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.

First Problem

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.

Second Problem

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.

Conclusion

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.

109 Comments

  1. 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”

    https://www.bbc.co.uk/news/uk-63224014

    Renewable energy generators and nuclear power plants could have their revenues capped under a new government plan.

    The move could hit the profits energy companies, like SSE and Scottish Power, generate from record-high wholesale power prices.

    Ministers say the proposal would ensure consumers and businesses pay a fair price for energy.

    But energy bosses say the plan – for which there are few details – could put off investors.

    Currently in the UK, wholesale electricity prices are set by gas-fired generation.

    With the price of gas rocketing in recent months, some nuclear power plants and solar and wind farms have made big profits.

    This is different at newer facilities, which produce power at an agreed price.

    The temporary cap, which will limit the amount generators can make, is set to be introduced in the House of Commons on Wednesday as part of the Energy Prices Bill.

    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.

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  2. 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.

    Liked by 1 person

  3. Then there’s this:

    https://www.theguardian.com/business/2022/oct/11/power-giants-to-face-windfall-tax-after-all-as-liz-truss-delivers-u-turn

    “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.”

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  4. “The dodgy numbers behind Labour’s energy policy”

    https://www.netzerowatch.com/the-dodgy-numbers-behind-labours-energy-policy/

    At its recent party conference, Labour announced its plans for a renewed drive for renewable energy, stating in justification that wind power is now “nine times cheaper” than gas-fired. This claim has been repeated by a number of its MPs in recent days, as well as by the Unite union’s Howard Beckett.

    Unfortunately, it’s not even remotely true. Let me explain.

    The claim has its origins in a blog post from the Carbon Brief. It is, to put it politely, an interesting offering. For a start, the figure quoted for gas-fired power – £446 per megawatt hour – appears to be the average market price for electricity in Week 35. Using overall market prices to represent gas-fired power prices is fine, because the former tracks the latter very closely. The problem is that in their haste, Carbon Brief seems to have taken the market price in Euros rather than Sterling, so they are wrong by 15% before they even get going. The correct value is £381.

    But why would anyone think that Week 35 was representative anyway? A cursory glance at the data would show that it is not. The average price for the year to date is far lower, and before the energy price crisis it was as low as £40 or so. On that basis – and a long-term figure is surely more meaningful than one distorted by the Ukraine war if you are making plans for the electricity system – gas is cheaper than the £48 per megawatt hour Carbon Brief quotes for wind power.

    However, the latter figure is, if anything, even more dubious. There’s a story here. Back in 2017, it was announced that the renewable power auctions had resulted in several successful bids to supply power at £57 per megawatt hour. Renewables advocates heralded what they called a revolution in windfarm costs, and an a credulous (or perhaps culpable) media lapped it up. Five years on, the windfarms involved are all operational, but, thanks to a loophole, they have refused to take up their “contracts” at £57, and are merrily selling power into the open market at anything from £200 to £600 instead. The cost to the consumer is running into billions every year.

    Then, last year, the latest renewables auction closed out at just £48, and it is this that is the source for Carbon Brief’s claim. But why should anyone think that these prices will be realised in practice, any more than the 2017 ones were? If market prices are higher when the windfarms come on stream, the directors will be in breach of their fiduciary duty to shareholders if they accept the lower price!

    In fact, we know that the costs of windfarms, both offshore and onshore, remain extraordinarily high, because we can see the unexpurgated facts in their audited financial accounts. Onshore wind is more than twice the long-term cost of gas-fired power and the cost is going up. Offshore is between three and four times as expensive, and is at best only coming down slightly. There can be no doubt about the facts here: these figures are based on hard data, and the results have been widely reproduced, including in the peer-reviewed literature. We can even look at announcements about the (allegedly) even cheaper windfarms coming on stream in 2026, and see that it is simply impossible for them to be profitable at £44 per megawatt hour; the capital cost alone will be higher than that….

    Much overlap here with my article above, but some useful additional information too.

    Liked by 2 people

  7. 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”?

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  8. Steve,

    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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  10. Liked by 1 person

  12. 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

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  13. JamesS,

    Thanks for drawing that to my attention. For those interested, the National Grid live data can be found here:

    https://grid.iamkate.com/

    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.

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  15. I think we need to concentrate on average, rather than spot prices. At 8.35pm, it’s £67.10 per MwH.

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  16. 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.

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  17. 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.

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  18. 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.

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  19. 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.

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  21. 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”

    https://www.bbc.co.uk/news/uk-scotland-scotland-politics-63641770

    Claims about Scotland’s potential offshore wind capacity are not accurate despite regularly being cited by ministers, the Scottish government has admitted.

    The government first claimed in 2010 that the country had 25% of Europe’s offshore wind potential.

    The statistic has been used by several different SNP ministers since then.

    But research by a campaign group suggested that a more realistic estimate was between 4% and 6%.

    Lorna Slater, the government’s circular economy minister, told Holyrood that the 25% figure was “now out of date” after being questioned about its accuracy by a Conservative MSP.

    Ms Slater, a Scottish Green MSP, insisted that ministers had “understood that the statistic was accurate at the time that they cited it”.

    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?

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  23. “Flooding shuts Kildonan’s lifeline road for days”

    https://www.bbc.co.uk/news/uk-scotland-highlands-islands-63652246

    Climate change has been blamed for flooding that has closed an island community’s lifeline road since Friday following heavy rain.

    The coastguard has been using 4×4 vehicles to help residents of Kildonan in South Uist to cross a waterlogged causeway over a loch.

    Landowner Stòras Uibhist said climate change was having a “real and immediate” impact on the Western Isles.

    The local council said drainage had not coped with increased water levels….

    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:

    https://www.metoffice.gov.uk/research/climate/maps-and-data/uk-climate-averages/gf4wr9twt

    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:

    October:
    1961 -90 = 112.54mm.
    1971-2000 = 114.15mm
    1981-2010 = 136.19mm.
    1991-2020 = 132.14mm.

