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Will Offshore Wind Lower Energy Bills?

March 25, 2023

By Paul Homewood



We have been told repeatedly that our electricity bills would soon be much lower thanks to the reducing cost of offshore wind farms. Last summer, following the latest CfD allocation round, Kwasi Kwarteng grandly pronounced:

Our renewable energy auction scheme has been an outstanding success, with the latest round securing enough clean energy to power twelve million British homes and the price of clean energy plummeting even further. 
Getting contracts signed means projects can push on and deliver jobs and opportunities across the country. This will help to secure our homegrown supply of cheaper renewables and bring down the price of energy for millions of British families as we shift away from expensive fossil fuels.”

The allocation round he was referring to handed CfDs for 7 GW of offshore wind capacity at £37.35/MWh, in addition to another 4 GW of other renewables:


These prices are all at 2012 prices, but even at current prices, offshore wind is still cheap at about £47/MWh, bearing in mind that historically market prices have been around £50/MWh until the Ukraine war.

But there is one slight snag! None of these wind farms have been built yet, and detailed research of Annual Accounts has revealed that such low prices are simply not viable given the capital costs involved.

The lowest price currently being paid via CfDs for offshore wind power is £94.81/MWh to the Triton wind farm, which began operations two years ago. However, more recently other wind farms such as Moray East, which as a guaranteed strike price of £73.71/MWh, have opted to not take up their contracts yet, and instead sell their electricity on the open market at much higher prices, which are around £120/MW at the moment.

And it seems that, other than begging, the government is powerless to stop them.

I therefore decided to FOI both BEIS (now DESNZ) and the Low Carbon Contracts Company (LCCC), which is the government owned company that administers the CfD programme, asking what powers they have to enforce the contracts, or what penalties the generators would pay if they did not take up their contracts.

The answer I got back was that they have no power at all, and there are no penalties either.

This is the reply from LCCC:



The final paragraph has to be one of the most naive things I have ever read from a public body!

The DESNZ reply was similar, and included links to the actual contracts, which confirm there are no penalties or other consequences of a Pre-Start Date termination:


DESNZ’s only other comment was that projects that do not meet CfD delivery commitments are excluded from applying to the next two applicable CfD allocation rounds.

In essence, CfDs are no more than options, which the generator can choose to take up or not. On the other side of the coin though, the LCCC is legally bound to honour it.

It is highly unlikely that power prices will return to below £50/MWh in the foreseeable future, not least because the Emissions Trading Scheme is now artificially adding about £30/MWh to wholesale prices. It is therefore exceedingly unlikely that any of those renewable generators, who were successful in last year’s allocation round, will take up the option of a contract, when they can make much more money on the open market. And the same applies to all of the other offshore wind farms from previous rounds who have not yet commissioned.

So we can kiss lower energy prices goodbye!

We should remember that it was the disastrous Ed Davey who set up the CfD system in the first place, at a time when the Lib Dems were given control of DECC and energy policy.

He has a lot to answer for!

  1. dave permalink
    March 25, 2023 6:27 pm

    “Will off-shore wind lower energy bills?”

    Well, that is certainly not the plan!

    • Curious George permalink
      March 25, 2023 8:04 pm

      The only way to lower energy bills: coal.

  2. Douglas Dragonfly permalink
    March 25, 2023 6:28 pm

    Where is Ed Davey live now ?
    If it’s in a big house it had better be one with bars on the windows !

    • Harry Passfield permalink
      March 25, 2023 6:42 pm


      • Douglas Dragonfly permalink
        March 26, 2023 5:54 am

        Ok Harry. Straight to the dungeon then and ‘Do not pass go!’

  3. Mark Hodgson permalink
    March 25, 2023 7:03 pm

    Paul, thank you so much for taking the time and trouble to flush that information out. I have been trying to find it for ages, but have found all the government websites dealing with things like CfDs to be hopelessly (deliberately?) opaque.

    Your FOI requests have produced a smoking gun. Well done!

