I commented earlier this week regarding the repetition, yet again, of the claim that “in the UK, renewables are now a staggering nine times cheaper than gas”. The claim was made (this time) by Green Party MP Caroline Lucas, in an article in the Guardian. This is a claim that has been doing the rounds in one form or another since July, and has been oft-repeated since then. For instance in August this year Ed Miliband MP tweeted “New renewable power is now NINE TIMES cheaper than gas.” In doing so he re-tweeted Dr Simon Evans of CarbonBrief, when he said “UK gas power now costs a staggering NINE TIMES more than new renewables The average wholesale price for electricity over the past 7 days – set by gas power – was £446/MWh In July, the govt secured 11GW for an avg £48/MWh”.
And of course this canard can be traced back to Dr Evans and CarbonBrief. On 8th July 2022 a report by CarbonBrief appeared, with an analysis of comparative energy prices following the outcome of the latest Contracts for Difference (CfD) round. In its latest incarnation (it was updated on 24th August 2022) it bears the heading “Analysis: Record-low price for UK offshore wind is nine times cheaper than gas”. There can be little doubt that CarbonBrief is the source of the claim. First there is the report itself. Secondly there is the strange language – “wind is nine times cheaper than gas” – which features in the heading to the report and which is repeated by both Caroline Lucas MP and Ed Miliband MP. Perhaps it’s just me, but that language doesn’t strike me as normal usage. A claim that gas is nine times more expensive than wind, or that wind costs one-ninth the price of gas, is how it would normally be expressed. But “nine times cheaper”? I’m pretty confident that this is a cut and paste job. Regardless of that, however, the problem with the claim is bigger than my perplexity at what strikes me as an odd way of expressing things. The issue is that although it might, briefly and technically, have been true when the claim was made, it certainly isn’t true now, and never was in anything but a highly technical sense. And yet it’s the go-to phrase of those who would have us believe that gas is ridiculously expensive while wind power is now ridiculously cheap. Let’s look at the two key problems with that claim.
As I indicated above, the Carbon Brief report first appeared, in its original incarnation, on 8th July 2022. As the url for the original article hints at, the price of gas on that date wasn’t anything like as high as it would later (briefly) become. The url, by the way, is https://www.carbonbrief.org/analysis-record-low-price-for-uk-offshore-wind-is-four-times-cheaper-than-gas/. I think it’s reasonable to surmise that the original report claimed that gas was four times more expensive than offshore wind (or, as CarbonBrief, with its mangled use of English would put it, offshore wind was four times cheaper than gas). The report hit CarbonBrief’s website on 8th July 2022, so I’m assuming the finishing touches were put to it on 7th July 2022, before its appearance the following day. If one visits the Business section of the BBC website and follows it through to the section on Market Data, one can bring up a graphic showing the price of natural gas over various time frames between one day and five years. The one we need to look at for present purposes is the one year graph. It shows gas prices peaking on 7th July 2022 at 298.31p per therm, before dropping back to 193.68p per therm just eleven days later. It was that price of 298.31p that created the “four times” number. However, that wasn’t the end of the story, because gas prices then proceeded to rise rapidly, peaking at 702.95p per therm on 26th August 2022. The re-write of the CarbonBrief headline and main message (the “nine times” price story) you will recall was on 24th August 2022. That wasn’t quite the peak, but near enough for the good folks at CarbonBrief to make the most of their claim. As they said when up-dating it – “Update 24/08/2022: The article was updated with the latest power prices, which have risen significantly.”
All well and good so far as concerns the fact that gas prices seven weeks ago justified a bit of hyperbole. Unfortunately for them, the price of natural gas as I look at the BBC price chart on the evening of 11th October 2022, is just 280p per therm, and the trend seems to be steadily downwards. In other words, the price now is 18.31p per therm lower than when CarbonBrief first got excited and produced their “four times” claim. That’s the problem with updates about prices – if you’re going to tell the whole story, you have to keep updating, otherwise people like Caroline Lucas MP will write articles recycling hopelessly out-of-date and inaccurate information.
The second problem is an equally fundamental one. It relies on the “strike price” achieved by the fourth auction round of the CfD programme. As CarbonBrief puts it:
Under the contracts, projects agree to generate electricity for a “strike price” that is fixed in real terms, meaning it is index-linked to inflation. The results are usually reported in 2012 prices.
