I have had a go at mapping the successful AR6 bids using the information provided in the results announcements. You will see that “offshore” locations are actually grid connection points onshore. Overlapping geographical bids are unfortunately not displayed. I will update this map with the proper physcial locations when they become available in a couple of weeks or so. The map is mouseover and zoomable to show details of each project. I have chosen to show some version of likely average output rather than nominal capacity so that the relative insignificance of solar is clear. If I get time, I may attempt to show location specific estimates based on renewablesninja locational data.
Most useful piece of work. Given how many windmills are in the development phase or already have consents in N.Scotland not that many were awarded a contract. (Is there a register of who qualified for AR6 anywhere?) Mind you this is just as well as most of the Scottish Transmission boundaries are up against there max thermal capacity already so the equivalent added power can't be utilised in high wind situations and will have to be constrained off. Once the Eastern DC links are commissioned there will be a step change down in constraint payments but thats 5yrs away.
There are also a few mega sized BESS batteries coming on line in Scotland which will partially help but only cream off a couple hours of the peak. This is just a microcosm of the chaos and complexity that the current system is creating and as Rumsfield says its the Unknown Unknowns that will catch us out at some point
This chart shows the cumulative capacity additions procured by the AR6 auction by technology, with timings based on the Target Start Date from each bid (this is actually relatively meaningless in most circumstances but acts as a tie breaker in the auction). Note the rebid volumes from the AR4 auction, which is still likely to see more project failures because of the low prices. It becomes uninteresting to hurry a grid connection if you have a later auction at a higher price, and eventually the project gets terminated (as has already happened to over 2GW).
Again another useful chart. Presumably the CfD contract can be cancelled if the asset isn't commissioned by a specific deadline?
Separately Millibrains 2030 deadline was always pie in the sky political speak and he's now engineering (actually that suggest he knows something!) a walk back from that as the targets are ludicrous and utterly unachievable. Where did they even come from? If achieved we'd have a level of "theoretical" generation way beyond need anyhow. What needed to happen was a complete reset of how they are going about decarbonisation. Whether you agree with it, I'm agnostic and largely only in favour of improving air quality in cities, or not the current approach is chaotic. I would have rather seen the creation of CEGB MkII with a remit to develop a plan that decarbonised at a realistic pace without raising consumers bills and ensure security of supply. I would also have been "socialist" and said that at least 50% of any new investment in generation or transmission generator was locally sourced. This would have taken several years to build up supply chain but at least there would have been UK jobs. On this point I see some unions are making the same point now about where are the "high value" green jobs.
How can the Government get it so very wrong? This is obscene. Why is the whole industry not shouting from the rooftops that this is wrong. I know that the industry has been captured by the Regulator and they dare not upset the Regulator because of their shareholders, but sometimes an issue is far too important. Are there none of the old school engineers or economic accountants out there working in the industry any longer. Do they simply not understand even with articles such as yours and Kathryn Porters explaining what is happening. I dispair.
My weekly thanks to you David for elucidating what might have been impenetrable. Even so, the complexity of it all still leaves me with brain-ache.
This week, and I mean no disrespect to you, I ask, so what? Weeks ago I wrote to my MP, essentially saying, I think we're on the wrong track with energy (because, because...), please can we pause and think a bit. A few days ago I received a copy-and-paste piece of condescending Liberal Democrat dogma, essentially the Miliband playbook of a bright future of cheap wind and solar, and cheap battery storage, with a bit of small modular reactors thrown in (the political baby's new toy). What I learned from this is that across a broad swathe of politics, if there ever was a time for rational discussion of costs and benefits, it has now passed. I also warned my MP of a likely backlash of failure on all fronts (to provide for reliable, secure, affordable, low-carbon energy).
Some of your subscribers may be interested in my current read: 'The Climate Misinformation Crisis: How to move past the mis-truths to a smarter energy future' by Tushar Choudhary. The style of English leaves something to be desired, but I feel the author has made an honest attempt to deal factually with the subject and the forest of false claims by both activists and sceptics. He is very clear, based on first principles rather than detailed calculation, that "renewables" will raise energy prices, that what is being proposed and attempted by way of net-zero is gargantuan and unprecedented, and that the world is moving from hydrocarbons from diverse sources, to minerals which are heavily concentrated in what I would call the wrong places - so much for the activists' claim of energy security. All this from an author convinced that climate change must be addressed.
From AR4 there was a total reduction of 3.5GW split between terminations and permitted capacity reductions.
The terminations totalling 2,041MW were:
Norfolk Boreas 1,396 MW (currently in limbo having been sold by Vatenfall to RWE)
Beaw Field 72MW (Remote Island Wind)
Mossy Hill 48MW (Remote Island wind: bought by Equinor who are working up a new proposal with fewer, larger turbines for 36MW)
Douglas West Extension 71.5MW (Onshore Wind)
High Constellation Wind Farm 50MW (Onshore Wind)
Stranoch Wind Farm 99.96MW (onshore Wind)
Plus 9 solar farms totalling 276MW.
