Offshore Wind Costs
By Paul Homewood
https://renews.biz/89521/uk-hikes-offshore-wind-cfd-price-cap-by-66/
Following the news that offshore wind prices will rise to over £100/MWh in the next round of CfDs, it is worthwhile recapping what we are currently paying existing wind farms.
The older wind farms, which are covered by ROCs, are currently paid a subsidy of £125/MWh, on top of the market price for the electricity they produce, which was £96/MWh in September. In September therefore we paid a total of £221/MWh. ROC account for about a half of total generation.
Newer wind farms are paid via CfDs. Theses guaranteed strike prices vary from one wind farm to another, but in September the average was £176/MWh.
There are of course a couple of offshore generators which have refused to trigger their CfDs at the low prices they originally agreed to, and these receive the market price instead.
CfD strike prices are guaranteed and index linked for 15 years, so even the oldest projects will still be subsidised well into the 2030s.
Based on current market prices, we are paying a total annual subsidy of £4.8 billion to offshore wind, on top of the wider system costs. With a government offshore target of 50GW capacity by 2030, this subsidy will rise to over £11 billion a year.
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NOT A LOT OF PEOPLE KNOW THAT 
And that is just for offshore wind. On top of that is onshore wind, solar, Anaerobic Digesters etc. We are well and truly being screwed by the renewable energy industry. Of course we never hear about this in the MSM.
‘this subsidy will rise to over £11 billion a year’
No wonder HS2 extensions bit the dust.
And yet wind power is the future of our economic prosperity!
For reference, do we know what the average cost of electricity is from Gas Turbines Paul?
Up until 2021 , when the ETS changed to hide the subsidies to unreliables , and of course put up the price of other forms of generation , the price paid for gas generation had been averaging around £30 to £ 40 per MWh for about 10 to 15 years .
There was a VERY convenient Russian invasion which put up the gas cost , but that was only a small part of the cost and did not last very long .
So the present cost for gas generation is very much affected by Carbon Taxes , but is still about 3 or 4 times lower than offshore wind .
And idiot Milliband still insists wind power is the cheapest electricity generation, and he’s going to make Britain “fossil fuel free by 2030”.
Heaven help us when he becomes Energy Secretary in the almost inevitable next Labour Govt
The gas price had already risen significantly before the invasion of Ukraine.
Spot on Pheonix44 , a huge rise in Carbon Taxes caused the costs to go up by a lot , but the later invasion was a handy excuse for the media to find something else to blame .
And idiot Milliband still insists wind power is the cheapest electricity generation, and he’s going to make Britain “fossil fuel free by 2030”.
Heaven help us when he becomes Energy Secretary in the almost inevitable next Labour Govt
If I know this and YOU know this and everyone on this site knows this, then presumably our wonderful ruling elite know this?
The question is are they incredibly stupid, malignant, or so far up their green backsides that the virtuous idea, rather than the grim reality, is the important thing?
I think the reality is that the ‘wonderful’ elite DON’T actually know this. Note that Sushi’s Bimbo, presumably with a straight face, said that giving more money to windmills will make our electricity cheaper. And even if they did know the truth, they would think it is a price worth paying to save the planet with no thought to the consequences of driving businesses – not just manufacturing – bankrupt through electricity costs. The German economy is cratering in front of their eyes but their leaders are ploughing on regardless and considering chucking taxpayers money around to try and stop the mass migration of industry. Where the taxpayers will find the money is anyone’s guess.
They lie and they lie. It ill be “cheaper” because they will make gas more expensive and it will be “cheaper” because the subsidies will come from taxation.
We seem to be in an era when feelings and beliefs trump facts. Net zero has become a religion and its beliefs are not open for debate or questioning – that would be heresy.
How much, in addition to all this, does it cost to convert wind and solar output that can actually be fed into the grid, including the cost of connectors and the Crown Estate’s rake off for incoming cables?
And how much has it cost so far to import power from Europe via the exInterconnectors?
And how much for keeping obsolescent but working power stations functional until Alok Sharma can fit blowing them up, into his busy diary? (Perhaps now some virtue-signalling panjandrum from the Department of Zero Energy Security).
Enquiring minds would like to know!
Four of the eight cooling towers at the Fiddlers’ Ferry power station will be blown up on the 3rd December, the other four to follow. Fiddlers’ Ferry in Cheshire provided jobs for thousands of people for many years.
