Six years ago Carbon Brief published on its website a guest post with the heading “The era of ‘negative-subsidy’ offshore wind power has almost arrived”. The inclusion of the word “almost” seems, in retrospect, to have been very wise. The article claimed, somewhat optimistically:
The offshore wind farms auctioned last September in the UK will most likely be the world’s first “negative subsidy” projects – wind farms that will pay money back to the government over their lifetime.
This was a key finding from a study titled “Offshore wind competitiveness in mature markets without subsidy” published in Nature. We were told that the authors’ investigation “suggests that the era of subsidy-free wind farms will begin in 2023, based on recent auctions.” Sadly, we know now that this conclusion has not aged well, and was massively over-optimistic. Far from continuing to decline, AR7 and (putatively) AR8 strike prices under the Contracts for Difference (CfD scheme) are at £92 per MWh for onshore, and at £113 per MWh for fixed offshore wind farms, in 2024 prices. The only year in which the CfD regime resulted in payments to the Exchequer from renewable energy companies was 2022, at the height of the fossil fuel price strike resulting from the commencement of Putin’s war against Ukraine. That net payment of approximately £346 million has been dwarfed by all the payments that have flowed, and continue to flow, in the other direction. David Turver’s article reflecting on the cost of CfD subsidies is a useful reference work. So far as concerns 2025 he notes: “A record total of £2.64bn was paid out in subsidies across a range of technologies, but the largest recipient was offshore wind, taking over £2bn of the total.”. That makes mockery of the optimistic claims being made in 2020 for offshore wind and the brave new world of negative subsidies that was then anticipated.
It turns out (I keep learning about the legislative and bureaucratic labyrinth that is the world of renewable subsidies) that the subsidies under the CfD regime fall within the scope of the Subsidy Control Act (“An Act to make provision regulating the giving of subsidies out of public resources; and for connected purposes”) and The Subsidy Control (Subsidies and Schemes of Interest or Particular Interest) Regulations 2022. A brief explanation of what this is all about can be found on a government webpage here. The guidance set out there “is designed to help public authorities award subsidies in a way that minimises any negative impact on competition and investment, and to help ensure public money is used in an effective and efficient way.” I’m not convinced that it’s working where subsidies for renewable energy are concerned, but what do I know? And how anyone can find their way round the detailed guidance running to 267 pages is beyond me. Perhaps all that complexity is why there is a Subsidy Advice Unit (SAU) whose role is to “assist public authorities by providing independent non-binding advice in relation to certain subsidies”.
Yesterday the SAU accepted a request for a report providing advice to the Department for Energy Security and Net Zero (DESNZ) concerning its proposed Contracts for Difference (CfD) Allocation Round 8 (AR8), which it turns out is a Subsidy Scheme of Particular Interest. The details of this request can be found here. The plan is that the SAU will prepare a report, which will provide an evaluation of the DESNZ assessment of whether the subsidy scheme complies with the subsidy control requirements (Assessment of Compliance). The SAU will complete its report within 30 working days.
The notes offer a very helpful summary of how the CfD scheme works – or, at least, how it is supposed to work:
The CfD scheme has existed since 2014 and aims to encourage low carbon electricity generation. CfDs are long-term (15 or 20 year) contracts between a low carbon electricity generator and the CfD counterparty – the Low Carbon Contracts Company (LCCC). This is the eighth allocation round (AR8) of the Scheme.
Under the Scheme, the generator sells its electricity at a variable market price. When the reference price (a proxy of the wholesale electricity price) is below the strike price agreed in the CfD contract, the generator receives a top-up payment from LCCC for the difference (funded by a levy on electricity suppliers). When the reference price is above the strike price, the generator must pay back the difference to LCCC.
However, as we have seen, with the modest exception of 2022, the money keeps on being paid to the renewable generators. And this is openly acknowledged in the notes explaining the background to the request made by DESNZ to the SAU:
DESNZ estimates that the total lifetime subsidy amount for contracts awarded in AR7 is £40 billion (2024 prices, rounded to the nearest £5 billion), and the largest estimated subsidy amount for any of the contracts awarded under AR7 is £6 billion (2024 prices, round to the nearest billion).
Note the careful wording. These are the anticipated subsidies under AR7 alone. As to the subsidies that are likely to be paid under AR8 (and that are being paid under the earlier ARs) there seems to be a significant degree of embarrassment, with the result that nobody is nailing their colours to the mast with regard to the subsidy levels:
The estimated total subsidy amount and estimated maximum subsidy amount for any individual contract for AR8 may be significantly lower or higher than this figure. Additionally, these estimates are highly uncertain as actual payments will depend on wholesale electricity prices at the time and the amount of electricity generated by successful projects.