Capacity reductions totalling 1,452MW (percentage reduction and any successful rebid capacity) were
EA3 318MW – 23% (Offshore Wind): 158.9MW rebid
Hornsea Project Three 705.9MW – 24.75% (Offshore Wind): 1,080MW rebid
Inch Cape 270MW – 25% (Offshore Wind): 266MW rebid
Moray West 73.5MW – 25% (Offshore Wind): 73.5MW rebid
10 solar farms 73MW – 20%
2 Onshore wind farms minor reductions 12MW
Total rebid successfully: 1,579MW
There have been some other small capacity reductions and terminations from other bidding rounds. In effect, the AR6 auction started well behind because of the wind dominated terminations and reduction
Wow hadn't picked up the other AR4 reductions not mentioned anywhere of course. Where were they published?
I was also looking at LCCC to see how many AR3 sites have actualised contract but doesn't look like any have despite already being connected eg Seagreen?
CFDs in payment can be verified from the daily data, which gets historically revised as more refined meter settlements are made. Skills in sorting and spreadsheet pivot tables help to sort the wood from the trees and provide useful summaries. I have found it helpful to add additional columns to the data to make it easier to create summaries by month and to calculate weighted averages.
Indeed. I only noticed that this morning. I've got an enquiry into the DESNZ Press Office and FOI request in too. I can't understand how they were awarded permitted reductions in excess of the 25% limit. I've got an article on that drafted that will come out tomorrow or Tuesday depending upon what response I get from them.
As you already know Hornsea Three is an Orsted project, as is Hornsea Four that won the biggest project. The relationship between a certain senior DESNZ official and a certain director of Orsted leads to a certain amount of suspicion.
AFAICS none of the terminated projects got new CFDs. Doesn't mean they didn't bid of course. But the exemptions don't seem to cover the case of permitted reductions. Nor do there appear to be terms handling how rebids flange with the previous contracts.
According to those AR4 terms, if the requested reduction is >25% of the initial capacity, the the original contract is void. So, the reduction they got granted is <25%. Separately, they have been awarded new contracts under AR6 for ~38% of the initial capacity.
It looks might odd to me, and as you might say, it doesn't add up!
So any bidder with a CfD contract can legitimately request a reduction in output? If so makes a nonsense of grid planning and especially the great grid upgrade as we will end up with over provision.
A further complication is that Hornsea Project Three was bid as a single entity. The new bids are split in three equal tranches of 360MW.
It wouldn't void the contract to give notice reduce the planned capacity by more than 25%. The consequence would be that the contract would be treated as if no notice had been given.
OK. But then where is the justification to award new contracts in AR6 under the "Permitted Reduction" scheme for more than 25% of the original contract.?
6.2 The Revised ICE shall constitute the Installed Capacity Estimate with effect from the date of the ICE Adjustment Notice, provided that if an ICE Adjustment Notice specifies a Revised ICE which is less than seventy-five per cent. (75%) of the Initial Installed Capacity Estimate (or, if relevant, the RCE-Adjusted Installed Capacity Estimate), such ICE Adjustment Notice shall be invalid and of no effect.
6.3 Any ICE Adjustment Notice shall be irrevocable and the Generator may not subsequently increase the Installed Capacity Estimate.
So it was the government allowing them to rebid the reduced capacity that broke the terms, although these will be separate contracts. There are obvious issues about how the metering allocation between the contracts will work. A question for LCCC once the new contracts are in place.
The real contract breakers from AR 4 were the 2,041MW where the CFDs have been terminated.
The penalty is supposed to be that a company is wallied from applying in the next round of CFDs, but as I have pointed out, companies were free to ask the SoS for an exemption. Given that in practice the government is now desperate for capacity, and there is plenty of room for more commercial failures of projects it's not much of a sanction.
Thanks David. We are all indebted to you and the other informed analysts commenting, to make sense of this policy. The complexity and opacity of this process is surely designed in to conceal from the public and politicians supposed to represent us, the fact that we are all being screwed in the name of sustainability.
A couple of points to make, new renewable generators pay a connection fee for the grid upgrade, so it’s part of the capital cost of the project that the CFD payment is supporting. Does anyone know what proportion of the £112 billion quotes will be paid for by the generators?
Secondly, the reference price is heavily influenced by the gas price but will also be more and more influenced by times of surplus renewables pushing the price below gas generator operating costs. So while CFD costs do not equal the cost increase to consumers. Though I do agree the balancing and capacity market impacts need to be added.
The generator does pays to connect to the grid at the connection point but what it doesn't pay is the wider impact of its power flowing across the system under the daft "connect & manage" policy. This is really showing up in Scotland now where the transmission system capacity is way below the "theoretical" installed nameplate capacity of the windmills. Of course we know that wind is variable but even in medium wind conditions now the aggregated output of all the windmills will exceed the available transmission capacity so there is then a bidding war as to who is prepared to accept the lowest payment from the ESO to switch off. The problem is the windmill owners know this so they set price highish in the full knowledge that the ESO will have to take some of them off. In some respects this isn't there fault but the process should have been designed that the windmills were subject to an additional levy/MW say to pay for downstream transmission enhancements to avoid this situation. For example on several of the high wind days in late August ESO has paid out over 20m/day to deal with thermal constraints largely in Scotland. This will alleviated when the Eastern DC links are commissioned in 29/30 but until then every windmill planted in Scotland is just increasing the problem.
