By Paul Homewood
How often do we hear claims that the cost of offshore wind has halved?
I often see it argued in comment threads in the Telegraph and elsewhere, and it is hardly surprising given the barrage of misinformation fed to the public by official sources, the media and the renewable lobby.
The advert above is one of the most obvious examples, paid for by the renewable lobby, Greenpeace etc. It appeared at at Westminster tube station, and was seen by thousands of passengers. But how many of these will have been aware that the claims were withdrawn after the ASA declared them as false.
And it is not just Greenpeace who lie. Take, for instance, this grossly misleading headline from Roger Harrabin:
https://www.bbc.co.uk/news/business-41220948
OK, the article then goes on to clarify that it only refers to new offshore projects. But millions will see headlines like this, but never bother to read through the articles.
And then there's Claire Perry herself making this claim last year in an article written by her for the Telegraph:
Today renewables provide almost one third of our electricity, with wind accounting for half of that and prices falling by more than 50pc in only a few years
Very few people understand the intricacies of renewable subsidies, and will more than likely end up believing that the cost of offshore wind power now being produced costs half as much as it did not long ago. This after all is the deliberate intent of all three examples I have listed.
So what is the truth? How much are we really paying for offshore wind?
Subsidies for offshore wind power are paid via two schemes, ROCs and CfDs:
1) Renewable Obligation Certificates (ROCs)
This scheme is now closed to new projects, but wind farms already qualified under ROCs will continue to receive subsidies for as long as they carry on generating.
In the latest 12-month figures published by BEIS (to Sep 2018), offshore wind farms covered by ROC generated 21.3 Twh, and received 40.2m ROCs.
The current value of an ROC is £47.22, so the value of the ROCs is £1898m. This equates to £89/MWh.
As these wind farms also receive the market value of the electricity produced on top of the ROCs, the value of the ROCs is pure subsidy, and is added to electricity bills.
2) Contracts for Difference (CfDs)
In 2014, a new system of subsidy was introduced to gradually take over from ROCs.
CfDs offer a guaranteed strike price to successful applicants, index linked for 15 years, (with the exception of Hinkley C which lasts for 35 years).
Strike prices are agreed via auctions, and have declined over the years, not least because the first tranche were arbitrarily set by Ed Davey, rather than by auction, and were arguably far too high.
Below is t he list of CfDs currently awarded. Some are operational, but others won't start until as late as 2024:
| Price | MW | |
| Beatrice | 155.53 | 664 |
| Burbo | 166.59 | 258 |
| Dudgeon | 166.59 | 402 |
| EA | 133.29 | 714 |
| Hornsea | 155.53 | 1200 |
| Hornsea Project | 63.66 | 1386 |
| Moray | 63.66 | 949 |
| Neart | 127.21 | 448 |
| Triton | 82.75 | 860 |
| Walney | 166.59 | 660 |
| WEIGHTED AV | 116.93 | 7541 |
https://www.lowcarboncontracts.uk/
CfDs for offshore wind projects are guaranteed and index linked for 15 years, so all of these will still be paid well after 2030.
Based on the average weighting, the average strike price is £116.93. With market prices around £55/MWh at the moment, this equates to a subsidy of about £62/MWh.
Summary
There is about 6200 MW of capacity covered by ROCs. Averaging this together with the 7541 MW of CfD capacity, and we get a weighted average subsidy of £74/MWh, and an actual price of £129/MWh.
This is of course more than double the market price of £55/MWh.
Based on 39% loading, output from these projects, both operational and planned, amounts to 47 TWh, meaning the annual subsidy will total £3478m.
Remember that these prices are index linked, so subsidies will rise each year.
Remember also that these subsidies will continue to be paid out well into the 2030s. Whilst new schemes will also be added in future CfD auctions, they will continue to add to these subsidies, even if the overall average price drops.
Remember all of this next time Claire Perry, the BBC or renewable lobby try to persuade you that we are getting a good deal from offshore wind.
from Climate Change Skeptic Blogs via hj on Inoreader http://bit.ly/2IlLMJs
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