Offshore Wind Demands £95/MWh
By Paul Homewood
h/t Philip Bratby
So now we get an actual figure on it!!
From the Telegraph:
No new wind farms will be built off Britain’s shores unless the Government lets operators earn more money from the electricity they produce, the chief of the nation’s biggest generator has said.
Tom Glover, country chair of RWE’s UK arm, said the price offered by the Government to wind farm operators must rise by as much as 70pc to entice companies to build.
Developers must be offered between £65 and £75 per megawatt hour (MwH) for the power generated from wind farms, Mr Glover said.
That compares to the £44 offered in the most recent government-run auction.
His warning follows the disastrous result of the last offshore wind allocation round in September, which ended in a humiliation for ministers with not one company offering to build new offshore wind farms.
Mr Glover called the incident “clumsy” and said a failure to increase the price offered to developers risked a repeat.
https://www.telegraph.co.uk/business/2023/10/25/electricity-prices-rise-70pc-pay-wind-farms-energy/
A number of commentators have rightly criticised this article as being pro-renewables, putting the blame on government. All they did, of course, was to believe the wind industry’s own propaganda about rapidly falling costs.
In particular, the article fails to point out that the prices mentioned are at 2012 prices, which incidentally should be dropped entirely in future auctions, as they are of no relevance and are highly misleading.
£75/MWh, for instance, equates to £95/MWh at current prices. This is an important omission by the Telegraph, because one commenter pointed out that since the current market prices is £100/MWh, offshore wind must still be a bargain!!
The whining of the wind lobby about inflation is also not really valid.
At last year’s auction, offshore wind projects such as Dogger Bank won contracts at £39.65/MWh. This year the govt set the bar at £44/MWh, thus handing a 10% price increase straightaway. And in the year just gone, about another 10% has been added on via RPI indexation.
So RWE and co are already being offered 20% more than projects were signing up for last year.
It may be that some of their costs are rising faster than general inflation, but any competent business builds in contingencies for things like that.
Also with inflation seemingly remaining stubbornly high, the index linked price will be much higher still by the time these projects are commissioned in a few years time.
The undeniable reality is that offshore wind never was viable at the fanciful prices signed up for last year and before. The cheapest offshore wind being sold via CfD is from Triton Knoll, which is being paid £97.82/MWh.
There never was any intention trigger those contracts, instead wind farm owners always planned to sell at much higher prices on the open market.
In the latest auction, this loophole was closed by the govt, leaving the wind industry between a rock and a hard place, with their bluff having been well and truly called.
Comments are closed.
NOT A LOT OF PEOPLE KNOW THAT 
Whatever happened to reducing bills
That would never do. We consumers have a mission to keep his bonuses and dividends as high as possible
Reducing bills reduces profits, ain’t going to happen
Aren’t wind and solar free?
Indeed, but shame about the cost of capturing their power, sending it somewhere it can be used, and giving the provider a healthy profit.
Healthy is one word that can be used for the level of profit they provide; but maybe obscene is a better one?
The greed and hubris knows no bounds – billions they’ve made by wilfully ignoring their signed CfDs and selling their intermittent wares on the spot market at 10x the agreed contract price
These guys are the modern day Dick Turpins, they just don’t bother wearing masks anymore
I hope Sunak has the gonads to say shove it
If Sunak does Starmer and Millibot will say yes please!
Hopefully Starmer & Millibot won’t be anywhere near the levers of power next year
🙏🙏🙏
He would have to grow a pair first of all.
Indeed. If this rate is to be offered up, then as part of the new deal, all current CfD options must be taken up first.
If only they shared Dick’s fate!
Suffice to say this doesn’t put our political masers in a good light.
I would hesitate to say that after all their kowtowing to the great god of climate change hysteria and their childish panicking over covid since 2020 the phrase “in a good light” is a definite non-starter with those numpties calling themselves politicians
Millibot says renewable electricityis 9 times cheaper
He would say that wouldn’t he?
Maybe his GB energy nationalised company will make it free
Milliband does not live in the real world. He lives a make believe life supported by lies and a vivid imagination. God help us all if he or his supporters, get anywhere near power after the next election.
He’s has no idea, he regurgitates what his lefty SPADs tell him – for clarity, wind & solar are10-12x more expensive than coal, gas or nuclear and have a capacity factors half that of the latters
If Miliband was in advertising and used such misleading language to promote his product he would be in court. I wish.