In response to the this fiasco largely bought about by OFGEM who refused funding adjustments to allow the Eastern DC links until recently they've now flipped the other way and are unleashing a vast array of enhancements irrespective of whether the windmills are going to get built or not. Im not against renewables per se (except subsidised solar) but the chaotic way we are going about it is driving up costs and lowering security of supply. So the best thing Millibrain could have done was to have taken a pause and come up with a deliverable plan that kept costs down (NZ will never be cheaper nor 100% deliverable just be honest about it ) and ensured security of supply oh and assured that the green jobs were in the UK not overseas.
I do appreciate this but it doesn’t directly answer my question about how the £112b comes from. Are you saying that NG are allowed to fund this through BSUOS if it reduces balancing costs?
If OFGEM agree to the individual investments (there are dozens of them) then the TnuoS charges will be adjusted to recover the investments made over a period of time (10+ yrs). Some of the transmission investments like Eastern DC links will actually alleviate some of the constraint payments that are being recovered through BsuoS charges and ought to be cost neutral overall to consumers.
A good description. If we go back to a time essentially Before Renewables the grid calculated connection charges and use of the grid charges based on the forecast or actual power flow configurations against varying demands and optimised or actual supply. This meant that generators close to large centres of demand could actually get paid by the grid because they reduced the need for grid investment, and there were incentives to invest in local generation to meet local demand. Distant wind farms in Scotland stood to suffer substantially all the costs of beefing up the grid to deliver their output, and a substantially higher set of ongoing charges for grid use.
Alex Salmond grasped the issue and fought it in the UK parliament and in Brussels. The result was that charges for Scottish wind farms were capped, and OFGEM split the grid use charges 50/50 between generation and demand. Brussels later came up with a regulation capping generator charges for grid use at €2.50/MWh.
More recently, OFGEM revised the charging allocation scheme so that Transmission Network Use of System (TNUoS) charges are now allocated 100% to demand which is one of the reasons why standing charges have gone up so much, particularly for businesses where charges now effectively penalise them for not being located close to generators. We are supposed to move to live amongst the turbines.
The next phase is where it may get even more complex. The Review of Electricity Market Arrangements, REMA (eponymously the reamer of your pocket) is giving serious consideration to Locational Marginal Pricing. Greg Jackson of Octopus argued that instead if receiving curtailment payments, the new Viking wind farm on Shetland should have been providing free electricity to Shetland. That would actually cause a host of problems to the power supply on Shetland,nand wouldn't necessarily eliminate the need for curtailment. National Grid are very much in favour of LMP, because the extreme pricing dislocations it causes mean that the biggest incentive is to invest in more grid to alleviate them, on which they would be guaranteed a return. It's beyond time that National Grid were reined in: they have far too much influence on system and market design.
The whole point of separating out the ESO from NG is to presumably have some independence of NG/SP/SHET trying to influence the outcome in their favour. Of course that depends on those running it not being pawns of their previous employer!
Have to say it does seem immoral that some of the highest leccy charges are faced by Scottish rural consumers given the amount of wind they have in their backyards now but thats not a reason to go for LMP more just an adjustment to the charging mechanism that reflects the changed generation mix.
Viking got constrained off as they were bidding quite low compared to other windmills. What im not sure about is wether thats the only payment they receive or do they also get the equivalent CfD rate added in for the lost generation?
Yes, at times of excess renewables generation, the market value of their output can fall close to zero. But we pay the difference between that market value and the strike price as a subsidy.
They don't show their workings. You have a much better guide from David's article, which does. I have suggested elsewhere that they should be invited to explain themselves properly. You can bet that they have conveniently forgotten to count a lot of costs and made other slanted assumptions.
They are professional forecasters paid for their forecasts rather than a lobby group so I wouldn’t be so cynical. And they are not contradicting David. Still saying it’s a price increase, just putting a number for the next few years rather than saying just saying it will be more expensive.
Dig into it and you find a link to one of their paid for forecast products, so I think it qualifies more as advertising. If you read what they say frankly it sounds confused, talking about lower market prices offsetting CFD payments and hence lowering bills (do they understandhow CFDs work?), and also anticipating lots of gas price spikes ignoring what the futures markets are expecting.
Whilst Cornwall track the inputs to get OFGEM price cap and report their forecasts for that which are often quoted I find they tend to lack the insight of Timera.
The pedant in me takes exception to “Ofgem says that the average household electricity consumption in 2,700kWh”
From BritishGas website (and elsewhere I’m sure):
“According to Ofgem, the average British household has 2.4 people living in it and uses 2,700 kWh of electricity and 11,500 kWh of gas. This works out at 242 kWh of electricity and 1,000 kWh of gas per month.”
