative position could be back to zero.

It’s ripoff after ripoff after ripoff.

  1. Harry Passfield permalink
    May 27, 2022 5:31 pm

    I wonder which MP will have the guts – let alone the IQ – to raise this as a question in the House.
    The subsidiary to that is if Sharma has tge IQ to answer it.

    • May 27, 2022 7:16 pm

      Q1. not a single one of them; on either count
      Q2. see answer to Q1.

    • bobn permalink
      May 27, 2022 7:57 pm

      Steve Baker might – he reads ‘Net zero watch’. John Redwood is the other hope. However none of the green morons they’ll be speaking to will comprehend.
      I think those are the only 2 MPs I could bring myself to vote for. The rest are zombies.

      • Harry Passfield permalink
        May 27, 2022 8:03 pm

        Perhaps an honourable mention for Stringer?

  2. May 27, 2022 5:33 pm

    You Gov Poll

    Live results so far…👇

    Helping those struggling with bills
    Reaching the net zero by 2050 target
    Both equally
    Not sure
    These results are live, unweighted and not representative of the population.

  3. jimlemaistre permalink
    May 27, 2022 5:46 pm

    The whole ‘Net Zero’ global program is a scam, an environmentalist fraud. Nothing more than trading 4 quarters for a dollar and leaving a commission on the table for traders. The following paper spells out in great detail how badly we have been fooled . . .

    Madness at every turn . . .

  4. Athelstan. permalink
    May 27, 2022 6:04 pm

    From milipeed to huhne and potato-ed and his green investor chums, the government and the subsidy thieves with FoE and bryony were able to write their own terms and cheques, cushty said del boy and the lads and the dollars keep rolling in. Never mind says Mr. Boris Johnson, the green agenda will make bills cheaper but then again, Johnson was too deranged so that he had to be disinvited to the mad hatters tea party.

    • Harry Passfield permalink
      May 27, 2022 7:02 pm

      10/10 for first sentence, Athelstan (Davy is someone who needs a bright light shone on him: IMHO he’s very dirty), but reserved judgement on second because, BJ, being a populist (hence Brexit – thank God), may just realise that NetZero is a vote loser. And on that we need to persuade him.

  5. MrGrimNasty permalink
    May 27, 2022 6:39 pm

    “It’s ripoff after ripoff after ripoff.”
    Sounds like an advert for full body waxing.
    Painful for the customer either way.

  6. It doesn't add up... permalink
    May 27, 2022 9:02 pm

    The devil is in the detail. Although CFD generators are supposed to pay or receive payments promptly after the numbers are calculated following reconciled meter readings (which still can be further adjusted later), the monies initially only flow between them and the Low Carbon Contracts Company. The LCCC is funded to be able to make payments to generators via two separate mechanisms. One is the Interim Levy Rate, which is set at a figure per MWh, and charged to suppliers daily, which can never be set below zero by law. It has been at zero since last summer, essentially anticipating payment from generators. The other is the Total Reserve Amount (TRA), and upfront buffer payment from suppliers, which is set quarterly, taking account of market volatility, forward prices and forecast CFD generation and strike prices. This fluctuates according to the parameters which go into its assessment, but it is conservative. There can be an interim adjustment to the TRA if market circumstances suggest that payouts to generators might be substantially higher or lower than originally forecast: again the TRA can never fall below zero, leaving potential credit risk if generators fail to make their payments that is not adequately covered by the collateral terms in CFD contracts.

    There is then a quarterly reconciliation which looks at the net change in the TRA from the previous quarter, the payments (if any) made via the Interim Levy Rate and the payments due to or from generators over the quarter, with the balance paid in arrears as a reconciliation amount (which might be in either direction).

    Thus in Q4 last year there was a net repayment to LCCC by generators of £133.1m, but because the market was very volatile, the formula for the TRA increased the reserve from £209m to £303.4m, resulting in £94.4m being retained by the LCCC and a payment of just £39.3m to suppliers made in mid January. For Q1 this year the LCCC describe the sums like this:

    When moving into Q2 2022, however, the movement in TRA was the other way, with the amount originally set for the period being £233.3m, a difference of £70.1m in suppliers’ favour, and a before-period adjustment of the TRA for Q2 2022 further reduced it to £100m, increasing the net payment to suppliers by a further £133.3m. Combined with the £138.6m of accrued payments, a total of £342.0m was thus owed to suppliers at the end of Q1.

    That was written on 13th May. I wrote to the LCCC on 6th May, castigating them for not announcing the credit to suppliers, and for the large sums being held back via the TRA that rightly belonged with suppliers and their customers. I reported the text of my missive here:

    Perhaps they took notice, though doubtless they couldn’t possibly comment… but they did increase the TRA for the current quarter by £50m on the 12th because of the low market prices.

    Perhaps the prize comment when they finally replied to me on the 17th was this:

    In response to your query on whether low strike price CFDs have any value to consumers in the future:

    The policy intent and terms of the CfDs is the responsibility of BEIS. As designated CfD Counterparty our role is to enter into and manage the CfDs awarded.

    Ouch! for Kwarteng methinks.

    • Nicholas Lewis permalink
      May 28, 2022 1:54 pm

      Cricky thats a lot more complicated than I had assumed so thanks for unravelling it. Of course there are also the windfarms that are voiding commencing their CfDs further reducing the pot.

  7. GeoffB permalink
    May 27, 2022 9:03 pm

    Some MPs have PPE degree. That is philosophy. politics and ECONOMICS. The mess that we are in is just simple supply and demand economics, but totally distorted by carbon taxes and subsidies on unreliable renewables. Surely someone in government actually understands about this?

    • May 27, 2022 10:55 pm

      The loons are in charge, don’t understand economics or physics (or reality), but the vast majority of our useless MPs believe i the green scam so just go along with it. It reminds me of the famous phrase from Hot Fuzz, “the greater good”.

  8. May 28, 2022 7:54 pm

    These trivial sums combined comparative native generation costs an Weather-Dependent productivity might might give another less complicated view of the “Renewables” rip off from a less complex perspective.

    The excess costs of Weather-Dependent power generation 6/2022

    Would anyone sane ever buy a car costing between 8 – 25 times the normal price that only works one day in five, when you never know which day that might be ? And then insist that its technology is used to power the whole economy.

  9. May 28, 2022 7:59 pm

    Try again

    These trivial sums combining comparative power generation costs and Weather-Dependent productivity might give a less complicated view of the “Renewables” rip off from a less complex perspective.

    The excess costs of Weather-Dependent power generation 6/2022

    Would anyone sane ever buy a car costing between 8 – 25 times the normal price that only works one day in five, when you never know which day that might be ? And then insist that its technology is used to power the whole economy.

Comments are closed.

%d bloggers like this: