Great article. It would be nice to know how much money has been given out to electricity producers since the beginning of the scheme, and how much the “total bill” will be in year 2037 when the scheme ends.
David it wasn't remiss of you its great you are shining a light on what is really happening here. For me though its the outright lying by the politicians and environmental evangelists that green is going to cheaper it never was and never will be. Its time for people to be told the truth and decide whether they want to pay more but no mainstream political party will tell the truth and most of them just want to double down on green is cheaper. Even for all the berating the Torys are getting the moment they are fundamentally behind this mantra still.
Anyhow back onto the ROC (don't forget the smaller FiT scheme as well!!) take London Array its owned by four entities but one of them Orsted split out the income between wholesale and ROC in accounts and pre the 2022 high price year it was c50% of income but they were able to cover running costs (which aren't cheap for offshore wind) along with finance charges most years from wholesale so ROC was free cash. Then last year Orsted sold its stake to Greencoat UK Wind for 717m which was c20% premia to value of its share of the assets so with less than 10 years ROC subsidy remaining they obviously see the value. As i see it the inflation spike has played right into hands of these assets with ROC value here worth 118/MWh and its due another uplift soon as well. Also not forgetting they get this covered as well if they are constrained off the grid. Conversely though they (as over 50GWh pa) will be subject to Generator Levy when wholesale prices (not the ROC element) exceed £75/MWh although that is indexed linked as well. All in all a nice money spinner for those that got in before the CfD sheme. Oh and don't get me started on DRAX.
It is blindingly obvious that the reason our treasonous Uniparty politicians push the Net Zero agenda supported by the likes of the bought-and-paid-for BBC, the Met Office and the CCC is nothing to do with climate. They are doing it at the behest of their Malthusian globalist overlords and paymasters to shackle and control the global populace (or at least the gullible, complacent West) through impoverishment, deindustrialisation, food deprivation and depopulation. Their depraved behaviour through their Covid “plandemic” exposed their true colours.
At the bottom you will find .ods and .xlsx files showing the detail of ROCs issued monthly, by band and technology, and the associated generation.
You have to go digging year by year at the OFGEM website to get details on the full value of ROCs. Because in almost all years the mechanism has engineered an artificial shortage ROCs trade at a premium to the cashout value, reflecting the anticipated payment from the recycle fund which is financed by cashout purchases to cover the shortage. There is also a redistribution of monies collected for late payment or failure to submit sufficient ROCs. These recycle values are only finally determined well after the end of the ROC scheme year to which they apply when the money is paid out against real ROCs submitted. For 2022/23 they were worth a total of £6.88/ROC on top of the cashout price.
The ROC market is somewhat opaque, only reported in the highly specialised press. This article explains how it works while commenting on the impact of low demand on recycle values in 2020.
High renewables output can reduce ROC traded values to below cashout price, but because they can be hoarded for use in a future year that is limited.
ROCs values are also important in determining what we pay for wind curtailment. A wind farm on the scheme can continue to produce, using ROC revenue for the MWh it generates to offset any negative market price. Only when the market price reduces its net revenue below zero would it have the incentive to curtail voluntarily. If it is to be persuaded to curtail, it must be paid to cover the loss of ROC revenue, plus or minus the market price. We recently saw some balancing mechanism cashout prices of £65/MWh which is probably a good indication of the current market value of an ROC paid to an onshore wind farm.
I produced this chart using the full historic recycle values of ROCs for comparison against CFD costs and market prices for wind generators. I will update it when there is a reasonable handle on final ROC value for 2023/24. High cost ROCs more or less guarantee that we pay a premium to market price for wind overall, even in the extreme market conditions that saw CFD refunds.
Probably also worth pointing out that in addition to ROCs there are REGOs, Renewable Energy Guarantees of Origin, or greenwash certificates(UK REGOs are also reported at OFGEM. These used to sell for just a few pence per MWh in the days when they could be bought in from solar schemes in India or Norwegian hydro, to allow retailers to make false claims about supplying you with 100% green energy. As the acceptable sources for REGOs have been tightened up, their prices have firmed. Again, the market is not transparent but I did see reports of prices of up to 10/MWh at one point. More recently, prices have dropped back (at least in Europe), but they are still useful bunce. The most recent values I can find are around €1.70/1.80/MWh.
Some retailers have given up making the greenwash claim to reduce their costs. Perhaps it will disappear altogether as more people come to realise the true costs of renewables.
One wrinkle is that Drax unit 4 is capped at 125,000 ROCs for a year, which means that is only operates when the market price of electricity is high enough to earn a margin once it has earned its maximum ROC haul. Thus it is a canary for the real costs faced by Drax.
Great article. It would be nice to know how much money has been given out to electricity producers since the beginning of the scheme, and how much the “total bill” will be in year 2037 when the scheme ends.
David it wasn't remiss of you its great you are shining a light on what is really happening here. For me though its the outright lying by the politicians and environmental evangelists that green is going to cheaper it never was and never will be. Its time for people to be told the truth and decide whether they want to pay more but no mainstream political party will tell the truth and most of them just want to double down on green is cheaper. Even for all the berating the Torys are getting the moment they are fundamentally behind this mantra still.