    November:
    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.

    Liked by 1 person

  24. 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.

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  25. Best yearly figure 2002 -1693.5 mm. wouldn’t be a factory without that sort of level !

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  26. 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:

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  28. Yes, some people are calling it out, many are accepting it uncritically. One tweeter keeps referring to this:

    https://finance.yahoo.com/news/offshore-wind-u-k-9-205015051.html

    “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”.

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  29. Like

  31. Like

  32. 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.[1][2] 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.[3]

    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[citation needed].”

    well that cleared it up for me!!!

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  33. 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.

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  35. 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).

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  36. 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.

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  37. 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.

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  38. 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%.

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  39. 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.

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  40. 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.

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  41. 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).

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  42. Paul Homewood is reporting that:

    “Gas Power Is Now Cheaper Than Offshore Wind (Again!)”

    https://notalotofpeopleknowthat.wordpress.com/2023/02/11/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.

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  43. Contracts for Difference aren’t really contracts at all

    Contracts for Indifference might be more accurate? Carbon Barf wouldn’t agree, but hey-ho.

    Liked by 1 person

  44. 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.

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  45. “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”

    https://davidturver.substack.com/p/exploding-the-cheap-offshore-wind-power-fantasy

    Well worth a read, IMO. This paragraph is at the heart of it:

    This week, Energy UK and RenewableUK ran campaigns to lobby the Government for more subsidies for renewables in general and offshore wind in particular. Essentially, Energy UK admits that the bids of £37.35/MWh made during Allocation Round 4 (AR4) in mid-2022 were far too low and now the operators need more money to make their projects viable. This is a far cry from the claims made at the time by Carbon Brief and others that offshore wind power is nine times cheaper than gas.

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  46. 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.

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  47. 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.

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  48. “The shameless blackmail by the wind industry is a golden opportunity for the Chancellor”

    https://notalotofpeopleknowthat.wordpress.com/2023/03/03/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.

    ///Dr John Constable, Net Zero Watch’s director of energy, said:
    “From 2002 to 2022, the offshore wind industry in the UK has received about £20 billion in subsidy, charged on consumer bills and mostly under the Renewables Obligation. If offshore wind is not yet showing real cost reductions it is unlikely ever to do so. The Chancellor should stand up for consumers and taxpayers and say that enough is enough.”

    Well worth a read in full.

    Liked by 1 person

  49. 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.

    Like

  50. “Is Hornsea Viable At £37.35/MWh?”

    https://notalotofpeopleknowthat.wordpress.com/2023/03/05/is-hornsea-viable-at-37-35-mwh/#more-62611

    Hornsea has an estimated capital cost of about £8 billion,with planned capacity of 2852MW and a current strike price of £37.35/MWh

    Experts who have studied wind farm costings and accounts say such a price is simply not viable.

    Probably the best crosscheck we have is Triton Knoll, which lies 28 miles off the coast of Norfolk and was commissioned two years ago. Triton cost £2.1bn, according to their accounts, and has a capacity of 857MW. Its current strike price is £94.81/MWh.

    Comparing the two, Triton’s capital cost works out at £2.45 million/MW, and Hornsea’s is £2.81 million/MW. The difference may partly be due to Hornsea’s greater distance from the coast and inflation given that it is being built four years later.

    On the face of it therefore, there is no logical reason why Hornsea should be 60% cheaper. The expectation is that as Hornsea is further out at sea its productivity will be a bit higher, but even an increase of 10% would only reduce costs by £9/MWh. Against this must be offset the higher cost of maintenance and the higher cost of turbine blades and other supplies.

    Hornsea’s biggest cost headache however is the rise in interest rates over the last year. Bank rate has already risen from 0.75% to 4% in the last 12 months, and further increases seem certain to follow. An extra 4%, for example, would increase finance costs by £320/million a year, based on borrowings of £8 billion. And that equates at an additional cost of £28/MWh.

    In my view, Oersted never had the slightest intention of taking up its CfD. But with its costs rising rapidly, they must be having grave doubts whether Hornsea will even be able to make money at current market prices, which are currently around £130/MWh.

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  51. This tweet from last July isn’t aging well:

    Liked by 1 person

  52. 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.

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  53. 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.

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  54. “THE ECONOMICS OF WIND POWER”

    Click to access True-cost-of-Wind-2023.pdf

    Since 2017, the wind industry and its supporters in the media have pointed to the very low bids put into the Contracts for Difference (CfD) auctions as proof that a cost revolution has taken place. They have told public and politicians, incessantly, that wind power is now the cheapest form of generation.

    However, in recent weeks, the wind industry and its supporters have changed tack, arguing that materials price rises and inflation mean that they can no longer make a profit without further subsidies and tax
    breaks, and that CfD Round 4 developments, such as Hornsea 3, will not come on line unless ministers assent. Industry bodies that have insisted for the last six years that offshore wind can deliver power at less
    than £50/MWh now expect us to believe that they cannot make a profit. This doesn’t so much strain belief as blow it to smithereens. Market prices have averaged over £130/MWh this year, so even if input prices had
    doubled, windfarms should still have operating margins of 25%, a extraordinary level of profitability.

    What is going on?

    Worth a read to find out.

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  55. 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.

    Like

  56. 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:

    Like

  57. 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.

    Liked by 1 person

  58. 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.

    Like

  59. 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.

    Like

  60. 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?”

    https://notalotofpeopleknowthat.wordpress.com/2023/03/25/will-offshore-wind-lower-energy-bills/#comment-245427

    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.

    Like

  61. “Gone with the wind
    Renewable energy is cripplingly expensive”

    https://thecritic.co.uk/gone-with-the-wind/

    …With our political leadership hurtling the country full throttle towards a renewable tomorrow, it sure would be alarming if their calculations were wrong. As in, really, catastrophically wrong.

    So, what’s all this about wind energy costs coming down?

