CfD Subsidies Increasing Again
October 16, 2023
By Paul Homewood
Contracts for Difference subsidies are still costing energy users a lot of money. Between April and September 2023, subsidies of £640 million were paid out, nearly all for offshore wind.
The average strike price was £171/MWh, against a market price of £83/MWh.
Total generation covered by CfDs was 7.3 TWh.
Most renewable output is still subsidised via Renewable Obligations. For the 6 months to June 2023, the latest data available, subsidies for ROCs amounted to £3.0 billion on generation of 37.2 TWh.
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NOT A LOT OF PEOPLE KNOW THAT 
Oh to let Market Forces control the power industry! Cheapest provides the power and the rest can rest on their overpriced green laurels!
Ha yes indeed: like Council work contracts: Shares in Brown envelopes do very well whilst the cheap workers get quickly worn / burnt out as the rest sit back and enjoy….. and debate what Scottish Sceptic says below.
SO what does all that mean? ( to the average Jean on the street ). Does it put more money in their pocket – or make their house warmer? POINT is: that the average Jo P. doesn’t have a clue about all this stuff – Lack of education ? Listening to a lot of Primary School ( Oh! sorry – forgot that is being disrespectful to them, it is year …. well I dunno, but the early years) children ( Oh! Kidds) or was that kids – something to do with Donkeys .? No GOATS. OK Aye these little folk ( Ohh … ach wot de heck ) Seem to be able to talk the talk like their enlightened elder siblings already … but that’s just it. I learnt what i had to , to do my jobs with NO TIME to learn other non-important / relevant/ urgent/obscure / / / topics. SO we wonder when there’s an election on Real issues that the Voters do not have a clue . and like football ( to me ) just go along with the team, regardless of how useless it is. [You want balls placed in certain places, you get a Russian or Chinese Circus Act to do the job].
I’m currently sorting out flights from Peking like Gramps did before me( way back in the late 80’s/ early 90’s) to get guys to come over for the day: work experience / busman’s holiday , if you like, to dig & shift some material, cheaper than the Cost of local wages & fuel & Red tape this now.
It was always a stealth tax – a tax in all but name, because if it were a tax, the public would be told the true appalling cost of the tax.
Yes , like VAT – where if you give the private punters a 20% discount , calling it trade discount and we pay your tax, they’ll come rushing. Silly Ppl.
The entire tax system is a fraud, designed not to be effective and fair but to make it extremely hard for individuals to see how much tax is paid. Look at Employer’s NI – even the name is a fraud. It’s income tax but because the amount never appears in pay, people think it’s paid by employers. Same with John Major’s absurd insurance premium tax, introduced because he had pledged not to raise income taxes. Why tax insurance premia? VAT is hidden as the total price, stamp duty is huge but we only pay it once in a while, inheritance tax generally once. We live in a deliberately produced haze.
Further to Phoenix44 the greatest fraud was when the government sleight-of-handed the index-linked pension increase (10.1%) not just to state pensioners but to ALL public sector pensions, including even the richest ones. Must be costing billions. And they already gearing up for the same stunt for next year.
“Voters do not have a clue”, but neither do the politicians ? Why do we still have politicians when all the rules are made by NGO’s and other unelected idiots ?
Because the Left discovered years ago that people generally would not vote for their policies so found ways to circumvent that. The EU was the biggest and most successful of their creations, permanently centre-left and totally undemocratic. Convincing centre right politicians such as Cameron that government should be technocratic allowed the vast growth of quangos and politicised charities which are entirely staffed by the centre-left.
Paul
Is that right?
£3B on 37.2TWh? That is roughly 80p/KWh on the wholesale price of the electricity. Smells wrong from my own work on this.
I don’t doubt the £3Billion pa BTW, but perhaps the total renewable 37.2TWh is wrong? That equates to a wholesale premium of 81p/KWH, right? Perhaps wrong, but where? Why the question?
