Wind farms can simply ignore agreed contracts and cash in big time, FOI reveals
By Paul Homewood
London, 28 March – Net Zero Watch has accused the wind industry and the government of colluding to mislead the public about the true cost of wind energy.
The Government has repeatedly assured us that energy bills would soon fall as a result of much lower prices for offshore wind power, set at recent Contracts for Difference (CfD) auctions.
However, a new Freedom of Information (FOI) request to the Department for Business, Energy & Industrial Strategy (now Department for Energy Security and Net Zero) and the Low Carbon Contracts Company (LCCC) has revealed that offshore wind farms and other generators are under no obligation whatsoever to take up their CfD options.
What is more, the Government has no power to either enforce them or impose penalties on those who don’t.
It is therefore almost certain that wind farm operators will simply not trigger their contracts. Instead, they are sell electricity on the open market at much higher prices, as two offshore wind farms are already doing. They are selling electricity at prices nearly double than they agreed in their contracts.
A series of research papers published by Net Zero Watch and others has shown that the true costs of offshore wind power are much higher than claimed, and that the low prices contracted at recent CfD auctions are simply nonviable.
Net Zero Watch is calling on the Government to impose a 100% windfall tax on all generators who refuse to honour their contracts.
Climate and energy analyst, Paul Homewood, said:
"The Contracts for Difference scheme has been badly designed since the outset, and has already cost energy users £5.7 billion. For offshore wind farms, it is Heads I win, Tails you lose."
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NOT A LOT OF PEOPLE KNOW THAT 
Despite their vast profits, aside from very occasionally painting the blades strippy, apparently, they don’t even attempt to prevent death to birds.
Selfish, greedy, lying, crooks.
Green energy equals evil energy.
Forget birds. They kill billions of pollinating insects each year.
So if you ran a business and were offered either to sell your products at a loss or at a profit, which would you choose? New windfarms can choose either the CfD price or the market price. That the market price is far higher than it ought to be is not their fault. Nor would them agreeing to take a lower price make any noticeable difference to our bills as they represent a very small volume at the moment. People support renewables in every poll so I fail to see how these investors are any of the things you claim?
People “support renewables in every poll’ because they are consistently lied to by the Govt about how cheap they are. The contracts for difference set up by the Govt don’t work but give huge subsidies to wind farm builders while giving the illusion of cheapness. The oil companies have been hit hard by swingeing windfall profits – the same measures should be taken against the wind farm owners.
Phoenix 44 – I believe Chair of the Climate Change Committee (CCC), Lord Deben to be dishonest.
In fact I believe he hides the truth and spins lies as he has alway done in order to line his own pockets.
If anyone has invested in these bird and insect killers then that is their look out.
The following are just two examples to back up my statement that this technology is false. Of course you are entitled to your own point of view.
Net Zero Watch is calling on the Government to impose a 100% windfall tax on all generators who refuse to honour their contracts.
Climate and energy analyst, Paul Homewood, said:
“The Contracts for Difference scheme has been badly designed since the outset, and has already cost energy users £5.7 billion. For offshore wind farms, it is Heads I win, Tails you lose.”
Wind farms can simply ignore agreed contracts and cash in big time, FOI reveals
March 28, 2023
In “Climate Change”
Harrabin has made much of the fact that offshore wind prices have come down so much in the last few years. This however raises the question of why the government was prepared to pay so much over the odds in the first place. For instance, the initial set of projects signed off by Ed Davey without an auction four years ago are costing up to £161/MWh.
It is claimed that costs have come down due to the learning curve, but even if true, why should the UK be the guinea pig?
In their rush to get renewable capacity built, the coalition government have wasted billions of pounds.
It is estimated that these new projects will supply just 2% of the UK’s total electricity.
NAOPKT September 11 2017 not
And with our failed legacy media this information won’t make it to the great unwashed.
Govt. should have woken up to this ages ago & heavily tax the difference between the CfD & receipts from sales.
Starting at 50% and frequently rising by 10% until the pips squeak & they take up the CfD.
This is a perfect example of the reason why this governmen(Civil Service) is completely not fit for purpose. They have stood by while the people who voted for them have been shafted by the renewables industries who have been bunged subsidy from day one. When eventually the penny drops that the Climate Crisis is a Scam , these companies are going to get the boot.
They won’t do that, they’ve all got their snouts in the Green trough.
Contrast the way they are driving oil and gas companies out of the UK by taxing them to levels that makes operations here untenable.
AFAICS the new windfall tax would apply to a wind farm that had not taken up its CFD, at least on the present draft of the Finance Bill. They are taxed at 45% on proceeds that average over £75/MWh and over £10 million, and then a further 19->25% for CT. It is unclear whether ROC and REGO income will be included: there is scope to regulate either way. 35 pages of legislation! See Part 5 Electricity Generator Levy
Click to access 220276v2.pdf
I think I first started suggesting that excess proceeds should be taxed (or better, ROC subsidies should be trimmed) back in 2021 as day ahead prices were first flirting with the £100/MWh level. At that stage no CFD wind farm had failed to take up its CFD, with strike prices being above wholesale.
No, government should have largely stayed out of the energy market. Trying to correct a government mistake with more government never works. Wind farms that don’t take up their CfD are simply doing what’s right for their shareholders. Market prices are high entirely because of government – lockdowns, fracking bans, renewables. Government punishing those who simply act as they should for the stupidity of government – and rewarding government with more money to waste – isn’t a solution.