    Twitterphilic politicians and thoughtful campaigners alike point to the strike price offered to budding wind producers via the Government’s Contracts for Difference (CfD), which has fallen two thirds since 2014.

    Indeed, the latest auction appears to show that offshore wind farms starting service in 2024-25 will sell wind at a stunning £48/MWh — roughly in-line with pre-crisis electricity prices and well below those seen in the last two years of gas shortages.

    Who’d have thought it: a political decision with no negative trade-offs? Case closed!

    Not so fast. The last few weeks have seen the headline-grabbing CfD contract winners threatening non-delivery unless they’re offered more generous subsidies, with owners of the biggest-yet commissioned wind farm positing a halt to construction. Meanwhile, the world’s biggest wind turbine producer, Vesta, has raised it pricing per MW by 62 per cent, reported losses, and had its credit rating downgraded.

    Looking at the UK offshore projects which have activated their CfD contracts — all but one is selling above the current price of gas, at £151/MWh (with an unlucky late entry stuck at £95). The farms which came online last year wisely chose not to activate their £73.71/MWh government contracts and have been merrily milking the gas crisis to charge as much as £600/MWh.

    What’s going on here? ..

    Like

  62. 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.

    Liked by 1 person

  63. 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.

    Like

  64. 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.

    Like

  65. 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.

    Like

  66. 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.

    Like

  67. 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.

    Like

  68. 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?

    Like

  70. 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.

    Like

  72. 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.

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  73. 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.

    Like

  74. 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.

    Like

  75. 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.

    Like

  76. 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?

    Like

  77. 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%.

    Like

  78. 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

    Like

  79. Recently the price of gas has been increasing, though over the last few days it has eased back. According to the Market Data section of the BBC website it currently sits at 84.37p a therm. This makes it just over 1/9 of the price when the “wind is nine times cheaper than gas” claims were made.

    However, as we know those claims fail to take into account the costs associated with the unreliable and disruptive nature of renewables, with the related costs of upgrading the grid, back-up costs etc. But even then, that is only part of the story regarding the other side of the equation, namely what renewables really cost. The “cheap” claims were based on recent strike prices under the CfD regime. Well, as we also know, they aren’t what are claimed either. And that situation seems to be getting worse. Paul Homewood has more on this, via an article in the Telegraph:

    Offshore Windfarms Threaten To Pull Out Of Uneconomical Contracts

    First the Telegraph:

    A surge in supply chain costs has pushed up the price of wind turbines, while increases in global interest rates have raised refinancing costs substantially.

    It has made several projects unviable just a year after they won government subsidy contracts – leading to fears from industry insiders that Britain’s future is in jeopardy as the “Saudi Arabia of wind”.

    Inch Cape, a 50:50 joint venture between Ireland’s ESB and China’s Red Rock Power to develop a project located 15km off the east coast of Scotland, is understood to be at risk, with the Irish side refusing to proceed with a so-called final investment decision (FID) after balking at the economics of the project.

    One source said: “People won’t invest if it doesn’t give you a decent return on equity. And presently, it’s hard to see how it can.”

    Schemes developed by Danish company Ørsted and Swedish player Vattenfall are among other projects understood to be at risk, as the industry seeks more government help to ensure projects remain viable…

    …Last year’s CfD auction was the biggest to date and secured enough capacity to provide more than 10 million homes with clean power.

    However, it is understood that the £37.35 strike price secured by Inch Cape is currently “below the waterline” for ESB, meaning they are not satisfied with the level of returns on offer.

    “It should be nearer £50 to £55,” a source said.

    The Norfolk Boreas offshore wind farm operated by Vattenfall is also understood to be at risk as costs mount.

    A spokesman admitted that market conditions were “extremely challenging”, suggesting that a final investment decision was not forthcoming. He warned that the Government must reflect the realities of the market, suggesting Vattenfall was unwilling to proceed without more state help…

    As Paul observes:

    It has been apparent for a long while that the prices agreed under CfDs by offshore wind farms are in no way viable. It is worth noting that the £55/MWh figure quoted as a reasonable price is at 2012 prices, and works out at about £67/MWh at current prices. This certainly does not equate to the “cheapest” claims made by the renewable lobby. Furthermore because CfD prices are inflation linked, these prices will likely be over £80/MWh by the time the wind farms come on stream.

    With interest rates now back to proper levels, and supply chain issues pushing up costs, the economics of offshore wind look distinctly unfavourable. If investors in these Round 4 auctions are getting cold feet, despite the fact they can sell on the free market anyway, what chance is there that investors will bother to bid at even lower prices for the next allocation round? And if these investors pull out, the 2030 wind power target is pie in the sky.

    Liked by 1 person

  80. I could have posted this at Spot the Difference or at An Abuse of Language, since it’s relevant to both. Certainly, if ever there was an example of words not meaning what they say, this press release looks like it:

    https://www.renewableuk.com/news/645089/Energy-industry-urges-Government-to-reform-clean-power-auctions-to-maximise-benefits-for-consumers.htm

    For “Energy industry urges Government to reform clean power auctions to maximise benefits for consumers” I think we can safely read “renewable energy companies urge Government to reform CfDs to maximise benefits for renewable energy companies.” That’s certainly Net Zero Watch’s take on it:

    Net Zero Watch has urged the Government to stand up for consumers and businesses by rejecting the wind industry’s latest demands for more subsidies.

    In a move that gives the lie to years of propaganda claiming falling costs, the wind industry’s leading lobbyists have written to the Government, threatening to abandon the UK unless there are hugely increased subsidies for their companies (see RenewableUK press release [above]).

    The industry is claiming that unforeseen rising costs now necessitate and justify three actions:

    1) A vast increase in the budget for the fifth auction (AR5) of Contracts for Difference subsidies, with an increase of two and half times the current levels for non-floating offshore wind alone;

    2) Special new targets and thus market shares for floating offshore wind, one of the most expensive of all forms of generation, and, most importantly of all,

    3) a revision to the auction rules so that the winners are not determined by lowest bids but by an administrative decision that weights bids according to their “value” in contributing towards the Net Zero targets.

