Excellent analysis. Depressing and predictable. When will UK voters have any choice? If this is the Tories, imagine how much worse the labour or liberals would be? Net Zero Economy coming to a country near you soon!
David thank you for exposing this but it will of course never be referred to in mainstream media and getting any MP to question it is more likely to happen in the Duma than the Commons.
Specifically what is flawed about this expensive scheme is that it further exacerbates the extra costs for constraining the windmills off the grid almost daily due to transmission constraints. Thus to prequalify should require the applicant to have agreement from the ESO they can transmit the power to where its needed if not your not eligible. They wont of course as that will wipe out all windmills applications North of the B6 boundary as being ineligible plus half of what's planned off East Anglia until the transmission companies spend 10's Billions on upgrade which the environmentalists dont want anyhow!! Mind you at least with gas prices now closer to historic norms its not costing as much to replace the generation. Also there is a huge amount of LNG coming to the market in a couple of years which will further keep the lid on prices as long current geopolitics doesn't worsen.
The allocation to previous AR projects i believe is only allowed if those projects have already completed a permitted reduction contract amendment. EMR delivery administers the CfD allocation process but can't see anything around changes to contracts so that might be through another body so we will have to wait until they publish who has prequalified later in the month to see if any previous schemes are using this ruse.
The trillion dollar question is - why are we spending billions (trillions worldwide) to get more expensive and less reliable power from facilities with a catastrophic environmental footprint?
Lots of talk about a cut in this or that tax in the budget but, funnily enough, no mention of an extra £50 on household bills on top of overpriced electricity.
It has prompted one of my Bcc addressees, Euan Mearns of Energy Matters fame to try to get into Sir Edward Mountain’s “Let’s Talk Energy” summit and give a 15 minute presentation.
It's worse than you say, because the CfD contracts pay for curtailed production. Wind power has reached the point where increased capacity means increased curtailment, so you are not only paying high prices for generated electricity, you will be paying more and more for those wind turbines to not generate electricity.
Well dissected David - Net Zero is a locked in goal of the red & blue Uniparty - I will put my faith in Reform UK at the GE - they will scrap Net Zero, amongst other great things for indigenous British energy
The "budget" is a somewhat notional affair that bears little relation to reality, not merely because it is cast in 2012 money much as if postage could still be bought for a 1d stamp (although a penny black has actually increased in real value). This article at LCCC gives some hints:
The nitty gritty of the calculation is this formula:
“Valuation Formula” means:
Budget impact.s,yr,p = (Strike Price.cy,t – Reference Price.yr) X Load Factor.t,yr X YR1F.s,c,p X
Capacity.s,p X (Days.yr X 24) X (1 – TLM.yr) X RQM.t X CHPQM.s
While it's fun to note that they bother with distinguishing leap years and imposing a 0.9% Transmission Loss Multiplier, and have a correction YR1F for a plant starting mid year and other fudge factors that turn out to be 1 except in exceptional circumstances, the real heart of the formula is
Budget impact.s,yr,p = (Strike Price.cy,t – Reference Price.yr) X Load Factor.t,yr X Capacity.s,p X 8760
The initial valuation is made at the published Administrative Strike Price - £73/MWh2012 in the case of offshore wind. The Reference Price is a supposed guess for what a particular technology will harvest in market sales prices - in 2012 money. For Offshore Wind the numbers are £44.92/MWh, £37.74/MWh, £30.22/MWh, £25.81/MWh and £24.13/MWh starting in 2026/27 through 2030/31 - and are crucial in determining the real budget impact, since if we subtract them from the £73/MWh Administrative Strike Price (maximum auction bid level) we get the margins for each year: £28.08/MWh, £35.26/MWh, £42.78/MWh, £47.19/MWh and £48.87/MWh. The realism of these prices is of course highly questionable, although if we allow for a large chunk of curtailed production at zero value it would bring down the averages somewhat.
The Load Factor for offshore wind is assumed at a constant 61% - which is way above anything likely to be achieved in the real world (especially given rising curtailment as capacity increases), but which again helps to chew up the budget faster than might otherwise be assumed. However, the assumption means that in a normal 8760 hour year, 1MW of capacity is assumed to generate 5,343.6MWh, or 5,295.5076MWh after allowing for the 0.9% loss factor (multiply by 0.991). In reality, load factors will be much less, meaning that less money will need to be spent by bill payers other things being equal.
We are now in a position to see what the £800m offshore wind budget might procure by way of capacity. Each MW of capacity will "use up" 5,295.5076 x the margin for the year, so at £73/MWh2012 the maximum potential capacity for each delivery year would be 5,380MW, 4,284MW, 3,531MW, 3,201MW and 3,091MW. Clearly project gestation times will mean that new capacity is unlikely to commissioned until at least 2027/28, and that would be a stretch. If the auction were to bid prices down to £63/MWh2012 (just under the Administrative Strike Price of £64/MWh2012 for Onshore Wind) then the maximum volumes would be 8,356MW, 5,981MW, 4,609MW, 4,062MW and 3,887MW.
Ignoring the first year, delivering 4-5GW per year would be challenging in terms of construction and installation capacity - and at this stage the only quoted years for offshore wind are the second and third year, implying a total over the 2 years of 7,816MW before competitive bidding is required. But even 11GW at this late stage is going to leave the politicians facing the reality that 50GW of wind by 2030 is unachievable - and they will be facing the reality of steadily reducing dispatchable capacity.
Excellent analysis. Depressing and predictable. When will UK voters have any choice? If this is the Tories, imagine how much worse the labour or liberals would be? Net Zero Economy coming to a country near you soon!
David thank you for exposing this but it will of course never be referred to in mainstream media and getting any MP to question it is more likely to happen in the Duma than the Commons.