  4. 2hmp permalink
    March 25, 2023 7:36 pm

    Why should anyone doubt that efforts to change the climate will rely on anything but corrupts statistics and mendacious officials ?

  5. Tonyb permalink
    March 25, 2023 7:48 pm

    It would be good if the Govt issued some contracts to get the Rolls Royce Modular nuclear reactors up and running. Then other countries will order some.
    Much better and more reliable than wind power. Its not even as if much of the wind turbine will likely be made here.

    As it is we seem to have kicked the can down the road by inviting other countries to submit ideas for their own prototypes MR’s.

    • Vernon E permalink
      March 27, 2023 11:32 am

      Tony: There is a huge amount to be said in favour of forging ahead with SMRs. Whatever happens in the future with our energy needs there is going to be a rapid increase in the demand for skilled labour especially in the construction/metal working (incl welding) skills. Building these smaller units could achieve this. Build a large nuke? No way. Build a couple of thousand steam reformers to produce hydrogen? Fantasy. I expect the number of welders who could weld Incolloy “pigtails” today can be counted on the fingers of one hand. And this could so be wrapped in with the governments forlorn “levelling upp” agenda. Why are they all so blind?

  6. Phil Beckley permalink
    March 25, 2023 8:44 pm

    It is fortunate that the UK’s virtuous energy policy of abandoning fossil fuels in favour of wind and other “renewables” will assuredly result in cheaper energy prices and hence also a more successful economy (although perhaps our present government and also the Labour / Lib Dem / Green etc parties would disdain such a worldly concern as unworthy.) The policy of the Chinese, Indians and others with huge investments in expensive fossil fuels will presumably result in them becoming even weaker on the world stage, while the UK forges ahead as the Saudi Arabia of wind.

    • Graeme No.3 permalink
      March 25, 2023 9:21 pm

      Largely deserted and unproductive?

    • Gamecock permalink
      March 25, 2023 9:32 pm

      UK will be the India of dung cakes.

    • The Bard permalink
      March 26, 2023 11:13 am

      This is parody surely ? When clearly the exact opposite is true. Cheap energy is China’s/India’s one their competitive advantages over our VS world. Agree that Rolls Royce modular nuclear is the way to go and could be up and running before EDF’s hugely ever more expensive mega project and more damaging Solar/Wind.
      Great work Paul..

  7. It doesn't add up... permalink
    March 25, 2023 8:44 pm

    I had a very similar response from LCCC last year when I asked them whether they though that CFDs that have not been commenced despite wind farms being commissioned would ever be commenced. The consultation for AR5 suggested that there would be a plan to make taking up the CFD rather more enforceable in revised Standard Terms and Conditions, along with removing any right to compensation in any hour for which the Intermittent Market Reference Price was negative (currently there has to be at least 6 contiguous hours of negative prices before compensation is curtailed).

    I haven’t ploughed through the 541 pages to see what they finally seek to impose.

    Click to access ar5-standard-terms-and-conditions.pdf

    With the increasing amounts of curtailment there are questions to be asked about how that is remunerated, with some of it being charged to the Balancing Mechanism, and some to the LCCC. I am drafting a request for information to LCCC to tackle these issues. The high price paid to Hornsea 1 yesterday in the small hours tells us these sums could become quite significant in future.

    • Phoenix44 permalink
      March 26, 2023 9:24 am

      So if they think there’s “no suggestion” CfDs won’t be taken up, why do they think they need to close the loophole!?

  8. It doesn't add up... permalink
    March 25, 2023 9:11 pm

    Under the AR5 terms the LCCC has the right (but not the obligation) to declare a Start Date if the generator has failed to do so:

    3.21 The Generator shall after the earlier of (i) the Generator giving the Operational CP Notice relating to the fulfilment of the final Operational Condition Precedent; or (ii) the CfD Counterparty giving the Unilateral Commercial Operations Notice, and in any event no later than ten (10) Business Days after receipt of:
    (A) in the case of (i), the CP Response Notice or the Further CP Response Notice confirming that the CfD Counterparty considers the final Operational Condition Precedent to have been fulfilled; or
    (B) in the case of (ii), the Unilateral Commercial Operations Notice,
    give a notice to the CfD Counterparty (such notice being, a “Start Date Notice”).