Given we are moving from gas boilers to heat pumps, maybe the annual space heating load will decrease from ~12MWh to 4MWh
IE total household E consumption will be about 6700KWh
And, as you already mentioned, the space heating demand will require generation when it’s cold and winter so the dunkelflaute risk is high
We cannot rely on the Ed Millipede’s Solar Revolution, because solar does not work in the winter. There is no point having a generation system, that completely fails when we need the energy most. Solar is worse than useless in the UK, and demonstrates how brain-dead the Millipede really is.
Not sure if there is a proper analysis of solar production (capacity factor), between summer and winter. All the ones I see, smear the efficiency out across the whole year. But what we need to know, is will all these panels be perfectly useless, when we need them most.?
You can calculate monthly LF for solar from the CfD data on LCCC. There's only two active solar CfDs, but that should be enough to give an indication. I might do a piece on that.
As i had the LCC dataset downloaded i looked at Triangle Solar Park nominally 12MW. I would paste in a graph but can't work out how to do that. Anyhow it ranged daily from 1% to best LF of 28% for an average of 11% across calendar year 2023. Total 11.68GWh with a CfD contract rate of 110/MWh but after adjustment they got 93/MWh netted them 1.08m at the meter. It cost 10-11m which they borrowed off govt but will have other running costs like leasing the land and keeping the panels clean plus presumably DuoS charges so nett income going to be lower. Pretty hard to see how even at these rates they make any return for local taxpayers.
Eyeballing, I make the December generation only 1/10 th the max summer generation. And that is not going to blow the skin off a milk pudding - let alone power a blast furnace.
Much better is to use the data from Sheffield Solar, which makes a reasonably credible estimate based on sampling the output of geographically spread Solar PV systems, including rooftop systems with suboptimal shading and orientation. It's what the Grid Control Room in Wokingham essentially relies on. The public downloadable data are per 30 minute grid settlement period going back to 2013.
"The surprising thing is that all the awards came in at lower prices than the Administrative Strike Prices that were offered in the auction."
But in the first diagram box it appears that all but one of the technologies has a 2024 strike price higher than the Administrative Strike price. While Tidal Stream appears to be the only one at a higher price than the administrative strike price. Plus, this is also shown and a negative percentage along with the rest of the strike prices in the Award Delta to Admin Strike Price column! I am unsure how the numbers in this column could all be negative?
Is it just the case that the Admin Strike Price for this auction is not shown?
I will read on but this is confusing to me and produces a dissonance that is distracting. So, if you have the time to explain what I have missed it would be appreciated.
If we take the first line Solar PV with a Strike Price of £69.88 and then apply 18% to this [this being how much less than Strike Price is in percentage terms to the Admin Strike Price] we get circa a figure of £82.46.
Is this then the actual 2024 Admin Strike Price for this source of power?
Glad it was not only me. I can often be a bit dim and miss the obvious! But If, like here when the information does not appear to correspond to what is written it creates real dissonance that prevents me from moving on until I have understood!
All I can come up with is the Admin Strike price is 2012 and the 2024 Strike price is the bid price plus the Award Delta price. I don't have the inclination to go through and work that out!
But other than that another great and informative SubStack post.
I have had a go at mapping the successful AR6 bids using the information provided in the results announcements. You will see that “offshore” locations are actually grid connection points onshore. Overlapping geographical bids are unfortunately not displayed. I will update this map with the proper physcial locations when they become available in a couple of weeks or so. The map is mouseover and zoomable to show details of each project. I have chosen to show some version of likely average output rather than nominal capacity so that the relative insignificance of solar is clear. If I get time, I may attempt to show location specific estimates based on renewablesninja locational data.
https://datawrapper.dwcdn.net/kvKCn/1/
Most useful piece of work. Given how many windmills are in the development phase or already have consents in N.Scotland not that many were awarded a contract. (Is there a register of who qualified for AR6 anywhere?) Mind you this is just as well as most of the Scottish Transmission boundaries are up against there max thermal capacity already so the equivalent added power can't be utilised in high wind situations and will have to be constrained off. Once the Eastern DC links are commissioned there will be a step change down in constraint payments but thats 5yrs away.
There are also a few mega sized BESS batteries coming on line in Scotland which will partially help but only cream off a couple hours of the peak. This is just a microcosm of the chaos and complexity that the current system is creating and as Rumsfield says its the Unknown Unknowns that will catch us out at some point
This chart shows the cumulative capacity additions procured by the AR6 auction by technology, with timings based on the Target Start Date from each bid (this is actually relatively meaningless in most circumstances but acts as a tie breaker in the auction). Note the rebid volumes from the AR4 auction, which is still likely to see more project failures because of the low prices. It becomes uninteresting to hurry a grid connection if you have a later auction at a higher price, and eventually the project gets terminated (as has already happened to over 2GW).
https://i0.wp.com/wattsupwiththat.com/wp-content/uploads/2024/09/AR6-Cumulative-capacity-addition-timing-1725572297.5971.png
That 2030 deadline is looming, given the lead time on wind projects.
