By Paul Homewood
I have updated the ROC windfall profit figures, using the most recent available data for December 2021:
I have written before of how renewable generators are profiteering from the Renewable Obligation scheme. I now have the generation data from December 2021 to quantify just how much.
To recap, as we know power prices began to rocket last autumn. Day ahead prices rose to well over £200.MWh in December, up from the historic level of under £50.
Under the Renewable Obligation scheme, renewable generators are subsidised by ROC’s. Last year , the total subsidy was worth over £6 billion, all of which is added to our energy bills.
On top of this subsidy, of course, generators also receive an income from electricity sales.
Virtually all of our onshore wind generation, about 95%, is subsidised via Renewable Obligation Certificates, ROCs. Something like two thirds of offshore wind and half of solar output is also covered.
BEIS have now published the generation data for all ROC schemes for last December, as per the table below.
We also have the daily market price data for the month, as provided by the Low Carbon Contracts Company, which they use for calculating subsidy payments under the CfD scheme. Obviously these are average prices, rather than the actuals received by each individual generator. However, they calculate what they call the Intermittent Market Reference Price for each category of intermittent generators, so they are clearly robust and an accurate reflection of revenue.
Biomass prices are lower, as much of baseload generation would have been sold on Forward Contracts at lower prices. These can be expected to rise after a time lag.
So, for instance, we are now paying £317.53/MWh for offshore wind, an obscene amount given that a third of this is subsidy.
When the ROC scheme was set up in 2002, it was never considered that market prices could rise so high. The implicit understanding was that renewable generators could make a healthy profit with market prices at around £50/MWh.
Now they are not only benefitting from sky high electricity prices, they are also still receiving their handsome subsidies.
Clearly the ROC scheme was poorly designed from the outset, but Blair was so keen to push ahead with renewable energy that he was blind to its obvious flaws. Now we are all paying the price.
For December 2021 alone, the windfall profit for wind, solar and biomass was £923 million. This is the profit over and above a market price of £50/MWh. In addition to that of course, the ROC subsidies amounted to £502 million.
As I commented a few weeks ago, there is clearly now an unanswerable case for a drastic revision of the ROC scheme. There will doubtless be legal challenges. However, if these prove to be insuperable, the government should instead institute a windfall tax. There are of course precedents for this.