    3.21Z If a Start Date Notice has not been given by the Generator as required under Condition 3.21, the CfD Counterparty is permitted but not obliged to give a notice to the Generator, such notice also being a “Start Date Notice”.

    3.21A A Start Date Notice shall specify the date that the Generator or (where it is given by the CfD Counterparty under Condition 3.21Z) the CfD Counterparty proposes to be the Start Date for the purposes of the Contract for Difference

  9. March 25, 2023 9:52 pm

    The lies about “cheaper” renewable energy are increasing in direct proportion to their installations.

  10. Jordan permalink
    March 25, 2023 11:53 pm

    I doubt the government cares about any of the above.
    There have been hundreds of thousands of lawyer-hours spent on the terms of the CFD and allocation process. It would not be credible to suggest anything other than the arrangements are very well informed and represent intent of both parties.
    When there is an accepted need to change them, they will be updated, so they come with some measure of adaptability.
    Rather than questioning the effect of the CFD (on assumptions of intent), an alternative approach is to look at the risk allocation to infer context: what context helps to make sense of the terms?
    “CfDs are no more than options, which the [holder] can choose to take up or not. On the other side of the coin though, the [seller] is legally bound to honour it”
    We cannot assume all those lawyer-hours spotted this point. So best assume it is intended to be this way.
    “there are no penalties either”
    Same again, so what does risk allocation tell us. To participate in an allocation round, I understand a proposal should have development consent, licenses, and electrical connection (Chapter 3 of The Contracts for Difference (Allocation) Regulations 2014). Developers’ own corporate tests will probably need financing in place too. Altogether, it will probably take an outlay of a least a couple of £10M to qualify. Conclusion: CFD is an option, but it’s not a free option for developers. Significant outlay should deter to frivolous proposals.
    “projects that do not meet CfD delivery commitments are excluded from applying to the next two applicable CfD allocation rounds”
    Which means financial losses if a developer messes up the government’s scheme. The incentive to perform is at least the cost of development expenditure.
    “And it seems that, other than begging, the government is powerless to stop them.”
    No need to beg. The government is not a hostage to the fortunes of CFD allocation. EPH has just been awarded a CM contract at £63/kW/yr for a couple of GW CCGT capacity at Eggborough. Eggborough will signal opportunities to others.
    The government is firmly on the pathway of committing something like $40bn on the next new nuclear power station. If private sector wind developers are not reliable, the government could easily look upon this as an improvement in the case for new government-controlled nuclear as the preferred low carbon technology.
    “So we can kiss lower energy prices goodbye!”
    Well, $40bn isn’t cheap, delivery is not certain and the final cost is likely to go higher.

    • It doesn't add up... permalink
      March 26, 2023 2:43 am

      The exclusion provision is completely toothless. CFD projects are all run through SPVs project by project. The only time they might need a further contract is if they indulge in re-powering. Otherwise, a new entity is concocted to submit the next round of bids.

      Not sure I entirely share your view about lawyerly advice: it’s probably not lawyers, but rather traders that the government needed to be advised by. Lawyers are not the right people to diagnose the holes in an agreement. If you point out a hole, they can draft a way to close it. I’ve had plenty of experience of that. A reason to think the government were poorly advised is the rising scandal over gaming the market by withdrawing capacity just hours before Gate Closure, and then re-offering at massive prices under the Balancing Mechanism. They should have taken advice from former Enron traders, who probably knew every trick in the book.

      The new rules for AR5 are much less attractive – see my post above. It will be interesting to see how many bids they get. Also interesting to see at what rate AR4 lowball bids move to financial close. Much is hanging on assumptions that the whole market will get restructured under REMA, and the compensation payments to existing CFD wind farms for the QCiL (qualifying change in law) on higher strike prices will be extensive, while letting the low ball bids off the hook. All paid for by consumers.