Specifically what is flawed about this expensive scheme is that it further exacerbates the extra costs for constraining the windmills off the grid almost daily due to transmission constraints. Thus to prequalify should require the applicant to have agreement from the ESO they can transmit the power to where its needed if not your not eligible. They wont of course as that will wipe out all windmills applications North of the B6 boundary as being ineligible plus half of what's planned off East Anglia until the transmission companies spend 10's Billions on upgrade which the environmentalists dont want anyhow!! Mind you at least with gas prices now closer to historic norms its not costing as much to replace the generation. Also there is a huge amount of LNG coming to the market in a couple of years which will further keep the lid on prices as long current geopolitics doesn't worsen.
The allocation to previous AR projects i believe is only allowed if those projects have already completed a permitted reduction contract amendment. EMR delivery administers the CfD allocation process but can't see anything around changes to contracts so that might be through another body so we will have to wait until they publish who has prequalified later in the month to see if any previous schemes are using this ruse.
The trillion dollar question is - why are we spending billions (trillions worldwide) to get more expensive and less reliable power from facilities with a catastrophic environmental footprint?
https://www.flickerpower.com/index.php/search/categories/general/the-energy-crisis-how-we-got-here-and-how-to-move-on
All this subsidy does is raise the rents on windy land.
Terrible for workers,
Great for the establishment.
Lots of talk about a cut in this or that tax in the budget but, funnily enough, no mention of an extra £50 on household bills on top of overpriced electricity.
So depressing. At least my latest Net Zero broadside is getting some traction, now posted on Joel Smalley’s substack: https://metatron.substack.com/p/net-zero-climate-change-broadside.
It has prompted one of my Bcc addressees, Euan Mearns of Energy Matters fame to try to get into Sir Edward Mountain’s “Let’s Talk Energy” summit and give a 15 minute presentation.
It's worse than you say, because the CfD contracts pay for curtailed production. Wind power has reached the point where increased capacity means increased curtailment, so you are not only paying high prices for generated electricity, you will be paying more and more for those wind turbines to not generate electricity.
Well dissected David - Net Zero is a locked in goal of the red & blue Uniparty - I will put my faith in Reform UK at the GE - they will scrap Net Zero, amongst other great things for indigenous British energy
The "budget" is a somewhat notional affair that bears little relation to reality, not merely because it is cast in 2012 money much as if postage could still be bought for a 1d stamp (although a penny black has actually increased in real value). This article at LCCC gives some hints:
https://www.lowcarboncontracts.uk/insights/explainer-contracts-for-difference-cfd-allocation-round-6-ar6-final-parameters/
The nitty gritty of the calculation is this formula:
“Valuation Formula” means:
Budget impact.s,yr,p = (Strike Price.cy,t – Reference Price.yr) X Load Factor.t,yr X YR1F.s,c,p X
Capacity.s,p X (Days.yr X 24) X (1 – TLM.yr) X RQM.t X CHPQM.s
While it's fun to note that they bother with distinguishing leap years and imposing a 0.9% Transmission Loss Multiplier, and have a correction YR1F for a plant starting mid year and other fudge factors that turn out to be 1 except in exceptional circumstances, the real heart of the formula is
Budget impact.s,yr,p = (Strike Price.cy,t – Reference Price.yr) X Load Factor.t,yr X Capacity.s,p X 8760
The initial valuation is made at the published Administrative Strike Price - £73/MWh2012 in the case of offshore wind. The Reference Price is a supposed guess for what a particular technology will harvest in market sales prices - in 2012 money. For Offshore Wind the numbers are £44.92/MWh, £37.74/MWh, £30.22/MWh, £25.81/MWh and £24.13/MWh starting in 2026/27 through 2030/31 - and are crucial in determining the real budget impact, since if we subtract them from the £73/MWh Administrative Strike Price (maximum auction bid level) we get the margins for each year: £28.08/MWh, £35.26/MWh, £42.78/MWh, £47.19/MWh and £48.87/MWh. The realism of these prices is of course highly questionable, although if we allow for a large chunk of curtailed production at zero value it would bring down the averages somewhat.
The Load Factor for offshore wind is assumed at a constant 61% - which is way above anything likely to be achieved in the real world (especially given rising curtailment as capacity increases), but which again helps to chew up the budget faster than might otherwise be assumed. However, the assumption means that in a normal 8760 hour year, 1MW of capacity is assumed to generate 5,343.6MWh, or 5,295.5076MWh after allowing for the 0.9% loss factor (multiply by 0.991). In reality, load factors will be much less, meaning that less money will need to be spent by bill payers other things being equal.
We are now in a position to see what the £800m offshore wind budget might procure by way of capacity. Each MW of capacity will "use up" 5,295.5076 x the margin for the year, so at £73/MWh2012 the maximum potential capacity for each delivery year would be 5,380MW, 4,284MW, 3,531MW, 3,201MW and 3,091MW. Clearly project gestation times will mean that new capacity is unlikely to commissioned until at least 2027/28, and that would be a stretch. If the auction were to bid prices down to £63/MWh2012 (just under the Administrative Strike Price of £64/MWh2012 for Onshore Wind) then the maximum volumes would be 8,356MW, 5,981MW, 4,609MW, 4,062MW and 3,887MW.
Ignoring the first year, delivering 4-5GW per year would be challenging in terms of construction and installation capacity - and at this stage the only quoted years for offshore wind are the second and third year, implying a total over the 2 years of 7,816MW before competitive bidding is required. But even 11GW at this late stage is going to leave the politicians facing the reality that 50GW of wind by 2030 is unachievable - and they will be facing the reality of steadily reducing dispatchable capacity.
When will they wake up?
Disgusting. Not your forensic work David, but the lying rats who are setting and benefiting from energy policy.