Well, given that a wind turbine lasts about a third as long as a nuclear plant and only provides power a third of the time, I reckon it’s 9 times more expensive
I make it more like £100/MWh. The inflation factor applicable currently is 1.33756613756613 according the the LCCC spreadsheet on strike price adjustments.
Thank goodness offshore wind generation is “9x cheaper” than gas-fired generation according to Miliband Jnr.
https://x.com/Ed_Miliband/status/1566405883621523457?s=20
The other day Claire Coutinho announced that the stikre prices and conditions for AR6 would be announced during November. It will be interesting to see what homework they have done meanwhile. There was a consultation about sweetening CFDs with “non price factor” payments to which I responded, saying that no such backdoor subsidies should be offered, and they needed to abandon the farce of calculating everything non-transparently in 2012 money and completely redesign the auction mechanism and its bases of indexation to be much more reflective of real costs.
I also pointed out that they will need to add more conventional capacity under the Capacity Mechanism because they are now getting seriously behind on capacity procurement.
The 2012 basis is fine for an auction and fine for those actually involved in the system. It creates trouble outside that because most people don’t know it exists. Investors need a base price. I’d agree that as we have had a period of high inflation since 2012, it ought now to be reset to 2023 figures.
The “budget” is also in 2012 money, as are the Market Reference Prices applied to each technology that are used to determine how much of the budget us used up. Then the assumed capacity factors for each technology are yet another fudge factor. I doubt whether there are more than a couple of people who understand how it all works (or fails).
I think they also failed to get any takers for gas generation as the return on investment doesn’t stack up. They need subsidy to make it worthwhile. They have the same problem in Germany where having realised the private sector won’t build it, the government are at odds with the EU over the state subsidising the gas generation.
There is a new Gas fired power station being built at Eye in Suffolk . Some of the turbines have been coming through the area recently .[ Quite something to see . a 500 ton load on a truck .]
https://www.suffolknews.co.uk/stowmarket/gas-power-plant-plans-for-airfield-resurrected-9191292/
Interesting link. I see it is our US forest burning friends at Drax that are behind it. Sorry for the pun but I guess they have money to burn. The article is from 2021 but interesting to see the lies from the Green moron – “The Green Party view is that the Eye proposal is now obsolete. Given shrinking costs of both renewable generation and storage of power, a gas fired intermittent power station in 2021 is environmentally and economically unsustainable.” The storage of power is the most outrageous lie that has yet to be properly challenged in the legacy media.
The fact that DRAX is a very large receiver of subsidies for its wood burning makes me think that they would not build a gas plant unless it could make money . Perhaps their CARBON CREDITS will reduce the costs of running the gas plant , and with the very real chance of electricity prices going up , they could turn a large profit as gas plants can be very efficient .
Bit off topic , one of the turbines coming from Ipswich Docks on the way to the new plant .
Amazing bit of transport work going on there .
Contributors here may well be aware of the planned floating wind farm about 30 miles off the north Devon coast. Residents in Braunton were rightly concerned about the proposals to bring power ashore at Saunton Sands and right through Braunton Burrows, an area of outstanding natural beauty, a Unesco world heritage site and several sites of scientific interest (SSSI). The area is a VERY popular tourist destination and the disruption will be devastating, with no risk assessment having been made. There is one road from Braunton connecting Saunton, Croyde and Putsborough beaches.
Paul do you know if a generation price has been taken? Having had the Fullabrook eyesore trash the view on the hills behind Saunton you can be sure no part of Britain is sacred.
If that is the ” TWIN HUB ” floating wind farm , the current listed price is £116.77 . But it will have gone up a lot by the time it comes online by 2027
CFD prices are here .
https://www.lowcarboncontracts.uk/cfd-register/
Notice that a lot of the earlier offshore wind farms are still being paid around £200 per MWh .
But when the ETS changed in 2021 , the prices from then went down under CFD I think this was to try to hide the massive subsidies they got under the ETS change so that they could claim wind energy was getting cheaper .
It’s the White Cross Wind Farm. See https://www.bbc.co.uk/news/articles/c80j233xj7jo
Cant see a WHITE CROSS in the CFD register .