    This would in effect not only increase total subsidy to an industry that was until recently claiming to be so cheap that it no longer needed public support, but also provide it with protected market shares, all but entirely de-risking investors at the expense of consumers.

    It would also be an open invitation to graft and corruption.

    The Government should reject these self-serving demands on three grounds:

    1. The UK economy cannot be expected to continue to subsidise a sector that is still uneconomic after nearly twenty years of above-market prices and guaranteed market share. The wind experiment has failed and must be wound down.

    2. UK consumers of all kinds, from households to businesses, are already experiencing extreme pressures on budgets, and a further burden on the energy bill simply cannot be tolerated. Government must recognise that households and businesses are unable to afford yet more subsidies to the wind industry.

    3. The industry’s current cost difficulties are neither unforeseen nor unpredicted but have been obvious to careful observers for over a decade.

    Dr John Constable, NZW’s energy director, said:

    “It would be both absurd and counterproductive for government to bail out the wind industry in spite of the evident failure to reduce costs. A refusal to learn from mistakes will be disastrous.”

    If renewable energy is really so cheap, why the urgent need for all this lobbying to plead for more money?

    Like

  81. The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 72.76p per therm.

    That’s less than 1/9 the price it was when the claim was made that wind energy was “9 x cheaper” than gas.

    Like

  82. The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 65.56p per therm.

    That’s less than 1/10 the price it was when the claim was made that wind energy was “9 x cheaper” than gas.

    Like

  83. The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 62.96p per therm.

    That’s less than 1/11 the price it was when the claim was made that wind energy was “9 x cheaper” than gas.

    Like

  84. Still the price of gas is going down : 62.06p per therm this evening, according to the Market Data graph on the business section of the BBC website.

    Like

  85. The price of gas is now (according to the Market Data graph on the business section of the BBC website) at 60.19p per therm.

    That’s just over 1/12 the price it was when the claim was made that wind energy was “9 x cheaper” than gas.

    Like

  86. I have regularly been reporting the price of gas, and in fairness, I must report that it has just gone up again, albeit only to 75.31p per therm (i.e. still just under 1/9 its price at its peak). However, the other side of the claim that renewables are 1/9 the price of gas was reliance on low strike prices achieved (but not yet implemented – and not likely to be implemented) in last year’s CfD round (as well as simply choosing to ignore all the costs to the Grid associated with renewables). Now today we have this from net zero watch:

    As one of the world’s biggest windpower developers halts its top UK wind project and warns about further cancellations, Net Zero Watch reminds ministers that they have been warned for years about this inevitable fiasco.

    Vattenfall, an international mega-developer of windpower, has put the UK’s giant 1.4 GW offshore wind project Boreas on ice, claiming that rising costs have made the Contract for Difference, awarded last year for £45/MWh (2023 prices), uneconomic

    Net Zero Watch, amongst others (see publications listed below), has long warned that the low CfD bids made in the UK had no basis in economic reality. The capital and operating costs of wind power, particularly offshore are still very high. This technology is unattractive and imposes very high system costs when compared to gas generation even at today’s elevated prices. It is completely uneconomic if the gas prices continue to revert to their historic levels.

    Net Zero Watch notes that Vattenfall has said it will be considering the future of all is wind projects in the Norfolk zone, with a total of 4.2 GW, placing pressure on the UK government to make extra support available to ensure construction and meet the targets for offshore wind.

    Professor Gordon Hughes (University of Edinburgh), the author of many of the studies exposing the reality of wind power costs, said:

    “It is obvious and now increasingly widely recognised that wind industry claims about costs and performance should not be taken seriously. Very high costs have been clear in the financial data for a long time, and are not the result of recent inflation and supply chain difficulties, though these may be making a bad situation still worse.”

    Dr John Constable, NZW’s Energy Director, added:

    “It is critically important that the UK government does not succumb to the tacit blackmail of Vattenfall’s announcement. The wind experiment has failed. The consumer cannot be expected to continue propping up this unfolding disaster.”

    Like

  87. The BBC has the story )not front page news, however:

    “Norfolk Boreas: Work on offshore wind farm stops over soaring costs”

    https://www.bbc.co.uk/news/uk-england-norfolk-66263340

    Work has stopped on one of the UK’s largest offshore wind farms after its developer said it no longer made financial sense to continue.

    The Swedish energy giant Vattenfall is to shut down development of the Norfolk Boreas site, off the Norfolk coast.

    Market conditions had deteriorated since it signed a contract to fix the price of electricity it sells for 15 years, the company said.

    Two other sites, known as Vanguard East and Vanguard West, will be reviewed….

    …It said the market conditions were challenging, as costs for the offshore wind industry had risen by 40%.

    It has become more expensive to borrow money to build the wind turbines, and supply chains are also struggling, the business said….

    …Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said the government needed to take into account rising costs for wind farm companies when it awarded contracts.

    For much of the past decade, offshore wind farms have been promised a fixed price for the electricity they produce through a so-called contract for difference (CfD).

    This means that if electricity prices are below the promised price then companies get a subsidy to make up the difference.

    Equally, if prices rise above that level then they have to pay back their additional gains.

    Last year, Vattenfall won one of these contracts to build the Norfolk Boreas wind farm at a joint record-low strike price of £37.35 per megawatt hour.

    But since winning the auction, Vattenfall and others have warned that costs have increased far too fast for these projects to be economical anymore.

    “Costs of wind farms have been driven up by ongoing high gas prices causing supply chain inflation, just like for other industries,” Ms Ralston said.

    “If the government gets the policy wrong on the current round of renewables auctions and doesn’t keep pace with increasing costs, the UK could end up even more reliant on foreign gas, leaving households on the hook with higher bills.