Once projects have been built, the money they earn from generating electricity is compared with a market reference price. If this is lower than the strike price, the project receives a subsidy to make up the difference. When prices are higher, the project must pay back the extra money.
This summer’s strike price was “an average price of £41/MWh in 2012 prices (£48/MWh in today’s money).”
When the article was updated in August, the price of gas-generated electricity was £446 per MwH. Which is a little more than nine times £48 per MwH. To that extent CarbonBrief can’t be accused of exaggeration.
However, none of the renewable energy projects bid for in the latest CfD round are on-stream now. Of course they’re not – they’ll take some time (in some cases years) to build. As CarbonBrief tells us:
Figures are all in £(2021) per megawatt hour (MWh) of electricity, plotted against the year of delivery, for example the lowest figure is £44/MWh for offshore wind CfD projects due to start operating in 2026/27.
Comparing the price of energy generated by gas now (or, rather, in August, at a time of an unusually high but temporary price peak) against the hypothetical price of renewable energy to be generated in four of five years’ time, is not comparing apples with apples. Instead it is comparing apples with pears. And why do I suggest that the future price of renewable energy under the latest round of CfDs is hypothetical? Because as it turns out Contracts for Difference aren’t really contracts at all, not in any meaningful sense, and certainly not in the sense that ordinary people would expect.
To illustrate the problem, here’s an example of how CfDs don’t work for consumers, as reported by Singletrack World:
The Times has reported that the Hornsea 2 windfarm, which had a contract to sell power at £73 per megawatt hour, will instead sell in the open market, where prices have averaged £200 per megawatt hour this year, and reached £508 last week.
Britain’s struggling energy consumers are likely to end up paying a billion pounds extra for Hornsea’s electricity over the next 12 months.
The new Prime Minister should urgently look into the legal options for cancelling or revoking these poorly written contracts, the spirit of which are being grotesquely abused to the huge disadvantage to British consumers.
By 2026, there could be more than 16GW of offshore windfarms exploiting the perverse loophole (Moray East, Hornsea 2, Triton Knoll, InchCape, Seagreen Phase 1, Neart na Gaoithe, Dogger Bank A, Dogger Bank B, Dogger Bank C, Sofia, Hornsea 3, Norfolk Boreas, Moray West and East Anglia Three.)
Assuming they deliver 50% of capacity each year, and the differential between market price and CfD price remains at £130/MWh, the cost to consumers will be £9billion per year, at a cost of £337 per household.
To the best of my knowledge, the latest round of Contracts for Difference allow the renewables companies to ignore the strike price and instead to sell at market prices. That being the case, the claim of new renewable energy being generated at £44 per MwH (even by 2026/7) simply isn’t credible. Even if, by some miracle, it comes true, it doesn’t take into account the additional costs imposed on the National Grid in coping with unreliable energy generation by renewables – cabling, back-up, etc. Furthermore, gas generated energy is artificially expensive because it has to pay carbon levies that don’t apply to renewables. And as John Constable and Gordon Hughes have shown:
Audited accounts show that far from getting cheaper, wind power is actually becoming more expensive.
It’s worrying that people like Ed Miliband MP and Caroline Lucas MP, whose pronouncements are given so much credence by the mainstream media, either don’t understand how energy pricing works, or aren’t interested in ensuring that their absurd claims are accurate at the time when they are made. The CarbonBrief claim was at best only ever hypothetically true and only for a few days at most. Since then gas prices have fallen substantially and with luck will continue to fall, and there’s every chance (unless someone tears up some badly written supply contracts) that renewable energy going forward won’t be anywhere near as cheap as claimed by CarbonBrief based on the latest (unenforceable) CfD round.
As Mark Twain said, a lie can travel half way around the world while the truth is putting on its shoes.
As for the idea that renewables are cheap, well, this wouldn’t even be an option if they were:
“Government plans cap on renewable energy revenues”
That penultimate sentence is arguably a case of misinformation from the BBC. Newer facilities sometimes produce power at an agreed price, but not at low agreed prices. If they have agreed low prices under CfDs, they simply ignore the CfDs and obtain market prices instead.
Mark, it seems to me that Milliband and Lucas have an entirely false understanding of the situation, based on the superficial idea that wind has no fuel cost so must be cheaper, the fact that they actively want to believe that wind is cheaper, and the lack of a desire to expose themselves to alternative facts in case it shatters their worldview. [The latter we sceptics are often accused of doing here in our silo.]