      • Jordan permalink
        March 26, 2023 11:53 am

        I’m not close enough to the CFD to comment on the toothlessness of the 2 year exclusion and whether it extends to Affiliates. As I suggested above, look for reasons, and make sure you keep crass stupidity at the end of the list of reasons for the way things are, not near the beginning.
        I’m surprised you think traders have not been involved in the development of these types of arrangements. The government always has lavish budgets to spend on expert advisors as well as lawyers. Industry consultees put large teams together to represent themselves – this is common corporate governance to support their decision making.
        Lawyers are extremely adept at identifying and raising risks but are rarely decision makers. They work best among a large team of subject matter experts.
        The rising scandal over “gaming the market” is an interesting one. We all seem to be schizophrenic about seeming to want a market and profit maximising behaviour (on belief that it is efficient), until we don’t want a market and profit maximising behaviour because it is not to our taste. When we have tried deregulation and don’t like the outcomes, suddenly we develop a preference for rules to limit profit maximising behaviour. There isn’t a nice easy line to be drawn here.
        Former Enron traders are former for a reason. New entry and going bust is all part of market operation. If you accept that going bust is part of market operation, are you happy with where it might take you? No energy supply because your Supplier or Distributor has folded? Abandoned nuclear assets left to rot?
        On CFD allocation, to my recollection, EMR intent was to allocate CFDs as a limited duration support mechanism while renewable technologies reached economies of scale. The brash claims that they are now “nine times cheaper” can be read as an acknowledgement that allocation rounds are no longer required. That’s what I would do.
        I expect the reason we are having another is because the government anticipates a political brouhaha about abandoning Net Zero if it announced there would be no more. So the pragmatic compromise is to make the CFD less attractive: less generous support is a step closer to no support.
        The real game and money in future is GBN. So we better make sure that government team of industry expert advisors, lawyers and decision makers are on the ball. And, yes, we should be free to criticise. Critical appraisal helps us to learn and improve.

      • It doesn't add up... permalink
        March 26, 2023 1:19 pm

        If traders have been involved in the contract negotiations behind the scenes they will have been supporting the industry, not the government. That is quite evident when you look at the contract detail. It took me pointing out to OFGEM in a consultation that the 6 hour curtailment regime was being gamed to elicit a change for AR5. I provided evidence that prices were being bid just over zero after 5 hours before dropping negative again so as to evade the 6 hour rule. Government advice was coming from their pet green consultancies which has allowed them to be conned into believing that renewables were getting cheaper fast. They hear what they want to hear, not what they ought to hear. Look at yhe LCCC response that still thinks a lowball CFD will get exercised. They know that the carbon price can be turned up to skew the market as much as they want. IIRC AFRY assumed £400/tonne by 2035 in their latest modelling for the CCC. There is REMA to install new fixes, with big battles as to who gets the biggest rip offs (National Grid would profit hugely from locational pricing for example).

        I am yet to be convinced of a major policy switch to nuclear. Kwarteng was basically against it, partly because he failed to understand wind intermittency even if he did understand that wind and nuclear do not play nicely. The big money announced is for CCS. Nuclear is still a French political football.

        A nationalised industry run by green zealots would be even costlier and more failure prone than the present highly regulated by green zealots one.

      • Jordan permalink
        March 26, 2023 5:04 pm

        “The big money announced is for CCS”
        Not quite the same as big money committed. We’ll get to see the size of the commitment when projects get through FID and there is metal on the ground.
        “A nationalised industry run by green zealots would be even costlier and more failure prone than the present highly regulated by green zealots one.”
        Would you still say that if you take out “green zealots” and insert “nuclear zealots”? Another way, is GBN and Sizewell C a step in the right or wrong direction for you?

      • It doesn't add up... permalink
        March 26, 2023 7:40 pm

        An EPR at Sizewell C is an unforced error brought about by pandering to the French. The only good thing is that the Chinese are out of the picture. The £700m committed to the design phase is a waste of money, but easily exceeded by other green waste annually. The only other substantive nuclear funding announced but not spent is £120m towards SMRs. Nuclear policy is still small beer in capacity terms, and there is no urgent push as yet for lower cost, faster build proven technology. GBN is an infant struggling to learn what to do, not an all consuming behemoth.

