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Demands for more subsidy expose the illusion of falling wind power costs

March 1, 2023

By Paul Homewood






“The belief in falling wind power costs is the central foundation of the government’s Net Zero enterprise, and it is demonstrably false. The absurdity of current Net Zero plans is now exposed for all to see.”
London, 1 March – Net Zero Watch is highlighting the fact that claims of falling wind power costs are contradicted by demands from wind power operators for additional subsidies on top of existing support.
This debate has been in progress since 2017, when research published by the Global Warming Policy Foundation indicated that the wind industry’s bids for Contracts for Difference subsidies (CfDs) were absurdly low and did not reflect underlying capital and operating costs.
These observations were confirmed by alternative methodologies and by other authors (details are given below), and critics repeatedly predicted that the industry would eventually beg for more subsidy.
Confirmation that we were correct can be found in the fact that the Financial Times is now reporting that wind farm developers, including the industry giants Vattenfall and Ørsted, are asking for tax breaks in the forthcoming budget, offering the spurious justification that inflation has made uneconomic their low Contracts for Difference contracts awarded for delivery in 2024 (FT:
"Wind Farm Developers demand UK tax Breaks to offset Rising Costs”).




Net Zero Watch notes that since the CfD strike prices are inflation-indexed the industry’s excuse does not hold water. On the contrary, the demand for tax breaks confirms that the low bids in the CfD auctions were never accurate reflections of underlying windpower costs.
Net Zero Watch says that the Chancellor should refuse to be blackmailed by the wind industry and must reject demands for further financial support.
Professor Gordon Hughes, author of several of the studies cited below, said:
“The offshore wind developers seeking additional subsidies are treating taxpayers as fools. CfD contracts are inflation-indexed, so electricity customers will be paying higher prices for their electricity until 2040 and beyond as a consequence of recent inflation. The notion that there has been an unexpected increase in capital costs since bids were submitted last summer is ridiculous, as suppliers have been warning of severe cost pressures for at least 18 months.
The reality is that offshore operators have been submitting unsustainable CfD bids ever since 2017, hoping that something would turn up. Even a period of very high market prices is not enough, so now they want to be bailed out by tax breaks. The Chancellor should just say No.”
Dr John Constable, NZW’s director of energy, said:
“The belief in falling wind power costs is the central foundation of the government’s Net Zero enterprise, and it is demonstrably false. The absurdity of current Net Zero plans is now exposed for all to see.”

Notes for Editors: Articles and studies on unrealistic offshore wind bids for Contracts for Difference
1. Gordon Hughes, Capell Aris, John Constable, Offshore Wind Strike Prices: Behind the Headlines (GWPF: London, 2017)
2. Gordon Hughes, Who’s the Patsy? Offshore wind’s high-stakes poker game (GWPF: London, 2019)
3. John Aldersey-Williams, Ian D. Broadbent, Peter A. Strachan, “Better estimates of LCOE from audited accounts– A new methodology with examples from United Kingdom offshore wind and CCGT”, Energy Policy, 128 (2019), pp 25-35.
4. Gordon Hughes, Wind Power Economics: Rhetoric and Reality: Volume I: Wind Power Costs in the United Kingdom (Renewable Energy Foundation: 2020).
5. Gordon Hughes, Wind Power Economics: Rhetoric and Reality: Volume II: Wind Power in Denmark (Renewable Energy Foundation: 2020).
6. Andrew Montford, Offshore wind: Cost predictions and cost outcomes (GWPF: London, 2021)
7. Kathryn Porter: Addressing the high real cost of renewable generation (Watt Logic 2022)

  1. March 1, 2023 10:53 am

    Who could have possibly guessed that businesses set up with their major returns based on receiving taxpayer money (a.k.a. “subsidies”) would always be wanting more and more subsidies? These organisations’ greed is becoming more and more apparent. As is the fantasy that is “Net Zero”

    • Mr Robert Christopher permalink
      March 1, 2023 3:14 pm

      Greed is an emotion that confuses the issue.

      There’s always give and take in any relationship, and whose to judge where the boundary lies. And playing by the rules can mean competitor takes advantage, and you are out – totally failed in getting, or keeping, your business running.