    “Doubling down on renewables, which remain much cheaper than gas, means in future price spikes we’ll be less exposed.”

    The business will be banned from putting the same project forward for a new contract in next year’s government auction.

    I take serious issue with the claims made in the penultimate paragraph above.

    Like

  88. The Guardian has woken up too”

    “Higher prices for UK’s offshore wind can’t be avoided”

    https://www.theguardian.com/business/nils-pratley-on-finance/2023/jul/20/higher-prices-for-uks-offshore-wind-cant-be-avoided

    elcome to the next little crisis in the UK energy world: the offshore windfarm industry is being blown off course. No, not because of the cost of leasing seabed plots from the crown estate. Rather, an inflationary gale is blowing through supply chains, upsetting the old and comforting notion that the cost of getting the turbines spinning always falls in real terms.

    The decision by Vattenfall to halt work on a big project off the coast of Norfolk is significant for what it says about how far the economics of new wind development have shifted in the space of a year. The state-owned Swedish company calculates that it is better to take a financial hit of 5.5bn Swedish krona (£415m), covering the work it has done so far on the Norfolk Boreas development, than plough on.

    The contract for the electricity to be generated from Boreas was priced at £37.35 a megawatt hour (in 2012 prices) when set in last year’s auction for renewables capacity. The price needs to be significantly higher to make the project financially worthwhile, says Vattenfall’s chief executive, Anna Borg.

    If this sounds like a plea for more subsidies – which it is – there is sadly little point in telling Vattenfall and other victors in last year’s auction that it’s their own damn fault for bidding so aggressively. Winning an auction brings the right to build a windfarm but not an obligation to do so. The government cannot simply order companies to get on with the job.

    Since it can take two years to lock down contracts with suppliers, one can see precisely why cost increases of “up to 40%” in a year, according to Borg, have undermined financial incentives to build. The higher cost of borrowing, as well as the higher cost of steel, will be a factor.

    Nor will the change in the economics be unique to Boreas. This year’s auction round is already in progress and all developers will also be pricing in higher costs. It is an open question whether the government’s maximum strike price of £44 a megawatt hour (again in 2012 prices because of the industry’s odd yardstick) will bring forth bidders in anything like the desired number.

    What’s to be done? One way or another, the government – which means all of us, via our energy bills – will have to pay more for the next crop of windfarms. If not, construction will only slow further and the dream of being “the Saudi Arabia of wind” will be lost in a North Sea haze….

    …One solution would be to reprice the 15-year contracts agreed last year – in other words, be more generous to the winning bidders. The problem with that idea is that it would bypass the competitive contracts-for-difference regime that, until now, has been highly successful in driving down the cost for consumers and ensuring the government isn’t given the runaround. It would be more sensible just to re-run the auction and invite new bids. As for this year’s auction, that cap of £44 a megawatt hour will surely have to be raised a notch or two.

    “The UK offshore wind sector needs to see higher tariffs/more policy support to incentivise investments,” says the Jefferies analyst Ahmed Farman. Yes, unfortunately that is the state of play. The crisis rumbles on.

    Like

  89. “What does the scrapping of a wind farm plan mean for UK renewable energy?”

    https://www.bbc.co.uk/news/uk-england-norfolk-66267860

    What an extraordinary article. It’s full of delusional thinking, and a failure to understand that recent strike rates under CfD were never going to be implemented. A few short sections:

    …Norfolk County Council said while it was “naturally disappointed” the development had been “paused” the company had “reassured” it the rest of the Norfolk offshore plan would still go ahead.

    A spokesman said it remained “optimistic” about the future….

    …Orbis Energy, a Lowestoft-based clean energy hub for about 40 businesses, said the decision was “disappointing” but claimed there were “opportunities and solutions that can bring it back on track”.

    Business development manager, Ian Pease, said the government needed to support developers.

    He said it was “not just about subsidies” but about how we can “work smartly and reduce costs” in order “to make it the most cost-effective region for offshore wind in the world”….

    …Professor Aled Jones, director of the Global Sustainability Institute at Anglia Ruskin University, said rising costs meant the “government needs to consider what role the private sector has in powering the future of Britain”.

    He said while renewable energy offered “significant returns on investment” those returns came over periods of time longer than the private sector is “currently willing to tolerate”.

    “The case for a UK-led renewable energy developer, backed by the UK public which can benefit from the returns over the next few decades, has just become stronger,” he said.

    Jess Ralston, head of energy at the Energy and Climate Intelligence Unit, said the government needed to take account of rising costs when awarding contracts.

    “If the government gets the policy wrong on the current round of renewables auctions and doesn’t keep pace with increasing costs,” he said, “the UK could end up even more reliant on foreign gas, leaving households on the hook with higher bills.”…

    Here’s the nub – give us more money:

    CfDs effectively guarantee a fixed price for the electricity produced for 15 years. It meant that if prices were low, the companies would get a subsidy. If prices rise, the gains must be paid back.

    But Vattenfall said it had seen its costs, driven by inflation, supply issues and rising wages, soar by 40%.

    The money the government had agreed to pay them, the firm said, would not cover these increased costs.

    The BBC summed it up this:

    Among MPs, councillors and industry experts there is real disappointment.

    There is also frustration because I’m told that in private, the energy companies have been telling local MPs and ministers about their concerns for some time. High inflation, supply shortages and rising wages made it inevitable that an energy company would reconsider its plans. Among MPs there’s a feeling the government will have to come up with more money (which will probably end up on our electricity bills) and reform its contract with the energy companies.

    But I’m told there are other grumbles too: windfall taxes, delays in granting planning permission and public anger over pylons which one MP claims, makes energy companies feel unwelcome.

    The onshore work is still going ahead. There is a feeling that this will be resolved “because there is no alternative” as one expert put it.

    But this is a delay which the industry and arguably our climate could have done without.

    Perhaps someone from the BBC’s Climate Disinformation Unit could tell us precisely what measurable difference the apparent failure of this project will make to “our climate”? The answer, by the way, is none.