        When government twigs that nuclear builds need a international market to drive down cost through learning curves and economics of scale, and a sensible regulatory regime that doesn’t impose ridiculous added costs, and the selection of low cost technology, all of which help to de-risk financing, will we see that they are getting serious. There is no reason why we couldn’t end up with costs less than half of Hinkley Point if sensible policy were adopted. At that level the risks for owners are much reduced because they have a competitive product. It can be done: the French did it in the 70s and 80s. They need a reset and to walk away from pushing the EPR.

      • Jordan permalink
        March 26, 2023 11:08 pm

        The rationale for a couple of EPRs will be to do with technology and skills development. The UK’s nuclear capability will be at a low ebb after a couple of decades of decline.
        “When government twigs that nuclear builds need a international market … to de-risk financing, will we see that they are getting serious.”
        That’s yesterday’s plan IDAU. The government has spent 20 years trying that idea, and it didn’t work. Their conclusion is GBN. If the government wants a civil nuclear industry, they will have to roll up their sleeves and get their hands dirty.
        The plan is to generate around 25% of GB electricity from nuclear by 2050. The future for the GB power industry is to live in whatever home has to be created to contain the GBN beast.
        If you think the CFD is soft or weak, it hardly matters. It is just a consequence of what the government needs to offer to the private sector to have a shoulder-to-shoulder role alongside a state owned behemoth in the supply of a product. The private sector can hardly be blamed for making sure its risks and liabilities are nothing like a proper market. There is some risk taking, but it’s not a market like many others.
        GBN will not be created by stupid people. It takes clever people of all sorts, including people who know how to shape the story to keep the public on board. You can even see this today as nuclear is now categorised as “environmentally sustainable” in our green taxonomy. Net Zero is a means to an end. It is ambiguous, and it will evolve to suit.
        Best assume you are not dealing with green zealots. (OK, maybe a handful of are true zealots for presentational purposes, but don’t let them put you off the scent.)

      • It doesn't add up... permalink
        March 27, 2023 2:04 am

        We seem to have taken a massive leap from Kwarteng’s “little role for nuclear” posture according to you. I don’t think it’s real yet, because there is no credible nuclear strategy. Really not sure where you get the idea that there has been such a complete volte face. 25% of generation by 2050 is not really a big target and it is still a long way away. The French got to 70%+ in less time. I have seen no sign of government seeking to encourage other countries to adopt nuclear, especially while we had so many anti-nuclear energy ministers (Kwarteng being just the latest). Offering the chance to other countries to bid to supply the odd plant while imposing the ONR on the process to kill it is hardly a big international nuclear push. We’ve acquiesced while the Germans and Belgians and Dutch have pursued total phase out, and the French promised to close half their capacity and replace it with wind.

    • Douglas Dragonfly permalink
      March 26, 2023 5:51 am

      Dollars ?

    • Phoenix44 permalink
      March 26, 2023 9:18 am

      You’ve obviously never dealt with government lawyers. They are simultaneously extremely arrogant and extremely naive. Look at PFI contracts for example. There’s nothing that actually clever people, like infrastructure investors, like more than having such people on the other side of negotiations.

    • Jordan permalink
      March 26, 2023 10:25 am

      @douglas I quoted dollars as this was quite widely reported as in February. For example:
      “You’ve obviously never dealt with government lawyers.”
      Hmm. Interesting.
      “[government lawyers are] extremely arrogant and extremely naive”
      This just means you haven’t worked out their motives.

      BTW, a correction to my comment above: “We cannot assume all those lawyer-hours NEVER spotted this point. So best assume it is intended to be this way.”