The TWINHUB is listed as a floating windfarm off the coast of North Cornwell on page 16 of the register
They are now expecting to apply in AR6, assuming that the terms are good enough. I don’t know if they had intended to apply in AR5, but dropped that because of poor terms.
Many years ago as a CCF cadet I spent a fortnight of summer camp, part hiking over Exmoor for several days, ending at Cloud Farm in Lorna Doone country, and part based at Fremington Camp in the squaddies’ barracks, where excursions included Croyde beach (but the waves weren’t big enough for surfers that day – but at least there was a fine view of Lundy), and being driven across the estuary to the Braunton Sands training ground in the Army’s last unit of DUKWs which were given a thorough workout over the dunes. Much better than a fairground ride. The single coach train from Exeter to Barnstaple was also an experience, stopping at milk halts.
Signs of the end of the wind power boom. Siemens Gamesa in deep financial trouble, unless the German government supports them, they are bust. I just read a report that a major problem is the high voltage cable connections are failing at roughly a 30 % per year (so 1 failure every 3 years) fixing takes a lot of resources.
rgylivenews.com/2023/09/22/subsea-cable-failures-pose-global-threat-to-offshore-wind/#:~:text=Global%20Underwater%20Hub%20(GUH)%20has,are%20linked%20to%20cable%20failures.
‘Subsea cable failures pose global threat to offshore wind’ [September 2023]:
Imagine what the New New Polar Bear could do. The Chinese ship that dragged its anchor through the gas pipeline and internet cable between Finland and Estonia.
Not just shipping being a danger to cables, the reverse can be true. A cock-up at a cable crossover off Kent in one of the safer inshore routes (away from shipping lanes) has meant that the rock armour is awash at times. This forces yachts out to sea into the shipping lanes. RYA complained but it was too late and the subsidy farmers refused to relay the cables to a safe depth.
Signs of the end of the wind power boom. Siemens Gamesa in deep financial trouble, unless the German government supports them, they are bust. I just read a report that a major problem is the high voltage cable connections are failing at roughly a 30 % per year (so 1 failure every 3 years) fixing takes a lot of resources.
rgylivenews.com/2023/09/22/subsea-cable-failures-pose-global-threat-to-offshore-wind/#:~:text=Global%20Underwater%20Hub%20(GUH)%20has,are%20linked%20to%20cable%20failures.
Well what a mess, I thought wordpress detected double posts and the link seems to be too long.
The text part isn’t needed.
So much for Milliband’s claim that wind electricity is the cheapest and that building 1000s more wind turbines will provide us all with cheap green and reliable electricity.
And what about our likely future energy secretary’s claim that he’ll make Britain fossil fuel free by 2030?
Anything Ed Miliband claims is for media purposes only.
Milliband is probably the most stupid person in Parliament, made so by his extraordinary arrogance and self-regard. His intellect has not moved on since he was 16 or 17 and he has no experience or understanding of the real world.
Like all Marxists
Not really stupid in the normally accepted sense as that would imply unknown ignorance rather he is a complete narcissist.
Siemens Energy looking for almost $17 billion in guarantees from the German government!
https://www.bloomberg.com/news/articles/2023-10-26/siemens-energy-in-talks-with-german-government-over-guarantees?srnd=premium-europe
“…but any competent business builds in contingencies for things like that.”
That’s nonsense. The costs are what they are today. They inform the price required to produce an acceptable return.
Phoenix44,
I don’t think it’s a simple as that. These projects take very many years to plan and build, they must factor in an increase in cost for everything they use to cover the inevitable rise for the duration of the project, with some stretch factor for unknown or unanticipated effects such as interest rates.
“…the index linked price will be much higher still by the time these projects are commissioned…”
Yes, but not in real terms. And if inflation continues to be high, construction and operating costs will rise significantly between now and commissioning in nominal terms. If inflation runs at 8% for tte next 3 years, then at that point costs will be 26% higher than now in nominal terms, requiring a similar increase in prices. Renewables are a very poor choice for lots of good reasons, but index-linking various aspects is noticed of those reasons.
Is there a website that shows current comparable costs for thermal power stations?
Energy Return on Investment is the value of the energy produced over the cost of the money needed to build and run the type of generation over the life of the system .
https://corporatefinanceinstitute.com/resources/accounting/energy-return-on-investment-eroi/
As you can see , neither wind nor Photo Voltaic produce enough to cover their costs which is why they both demand huge subsidies .