The embarrassment grows, as they try desperately to persuade us that these massive subsidies aren’t causing our electricty bills to be higher than they otherwise would be:
Importantly, the total subsidy amount is not the same as the net impact on consumer bills of an allocation round, and in particular, does not reflect the offsetting downward pressure that renewables place on the wholesale price.
Yeah right. Some evidence for that claim would be nice. Naturally none is forthcoming.
Conclusion
The level of the subsidies under the CfD scheme is becoming a political hot potato. As a result, some of the worst excesses are beginning to be controlled. For instance the scandal around surrendered CfD capacity, whereby renewable energy companies could surrender earlier, less profitable CfDs and take up later more profitable ones instead for the same project, is coming to an end. The government is making permanent the restriction on bidding previously surrendered capacity into future rounds to “protect auction integrity and deployment timelines”. Every little helps, I suppose. However, the hubristic claims of six years ago that we were about to enter a brave new world of negative subsidies are dead and buried. I think they were always pie in the sky. We are going to be subsidising renewable energy for many years to come. Don’t expect your electricity bills to come down any time soon – or, if they do, you should expect to pay a lot more tax, because the subsidies have to be paid for somehow.
Climate Scepticism 
The damage can be repaired, if the right party wins the next election. The nowcast at electionmaps.uk has a hung parliament as the likeliest option, with Reform as the largest party.
Meanwhile, I have been quite amused to hear our Andy’s blather about bringing hope etc. It is his government that is responsible for extinguishing hope (and the previous). Hope did not wither – it was callously struck down by those who are supposed to have our interests at heart. So all Andy needs to do to restore hope is to undo some of what has been done. [Naively put, with our sovereign debt crisis incipient.]
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Jit,
Who is the “right” party. I suspect we both think that Reform might do a lot of harm, as well as some good. The Tories? Well, they seem finally to have had a revelation about net zero, but are they truly repentant? Then there’s the problem of the subsidies being locked in by long-term binding contracts – 20 years for new ones rather than the pre-existing 15 years. It might not be too late to save the day, but it’s getting very late. We’re in danger of sounding, in this context, like climate alarmists – it’s almost too late, but there’s still just time to save the planet (or the UK economy).
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Energy analyst David Turver has a new paper out on the extortionate costs of Net Zero.
Politicians used to talk about the “energy trilemma”, the balancing of affordability, security and sustainability, the latter referring to decarbonisation of the economy.
The authorities pushing our ruinous unilateral Net Zero policies no longer pretend that they are “saving the planet” by decarbonisation. Their stated purpose of Net Zero is openly and absurdly reduced to achieving their own arbitrarily set legally binding emissions reduction targets.
Publicly available official publications such as (i) the Energy Institute’s latest Statistical Review of World Energy showing that total energy supply dependency on fossil fuels (oil, coal, gas) is a stonking 86% globally and 79% for the UK and (ii) the UK government’s recent admission that the UK achieved a net reduction of just 15% on greenhouse gas emissions over the period 1996 to 2023 show clearly that Net Zero is pointless and unachievable, both globally and nationally here in the UK.
It is equally obvious that Net Zero is not only ruinously expensive as David Turver has rigorously documented but is also the major cause of our ongoing deindustrialisation here in the UK. Energy analysts Richard Lyon and John Constable characterise the Net Zero reliance on unsustainable low-grade energy supplies from low-EROEI wind and solar as a catastrophically regressive policy which by the laws of physics is certain to lead to economic ruination.
So what on earth is stopping the authorities from admitting that the entire Net Zero endeavour has been a huge mistake which needs to be abandoned before any further pointless damage is inflicted on our energy infrastructure and economy, especially as most of the rest of the world, now including the USA, clearly doesn’t give two hoots about it? I can only conclude that malign deep state influence is being brought to bear for some inscrutable unfathomable ulterior motive which I fear is very much against the interests of the people of Britain.
It is very frustrating that there is no honest public debate with those at the top of the establishment on their reasons for pursuing unilateral Net Zero.
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Dougbrodie1, it is not necessary to suppose that “malign deep state influence” is at work if you believe, as does a Guardian-reading socialist friend of mine, that the UK has a duty to set an example to the whole world by following international ‘best practice’ through adopting Net Zero policies.
My friend also believes that we should hand over the Chagos islands for much the same reason.
I think my friend is extremely naive in his beliefs e.g. I think he mistakes globalism for internationalism, which is a very serious error but, I suspect, much embedded in the previous Starmer regime and already (?) evident is the new Burnham administration.
Regards, John C.
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John Cullen: I too have a Guardian reading friend who expresses horror at my view that there is no “climate emergency” and that it is unnecessary and pointless to try to reduce CO2 emissions. As he is a STEM educated graduate who ought to find the logic of my comment irrefutable, I can only conclude that he has succumbed to brainwashing.
However it’s surely different for those at the inner workings of the deep state as they are the people instigating the brainwashing!