Milliband is now spinning this announcement as a windfall tax and as something he had demanded. My memory may be faulty but I thought he only wanted a windfall tax on fossil-fuel energy. In any case, it is not a windfall tax but a price cap. And after having crowed about £48/MWh he and Carbon Brief should be very happy to pay windfarms that amount for electricity. [Of course they won’t.]
The reality is that the offer of £48/MWh for the future wind farms is merely a gambit to obtain a place at the table. I would stake my shirt that these ’26/’27 windfarms will not survive if forced to sell at this price. If Milliband believes the opposite, he is living in a dream world.
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Then there’s this:
“A spokesperson for SSE said: “Any revenue cap must be set at a level that doesn’t discourage essential investment in the UK’s renewable energy sector and therefore should be comparable to other countries, particularly given the €180 [per megawatt hour] cap being implemented by the EU. After all, the key lesson of the current energy crisis is the need to bolster our homegrown energy defences.”
“The dodgy numbers behind Labour’s energy policy”
Much overlap here with my article above, but some useful additional information too.
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The buggers at the BBC tried to pull a fast one.
On 5th Oct they used a 2-month old gas price graph.
So on 6th Oct I fired off a complaint.
Wonder-of-wonders, that disinformation has disappeared, and a correction has been added at the bottom of the article.
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Gas is at 277p per therm this evening.
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You like to look at dollars and cents and completely miss other cost
1) Wind is not 24/7 so does that mean every time you get a calm, you get a power outage?
2) Wind blade are killing huge number of birds. Some of those help keep pest like rats in check. Less birds mean more pest. Some birds help plants to spread their pollen. Some eat insects. So add less plants and more annoying insects to the cost.
3) Scenic Beauty is destroyed by wind farms. Think of all those seascape and then place an wild farm in it. That cost is priceless.
Why are the above facts completely ignored by writers. Could it be that those cost kill their “benefits”?
There are many costs, both financial and non-financial, that are completely ignored during discussions of wind farms in the mainstream media and by their fans generally. The discussion is completely unbalanced.
Greens are supposed to care about the environment, but they have a funny way of showing it.
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Gas is at 263.08p per therm this evening
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A continuation of the pricing theme. The national grid live sight is now quoting up to the minute pricing for MWH which is £146.96 at 19:05. It also has Demand, Generation and export etc etc. I’m sure it was sitting at £200 /MWH 30 mins ago when Mark’s gas price appeared
Thanks for drawing that to my attention. For those interested, the National Grid live data can be found here:
Currently the MwH price has dropped a little further, and now sits at £146.35. Which, of course, is less than one-third of the £446 per MwH relied on by CarbonBrief when making its “nine times more expensive” claim.
It’s fast-moving this evening. Now £120 per MwH!
I think we need to concentrate on average, rather than spot prices. At 8.35pm, it’s £67.10 per MwH.
This evening wind has dropped to less than half its output yesterday evening. Gas is once more providing more than 50% of electricity generation for the National Grid. And the price is back up to £259 per MwH. Averages, rather than spot prices, are definitely the ones to watch.
According to the Market Data section of the BBC website, the price of gas this evening sits at 227.25p per therm, down by 130.05% on the day.
According to the Market Data section of the BBC website, the price of gas this evening sits at 191p per therm, down by 17.76% on the day.
I can’t criticise the Guardian, CarbonBrief et al for not updating their report when figures change against them, if I don’t update in those circumstances either. The price of gas has gone up today by 19.31%, and currently sits at 218p per therm.
I thought the big lies was 9 x cheaper. Any advance on “up to 10”?!!!
“Onshore wind is up to ten times cheaper than gas, if the Prime Minister cared about the cost of living crisis he would lift the ban, says Bath MP.”
That’s the third MP (the others being Ed Miliband and Caroline Lucas) I’ve seen peddling this nonsense.
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Just as the “9 x cheaper” claim is close to going viral, though many of the people spouting that nonsense probably have no idea where the claim originated, there has been another inaccurate claim going the rounds, repeated ad nauseam by SNP politicians. The truth has finally caught up with them:
“Scottish government admits key wind power statistic is wrong”
Hmm. Assuming we take 4-6% as 5%, for the sake of argument, the oft-repeated SNP claim is wrong by a factor of five. Perhaps ministers should have taken a little more care to ensure the accuracy of a statistical claim that was obviously ludicrous, before they made it?