      • It doesn't add up... permalink
        March 26, 2023 1:35 pm

        If they spotted it (which I doubt) they assumed it would never be an issue. I’m with Phoenix on this, having had a lot of experience of negotiating with government departments and quangos over contracts and the drafting of laws. Some things they get a bee in a bonnet about that are relatively inconsequential, but which provide great negotiating levers, while they m8ss the barn door. Sometimes they have to be told that their proposals are not in the interests of industry or consumers. Sadly, no-one has been telling them that effectively over energy policy for a long time. Their ears are closed in zealotry

  11. Roger Tolson permalink
    March 26, 2023 9:00 am

    If it carries on like this electricity is going to be so cheap it won’t be worth putting meters in people’s houses.

  12. Phoenix44 permalink
    March 26, 2023 9:21 am

    “is the right”? Your typo or theirs?

    Do they have the right to terminate at any point after the Longstop Date or only at the Longstop Date?

    It’s really not much of an auction if the “winner” doesn’t have to pay the price bid!

  13. StephenP permalink
    March 26, 2023 9:52 am

    Could (or has it already been done) someone work out the cost of building an offshore wind turbine, including the cost of connecting it to the grid and maintenance, and divide that cost by the real amount of electricity produced over its lifetime? It would also need to include the cost of the money invested.
    I have never seen the figure published, but maybe I haven’t been looking in the right places.
    If, as is stated, it is so cheap then add a profit margin to give the cost we should be paying instead of allowing the generators to suck up subsidies in a game of keeping their charges up with the cost of the most expensive generators.

    • In The Real World permalink
      March 26, 2023 9:00 pm

      StephenP . There already formulas for energy return on investment .
      Which show that wind farms never produce enough energy to cover their cost .
      And is why they have to have massive subsidies and have also caused the cost of electricity for consumers to rocket up .

      • StephenP permalink
        March 27, 2023 7:35 am

        Thank you for the link. The government do seem to be backing the wrong horse.

      • In The Real World permalink
        March 27, 2023 10:07 am

        The formulas in ” Energy Return On Investment ” show nuclear power having the best returns .This is because a Nuclear station will keep producing energy for 50 or 60 years even if they cost a lot of money to begin with .
        But it also shows that coal / oil/ gas would be a lot cheaper if there was not massive carbon taxes put on top of their costs .These carbon taxes also hide the huge subsidies that wind / solar get.

        So , if it wasnt for sneaky taxes by Green politicians ,the price for energy would be a lot lower for consumers , and figures would show that renewable energy is hopelessly expensive compared to Nuclear , coal oil and gas .

  14. gezza1298 permalink
    March 26, 2023 12:08 pm

    Our energy system is a complete joke but then what do you expect when it has been designed by the government. And it is fairly common knowledge that the more unreliable wind generation you add to your grid, the more expensive it gets for everyone. Jo Nova showed how Australian costs were gradually reducing until guess what, the great race to unreliables started since when the path has been ever upwards at a very rapid rate.

    People need to take a leaf out of the French playbook and realise the government is always your enemy and working against you. Looking on a fuel supplier’s website they stated that last year’s reduction by government of the legal used of red diesel was to ‘encourage’ the use of vegetable oil based fuel.

    • Gamecock permalink
      March 26, 2023 12:57 pm

      Governments make political decisions. Businesses make business decisions. That’s why governments bullying their way into the market place fails.

      • Jordan permalink
        March 26, 2023 1:43 pm

        Businesses make business decisions and will never accept nuclear risks and liabilities.
        Having a nuclear sector in our energy system is a political decision. That’s the way its going to be for the foreseeable and it will define what our “clearing” arrangements look like (avoiding the word “market”).
        These clearing arrangements will wrap around the risk allocation of the Government’s nuclear interests and liabilities. This defines a significant boundary for any discussion of “markets” or “clearing” (take your pick what you call it) for the coming decades.
        We can all enjoy the debate, but no point in whining about the government. It’s a government gig.

      • Gamecock permalink
        March 26, 2023 4:49 pm

        So we must accept tyranny?