I would expect renewables to be 40% of output = 132TWh, and intermittents perhaps 25% = 82.5TWh. ROCs apply to both, at 100 or 200% level. As you know.
YES, Both are bad and actually unecessary, avoidable, resource intensive, unsustainable versus cheapest and safest and least environmentally impactful nuclear … oh, and wholly ineffectual as regards saving the planet from CO2 if CO2 was a provable meqasurable problem it is measurably not, so net zero is a pointless manufactured fraud at any level, BUT, not as fraudulent as suggested here. Probably. CEng, CPhys. MBA
Are you sure it’s 80p KWh? I make it 8p per KWh but I could be wrong.
Brian are you happy with your maths on that?
In modern parlance a financial billion is one thousand million thus £3 billion = £3,000,000,000.
A TWh represents one billion kWh thus 37.2TWh = 37,200,000,000kWh
My division makes that £0.081 or 8.1 pence not 81 pence.
Ah, that why the number was so high, then. Thanks for checking. Only out by a factor of TEN tho’.
Asa sanity check (that I didn’t make ……….. 😉 ) Iwould expect a roughly 150% premium on the unsubsidised wholesale price until recently,
So if, before the 2021 price rigging before Ukraine, the wholesale price was c. 55p/KWh, then we would expect roughly 8p/KWh premium from 150% , yes. But it’s probably twice that now. So best gues currently id c.16p/KWh. But I can’t find a source for the grid price…….
Also the reasonably recent Andrew Montford’s paper on this suggested £6Billion pa of ROCs, that would also be 16p/KWh on the wholesale price. BUt I don’t know his basis. Just that nuclear is still the big winner, we control the rpce and its 24/7.
Thanks for correcting me. We will get a handle on this in due course. The short answer is renewable energy is unnecessarily expensive by over 100 percent. And a big chunk of that is burning stuff like wood that emits more CO2 than coal, when we could have clean gas fired CCGT generation emitting half what coal does in CO2 without any subsidy, That’s the renewables racket. Not about the climate of course, it’s about monetising the bogus UN claims of the real tiny in fact effect of CO2 on much larger natural change to make the easy money from the legalised crime of the ECC Act.
People are doing this, I am doing that for the lumpen proletariat audience you define. Because the people must be told. It’s an interesting challenge. I just did the amount battery storage for an all r wind and solar grid i would cost on people’s annual bills, because it was decided people can’t do the multiplication to work out what the change in rate would be! Dear me…
Saying that the cost of renewables only with storage would quadruple their bills on the cost of weeks battery back up was deemed too hard.
So I have to say it in cash terms. Shedloads. Coming soon to a meter near you. £3,000 INCREASE on the average £1,000 electricity bill. Obs this is an extreme limiting condition, but it puts some scale on the realities of the rackets and the claims of idiots.
BY contrast Nuclear is cheapest with no premium or subsidy, easily replacing fossil on the existing grid with lowered costs at volume, 6.5p/KWh’ish global LCOE for 60 years per IEA. The cheapest and best is the most resisted. Why?Because it solves the claimed problems cheaply, no easy money for the crooks in charge of corruptly skimming our money our money off the energy economy by their laws.
PS and BTW Actually it was Ed MIlliband’s Act that Bryony Worthington wrote, she an opinionated know nowt FoE activist Eng LIt graduate with no engineering or physics, never mind economics, who knew nothing aout the core subjects, created a fairy tale act designed to reverse the prosperity of our energy dependnent developed economy by rolling out UN Agenda 21, which almost none of our pointlessly ignorant rent taking elected representative gobshite morons read in full before nodding it through, TWICE. Once under Blair and again under Cameron, and certainly did not understand it if they did. So ignorant, cynical, and selfish are our useless party hack undemocratic placeholders. Just follow the whip and keep your job. Ask Peter Lilley about that. IMO. You can’t make it up. That’s the government’s job.
” Only out by a factor of TEN tho’.” Brian you simply cannot sweep an error of an order of magnitude under the carpet. Maybe you should get a second opinion on your calcs in future. There are sadly some other very serious numerical flaws in your recent arguments that you seem to have not noticed.