Anyhow back onto the ROC (don't forget the smaller FiT scheme as well!!) take London Array its owned by four entities but one of them Orsted split out the income between wholesale and ROC in accounts and pre the 2022 high price year it was c50% of income but they were able to cover running costs (which aren't cheap for offshore wind) along with finance charges most years from wholesale so ROC was free cash. Then last year Orsted sold its stake to Greencoat UK Wind for 717m which was c20% premia to value of its share of the assets so with less than 10 years ROC subsidy remaining they obviously see the value. As i see it the inflation spike has played right into hands of these assets with ROC value here worth 118/MWh and its due another uplift soon as well. Also not forgetting they get this covered as well if they are constrained off the grid. Conversely though they (as over 50GWh pa) will be subject to Generator Levy when wholesale prices (not the ROC element) exceed £75/MWh although that is indexed linked as well. All in all a nice money spinner for those that got in before the CfD sheme. Oh and don't get me started on DRAX.
It is blindingly obvious that the reason our treasonous Uniparty politicians push the Net Zero agenda supported by the likes of the bought-and-paid-for BBC, the Met Office and the CCC is nothing to do with climate. They are doing it at the behest of their Malthusian globalist overlords and paymasters to shackle and control the global populace (or at least the gullible, complacent West) through impoverishment, deindustrialisation, food deprivation and depopulation. Their depraved behaviour through their Covid “plandemic” exposed their true colours.
If you go here
https://www.gov.uk/government/statistics/energy-trends-section-6-renewables
At the bottom you will find .ods and .xlsx files showing the detail of ROCs issued monthly, by band and technology, and the associated generation.
You have to go digging year by year at the OFGEM website to get details on the full value of ROCs. Because in almost all years the mechanism has engineered an artificial shortage ROCs trade at a premium to the cashout value, reflecting the anticipated payment from the recycle fund which is financed by cashout purchases to cover the shortage. There is also a redistribution of monies collected for late payment or failure to submit sufficient ROCs. These recycle values are only finally determined well after the end of the ROC scheme year to which they apply when the money is paid out against real ROCs submitted. For 2022/23 they were worth a total of £6.88/ROC on top of the cashout price.
The ROC market is somewhat opaque, only reported in the highly specialised press. This article explains how it works while commenting on the impact of low demand on recycle values in 2020.
https://www.icis.com/explore/resources/news/2020/07/06/10526965/uk-roc-prices-and-recycle-rates-fall-on-weaker-demand/
High renewables output can reduce ROC traded values to below cashout price, but because they can be hoarded for use in a future year that is limited.
ROCs values are also important in determining what we pay for wind curtailment. A wind farm on the scheme can continue to produce, using ROC revenue for the MWh it generates to offset any negative market price. Only when the market price reduces its net revenue below zero would it have the incentive to curtail voluntarily. If it is to be persuaded to curtail, it must be paid to cover the loss of ROC revenue, plus or minus the market price. We recently saw some balancing mechanism cashout prices of £65/MWh which is probably a good indication of the current market value of an ROC paid to an onshore wind farm.
I produced this chart using the full historic recycle values of ROCs for comparison against CFD costs and market prices for wind generators. I will update it when there is a reasonable handle on final ROC value for 2023/24. High cost ROCs more or less guarantee that we pay a premium to market price for wind overall, even in the extreme market conditions that saw CFD refunds.
https://i0.wp.com/wattsupwiththat.com/wp-content/uploads/2023/02/Production-weighted-wind-princes-inc-floating-1676292462.2479.png
Probably also worth pointing out that in addition to ROCs there are REGOs, Renewable Energy Guarantees of Origin, or greenwash certificates(UK REGOs are also reported at OFGEM. These used to sell for just a few pence per MWh in the days when they could be bought in from solar schemes in India or Norwegian hydro, to allow retailers to make false claims about supplying you with 100% green energy. As the acceptable sources for REGOs have been tightened up, their prices have firmed. Again, the market is not transparent but I did see reports of prices of up to 10/MWh at one point. More recently, prices have dropped back (at least in Europe), but they are still useful bunce. The most recent values I can find are around €1.70/1.80/MWh.
https://www.epexspot.com/en/market-data?market_area=ALL&trading_date=2024-01-24&delivery_date=&underlying_year=&modality=Mgo&sub_modality=&technology=&product=&data_mode=table&period=&production_period=
Some retailers have given up making the greenwash claim to reduce their costs. Perhaps it will disappear altogether as more people come to realise the true costs of renewables.
The process for setting the obligation (which is in ROC/MWh of sales) is described with full wrinkles here:
https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1108231/calculating-level-renewables-obligation-2023-24.pdf
One wrinkle is that Drax unit 4 is capped at 125,000 ROCs for a year, which means that is only operates when the market price of electricity is high enough to earn a margin once it has earned its maximum ROC haul. Thus it is a canary for the real costs faced by Drax.
"The other nine in the Top-10 are all offshore wind farms, receiving £100-220m of ROC subsidies in the year. "
IIRR the crown estate gets paid a rent for each offshore windmill. I wonder how much they are getting