Again another useful chart. Presumably the CfD contract can be cancelled if the asset isn't commissioned by a specific deadline?
Separately Millibrains 2030 deadline was always pie in the sky political speak and he's now engineering (actually that suggest he knows something!) a walk back from that as the targets are ludicrous and utterly unachievable. Where did they even come from? If achieved we'd have a level of "theoretical" generation way beyond need anyhow. What needed to happen was a complete reset of how they are going about decarbonisation. Whether you agree with it, I'm agnostic and largely only in favour of improving air quality in cities, or not the current approach is chaotic. I would have rather seen the creation of CEGB MkII with a remit to develop a plan that decarbonised at a realistic pace without raising consumers bills and ensure security of supply. I would also have been "socialist" and said that at least 50% of any new investment in generation or transmission generator was locally sourced. This would have taken several years to build up supply chain but at least there would have been UK jobs. On this point I see some unions are making the same point now about where are the "high value" green jobs.
How can the Government get it so very wrong? This is obscene. Why is the whole industry not shouting from the rooftops that this is wrong. I know that the industry has been captured by the Regulator and they dare not upset the Regulator because of their shareholders, but sometimes an issue is far too important. Are there none of the old school engineers or economic accountants out there working in the industry any longer. Do they simply not understand even with articles such as yours and Kathryn Porters explaining what is happening. I dispair.
Is the old lady in your picture a lighthouse keeper?
My weekly thanks to you David for elucidating what might have been impenetrable. Even so, the complexity of it all still leaves me with brain-ache.
This week, and I mean no disrespect to you, I ask, so what? Weeks ago I wrote to my MP, essentially saying, I think we're on the wrong track with energy (because, because...), please can we pause and think a bit. A few days ago I received a copy-and-paste piece of condescending Liberal Democrat dogma, essentially the Miliband playbook of a bright future of cheap wind and solar, and cheap battery storage, with a bit of small modular reactors thrown in (the political baby's new toy). What I learned from this is that across a broad swathe of politics, if there ever was a time for rational discussion of costs and benefits, it has now passed. I also warned my MP of a likely backlash of failure on all fronts (to provide for reliable, secure, affordable, low-carbon energy).
Some of your subscribers may be interested in my current read: 'The Climate Misinformation Crisis: How to move past the mis-truths to a smarter energy future' by Tushar Choudhary. The style of English leaves something to be desired, but I feel the author has made an honest attempt to deal factually with the subject and the forest of false claims by both activists and sceptics. He is very clear, based on first principles rather than detailed calculation, that "renewables" will raise energy prices, that what is being proposed and attempted by way of net-zero is gargantuan and unprecedented, and that the world is moving from hydrocarbons from diverse sources, to minerals which are heavily concentrated in what I would call the wrong places - so much for the activists' claim of energy security. All this from an author convinced that climate change must be addressed.
From AR4 there was a total reduction of 3.5GW split between terminations and permitted capacity reductions.
The terminations totalling 2,041MW were:
Norfolk Boreas 1,396 MW (currently in limbo having been sold by Vatenfall to RWE)
Beaw Field 72MW (Remote Island Wind)
Mossy Hill 48MW (Remote Island wind: bought by Equinor who are working up a new proposal with fewer, larger turbines for 36MW)
Douglas West Extension 71.5MW (Onshore Wind)
High Constellation Wind Farm 50MW (Onshore Wind)
Stranoch Wind Farm 99.96MW (onshore Wind)
Plus 9 solar farms totalling 276MW.
Capacity reductions totalling 1,452MW (percentage reduction and any successful rebid capacity) were
EA3 318MW – 23% (Offshore Wind): 158.9MW rebid
Hornsea Project Three 705.9MW – 24.75% (Offshore Wind): 1,080MW rebid
Inch Cape 270MW – 25% (Offshore Wind): 266MW rebid
Moray West 73.5MW – 25% (Offshore Wind): 73.5MW rebid
10 solar farms 73MW – 20%
2 Onshore wind farms minor reductions 12MW
Total rebid successfully: 1,579MW
There have been some other small capacity reductions and terminations from other bidding rounds. In effect, the AR6 auction started well behind because of the wind dominated terminations and reduction
Wow hadn't picked up the other AR4 reductions not mentioned anywhere of course. Where were they published?
I was also looking at LCCC to see how many AR3 sites have actualised contract but doesn't look like any have despite already being connected eg Seagreen?
You can download the CFD Register from here
https://register.lowcarboncontracts.uk/
CFDs in payment can be verified from the daily data, which gets historically revised as more refined meter settlements are made. Skills in sorting and spreadsheet pivot tables help to sort the wood from the trees and provide useful summaries. I have found it helpful to add additional columns to the data to make it easier to create summaries by month and to calculate weighted averages.
https://dp.lowcarboncontracts.uk/dataset/actual-cfd-generation-and-avoided-ghg-emissions
Note that Hornsea Project Three was allowed to rebid more than the capacity it reduced.
Indeed. I only noticed that this morning. I've got an enquiry into the DESNZ Press Office and FOI request in too. I can't understand how they were awarded permitted reductions in excess of the 25% limit. I've got an article on that drafted that will come out tomorrow or Tuesday depending upon what response I get from them.