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Doug Brodie,
Thanks for the heads-up regarding David Turver’s paper.
The problem with the establishment and with much of the brain-washed public (including the supposedly educated classes) is that they seem to be incapable of using logic. The mantra that “the cost of action is less than the cost of inaction” is a classic example of this. It all stems from Lord Stern’s report, which broadly concluded as much, or which at least offered up an intellectual prop for the claim. The justification for the claim is largely based on the discount rate selected, and there is certainly a debate to be had about that, but leaving that aside, the claim only makes sense if net zero style action has the effect of stopping or massively reducing the adverse effects of climate change. It ought to be apparent to all by now that the UK’s extraordinarily expensive net zero action isn’t, and can’t, make the slightest difference to climate change, so long as emissions continue to increase globally (as they are doing). Point out this obvious truth, and the zealots’ eyes glaze over, or they respond to the effect that we have to lead the way. The fact that it’s by now abundantly obvious that most of the world isn’t following just bounces off the carapace.
Then there’s the quasi-religious view that the Climate Change Act (and all its off-shoots, such as carbon budgets) are somehow embedded in stone, as though they’re an immutable part of the UK constiution. In the eyes of the zealots, the Act can’t be amended, let alone repealed. Yet it could be amended or repealed very easily. Let’s face it, the net zero amendment was pushed through quickly and easily enough. Suggest its amendment or repeal, however, and the High Priests of the climate religion would (metaphorically) have you burned at the stake for your thought-crime.
Point out the massive costs of net zero, and you’ll be confronted with denial, and a reference to some dodgy report produced at the behest of a climate change pressure group funded by “green” billionaires to re-label existing jobs as “green” and to claim that the “transition” is the road to the sunlit uplands and prosperity. They don’t want to face the evidence that is all around us that net zero, and its costs, are killing the economy. The net zero zealots are the true deniers. Logic doesn’t work with them.
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Much of the argument for and against Net Zero is couched in financial and moral terms.
However, if one examines the ratio of lifetime energy output to lifetime energy input (as expressed by the wannabe famous EROEI parameter) then the moral and financial cases for current renewables collapses (except perhaps for countries with exceptional solar resources) . This is seen most clearly in Figure 1 of David Turver’s article which is based upon research bt Weissbach et al. over a decade ago (https://davidturver.substack.com/p/why-eroei-matters).
Perhaps we should concentrate more of our arguments around the EROEI parameter.
Regards, John C.
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Wow Mark. What a great post on little-known stuff! (Well little-known to me! 😀) 👏👏👏
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Joe P, thanks. It was unknown to me 48 hours ago. The truly terrifying thing is how much of this stuff there is. There must be thousands, probably tens of thousands, of handsomely remunerated civil servants writing reports, ticking boxes and shuffling paper, all in connection with net zero – to achieve what?
John C, EROEI is airily dismissed by the net zero enthusiasts. A contributor at OxCAN seeks to argue that renewables waste less energy than burning fossil fuels, ergo they are more efficient than fossil fuels. Robin spends more time on the OxCAN discussion board than I do, so may be able to provide more details. I’m confident the argument is flawed, and it would be helpful if an engineer could show it to be flawed, otherwise it will become embedded in net zero folklore along with lies like renewables being 9 x cheaper than gas
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“A contributor at OxCAN seeks to argue that renewables waste less energy than burning fossil fuels, ergo they are more efficient than fossil fuels. Robin spends more time on the OxCAN discussion board than I do, so may be able to provide more details. I’m confident the argument is flawed, and it would be helpful if an engineer could show it to be flawed …”
Their argument is flawed because it’s a False Equivalence Fallacy.
Unlike gas generation, wind, solar & tidal generation is highly-variable, and incapable of generating dispatchable, synchronous electricity. Nor can they provide grid-stabilising inertia at no extra cost.
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Mark:
On the “renewables being 9 x cheaper than gas” meme (which also uses the same False Equivalence Fallacy):
‘Silly’ Sim Evans’ CB’s original claim of 8th July 2022 was “Analysis: Record-low price for UK offshore wind is nine times cheaper than gas”
However, its content states “A UK government auction has secured a record 11 gigawatts (GW) of new renewable energy capacity that will generate electricity nine times more cheaply than current gas prices.”
Only by reading that article do we discover: “Most of the new capacity – some 7GW – will be offshore wind. Notably, for the first time, these projects were cheaper than the 1.5GW of onshore wind or 2.2GW of solar.”
Hence Sims’s earlier sentence is ambiguous at best, and misleading in reality. It should have stated ” … SOME new renewable energy capacity that will generate SOME electricity nine times more cheaply than current gas prices.”