PS Andrew Montford’s report calls it at £6Billion pa in ROCs….. here….
https://www.dropbox.com/scl/fi/40jqvfjl5or4rgagf51e3/Montford-NetZero-Costsheet.pdf?rlkey=9eu1vmtsrp5vh3itpgt9cg5td&dl=0
Brian, the figures Paul is quoting are half year figures as stated by “For the 6 months to June 2023, the latest data available, subsidies for ROCs amounted to £3.0 billion on generation of 37.2 TWh.”
Andrew Montford’s figures are annual ones so both sets of figures are in broad agreement.
I have just read Andrew Mountford’s report on the costs of Net Zero. It includes £2bn/year for 30 years for NG upgrades. But this document from NG appears to request £18.4bn/year from 2024 to 2035. If correct this is a total of £220bn = £7K/household:
https://www.nationalgrid.com/document/149501/download
Yes , this report puts the price at £6000 per year per consumer .
But I doubt that these facts will get much mention in the MSM.
https://www.dailymail.co.uk/news/article-12635121/BBC-Hamza-Yassin-fakery-Planet-Earth.html
What we all knew about BBC climate propaganda getting another exposure in the media
The UK is living in an Infantile Nursery world, just rocking the boat. Yeah carry on sleeping & dreaming. Back & fore, back & fore, …. TIme to tip over and get up and change.
And yet the eco loons (including our likely future energy secretary Milliband) are still claiming that wind generated electricity is the cheapest. Why does our media not challenge this lie? This is dereliction of their duty and ignoring the justification for their existence.
As I understand from people in the media, and as stories from US media illustrate, there is a great deal of conflict between the older journalists and staff and the younger group across much of the media. The younger group are unabashed activists who believe that their job is to further their political agendas by any means. They are utterly certain they are right about everything and utterly determined to get what thry want.
And like most young people, they are so convinced they are right on the basis of an extremely low level of experience and general knowledge; particularly regarding STEM matters
This famous quote needs updating both in ages and timescale.
When I was a boy of fourteen, my father was so ignorant I could hardly stand to have the old man around. But when I got to be twenty-one, I was astonished at how much he had learned in seven years.
Probably 34 to 51 making 17 years
I recently queried the accuracy of a BBC article regarding house rentals as it depended solely on the opinion of Rightmove and read more like an advert for them. I quoted data showing Rightmove’s limited share of the rental market (most landlords, like me, do not use them) and demonstrated their market share was diminishing.
Having virtually accused the BBC of taking a bung from Rightmove (!) I expected a typical fob off reply. I was astonished to get a response largely agreeing with my points, apologising for the inaccuracies and advising they would be addressing the issues I raised further. Looking up my respondent I found he was in his late fifties and clearly very “old school”. So I have to agree there does seem to be an age and experience issue going on.
“Why does our media not challenge this lie? ” Because they aren’t our media. They are the controlled media.
” Why does our media not challenge this lie? ”
Most medjia people are not competent to challenge the lie. Added to which, their medjia brains generally have a very short attention span. There are exceptions.
Many medjia people do not appear to have a default ” this might be bullsh** ” approach . But again, there are exceptions.
Anyone attempted to set out the cost to domestic consumers in 4 or even 3 lines viz. the cost per unit before the burden of grants , subsidies and other inducements – with each class of surcharge per unit shown – to arrive at the current gross open market cost?
I cannot see that the surcharges are anything but a tax by other means, bypassing the Finance Act.
Something outside the competence of the scientists and engineers who are so compelling for each other in these Comments is needed to engage the interest/comprehension of the D. Mail readership and myself i.e. the broad electorate ( and which the majority of MPs might understand).