But under the latest C F D s and the ETS the amount of subsidies are well hidden up so that the Green Loonies can say that they are not as expensive .
Thanks ITRW. Nuclear is impressive!
How resilient is the Corporate Finance Institute to being “reputationally undermined” if they are attacked as the messenger?
Nuclear cost a lot of money to build , but the running costs are lower and they last a long time , probably 4 or 5 times as long as an offshore wind farm . And they generate reliable consistent energy .
Also I do not think they have to pay CARBON TAXES .
Which is why they have a much better return on investment .
I’ve always wondered how much electricity generated from wind is lost in the long transmission lines, before it reaches the user ????
Trying to power a country of 70million people with off grid technology that only works when it wants to is just collective stupidity.
Black Pearl,
the simple formula for loss due to resistance is current squared times resistance and resistance is proportional to distance of the conductor. (and there are other losses as well as resistive loss.)
It is a fundamental electrical engineering rule of thumb that source and load distance should be as short as practicable. So we have a concentraion of wind generation in Scottish waters which is mostly consumed in England. Not only that the transmission lines between the two are not capable of carrying all the power on the odd occasion that wind is strong so it is curtailed at great cost.
Yet our inept government wnats to build much more.
Well if it doesn’t make sense, (which it does not) “follow the money”
Guardian: Is crisis at Siemens Energy symptom of a wider wind power problem?
https://www.theguardian.com/environment/2023/oct/27/is-crisis-at-siemens-energy-symptom-of-a-wider-wind-power-problem
Yes. Next!
local media like Radio Humberside, local ITV and local BBC TV are always making news items which are PRasNews for the local windfarm industry
The foreign owned wind turbine blade factory in Hull
The foreign owned windfarm base in Grimsby
All failed to report this news which broke 5am Friday
“Siemens Energy shares plunge as it seeks government bailout”
The salaries/pensions of these Green Energy media shills should be paid in Siemens Energy shares
(Graph baseline is not zero .. shares have dropped 40%)
[img]https://pbs.twimg.com/media/F9YAxT-XQAAtjVm?format=jpg&name=small[/img]
Graph pic
https://pbs.twimg.com/media/F9YAxT-XQAAtjVm.jpg:small
It is not just Siemens Energy in trouble as the shares in the Danish companies are also tanking. GE Wind Energy have trouble with blades breaking leading to a windfarm closure while they look for the cause.
A brilliant summation by Jo Nova is that of an industry that is founded on government subsidies, and deemed necessary due to government funded fake science, needs government subsidies to avoid bankruptcy.
True. Wind power is not market driven at all.
What a perfect summary.
If the cheapest CfD price currently paid is £97.82/MWhr, then I presume that the new CfDs that we will be forced to pay by the CCC and the courts will be this new price of around £95-£100/MWhr meaning that although prices will not rise at this stage they certainly will not be falling?
I see from the DESNZ “Electricity Generating Costs 2023” that the LCOE for CCGT is £114/MWhr of which £60/MWhr are “carbon costs”. So the cost of ofshore wind is already double that of CCGT without even taking into account the additional costs for transimission, balancing and storage if dispatchable/reliable electricity is required.
Good point about gas. The levelised costs reflect optimal loading, ie 80 to 90%
In practice they are stopping and starting all the time, oushing their costs up. That is why market prices are much higher
There is a lot of lies and propaganda being put out to try to claim that renewables are not as expensive as they actually are .
For about 10 to 15 years before 2021 , grid price was fairly stable at about £35 per MWh , Coal Oil and gas made a profit with that price , but all renewables had to have large subsidies to exist .
Then the ETS has a very large increase , which put Carbon taxes up, which more than doubled the price for Coal , Oil and Gas, and these extra Carbon taxes were paid to the renewable generators which were the main reason electricity price went through the roof and made it look like the renewables were better value .
But the facts are that offshore wind costs about 4 or 5 times the price of CCGT , and about twice the price of Nuclear generation with out the stealth taxes .
” DESNZ “Electricity Generating Costs 2023” ”
… which I think is this pdf
Click to access electricity-generation-costs-2023.pdf
My limited understanding is that LCOE does not include the cost of “back-up” energy sources e.g. the use of the gas / coal / nuclear when wind / sun are low.