    Like

  90. This would be hilarious, were it not so serious:

    “UK offshore wind at ‘tipping point’ as funding crisis threatens industry
    Industry figures warn climate crisis goals cannot be met unless government pumps more money into renewables”

    https://www.theguardian.com/environment/2023/aug/05/uk-offshore-wind-at-tipping-point-as-funding-crisis-threatens-industry

    …a swathe of new projects, which Britain is relying on to meet key climate targets, could also become economically unviable under the existing regime. While the industry has been hit by huge price inflationary pressures, it warns that the government has failed to adjust the scheme that guarantees the price it is paid for energy.

    “If the government doesn’t do something, there’s a very real risk that, come September, just before party conferences, the story won’t just be about getting rid of the ‘green crap’ – it’ll be about failing to deliver on the projects they’ve already said that they wanted,” said one industry insider.

    Offshore wind developers have experienced soaring construction costs as inflation has raged. At the same time, the government has been trying to hold down electricity prices through the contract for difference (CfD) scheme designed to provide investors with certainty over new projects.

    For the latest bidding round, which concludes in September, the government set a maximum price of £44 per megawatt hour based on 2012 prices – similar to the previous round that took place before many of the inflationary pressures hit.

    Alarm over the mismatch has been increased by the decision of Swedish energy company Vattenfall to stop work on the multibillion-pound Norfolk Boreas windfarm, designed to power the equivalent of 1.5m British homes. It said the project was no longer profitable. Grant Shapps, the energy secretary, was confronted over the issue during a Downing Street gathering last week.

    Offshore wind is key to government climate targets. It is committed to decarbonising the electricity system by 2035 and achieving net zero by 2050. It is banking on a near-quadrupling of offshore wind from about 14 gigawatts to 50 gigawatts by 2030.

    Jan Matthiesen, head of offshore wind at the Carbon Trust thinktank, said: “The UK offshore wind industry is at a tipping point. The maximum prices set are now too low. Last month, we saw Vattenfall withdraw from the Norfolk Boreas windfarm. This may be the first of many if bold and swift action is not taken.”

    Adam Berman, a deputy director of Energy UK, the trade association for the energy industry, said: “To put it simply, if we have any hope of reaching the ambitious targets that the government has set, we cannot afford more major projects to delay or to stop altogether.”

    He added: “If we fail to put in place a financially sustainable regime, we do run the risk of underdelivering. We are running the risk of the first CfD round that might actually not procure a major offshore wind project.”

    Translation: the CfD prices that were so cheap (but not yet implemented) are unviable. Even leaving aside the ignoring of additional costs incurred by the National Grid in dealing with the stresses and strains caused by incorporating renewable energy, the “9 x cheaper” claim was always a load of tosh. And now the renewables industry is holding a gun to the government’s head and demanding more cash. Perfect timing as net zero is starting to wobble, now that some politicians have realised it’s expensive and unpopular.

    Like

  91. “No, Wind Power is Not Cheaper Than Gas”

    https://dailysceptic.org/2023/10/07/no-wind-power-is-not-cheaper-than-gas/

    The conclusion:

    You can see how easy it is to go from the fantasy of ‘cheap wind power’ promoted by the political class to the reality of very expensive wind, simply by including the real downstream costs. We have identified that the necessity of maintaining gas backup to wind power means that any savings from wind will often be more than negated by the costs of backup power. This proposition ties in with the observed reality that countries with higher levels of wind and solar capacity tend to have higher residential electricity prices.

    The real problem though is the hell-for-leather dash for Net Zero and the accompanying plans produced by the unelected and unaccountable Climate Change Committee. This Soviet-style planning coupled with the Department for Business, Energy & Industrial Strategy arbitrating between different technologies and handing out billions in support of its favoured solution has all the characteristics of an accident waiting to happen. Bjorn Lomborg warned that “we are now going from wasting billions of dollars on ineffective policies to wasting trillions”.

    The accelerated implementation of unreliable wind power will almost certainly lead to higher costs, lower living standards and the erosion of competitiveness and not to the green nirvana dishonestly promoted by Westminster politicians.

    Liked by 1 person

  92. “The myth of affordable green energy is over
    Progress is stalled around the world as nobody wants to admit the real costs”

    https://www.telegraph.co.uk/news/2023/10/10/green-energy-plans-wind-solar-power-myth/

    The pervasive narrative about offshore wind in recent years has been that costs are falling and that wind power is cheap. But scratch below the surface and you find that things are not quite so rosy. Turbine manufacturers have been losing money hand over fist in recent years.

    Collectively over the past five years the top four turbine producers outside China have lost almost US$ 7 billion – and over US$ 5 billion in 2022 alone. Last year the chief executive of turbine-maker Vestas said that the company lost eight per cent on every turbine sold.

    Some of these losses are down to warranty issues – this means the turbines have not performed as expected requiring the manufacturers to compensate windfarm developers and rectify problems. Privately this is attributed to the pressure for ever larger windmills which are harder to get right. Insiders now suggest that the growth in capacity per turbine has peaked, at least for the time being.
    But the losses have also been driven by pricing structures designed to win market share, and aggressive windfarm developers who have refused to pay up, often while pocketing billions in subsidies. The market has started to look, if not like a Ponzi scheme, then like a house of cards built on the shakiest of foundations. Turbine producers are all busily re-negotiating contracts and insisting on better terms to stem their losses, otherwise they will simply shift to other, more profitable, activities. This is putting pressure on developers who are now going cap in hand to governments, begging for more subsidies and more tax breaks, all of which must be paid for by tax-payers or bill-payers….

    Like

  93. “Electricity prices ‘must rise by 70pc to pay for more wind farms’
    Warning from UK’s biggest energy generator comes after latest bidding round received no offers to build new farms”

    https://www.telegraph.co.uk/business/2023/10/25/electricity-prices-rise-70pc-pay-wind-farms-energy/

    No new wind farms will be built off Britain’s shores unless the Government lets operators earn more money from the electricity they produce, the chief of the nation’s biggest generator has said.