As you already know Hornsea Three is an Orsted project, as is Hornsea Four that won the biggest project. The relationship between a certain senior DESNZ official and a certain director of Orsted leads to a certain amount of suspicion.
Probably start here
https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-6-exemptions-request-notice
AFAICS none of the terminated projects got new CFDs. Doesn't mean they didn't bid of course. But the exemptions don't seem to cover the case of permitted reductions. Nor do there appear to be terms handling how rebids flange with the previous contracts.
According to those AR4 terms, if the requested reduction is >25% of the initial capacity, the the original contract is void. So, the reduction they got granted is <25%. Separately, they have been awarded new contracts under AR6 for ~38% of the initial capacity.
It looks might odd to me, and as you might say, it doesn't add up!
So any bidder with a CfD contract can legitimately request a reduction in output? If so makes a nonsense of grid planning and especially the great grid upgrade as we will end up with over provision.
A further complication is that Hornsea Project Three was bid as a single entity. The new bids are split in three equal tranches of 360MW.
It wouldn't void the contract to give notice reduce the planned capacity by more than 25%. The consequence would be that the contract would be treated as if no notice had been given.
OK. But then where is the justification to award new contracts in AR6 under the "Permitted Reduction" scheme for more than 25% of the original contract.?
The Permitted Reductions from AR4 were exactly that - permitted by the standard terms of the contracts they signed, which can be found here
https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-4-standard-terms-and-conditions
See p.82
6.2 The Revised ICE shall constitute the Installed Capacity Estimate with effect from the date of the ICE Adjustment Notice, provided that if an ICE Adjustment Notice specifies a Revised ICE which is less than seventy-five per cent. (75%) of the Initial Installed Capacity Estimate (or, if relevant, the RCE-Adjusted Installed Capacity Estimate), such ICE Adjustment Notice shall be invalid and of no effect.
6.3 Any ICE Adjustment Notice shall be irrevocable and the Generator may not subsequently increase the Installed Capacity Estimate.
So it was the government allowing them to rebid the reduced capacity that broke the terms, although these will be separate contracts. There are obvious issues about how the metering allocation between the contracts will work. A question for LCCC once the new contracts are in place.
The real contract breakers from AR 4 were the 2,041MW where the CFDs have been terminated.
Im guessing, unlike the capacity mkt, there are no penalties for not progressing with a CfD?
The penalty is supposed to be that a company is wallied from applying in the next round of CFDs, but as I have pointed out, companies were free to ask the SoS for an exemption. Given that in practice the government is now desperate for capacity, and there is plenty of room for more commercial failures of projects it's not much of a sanction.
The head of the climate change committee is someone from Orsted? Seems like a conflict of interests
Not the head of, but Baroness Brown is part of the CCC and she is also a non-executive director of Orsted
Interesting!
Do the gas prices include the cost of CCS if we don’t use renewables?
What would be the cost of upgrading the grid for x3 capacity if we magically had, say, an all nuclear solution or other low carbon form of generation?
Thanks David. We are all indebted to you and the other informed analysts commenting, to make sense of this policy. The complexity and opacity of this process is surely designed in to conceal from the public and politicians supposed to represent us, the fact that we are all being screwed in the name of sustainability.
A couple of points to make, new renewable generators pay a connection fee for the grid upgrade, so it’s part of the capital cost of the project that the CFD payment is supporting. Does anyone know what proportion of the £112 billion quotes will be paid for by the generators?
Secondly, the reference price is heavily influenced by the gas price but will also be more and more influenced by times of surplus renewables pushing the price below gas generator operating costs. So while CFD costs do not equal the cost increase to consumers. Though I do agree the balancing and capacity market impacts need to be added.
The generator does pays to connect to the grid at the connection point but what it doesn't pay is the wider impact of its power flowing across the system under the daft "connect & manage" policy. This is really showing up in Scotland now where the transmission system capacity is way below the "theoretical" installed nameplate capacity of the windmills. Of course we know that wind is variable but even in medium wind conditions now the aggregated output of all the windmills will exceed the available transmission capacity so there is then a bidding war as to who is prepared to accept the lowest payment from the ESO to switch off. The problem is the windmill owners know this so they set price highish in the full knowledge that the ESO will have to take some of them off. In some respects this isn't there fault but the process should have been designed that the windmills were subject to an additional levy/MW say to pay for downstream transmission enhancements to avoid this situation. For example on several of the high wind days in late August ESO has paid out over 20m/day to deal with thermal constraints largely in Scotland. This will alleviated when the Eastern DC links are commissioned in 29/30 but until then every windmill planted in Scotland is just increasing the problem.
In response to the this fiasco largely bought about by OFGEM who refused funding adjustments to allow the Eastern DC links until recently they've now flipped the other way and are unleashing a vast array of enhancements irrespective of whether the windmills are going to get built or not. Im not against renewables per se (except subsidised solar) but the chaotic way we are going about it is driving up costs and lowering security of supply. So the best thing Millibrain could have done was to have taken a pause and come up with a deliverable plan that kept costs down (NZ will never be cheaper nor 100% deliverable just be honest about it ) and ensured security of supply oh and assured that the green jobs were in the UK not overseas.