Further madness, these towers could be used for CCGTs to reduce costs and increase the efficiency relative to less effective ACCs. They also allow the stations to be de-mothballed like in Germany in the event of future disasters: our energy security is the lowest ever now, but none of our “leaders” understand or care in their virtue hunt.
And thats when Ratcliffe is being used on a daily basis currently even when the wind is blowing despite its high cost its clearly more economical than CCGTs.
Imagine how much cheaper electricity would have been if it had provided jobs for hundreds instead of thousands. Jobs are a cost, not a benefit and the fewer people are producing one thing, the more people there are to produce something else.
Or, in the semi-apocryphal story attributed to Milton Friedman:-
“(Friedman) went to Asia in the 1960s and was proudly taken by the government to see a public works project. They were building a canal. He was struck everyone was digging the canal with shovels. Friedman says, why no heavy earth-moving equipment?
They said, oh, this is a jobs program. So Friedman says, why don’t you give them spoons instead of shovels?”
Ratcliffe on Soar was going well this afternoon.
Probably it will until September 2024, after which the site will be “redeveloped”.
There was piece in The Mail yesterday about the rising cost of the standing charge. Now I wonder why would that keep going up….
I wonder what the price would have to be before MPs would say “This costs too much”?
On the subject of Offshore Wind Costs, it’s worth remembering that in the recent “Contracts for Difference – Methodology used to set Administrative
Strike Prices for CfD Allocation Round 6”
Table 1: Administrative Strike Prices (£/MWh in 2012 prices) shows Offshore Wind at £73/MWh for those with fixed-foundations, owners of Floating Offshore Wind receive £176/MWh.
Click to access cfd-ar6-administrative-strike-price-methodology.pdf
A fact the Beeb’s Business Editor Simon Jack failed to mention with his claim “The government has lifted the amount it pays from £44 per MWh to a price up to £73” in his recent article.
Our MP in north Devon is chair of the All-Party Parliamentary Group for the Celtic Sea. She’s very keen on the proposed floating wind farm beyond Lundy that will beach it’s connection infrastructure slap bang in the middle of Braunton Burrows. This is an AONB and the largest sand dune area in England. It’s privately owned by Christie Estates so will they receive compensation? At £176 per MWh at 2012 prices someone is getting an Arthur Daley out of it. It’s scandalous that our MP seems oblivious that her constituents will be paying through the nose for this arrangement for years to come. Any claims about local job benefits should be taken with a boulder of salt. Much of North Devon is off the gas grid which is the final kick in the teeth.
Offshore wind has a 62% load factor in the assumptions is far too high so whether even this higher price will get any more interest remains to be seen.
The effect of the assumption is on the rate at which bids consume the budget. The calculation is strike price of marginal bid less assumed market value “reference ” price, multiplied by capacity at marginal bid or cheaper, multiplied by assumed load factor. If the total volume of bids valued at the Administrative Strike Price (maximum bid level) doesn’t consume the budget then all bids are accepted and paid the ASP, as happened with solar last time.
First, you divide the 123 Genders by the White Supremacy factor, to get the predicted climate change. THEN you know how many windmills are needed, and what rate to charge for them. FOLLOW THE SCIENCE people, we’re trying to save the planet here.
The BBC continues to pretend that 2012 money is what we pay. The government of course doesn’t pay anything other than its own electricity bills. For which they raise taxes.
I’m not alone in monitoring grid splits but today’s a bit special:
0830 – wind 3.2%, solar3.1%, coal 3.7%
12:30 – wind 2.4%, solar 11.4%, coal 3.7%, gas
Paul, is there not ONE newspaper willing to publish this- even if it was just a reader’s letter? It would be a bigger scandal if they didn’t.
I saw an unlikely heading to a story in Yahoo Finance a couple of days ago and sent myself a link to explore further:
“SSE to increase clean energy investment by £2.5bn after profits rise”
and the link text was the same but when I checked again a few hours later:
https://uk.finance.yahoo.com/news/sse-increase-clean-energy-investment-111811273.html
Clearly, their PR dept were tipped off and the good news cancelled. Cynical or what?
I wish I’d taken a screen shot or copied it.