True Phoenix, Government has raised the price of power. But there is a more direct reason: as soon as the UK Government and EU put a price on CO2 (EUETS or the UKETS and UK “price floor”), power prices would increase.
This made fossil fired generation more expensive, doubling the marginal cost of coal-fired power, placing it out of merit and creating an opening for renewables and nuclear.
It was always in the script. Recall that video clip and what Obama said about energy costs before he was President. Recall all of those calls for a high “carbon price” from people who stood to gain. Amongst others, the O&G industry did a great job of sticking the boot into the UK coal industry and guess who is doing very well out of today’s oil and gas prices.
Parliamentarians of all colours and snivel servants are theoretically supposed to work in the best interests of their employers – the tax payers. This simple fact escapes these money grubbing troughers. With the stakes being so high, one has to wonder how much greasing of palms and brown envelope bribes takes place. Gummers CCC is a example of blatant conflict of interest yet no action is taken. There has never been, and never will be, a business case for all forms of so- called green energy it only survives on subsidies which are paid for by the captive users. Taxing of windfall profits must be implemented.
Why? A large number of DB pension schemes invest in renewables. I’d rather they had the money than useless, profligate, dumb government.
It would be a good thing if investors made decisions on the underlying merits of a business rather than whether it has a sweetheart subsidy deal. ESG is highly damaging to the economy.
“I’d rather they had the money than useless, profligate, dumb government.”
Unfortunately for that notion, the bottom is going to fall out of the market for “Unreliables” sooner rather than later.
Mene, mene, tekel, upharsin!
Two large Canadian Pension funds lost all of their investments in the FTX scam
I would ordinarily send this in a letter to the editor of the DT but I’m afraid I must be on a naughty list for some reason as they haven’t published one of mine for years. Anyone up for the challenge?
In spite of changing my email address the B(LM)BC ignore my letters period. That is even after they dare to ask me to provide outrageous amounts of personal information in order to be permitted to object to their default partisan status. It seems that because we write “hate” (definition of hate: something based on factual evidence which dares to question the Leftie narrative), they are allowed to avoid the trauma our posts cause and simply ignore them, bless……
The term windfall tax has never been so ironic. Never in the field of energy generation has so much been fleeced by so few from so many.
Is it the case then, that our wind energy policy makers are closing down North Sea oil and gas exploration and production, stopping fracking and fossil fuel electricity generation and thereby causing energy price rises through shortages, so that the wind turbine and solar estates will continue to benefit enormously by selling at market prices and never at their CfD prices?
Plus of course making money from constraint payments where the electricity is double sold to an off-grid customer?
Whilst at the same time the policymakers are able to claim that renewable power is 9 times cheaper than fossil fuels by keeping electricity prices far higher than the false, never taken up CfD prices?
Is this also the reason why nuclear is not going anywhere? Only one expensive and duff technology Hinkley Point C with no uptake of SMRs despite a looming energy crisis and nuclear being the only affordable, reliable low carbon technology we have?
I think the government are now sailing into choppy waters. There is little they can do about the terms for AR4 and earlier, but even so it is likely that much of the yet to be built offshore wind will find it tricky to get financing on the basis of either the low CFD price or the Generator Levy and market price. Add in that the terms for AR5 are much tighter, with the ability to enforce the CFD, and they may get few bids. That would create a wind capacity pipeline crisis, and a wider generating capacity crisis. A wind hiatus might encourage a bit more CCGT capacity, but they are going to have to stop talking about banning unabated gas by 2035. The whole crisis will become very acute if nuclear stations have to start closing early because it isn’t worth repairing cracked cores.
A reminder of which sections of the market have been profiting particularly:
Yet more taxes when government makes mistakes isn’t going to encourage investment in the UK. That once again the state has shown itself to be incompetent shouldn’t surprise anybody yet pretty much everyone is calling g for more state involvement to “solve” the problem – if a doctor made you ill with a bad treatment would you ask him to cure it? The problem is the market price, not the new windfarms. If the market price wasn’t so high, there’d be no problem. And the market price is high because of a series of government actions.
This problem goes away with low market prices.
The problem is inadequate supply and use of fossil fuel, particularly gas and coal, caused by ESG and climate policies in the West.
I have just recently created an Excel spreadsheet to attempt to determine the total nameplate/installed capacity of wind turbines necessary in order for supply to always match the demand using hydrogen, produced by electrolysis from excess wind turbine energy, as a store of energy for when the wind doesn’t blow.
For the initial data I downloaded one year’s data (that of 2022) of demand and wind turbine power from the Gridwatch website.
IF my calculations are correct then it would have been necessary for 2022 (average demand = 30GW, installed wind capacity = 27GW) for there to be an installed wind capacity of 200 GW and a hydrogen storage capacity of just over 1m tonnes to provide a storage maximum of 14.3TWhrs with a 40% generating efficiency.
Now, I’ve yet to see anywhere this calculation (if anyone has, please reply below) but I would have thought that BEIS/DESNZ or their consultants must have done the same calculation and I wonder if mine is correct it explains why no storage is shown on the “Mission Zero” or any of the NG ESO FESs’ 2035 or 2050 energy flow diagrams?
At least two large Canadian pension funds lost their shirt on the FTX scam