I do appreciate this but it doesn’t directly answer my question about how the £112b comes from. Are you saying that NG are allowed to fund this through BSUOS if it reduces balancing costs?
If OFGEM agree to the individual investments (there are dozens of them) then the TnuoS charges will be adjusted to recover the investments made over a period of time (10+ yrs). Some of the transmission investments like Eastern DC links will actually alleviate some of the constraint payments that are being recovered through BsuoS charges and ought to be cost neutral overall to consumers.
A good description. If we go back to a time essentially Before Renewables the grid calculated connection charges and use of the grid charges based on the forecast or actual power flow configurations against varying demands and optimised or actual supply. This meant that generators close to large centres of demand could actually get paid by the grid because they reduced the need for grid investment, and there were incentives to invest in local generation to meet local demand. Distant wind farms in Scotland stood to suffer substantially all the costs of beefing up the grid to deliver their output, and a substantially higher set of ongoing charges for grid use.
Alex Salmond grasped the issue and fought it in the UK parliament and in Brussels. The result was that charges for Scottish wind farms were capped, and OFGEM split the grid use charges 50/50 between generation and demand. Brussels later came up with a regulation capping generator charges for grid use at €2.50/MWh.
More recently, OFGEM revised the charging allocation scheme so that Transmission Network Use of System (TNUoS) charges are now allocated 100% to demand which is one of the reasons why standing charges have gone up so much, particularly for businesses where charges now effectively penalise them for not being located close to generators. We are supposed to move to live amongst the turbines.
The next phase is where it may get even more complex. The Review of Electricity Market Arrangements, REMA (eponymously the reamer of your pocket) is giving serious consideration to Locational Marginal Pricing. Greg Jackson of Octopus argued that instead if receiving curtailment payments, the new Viking wind farm on Shetland should have been providing free electricity to Shetland. That would actually cause a host of problems to the power supply on Shetland,nand wouldn't necessarily eliminate the need for curtailment. National Grid are very much in favour of LMP, because the extreme pricing dislocations it causes mean that the biggest incentive is to invest in more grid to alleviate them, on which they would be guaranteed a return. It's beyond time that National Grid were reined in: they have far too much influence on system and market design.
The whole point of separating out the ESO from NG is to presumably have some independence of NG/SP/SHET trying to influence the outcome in their favour. Of course that depends on those running it not being pawns of their previous employer!
Have to say it does seem immoral that some of the highest leccy charges are faced by Scottish rural consumers given the amount of wind they have in their backyards now but thats not a reason to go for LMP more just an adjustment to the charging mechanism that reflects the changed generation mix.
Viking got constrained off as they were bidding quite low compared to other windmills. What im not sure about is wether thats the only payment they receive or do they also get the equivalent CfD rate added in for the lost generation?
CFD compensation is only paid against actual metered generation per hourly IMRP price period.
Yes, at times of excess renewables generation, the market value of their output can fall close to zero. But we pay the difference between that market value and the strike price as a subsidy.
But is the power that doesn’t receive CFD trading at a price lower than it would otherwise have done?
Also see https://www.cornwall-insight.com/press-and-media/press-release/renewables-scheme-forecast-to-add-5-to-household-energy-bills-by-2030/
They don't show their workings. You have a much better guide from David's article, which does. I have suggested elsewhere that they should be invited to explain themselves properly. You can bet that they have conveniently forgotten to count a lot of costs and made other slanted assumptions.
They are professional forecasters paid for their forecasts rather than a lobby group so I wouldn’t be so cynical. And they are not contradicting David. Still saying it’s a price increase, just putting a number for the next few years rather than saying just saying it will be more expensive.
Here's their press release
https://www.cornwall-insight.com/press-and-media/press-release/renewables-scheme-forecast-to-add-5-to-household-energy-bills-by-2030/
Dig into it and you find a link to one of their paid for forecast products, so I think it qualifies more as advertising. If you read what they say frankly it sounds confused, talking about lower market prices offsetting CFD payments and hence lowering bills (do they understandhow CFDs work?), and also anticipating lots of gas price spikes ignoring what the futures markets are expecting.
Whilst Cornwall track the inputs to get OFGEM price cap and report their forecasts for that which are often quoted I find they tend to lack the insight of Timera.
https://timera-energy.com/blog/gas-market-state-of-play-in-5-charts-2/
I have seen higher numbers for average household usage. Not clear how they are derived or sourced
OVO has 3,500. https://www.ovoenergy.com/guides/energy-guides/how-much-electricity-does-a-home-use
Statista by region is similar. https://www.statista.com/statistics/517845/average-electricity-consumption-uk/
And of course none of these figures include any allowance for switching from gas to heatpumps
You can go into much greater detail especially if you tie in to census data of similar granularity.
https://www.data.gov.uk/dataset/ed629618-7b69-465d-8e0a-0546b1809fc7/lower-super-output-area-lsoa-middle-super-output-area-msoa-and-intermediate-geography-zone-igz-electricity-and-gas-estimates
At one stage there were even stats by postcode.