      • Jordan permalink
        March 26, 2023 7:28 pm

        I don’t know if labels add anything Gamecock.
        Doesn’t this create a false dichotomy. Another commenter mentioned some trading behaviour which may develop into an investigation by regulatory authority. Regulatory authority gets its powers from government. So if we are to use a word like “tyranny”, somebody has raised a complaint because they are concerned about the “tyranny” of people who may be ripping them off. They have raised the complaint using the “tyranny” of government approved powers to intervene in the activities of the people who may be ripping them off . Which “tyranny” do we prefer and why is it preferable?

  15. Gordon Hughes permalink
    March 26, 2023 1:15 pm

    I think that it is important to note that there are separate issues involved in the discussion.

    1. Did the legal and trading advisers on both sides realise that the CfD contracts were written as options rather than firm supply contracts? Of course they did! If I could see that and point it out more than 5 years ago, then I am sure that even moderately people would see it and act on that basis. Even if the wind industry like to denigrate my findings, it doesn’t mean that they can’t learn from it. The options are not as simple as the guaranteed minimum prices in other West European countries, but they were still useful for investors.

    2. Did the politicians, civil servants and lobbyists understand the same point? The answer is more complicated because it is a choice between concluding that individuals in this group are incompetent fools or dishonest fools. Very few of them can have read the contracts or even (probably) the legal advice that they were given, so what matters is what they tell each other.

    The issue of dishonesty matters because groups like the Climate Change Committee and BEIS were making claims about the rapid fall in the cost of offshore wind generation based on CfD strike prices. That could only be true if CfD contracts were construed as firm supply commitments. Indeed, I have been told by reliable sources that Kwarteng, when he was Secretary of State for BEIS, was briefed by his civil servants that my conclusions about offshore wind costs were all wrong because the CfD bids showed that costs must be falling.

    In truth, I couldn’t care less about how civil servants view my findings – current and future evidence is what matters. However, what does matter is if policymakers are grossly incompetent or dishonest. Some may have noticed this week’s Economist which contains an article lamenting the state of the British civil service. What it carefully omits is any discussion of the perceived competence or honesty of the policymaking process. Yet everything we have seen from Brexit to Covid to NetZero indicates policymaking that is utterly compromised by some combination of incompetence and dishonesty. The reasons are not hard to discern but the consequences will take the UK back to what things were like 50 years ago.

    • It doesn't add up... permalink
      March 26, 2023 11:07 pm

      They probably believed Roger Harrabin quoting 2012 prices as if they were already in operation and current. What better source than the BBC?

  16. John Brown permalink
    March 26, 2023 1:57 pm

    Unfortunately those who make our energy policies did not take up Dieter Helm’s recommendation #7 (Key Findings & Recommendations page viii) in his 2017 “Cost of Energy Review” commissioned by the Government:

    “The FiTs and other low-carbon CfDs should be gradually phased out, and merged into a unified equivalent firm power (EFP) capacity auction. The costs of intermittency will then rest with those who cause them, and there will be a major incentive for the intermittent generators to contract with and invest in the demand side, storage and back-up plants. The balancing and flexibility of markets should be significantly encouraged.”

    It’s obvious why.

    • manicbeancounter permalink
      March 26, 2023 3:23 pm

      If the last week’s open market prices are the start of a trend, then the wind farms will be rushing to take up CfD contracts and absorbing huge write-offs. In the past week the have averaged £92 MWh. On Friday average prices were just £25. What is more, prices were negative for a number of hours last week, the last time being 11am yesterday morning when it was -£50. Last week the negative prices were related to high wind output at low demand periods.
      Coupled with likely higher costs of capital, the existing wind farm operators will want to renegotiate the existing CfD contracts, and the the next round new projects will not be so competitive on price.

  17. Ray Sanders permalink
    March 26, 2023 3:17 pm

    There is this probably crazy notion that generators, generate electricity and supply it to customers reliably and at the lowest price possible. Stupid idea really, why not invite lawyers and “Industry experts” and leverage financiers, and uncle Tom Cobbley and all into the process. We can then generate and distribute unreliable and expensive electricity AND keep loads of completely unnecessary hangers-on well heeled and running to the bank with barrowloads of our money.
    I am seriously moving away from the notion of private sector devices and thinking a single nationalised controlling body might actually be a better idea after all.