They are not a tax as the money does not go to the state. Subsidies are paid from general taxation raised under the Finsnce Act.
https://www.thesun.co.uk/motors/24419642/mclaren-luxury-hybrid-bursts-into-flames/
https://www.thesun.co.uk/wp-content/uploads/2023/10/i-m-told-press-launch-852739903.jpg?strip=all&w=362
interesting issue as the CFd’s are contractual and there’s not much we can do about this in the short term however, it seems that the Crown Estates are raking in something of the order of I billion a year from the Wind farm generators by the bizarre fact that KCIII owns the seabed. Which raises the question why is the sea bed not owned by the state and how is it that the doyen of all things green is raking it in from seabed leases. Before anyone points out I know that KCIII only receives a proportion of the Crown estate income and that he reduced the percentage take due to the massive profits made from windfarms and suggested to the treasury/ Government that the excess profits should be used for essential services sticks in my craw as all the profits should have accrued to the nation or better still used to reduce the level of subsidies
The Core Sovereign Grant up until 31 March 2023 has been calculated based on 15% of the income account net surplus of the Crown Estate for the financial year two years previous, subject to the provision that the Sovereign Grant does not decrease year on year. The Core Sovereign Grant for the financial year 2022-23 was therefore £51.8 million, unchanged from the prior year.
The Royal Trustees3 agreed that from 2017-18, the Sovereign Grant would include an additional 10% of the income account net surplus of the Crown Estate for the financial year two years previous to fund the Reservicing of Buckingham Palace over a period of ten years. The additional Sovereign Grant for Reservicing for 2022-23 was £34.5 million and the total Sovereign Grant for 2022-23 was therefore £86.3 million. For a summary of expenditure refer to the ‘overview of the year’ section on page 7.
The total Sovereign Grant for 2023-24 is unchanged at £86.3 million (Core £51.8 million and Reservicing £34.5 million).
That’s a pretty high rate of tax – 85% basic rate until March 2023 albeit with the 10% relief for refurbishment of Buck Pal, and now income frozen at last year’s levels despite a large inflation increase in Crown Estate income particularly from wind, and presumably an inflation increase in costs.
I came across the latest video on the eFIXX youtube channel which talks about a trial of extracting power from homeowners storage batteries to prop up the grid. Looks like the story is from ECN – electrical contracting news. An interesting find just as blackoutnews.de has an article of the destruction of part of a house in Hessen due to the explosion of a storage battery. Remains of the house is unsafe so the owners have been forced to move out but are unhurt.
I see the Winter Baseload Market Reference Price has been announced at £128.14/MWh, which means that Drax (£132.47/MWh) and Lynemouth (£139.08/MWh) can now operate their CFD Biomass units and be paid a few pounds over spot price via their CFDs. So now they will run more or less as if they were not subsidised at all, which will be an interesting indication of real costs..
How the Baseload Market Reference Price impacts generation:
Still on the topic of energy (just about) today’s Telegraph main business article “Sunak urged to close down gas network” contains the following paragraph “In the assessment published today the NIC said the UK’s committments to net zero means some heavy industrial businesses and back-up power plants will use hydrogen instead of natural gas, requiring a portion of the gas network to be repurposed.”
This a concept I have been banging on about for a while. If such hydrogen came from electrolysis (if not, there is no point whatsoever) the co-produced oxygen could be as valuable as the hydrogen. It could be used to oxycombust really difficult materials, especially plastics, and carbon capture would be feasible (no nitrogen diluting the exhaust). Just think – waste plastic could be an inexhaustible fuel for the future. C’mon Cat, what do you think?
Wat een verrassing
Dutch Energy Minister Admits That Wind Power Agenda Is Pricier Than Anticipated
https://oilprice.com/Alternative-Energy/Wind-Power/Dutch-Energy-Minister-Admits-That-Wind-Power-Agenda-Is-Pricier-Than-Anticipated.html
Yet another one who either thought he knew better or has hopelessly naïve, and who just didn’t listen to the multitude who were warning about both the cost and uselessness of wind.
Than anticipated by whom? I can see an argument for photovoltaic getting much cheaper but why would wind turbines get substantially cheaper? Politicians believing what they want to believe.