      The problem is that those that constructed the financial arrangements have been totally useless. They didn’t understand Competition, Business or anything Financial. It’s been said the UK Energy Market is dysfunctional, and this is another aspect to that. What else are they to do?

      • March 1, 2023 3:39 pm

        “The problem is that those that constructed the financial arrangements have been totally useless. They didn’t understand Competition, Business or anything Financial.”
        I might use the word ‘clueless’! Why is it that we allow major decisions of this type to be made by individuals who are ‘doing their best’. What the country needs is people doing ‘what they are best at’.

  2. Gamecock permalink
    March 1, 2023 11:28 am

    NZW is peeing in the wind.

    Who else is shocked that offshore wind isn’t financially viable? There is nothing new in this report to people who have been paying attention.

    ‘The absurdity of current Net Zero plans is now exposed for all to see.’

    The choir nods.

    • Ray Sanders permalink
      March 1, 2023 12:49 pm

      Hey GC, apparently my suggestion yesterday regarding “Cartels” and “Price Rigging” is completely false….. according to the Jordanian thought police.

      • Jordan permalink
        March 1, 2023 6:05 pm

        Try to get over it Ray. There is nothing to gain from coming here to cry on GC’s shoulder.
        Your comment was not good. And it related to the separate capacity market. I told you why it was not good, in plain and honest language.
        The right thing to do, as I suggested, is to make better comments. But here you are, STILL not listening.

      • Gamecock permalink
        March 3, 2023 12:43 pm

        I asked for an explanation.

        You said it was too complicated.

        Jordan gave flowery metaphors and whataboutery.

        I still don’t know.

    • Ray Sanders permalink
      March 3, 2023 2:59 pm

      Allow me to explain things with an analogy. Perhaps you are worried your car will not start in the mornings to ensure you get to work on time. So you pay for a taxi to be waiting outside your home for an hour , every morning of every day, just in case you need it. You very rarely do , but then one day your car will not start and you do need the taxi.
      So you get in the taxi and the driver charges you 50 times the price you would have paid if you had just called him the once. Wait a minute you have paid for the taxi to be ready every day and yet it is still way more expensive to use on the very rare occasion when you need it. Madness eh? Nah of course it isn’t.

  3. gezza1298 permalink
    March 1, 2023 11:45 am

    Sadly, governed as we are by ignorant morons, they will likely get their wish to receive more taxpayer cash.

  4. John Brown permalink
    March 1, 2023 11:56 am

    So much political capital has been expended on the Net Zero Strategy (P19 : “Our power system will consist of abundant, cheap British renewables”) that a way will be found to keep subsidising the wind industry to keep it afloat whilst at the same time ensuring that the visible strike prices remain cheaper than fossil fuels.

  5. John Brown permalink
    March 1, 2023 11:58 am

    Wind Europe
    Recharge WindEurope 05/04/2022

    ‘We’re all in trouble’ | Wind turbine makers selling at a loss and in a ‘self-destructive loop’, bosses admit

  6. Edward Cook permalink
    March 1, 2023 1:18 pm

    And this presentation indicates prices are not going to drop any time soon, the supply bottleneck in minerals is hardly considered.

  7. It doesn't add up... permalink
    March 1, 2023 2:10 pm

    We’re still waiting to see what the indexed prices for AR4 CFDs look like. In the mean time, it’s £37.35/MWh in 2012 money for offshore wind. Looking at the indexation applied to other CFDs and allowing an extra 10% for the inflation increment due to be added in April would make that £50/MWh in today’s money. Compare with market prices before the energy crisis blew up, and with what wind has been getting.

    It’s clear that wind can’t really compete. And that’s before you add in all the extra balancing, grid and capacity market costs that it causes.

  8. Douglas Brodie permalink
    March 1, 2023 4:35 pm

    It is high time GWPF widened the debate rather than just repeating the technical futilities of the Net Zero agenda ad nauseum. The globalists who call the shots and their poodle politicians have been trying to kill us through their Covid plandemic, just as are trying to deindustrialise and impoverish/freeze/starve us and hence depopulate us with their climate change/war in Ukraine/war against farming skulduggeries, see

  9. Adam Gallon permalink
    March 1, 2023 9:39 pm

    As has been long predicted.
    Unfeasibly low strike prices & a government desperate for electricity leading to further subsidies.

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