So SEE don’t want to risk their profits to invest in wind, they want the Government to subsidise them again,
Win-win for SSE; Lose-lose for the poor bloody tax-payer.
I believe you can view past web pages using the free wayback machine.
https://archive.org/web/
Crucially Paul, you have shockingly omitted to include the dynamic temperature and carbon reductions that the UK’s world leading wind technology will deliver for the planet.
It goes without saying I shall be reporting you to the BBC.
In the interests of accuracy I have included the numbers below.
Temperature reduction: 0.00C
‘Carbon’ reduction (parts per million) 0.00 ppm.
As readers can see these figures are accurate to 2 decimal places, so there can be little doubt about their precision or value to the planet.
We are soon parted from our money, by foolish politicians. Welcome aboard the Green New Grift.
I remain unclear what the legal basis for all this? The state had decided that we must be forced to pay higher prices for an essential service that is provided by private companies. Practically, we cannot go elsewhere and so we are forced to buy at prices dictated by the state. Where is this legislated for?
Net Zero was passed in Parliament in 2019 “on the Nod”, without a vote or costing. The OBR did an initial costing of Net Zero in 2023, four years after it was made “legally binding”, and the estimate was £1.4 Trillion, ie: £51,000 additional cost per household over 20 years. The Energy Bill just passed in Parliament and currently in the Lords for debate, includes a clause that will put us in Prison for a maximum of 12 months if we do not conform to the environmental requirements of Net Zero. So its all legal then …..
And….when all these wonderful mills start to become time-expired will the PTB really just replace them like-for-like regardless of the horrendous costs and inefficiency? Personally, I’d rather they were converted to gibbets: they’d be of far better use.
Why are government offices heated above 12 degrees C? Time for a law to forbid that.
Is the £4.8 billion the cost of the subsidy only ? Does it include the cost to consumers of suppliers failing to take up their CfD contracts ?
I ask because it could be argued that £4.8bn, only about £70 per person, is a modest price for saving the planet.
I also don’t understand how it can be known that the subsidy will increase to £11bn. Surely if all new contracts are CfD, they only get a subsidy if the market price falls below their strike price. We don’t know future market prices, so how can we know what the subsidy will be ?
” I ask because it could be argued that £4.8bn, only about £70 per person, is a modest price for saving the planet. ”
Saving the planet from what?
I estimate that “net zero” has cost the UK population approx £700 billion to date. Others have estimated that “net zero” will cost the UK population in excess of £4 trillion.
Any MP that believes renewables are cheaper than coal, gas or nuclear, really need to investigate the facts themselves, instead of relying on advice from their indoctrinated 20 something SPADs – without ever increasing subsidies, there is zero business case for them – they are the most expensive generation and are fleecing consumers
I couldn’t agree more energywise. My earlier comment refers to the Arthur Daley ( nice little earner) at our expense. It’s about as dodgy as that character’s business. Its one massive confidence trick.
This collection of documents announced by the Government today brings together all documents relating to energy generation cost projections.
https://www.gov.uk/government/collections/energy-generation-cost-projections?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=a809962b-912b-44fc-b485-ed714d149378&utm_content=daily
There are currently no plans for storage. As I write (19:04) the 28 GW of installed wind capacity is providing just 2.3 GW. Earlier today it was 0.6 GW.
So just building more renewable power isn’t going to provide the “cheap, abundant and reliable power always there at the flick of a switch” claimed on P19 of the Net Zero Strategy.
Has anyone made a calculation for cost to the UK if we have chaotically intermittent electrical power?
Energy company SSE doubled down on its outlook for the year even as poor weather conditions and delays to a wind farm hit power production at the company’s renewables arm.
SSE said it has seen a big drop in production from its onshore wind farms, down from 1.2 terawatt hours (TWh) in the first six months of last year to 788 gigawatt hours (GWh).
It was not enough to offset a big rise in the electricity coming from the company’s offshore wind turbines, as it brought more turbines online during the period.
https://www.independent.co.uk/business/unfavourable-weather-hits-wind-power-production-at-sse-b2447725.html
I assume this doesn’t include constraint payments.
No it doesn’t. October was a record month, with 779GWh of curtailment costing £58.5m. Still relatively small beer at an average of just over 1GW over the 744 hour month, but set to grow rapidly in windy months as more capacity is added.