That’s right, Micky – it does not include any of the wider system costs, which should also include grid upgrades
The biggest beneficiary of this news should be nuclear as this is another low CO2 emitting technology. The gas industry knows that the renewables, a parasitic technology, cannot operate without them (even if it has to be CCUS), so this news does not affect them.
My calculations show RR SMRs to be already cheaper than offshore wind, even before these RWE requested price increases plus the fact that their energy is reliable and secure (no dependency on the Chinese for infrastructure (turbines and solar panels)) and no need to either upgrade the NG to bring power onshore or spend enormous sums on storage. They can be built at existing nuclear sites already complete with all the necessary indrastructure and security. And can be built more quickly than covering the North Sea with 15MW wind turbines and all the necessary cabling.
John Brown – “The biggest beneficiary of this news should be nuclear as this is another low CO2 emitting technology”.
If I don’t see any merit in the Enhanced Greenhouse Effect, I have no reason to value “low CO2 emitting technology”. So how much should I be obliged to spend on it?
We probably all agree that wind-generated power is a lame duck because it is commercially and operationally inferior to alternatives. New nuclear generation capacity is in the same position.
Consider a test: will assets attract private sector risk taking (investment) without public support to shelter them from their risks and liabilities?
The centrally administered CfD arrangement confirms the private sector will not invest in wind generating assets without income guarantees funded from the public purse. They will not progress through private sector FID (final investment decision) on their operational and commercial merits alone. (Even if some have ditched the crutch once built, the crutch brought them into existence.)
A centrally administered CfD arrangement was initially provided for new nuclear assets, but it didn’t cut the mustard. Now it is planned to guarantee income though a RAB (regulatory asset base). Nuclear assets cannot get through FID on their operational and commercial merits alone. They are lame ducks according to the above test.
A contrived CO2 constraint is presently herding the GB power mix to give these lame ducks an opportunity to exist. We’ll learn the costs in the fullness of time as the net zero timescale dies a death of a thousand cuts and delays and we are left with the job of funding the lame ducks.
‘I have no reason to value “low CO2 emitting technology”.’
Excellent point! Being “better” than something that isn’t bad has no value.
‘New nuclear generation capacity is in the same position.’ I.e.,
‘commercially and operationally inferior to alternatives.’
Not really. The cost of new nuclear is orders of magnitude higher than it should be, because of government constraints and regulations. A good plant could be built for a tenth of current costs, and provide electricity at very low cost. The problem isn’t nukes, per se, it’s government.
But that’s not even the biggie. No one would be foolish enough to invest in nuclear without >100% financial backing from the government. Government capriciously reserves the right to cancel any nuke, and any time, for any reason.
See: Shoreham Nuclear.
Gamecock. I cannot comment on whether change of regulation would reduce nuclear costs significantly. I might as well accept your assertion that the costs would reduce tenfold, assuming the abandonment of regulations would be acceptable in the wider public arena (which is really the audience you will need to convince).
For example, reducing the reins on tight licensed nuclear site security standards is going to be a tough one for you to win, but good luck if you have that in your sights.
However I cannot accept more than one order of magnitude reduction in costs. It would sacrifice any credibility in your point. We can just call it a ten fold reduction for discussion. It makes no difference.
The private sector won’t take the risks Gamecock. This is a ship that sailed long ago. The private sector cannot carry the development risks or the multi-century management of nuclear liabilities. There is no answer to this – you might as well accept the liabilities will have to be managed by the public sector, and that’s a crutch that can never be removed.
Likewise, nuclear technology is so specialised that it is best managed at super-large scale. An operator is either in the game big style to divide the massive overheads into sufficient business to approach anything that could be cost effective. That’s one of the primary reasons the UK Government could only get interest from other Governments when it sought to competitively tender new nuclear build in GB. Only governments can work at the required scale.
There are very good reasons why the UK Government is forming GB Nuclear. The cost of regulation isn’t one of them.
These requested RWE prices will make nonsense of the Royal Society’s recently published “Large-Scale Electricity Storage” report where they assumed renewable electricity prices by 2040 to be between £30.2 and £45/MWhr, partiularly when comparing with other technologies, such a nuclear. This is in addition to the Royal Society’s very optimistic guesses for the 2050 efficiencies of electrolysis and generating electricity from hydrogen, especially when both will be suject to chaotic intermittency in operation.