    • John Brown permalink
      March 26, 2023 8:56 pm

      With BEIS/DESNZ/Ofgem running both the supply side with CfDs etc. and also running the retail side isn’t our electricity market already nationalised?

  18. It doesn't add up... permalink
    March 26, 2023 6:54 pm

    Excellent stuff from Kathryn Porter here

    The next speaker will be Chris Stark, CEO of the CCC. He has been seriously upstaged.

    • Mark Hodgson permalink
      March 26, 2023 7:50 pm

      Yes, excellent stuff. And thanks, idau, for all your efforts.

  19. March 26, 2023 10:01 pm

    I can’t decide if the political activists who initiate projects like these are liars who knew their proposals were pipedreams or naive, thinking the future was arriving on the wings of flying horses, or incompetent, unable to put reasonable plans together, or recognize incompetent plans when provided them.

    I am experienced enough to believe they understand political success and stability requires a public with a positive, calm view of the future. And cynical enough to believe they kick cans down the road for personal career reasons. But do they believe the BS tgey feed us? Dunno.

    I know this from decades working for large companies: when your bosses push bs that the Directors and stockmarket are happy to hear, the only way to mentally survive, especially as an officer, is to find some way to support it . Mentally change the time frame, what really would be considered “success”, imagine the bosses have additional Aces up their sleeves you don’t know about. Or say the entire business is built on bs, your company has to compete with bs from others, and yours is less bs-y than others. If you don’t, you are in distress, especially if your job requires you to affirm the bs to outsiders or your staff. On other words, you learn to lie convincingly to yourself.

    But my cynical self asks if it’s all just role-playing. Acting. Reading from a teleprompter and smiling on cue, the big bucks compensating for wearing a disguise every time they leave their house.


  20. It doesn't add up... permalink
    March 27, 2023 1:03 pm

    Hydrogen is set to increase our bills via investment grants and more lavish CFDs. Timera has the latest here

    Also click through to their earlier articles.

  21. March 28, 2023 12:42 pm

    As the article shows, the media, generally, do not understand that the figure they are looking at is what wind farms earn. They seem to have no knowledge of all the other significant costs to incorporate the power from wind farms, e.g.
    balancing costs, back up cost, the need for inertia and VAR (reactive Power), in addition to what subsidies are still being paid and the cost to fossil fuel generators of carbon payments. All this is why electricity is so very dear.
    Whern will the media wake up to what is actually happening?

  22. Gerard Wroe permalink
    March 29, 2023 8:43 pm

    You state “The lowest price currently being paid via CfDs for offshore wind power is £94.81/MWh to the Triton wind farm, which began operations two years ago. ” Do you have a list of the CfD contracts by project, which are active, and what the actual quarterly settlement prices are? I’ve looked at the LCCC website and haven’t been able to find this information.

    • March 29, 2023 9:24 pm

      They’re all here Gerard:

      • Gerard WROE permalink
        March 30, 2023 12:23 pm

        Paul Thank you. I want to dig into this. I’ve downloaded the 10 March report, and it shows the CfD and settlement rate. Is there a report on how much energy was generated at this price and the total bill. I’m assuming these are aggregated monthly reports and not just spot prices.

      • Nicholas Lewis permalink
        April 2, 2023 11:15 am

        Where is ROC data held?

  23. Alan permalink
    March 29, 2023 10:55 pm

    If the state owned the Wind farms, once the infrastructure is in place, we could all have free energy!
    Or the bonanza of wind energy (that belongs to you and me) could be used to offset taxes, not to line the pockets of foreign investors.
    And I was shocked when I found out the way in which the wholesale price of energy is arrived at ( everyone gets the price of the highest bidder -gas and nuclear) to favour private companies over bill payers.
    Well done ofgem – you’re doing a great job!

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