“COP27: Oil pollution in Egypt threatens one of world’s few thriving coral reefs”
Apart from the irony, I would take issue with the claim that it is one of the world’s few thriving coral reefs. Isn’t it established now that the Great Barrier Reef is thriving after all?
“Flooding shuts Kildonan’s lifeline road for days”
Perhaps drainage is the problem? Despite the claims, it certainly isn’t climate change, as the Met Office’s own data for South Uist shows:
Average annual rainfall:
1961-90 = 1,234.68mm.
1971-2000 = 1,247.23mm.
1981-2010 = 1,193.51mm.
1991-2020 = 1,201.55mm.
Admittedly there is a slight (but non-significant) trend towards slightly wetter autumns, but in the last decade that has eased very slightly:
1961 -90 = 112.54mm.
1971-2000 = 114.15mm
1981-2010 = 136.19mm.
1991-2020 = 132.14mm.
1961-90 = 111.94mm.
1971-2000 = 115.26mm.
1981-2010 = 128.85mm.
1991-2020 = 127.8mm.
In other words, the rainfall this autumn is self-evidently just weather, and has nothing to do with climate change. It is far too early to see a sufficiently significant trend to attribute it to climate change, and a single wet autumn certainly isn’t evidence – let alone proof – of climate change.
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Yeah rainfall is a funny thing, figures for Highland Spring area in October range from 21 to 266 mm and November 37 to 270 mm during the period 1995 – 2021, and they do need water.
Best yearly figure 2002 -1693.5 mm. wouldn’t be a factory without that sort of level !
I see that Caroline Lucas MP is still relying on a completely out-of-date figure that was never in reality true in any event:
Mark, any replies challenging that stat, or do they all have their tongues hanging out?
Yes, some people are calling it out, many are accepting it uncritically. One tweeter keeps referring to this:
“Offshore Wind in the U.K. Is 9 Times Cheaper Than Fossil Fuels”
But the article is dated 26th August 2022, is based on the latest CfD round (whose prices aren’t implemented in reality), and is a load of tosh for all the reasons I list in “The Lies Have It”.
Paul Homewood has given this splendid article a push, but it’s worth mentioning here too:
The original can be found at the Spectator website:
“The Tories’ wind power delusion”
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heard the term “Gaslighted” used a lot lately, but have no clue what it means, so looked it up on good old wiki –
“Not to be confused with Fart lighting.
This article is about human behavior. For illumination derived from burning gas, see Gas lighting.
Gaslighting is a colloquialism, loosely defined as manipulating someone so as to make them question their own reality. The term derives from the title of a British theatre play Gas Light (1938) by Patrick Hamilton though the term did not gain popular currency in English until the mid-2010s.
The term may also be used to describe a person (a “gaslighter”) who presents a false narrative to another group or person, thereby leading them to doubt their perceptions and become misled, disoriented or distressed. Oftentimes this is for the gaslighter’s own benefit. Normally[vague], this dynamic is possible only when the audience is vulnerable, such as in unequal power relationships, or fearful of the losses associated with challenging the false narrative.”
well that cleared it up for me!!!
According to the Market Data section of the BBC website, the price of gas this evening sits at 179.24p per therm, down by 14.66% on the day.
More doom and gloom from the Guardian:
“Environmental review of 2022: another mile on the ‘highway to climate hell’”
Regrettably they continue to repeat this glaring untruth:
I don’t think they know what “apocalyptic” means. One presumes the water has now receded (not to diminish the suffering of the affected individuals, but as we know they ought to be asking questions of their government, not blathering about the concentration of CO2 in the atmosphere). A recent guest post on WUWT showed how much afforestation of the uplands of a catchment can have a severe impact on rivers downstream (I’ll link at John’s story about the floods).
According to the Market Data page of the Business section on the BBC website, natural gas currently sits at £1.70 per therm. That’s less than 1/4 of its price when the “wind turbines are 9 x cheaper” story was launched.
A bit O/T
Gas/Electric/fuel prices seem to be driving (1 factor) a concerted strike by varies Trade Unions.
if this is a blip in price (as Mark shows above), which we all have to suffer, people asking for pay rises inflation+5% (19%) is madness.
ps – thank god I was never a small business owner, I’d be bust by now.
According to the Market Data page of the Business section on the BBC website, natural gas currently sits at £1.53 per therm, down another 10.62%.
In the interest of balance, gas is back up to £1.71 per therm this evening, according to the Market Data page of the business section of the BBC website.