    Tom Glover, country chair of RWE’s UK arm, said the price offered by the Government to wind farm operators must rise by as much as 70pc to entice companies to build.

    Developers must be offered between £65 and £75 per megawatt hour (MwH) for the power generated from wind farms, Mr Glover said.

    That compares to the £44 offered in the most recent government-run auction.

    His warning follows the disastrous result of the last offshore wind allocation round in September, which ended in a humiliation for ministers with not one company offering to build new offshore wind farms….

    Note, however, that the claim of £65-75 per Mwh being required is a piece of disinformation, at least without it being made clear that it (and the £44 it is being compared to) is at (iirc) 2012 prices, and is subject to inflationary increases since then. I can’t work out what £65-£75 per Mwh at 2012 prices equates to at 2023 prices, but I’d guess it’s probably north of £100 per Mwh.

    Please could someone explain all this stuff to Mr E Miliband – he seems to be under the illusion that if we build lots of renewable energy, then our energy prices will go down.

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  94. Thank you Paul Homewood for confirming what I suspected:

    Offshore Wind Demands £95/MWh

    …the article fails to point out that the prices mentioned are at 2012 prices, which incidentally should be dropped entirely in future auctions, as they are of no relevance and are highly misleading.

    £75/MWh, for instance, equates to £95/MWh at current prices….

    Well worth a read, and the conclusion seems unimpeachable:

    …Also with inflation seemingly remaining stubbornly high, the index linked price will be much higher still by the time these projects are commissioned in a few years time.

    The undeniable reality is that offshore wind never was viable at the fanciful prices signed up for last year and before. The cheapest offshore wind being sold via CfD is from Triton Knoll, which is being paid £97.82/MWh.

    There never was any intention trigger those contracts, instead wind farm owners always planned to sell at much higher prices on the open market.

    In the latest auction, this loophole was closed by the govt, leaving the wind industry between a rock and a hard place, with their bluff having been well and truly called.

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  95. This is what it’s come to:

    “When should I turn the heating on?”

    https://www.bbc.co.uk/news/business-67197871

    This BBC article treats us like children, offering us advice such as only heating rooms that we are using. According to the “experts” cited by the BBC, we should only put the heating on when the clocks go back. Well, I’ve news for the BBC and its experts, here in the north we put the heating on when it gets cold, and that was weeks ago.

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  96. Still a long way from recognising that we have been lied to (not least by the Guardian) about the cheapness of renewables (no sign of them apologising for publishing the “9 x cheaper than gas” story), but at least the dial seems to have moved, even if the costs and problems are still downplayed:

    ..Offshore wind, then, is less of an outright bargain than it seemed a few years ago when every clearing price at auction came in lower than expected. But, on a 10-year outlook, the technology still looks attractive price-wise compared with gas – even when one includes the considerable costs of hooking up projects to the grid. The shallow waters of Dogger Bank and other places remain the UK’s best resource in the decarbonisation game.

    Maybe they do “in the decarbonisation game” (except that it shouldn’t be a “game”), but they certainly don’t in the serious business of supplying cheap and reliable energy combined with that all-important additional component of energy security.

    “UK offshore wind is no longer a bargain. But it’s still better than the alternatives
    Even with bigger subsidies, the technology looks attractive price-wise compared with gas”

    https://www.theguardian.com/business/nils-pratley-on-finance/2023/nov/16/uk-offshore-wind-subsidies-price-gas

    Like

  97. “Zero onshore wind plans submitted in England since de facto ban was ‘lifted’
    Exclusive: Developers still unwilling to put forward schemes despite change to planning rules in September”

    https://www.theguardian.com/environment/2023/dec/27/zero-onshore-wind-plans-submitted-in-england-since-de-facto-ban-was-lifted

    …Analysis of the government’s renewable energy planning database shows that no applications for new onshore wind projects have been submitted since the prime minister, Rishi Sunak, claimed that the government would overturn the onshore wind ban in September 2023.

    At the time, the National Infrastructure Commission advised the government to go further and restore onshore wind to the government’s Nationally Significant Infrastructure Projects process, which would encourage more applications.

    The government rejected this recommendation and said the measures announced in September were enough.

    Analysis by Carbon Brief estimates that if onshore wind had continued to be built at the same rate it was in 2017 – before the ban started to come into effect – 7GW of onshore wind would have been built. This would have knocked £5.1bn off energy bills, or £182 for each UK household, in the year from July 2022 to June 2023….

    I think we can file that in the same place as CarbonBrief’s other claims about energy costs. Unfortunately, Ed Miliband still believes the propaganda:

    …Ed Miliband, the shadow energy secretary, said a Labour government would end the effective ban on onshore wind.

    “Every household in Britain is paying higher energy bills because of Rishi Sunak’s staggering failure to end the onshore wind ban,” he said. “The Conservatives have artificially inflated energy bills, and make the UK’s energy system dependent on fossil fuel dictators, because they ludicrously oppose cheap, clean power for our country….

    We’re doomed.

    Like

  98. PS Perhaps the failure to apply to build new wind turbines onshore in England has something to do with the (all-too-brief) tightening up of the Contracts for Difference procedure? Wind farms aren’t cheap, and they depend on subsidies.

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  99. Natural gas closed the day at 56.37p. That’s well under 1/12 of the high price used in the CarbonBrief article that made the mischievous “9 x cheaper” claim. Given that the price of electricity from windfarms has risen by 30% or more since then, the claim is looking very silly, but CarbonBrief, funnily enough, haven’t updated their article.

    In fact, even disregarding all the extra costs imposed on the Grid and the price of electricity generally that arise from accommodating unreliable and unpredictable renewable energy generation that is given poll position in the system, it looks as though wind generated electricity must be around 50% more expensive than gas just now.