Ofgem used to use 3,500kWh. But now uses 2,700kWh. So, I am sticking with that for now.
I have found a higher resolution photo of Ed Millipede, when he was playing a ukulele next to some windelecs.
https://i.ibb.co/8g90PTM/IMG-5288.jpg
Ralph
The pedant in me takes exception to “Ofgem says that the average household electricity consumption in 2,700kWh”
From BritishGas website (and elsewhere I’m sure):
“According to Ofgem, the average British household has 2.4 people living in it and uses 2,700 kWh of electricity and 11,500 kWh of gas. This works out at 242 kWh of electricity and 1,000 kWh of gas per month.”
Given we are moving from gas boilers to heat pumps, maybe the annual space heating load will decrease from ~12MWh to 4MWh
IE total household E consumption will be about 6700KWh
And, as you already mentioned, the space heating demand will require generation when it’s cold and winter so the dunkelflaute risk is high
FES2023 addresses dunkelflaute
It pretends to address it without looking at long run weather data by simply inventing a case that its system design can handle.
Sounds like they have failed in their statutory duty. Have you let Ofgem know?
We cannot rely on the Ed Millipede’s Solar Revolution, because solar does not work in the winter. There is no point having a generation system, that completely fails when we need the energy most. Solar is worse than useless in the UK, and demonstrates how brain-dead the Millipede really is.
Images: Solar is yellow.
Summer
https://i.ibb.co/09KMgb2/IMG-5206.jpg
Winter
https://i.ibb.co/gMtg1h9/IMG-5207.jpg
Not sure if there is a proper analysis of solar production (capacity factor), between summer and winter. All the ones I see, smear the efficiency out across the whole year. But what we need to know, is will all these panels be perfectly useless, when we need them most.?
Ralph
You can calculate monthly LF for solar from the CfD data on LCCC. There's only two active solar CfDs, but that should be enough to give an indication. I might do a piece on that.
As i had the LCC dataset downloaded i looked at Triangle Solar Park nominally 12MW. I would paste in a graph but can't work out how to do that. Anyhow it ranged daily from 1% to best LF of 28% for an average of 11% across calendar year 2023. Total 11.68GWh with a CfD contract rate of 110/MWh but after adjustment they got 93/MWh netted them 1.08m at the meter. It cost 10-11m which they borrowed off govt but will have other running costs like leasing the land and keeping the panels clean plus presumably DuoS charges so nett income going to be lower. Pretty hard to see how even at these rates they make any return for local taxpayers.
Ok, from that Sheffield data.
Eyeballing, I make the December generation only 1/10 th the max summer generation. And that is not going to blow the skin off a milk pudding - let alone power a blast furnace.
So what is the point of solar power?
Yes, Mr Millipede, I am asking you….
https://i.ibb.co/5RzwC3W/IMG-5292.jpg
R
Much better is to use the data from Sheffield Solar, which makes a reasonably credible estimate based on sampling the output of geographically spread Solar PV systems, including rooftop systems with suboptimal shading and orientation. It's what the Grid Control Room in Wokingham essentially relies on. The public downloadable data are per 30 minute grid settlement period going back to 2013.
https://www.solar.sheffield.ac.uk/pvlive/
What am I missing here?
You write
"The surprising thing is that all the awards came in at lower prices than the Administrative Strike Prices that were offered in the auction."
But in the first diagram box it appears that all but one of the technologies has a 2024 strike price higher than the Administrative Strike price. While Tidal Stream appears to be the only one at a higher price than the administrative strike price. Plus, this is also shown and a negative percentage along with the rest of the strike prices in the Award Delta to Admin Strike Price column! I am unsure how the numbers in this column could all be negative?
Is it just the case that the Admin Strike Price for this auction is not shown?
I will read on but this is confusing to me and produces a dissonance that is distracting. So, if you have the time to explain what I have missed it would be appreciated.
Compare like with like. At 2012 prices the admin strike price for solar was £61. The award in 2012 prices was £50. So, 18% lower.
Thank you for providing clarity.
It’s not the admin strike price for 2012, it’s the 2024 admin price stated in 2012 prices which is just how they do it for some reason.
I am more confused now!
If we take the first line Solar PV with a Strike Price of £69.88 and then apply 18% to this [this being how much less than Strike Price is in percentage terms to the Admin Strike Price] we get circa a figure of £82.46.
Is this then the actual 2024 Admin Strike Price for this source of power?
I was confused on that too.
Ralph
Glad it was not only me. I can often be a bit dim and miss the obvious! But If, like here when the information does not appear to correspond to what is written it creates real dissonance that prevents me from moving on until I have understood!
All I can come up with is the Admin Strike price is 2012 and the 2024 Strike price is the bid price plus the Award Delta price. I don't have the inclination to go through and work that out!
But other than that another great and informative SubStack post.