And now, according to the Market Data page of the business section of the BBC website, the price of gas is £1.36 per therm.
never seen a more concerted strike action by every Union to screw us taxpayers – do your job, or go work at KFC (better pay it seems, believe you not, give some pay rates).
Paul Homewood is reporting that:
“Gas Power Is Now Cheaper Than Offshore Wind (Again!)”
And concludes with:
“I wonder whether we will see Carbon Brief reporting that offshore wind is now dearer than gas?”
I think we all know the answer to that. And I don’t expect any of the politicians who tweeted the “nine times cheaper” nonsense to update their reporting on the subject either.
Contracts for Difference aren’t really contracts at all
Contracts for Indifference might be more accurate? Carbon Barf wouldn’t agree, but hey-ho.
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The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 129.4p per therm.
“Exploding the Cheap Offshore Wind Fantasy
As energy lobbyists ask for more subsidies for “record low” offshore wind prices, this article explains why the cheap offshore wind power bubble has popped”
Well worth a read, IMO. This paragraph is at the heart of it:
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 116.98p per therm. That’s a tiny amount less than 1/6 of its high price six months ago.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 113.3p per therm.
“The shameless blackmail by the wind industry is a golden opportunity for the Chancellor”
A Net Zero Watch press release as reported on by Paul Homewood.
Well worth a read in full.
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The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 109.25p per therm.
“Is Hornsea Viable At £37.35/MWh?”
This tweet from last July isn’t aging well:
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The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 107.75p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 105.8p per therm.
“THE ECONOMICS OF WIND POWER”
Click to access True-cost-of-Wind-2023.pdf
Worth a read to find out.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 104.5p per therm.
It was one thing for the likes of Miliband to repeat the false claim about “wind being 9 x cheaper than gas” last August, when gas prices spiked, but for the Labour Party to tweet an obvious lie in March 2023, when gas prices have fallen back dramatically and at a time when wind energy companies are crying out for financial help because their costs are rising dramatically, is unforgiveable:
I suppose this doesn’t count as an advert so they are free to misinform their followers. However, it is worrying that they are unaware that energy jobs are a cost, not a benefit, since energy itself is not the important metric, rather it is the productive purpose that energy is put to.
If it were otherwise, they could build nationalised jiggafactories making exercise bikes with built-in dynamos, and distribute one to every adult and pay them minimum wage for the energy they produce, regardless of how hard they are able or willing to pedal. It would be a win-win-win, keeping the populace warm, helping to “tackle the obesity crisis”, and creating green jobs.
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The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 96.31p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 94.25p per therm.
It seems that a couple of FOI requests submitted by Paul Homewood have produced replies that blow out of the water any suggestion that CfDs are resulting in lower prices:
“Will Offshore Wind Lower Energy Bills?”
I have been searching for a long time for something definitive regarding the rights and obligations of the parties to CfDs, but without success. Paul’s persistence has, I think, uncovered a smoking gun.
“Gone with the wind
Renewable energy is cripplingly expensive”
Of course, these costs aren’t included when making the ridiculous claim that renewables are “9 x cheaper” than fossil fuels, yet by and large they are costs attributable to renewables.
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The price of gas has been creeping up a little lately – according to the Market Data graph on the business section of the BBC website, it’s at 114.77p. That’s still less than 1/6 the price used to justify the “9 x cheaper” claim, however.
The price of gas has been easing back over the last few days. It is now (according to the Market Data graph on the business section of the BBC website) at 96.22p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 92.1p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 87.75p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 85.4p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 83.75p per therm. That’s heading down towards 1/9 of its peak price when the “renewables are 9 cheaper than gas” myth was first put out. If it goes down much further, I wonder if they’ll admit that gas is cheaper than renewables and stop spouting the “9 x cheaper” nonsense?
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 79.72p per therm.
Worth a read, IMO, but then I would say that, since it makes many of the points I made.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 76.25p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 73.9p per therm. Even using CarbonBrief’s “logic”, that makes gas cheaper than offshore wind. I look forward to the Guardian, Caroline Lucas, CarbonBrief and Ed Miliband all making a point of telling us this.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 72.75p per therm.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 69.1p per therm. In other words it is less than 10% of the price it briefly reached when CarbonBrief claimed that renewable energy was “9 x cheaper” than gas.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 64.9p per therm. It was over £7 when CarbonBrief’s article appeared. Time for a correction?
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 56.86p per therm, after another daily fall, this time of 11.1%.
The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 54.75p per therm