Interestingly the Contracts for Difference Allocation Round 4(AR4) results dated 7th July 2022 also include (RENEWABLE) Tidal Stream at £178.54/MW!! Can anyone show gas generation at £1,606.86/MW???
https://www.carbonbrief.org/analysis-record-low-price-for-uk-offshore-wind-is-four-times-cheaper-than-gas
On 24th Aug the silly *DOCTOR* posted on X:
“UPDATE 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”
[I can’t provide a link to his X post, because the coward blocks those who correct his frequent errors!!]
However, I can provide a link to Gullible Ed repeating Silly Sim’s stupid claim on 4th Sept 2022:
https://x.com/Ed_Miliband/status/1566405883621523457?s=20
At the risk of boring everyone who’s read down to here, Mark began this post with:
“This was a key finding from a study titled “Offshore wind competitiveness in mature markets without subsidy” published in Nature. We were told that the authors’ investigation “suggests that the era of subsidy-free wind farms will begin in 2023, based on recent auctions.”
Sim Evans also explicitly used the phrase “subsidy-free.” twice in his 8/7/2022 ‘Analysis’
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Joe P, and if course, see here:
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Ahhhhh …. 12 OCT 22 AT 9:03 PM:
“The buggers at the BBC tried to pull a fast one.
https://web.archive.org/web/20221005171345/https://www.bbc.com/news/uk-england-essex-62967716
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.
https://www.bbc.co.uk/news/uk-england-essex-62967716 ”
😀😀😀
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A recent article by Jordan Peterson states (no link):
“Belief in the severity – even the reality – of human-caused, CO2-driven climate change began to fracture sharply along partisan lines, a divide that has only widened. Recent Gallup polling (2026) indicated that 72 per cent of Democrats but only 6 per cent of Republicans worried about climate change.”
Peterson’s conclusion” “It makes sense only as part of a broader hostility toward capitalist industrial civilisation, and a desire to impose a socialist or degrowth alternative – whatever the cost”
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Well done Joe,
I note that no explanation for the correction was proffered by the BBC. Did they acknowledge to you that you had been correct to complain?
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Doug Brodie,
Thanks for the link. A bit more of Peterson’s article can be read here:
https://dailysceptic.org/2026/07/31/climate-change-catastrophism-is-a-leftist-weapon/
I certainly don’t always agree with Peterson, but his parting shot is probably worth quoting:
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This may be as good a place as anywhere to say that friend of the site, Ed Hoskins, has been busy. Clisceppers might, I hope, find these to be of interest:
https://edmhdotme.wpcomstaging.com/a-few-graphs-say-it-all-for-renewables/
https://edmhdotme.wpcomstaging.com/comparing-power-generation-technologies/
https://edmhdotme.wpcomstaging.com/the-costs-of-weather-dependent-renewables-against-conventional-power-generation/
https://edmhdotme.wpcomstaging.com/quantifying-futility-2025-probable-future-co2-emissions/
https://edmhdotme.wpcomstaging.com/a-comparative-costing-model-for-power-generation-technologies/
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Colin Tregear, of BBC’s ECU did another of his brush-offs. A complaint to Ofcom was, as usual, simply ignored.
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If the exorbitant cost of renewables interests you, you might find my UK subsidy Clock https://subsidyclock.co.uk/ useful. It aggregates the total cost of all direct and indirect subsidy schemes from primary official data and updates them daily. Each scheme – for example, CfD – is explained https://subsidyclock.co.uk/explainers/contracts-for-difference and the biggest recipients are plotted on a map https://subsidyclock.co.uk/map where you can find more information about the contract.
In the case of CfDs in particular, I’ve computed the cost of CfD subsidised electricity compared to the counterfactual of what electricity would have cost in a gas-generation-only fleet https://richardlyon.substack.com/p/the-contract-for-crisis – the scheme has yielded a clawback in only 8 of the 120 months of the scheme despite so-called gas price crises because the strike price is so high.
Finally, I’ve created a high fidelity simulator of the UK grid https://www.gridsim.co.uk/ which allows the performance of arbitrary configurations to be simulated against 40 years of UK weather at 30 minute resolution. That allows phenomena such as cannibalisation to be reproduced, which shows how CfD subsidy payments rise with increasing wind penetration https://www.gridsim.co.uk/notebook/cfd-wind-cannibalisation/.
I hope these are of interest
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Richard,
Apologies for the fact that WordPress decided that your comment required approval – which I was very happy to give!
Your work is very much of interest here, and I am very grateful to you for doing it. Society owes you a lot for shining a light on this murky area. Indeed, I have linked to your work here whenever I have spotted it.
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“The True Cost of Green Subsidies is Much Higher Than Politicians Admit
Renewable subsidies now account for three quarters of the price of electricity, say Professor Gordon Hughes and Dr Lee Moroney”
https://www.climateskeptic.org/p/the-true-cost-of-green-subsidies
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