    Liked by 2 people

  100. 18 months ago a (very) temporary spike in the price of gas led to claims at places like the Guardian that gas should give way to renewable energy that they claimed (falsely) was now “9 x cheaper”than gas. Being cheap was a good thing. Now:

    “Gas’s future looks cloudy as demand and prices tumble
    Alex Lawson
    A conference this week will discuss a market being transformed by green energy, LNG and milder winters”

    This is the same Alex Lawson whose analysis and freedom from Guardian Groupthink I praised here:

    Chickens Are Coming Home to Roost

    Yet the headline suggests capture by Guardian groupthink. Perhaps that is now the price of getting articles published in the Guardian: the article itself demonstrates much of the same independence of thought he has demonstrated for some time:

    …The UK industry regulator, Ofgem, confirmed last week that the ease-off in wholesale prices had fed through to household bills. From April, its quarterly price cap will fall by £238 to £1,690 and is expected to fall further from July before rising at the end of the year.

    The sharp drop in prices has stoked debate over the future of global gas stores, terminals and pipes. In Britain, a long-term switch away from gas-fired power stations has led bigger players to exit that sector, leaving it held by a clutch of smaller, privately owned entities. A commitment from the government to decarbonise the electricity grid by 2035 (and by 2030 from Labour) has led to fears over a gap in supply to meet an explosion in electricity demand. Industry sources argue that realism will trump targets, and a number of gas-fired plants will almost certainly be kept on hand well into the 2030s to ensure the lights stay on.

    Analysis by consultancy DNV found that most British homes will still rely on boilers which burn natural gas by 2050, despite the target to hit net zero by that point. Hydrogen has been proposed as an alternative by the powerful gas infrastructure lobby, but condemned by the National Infrastructure Commission….

    Liked by 1 person

  101. Unbelievable:

    “UK ‘risks repeat of surging energy bills’ amid continued reliance on gas

    Energy crisis panel warns country is ‘dangerously unprepared’ and must shift away from gas quickly”

    https://www.theguardian.com/environment/2024/oct/15/uk-risks-repeat-of-surging-energy-bills-amid-continued-reliance-on-gas

    Britain is at risk of experiencing a repeat of the sharp increase in energy costs which has fuelled the continuing cost of living crisis because it relies too heavily on gas, according to an expert panel of industry leaders.

    The Energy Crisis Commission has warned that the UK is still “dangerously underprepared” for another crisis because it continues to rely on gas for its power plants and home heating.

    The newly formed commission, made up of representatives from business groups Energy UK and the CBI, and the consumer groups Citizens Advice and National Energy Action, used its first report to warn that too little progress has been made in insulating homes and scaling up the installation of heat pumps since the UK economy was rocked by record high gas prices….

    …The commission called on the government to prioritise shifting the UK away from a reliance on gas to help protect households and the economy from future energy price shocks.…

    …It also called for the government to set out a plan to move homes away from gas heating by rolling out more heat pumps or other low-carbon alternatives.

    The commission urged the government to continue its efforts to cut the UK’s reliance on gas power plants in favour of low-carbon electricity sources, and to help energy intensive businesses to switch to clean energy alternatives.…

    ...Ed Miliband,the secretary of state for energy security and net zero, said: “This report shows industry experts support making Britain a clean energy superpower, which is a core mission of this Labour government.

    “After the Tories’ catastrophic failures, we have taken decisive action. We overturned the nine-year onshore wind ban within 72 hours, have overseen the most successful renewable auction in history, set up Great British Energy and taken action to lift 1 million renters out of fuel poverty with new energy efficiency standards.”

    Liked by 1 person

  103. Thank you Mark. A glimpse into the world of the Upside-Down. From bullet 11 (just skimming for now):

    ○ Stakeholders made efforts to keep the public informed – but the public
    were misinformed, sometimes by politicians, media commentators and
    vested interests, that ‘green levies’ were the reason for higher bills;
    domestic gas production would reduce prices; and that renewables were
    to blame for blackouts becoming more likely.

    Report is here, if anyone can bear to read it.

    Liked by 1 person

  104. Thanks for the link Jit. I’ve also skimmed it and was interested to find this (from Recommendations):

    1. The UK needs a clear strategy for shifting away from fossil fuels, particularly gas, across the whole economy.

    ○ There is still expected to be 5% of unabated gas on the power system even when the transition from gas has been made, and gas will be used by some industries for years to come.

    It’s hard to see how this can be reconciled with the Government’s plan to use gas-fired plants (with CCS) as back-up when there’s little or no wind or sun. 5% would not be nearly enough. Yet more would completely contradict the Energy Crisis Commission’s primary recommendation.

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  105. Thank you Jit. So the Commission is misinforming the public about misinformation. I think I posted the story on the appropriate thread.

    Like

  107. Here’s Ben’s concluding paragraph:

    And what of the hapless consumer? He is ensnared by the phantom institutions that represent the green ideology-addled British Establishment rather than his own interests while being fed the story of that Russia is to blame for his predicament. The U.K. could be producing its own gas and exporting plenty too, and an independent commission of energy experts could be pointing this out. But that possibility has been ruled inadmissible by the flood of phantom ‘civil society’ organisations that surround Westminster. The phantom “Commission”, convened by that swarm of spectres, adds to the chorus. At some point the public is going to discover for itself that U.K. energy and climate policy is far worse than any climate change, and that its interests have been harmed more by the British establishment than by Russia. That experience is likely to be very painful.

    No doubt that’s true. But there’s no sign of it happening. We may bleat all we wish about Net Zero – but few people seem to be particularly worried about it. Did anyone watch the GBNews Tory leaders’ debate yesterday? If you did you’ll have noticed that Net Zero – one of the major issues of our time – was barely even mentioned.

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  108. No doubt true, Robin – for now. But chickens will come home to roost, and when they do, I imagine the British people will be very angry indeed.

    Like

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