ROC Windfall Profits Hit £923 Million In UK, December 2021

From NOT A LOT OF PEOPLE KNOW THAT

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.

https://www.ofgem.gov.uk/energy-data-and-research/data-portal/wholesale-market-indicators

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.

Dec 2021GWhROC£/MWhElectricitySales£/MWhTotalIncome£/MWh
Onshore265255.00213.58268.58
Offshore2341103.95213.58317.53
Solar9278.65244.81323.46
Biomass168063.80102.45166.25

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.

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Oldseadog
April 19, 2022 2:04 am

A windfall tax for windfarm owners?
Brilliant.

Alba
April 19, 2022 2:17 am

griff et alia keep on telling us that the cost of renewables is falling. So how come the subsidy I pay on my electricity bill isn’t going down? Some even say that wind and solar are now the cheapest form of energy. So how come I am still paying a subsidy on my electricity bill?

Dyan Davison
Reply to  Alba
April 19, 2022 2:24 am

Quite.

another ian
Reply to  Alba
April 19, 2022 3:05 am

You weren’t supposed to notice

Chaswarnertoo
Reply to  Alba
April 19, 2022 4:46 am

Griff is not truthful.

Old Man Winter
Reply to  Chaswarnertoo
April 19, 2022 7:02 am

I found a great site with the outputs of UK’s worthless wind & solar in % & GWs that are quite
useful to help keep Griffo honest:

https://gridwatch.co.uk/WIND/percent
https://gridwatch.co.uk/SOLAR/percent

Right now wind’s @ 5% & solar’s @ 13% after peaking @ 15%!!! That’s about 90% useless!
The did get to ~97.5% on 4/14. Maybe someday they’ll achieve Nirvana & get to 100%
futility!!! 😮 😮 😮

This site gives wind, temperature, & sky conditions for current & past times at a given place
in the US. I used this to analyze the wind output on the plains knowing the conditions on
March 31.

https://www.timeanddate.com/weather/usa/omaha/historic?month=4&year=2022

https://wattsupwiththat.com/2022/04/17/fake-news-wind-tops-coal-nuclear-for-first-time-in-us-history/?utm_source=rss&utm_medium=rss&utm_campaign=fake-news-wind-tops-coal-nuclear-for-first-time-in-us-history

**** You may want to bookmark all of them. They’re very useful ****

Carbon Bigfoot
Reply to  Old Man Winter
April 19, 2022 7:51 am

Hey Paul this AM I watched CNBC’s World Wide Exchange to be annoyed at National Grid (UK) CEO John Pettigrew espouse his vision of US East Coast Off Shore Wind Power.
Can you blokes please keep this fu*king moron, with his lies, in your country. What a blabbering idiot!!

Dave Fair
Reply to  Carbon Bigfoot
April 19, 2022 9:55 am

Blabbering all the way to the bank.

D. J. Hawkins
Reply to  Carbon Bigfoot
April 19, 2022 10:34 am

Oi, mate! Misery loves company!

Alan Watt, Climate Denialist Level 7
Reply to  Old Man Winter
April 19, 2022 8:22 am

OldManWinter:

Do you happen to know a site which shows Wind/Solar output for Hawaii? I have tried searching HECO sites and I have not found one.

Old Man Winter
Reply to  Alan Watt, Climate Denialist Level 7
April 19, 2022 2:26 pm

No, the ones above I stumbled upon on 4/17. That’s all I have.

michel
Reply to  Old Man Winter
April 19, 2022 12:13 pm

https://www.gridwatch.templar.co.uk/

The original, and probably a better overview. The graphics on wind and solar on Gridwatch are easier and informative, but to see it all in proportion I prefer templar.

Old Man Winter
Reply to  michel
April 19, 2022 2:39 pm

WOW! The dials & charts are set up like a cockpit of a plane with 4 engines so
you can see everything at once! The key is to spread the word that this info’s
available vs the BeeEss you get from the MSM. Thanks!

It doesn't add up...
Reply to  Alba
April 19, 2022 4:59 pm

This is what is happening to the cost of renewables in production on CFDs: going up with inflation indexing. Chart is weighted by actual production of each facility hourly.

CFD Average Actual Strike Prices.png
observa
Reply to  Alba
April 20, 2022 10:20 am

Well you have to pay a subsidy cos it’s not fair the wind farms don’t get a decent earn with the production troughs when the wind doesn’t blow-
Wind Energy in Australia | April 2022 | Aneroid
How would you like it if your earnings went up and down like that? Have you no feelings like griff?

fretslider
April 19, 2022 3:16 am

Big subsidised profits – still to come…

“ How, though, will Whitehall know when the public is using too much power? Well, in May this year, Ofgem will require the smart meters in our homes to send updates to suppliers on usage every 30 minutes. It expects this intrusive monitoring of households to be ‘the norm across the industry by 2025’.

This means that Ofgem, the state regulator, will know the patterns of electricity use among the public. And it will use this knowledge to help control and push down people’s power consumption using methods such as surge pricing.”

https://www.spiked-online.com/2022/04/16/surge-pricing-for-energy-is-a-dreadful-idea/

Oldseadog
Reply to  fretslider
April 19, 2022 4:20 am

That depends on everyone having a working smart meter. I don’t, and won’t, have one in the house, and several friends have ones that don’t work.

fretslider
Reply to  Oldseadog
April 19, 2022 4:42 am

Compulsion isn’t far off

Chaswarnertoo
Reply to  fretslider
April 19, 2022 4:47 am

They are our EMPLOYEES. Time to remind them that we, the people, are their boss.

fretslider
Reply to  Chaswarnertoo
April 19, 2022 6:15 am

The people enjoy that illusion but the truth is it is a Parliamentary dictatorship

Boris isn’t the only ‘convict’ in that place, there’s also Claudia Webbe and Margaret Ferrier…

Only Mr Speaker can start a recall

Last edited 1 month ago by fretslider
AndyHce
Reply to  Chaswarnertoo
April 19, 2022 10:24 am

dreamer

Old Man Winter
Reply to  fretslider
April 19, 2022 7:30 am

It’s already being proposed as a way to “punish Putin”. It will include severe bans,
reduced energy use, lockdowns, & fasttracking useless solar & wind. They’ll also ~
fasttrack environmental, social, and governance (ESG) scores, where everyone will
be required by law to get one. While punishing all you Brits, Vlad will get lots of $$$$
from the Iranians as part of their deal with us Yanks. Given how useless their kind of
solar- versus our good 24/7 solar- & their wind are, that’s unfortunately, par for the
course when they think they’re winning!!!

https://www.climatedepot.com/2022/04/13/another-lockdown-in-europe-to-punish-putin-report-urges-europe-should-ban-all-business-flights-private-jets-internal-flights-ban-car-use-within-cities-reducing-heating-in-buildings-fast-tr/

https://www.tabletmag.com/sections/news/articles/biden-and-putin-in-business-together-thanks-to-iran-deal

Old Man Winter
Reply to  Old Man Winter
April 19, 2022 7:56 am

My bad! Cited the wrong Iran/US article. S/B:

https://www.gatestoneinstitute.org/18426/iran-us-russia-ukraine

Oldseadog
Reply to  fretslider
April 19, 2022 9:56 am

Compulsion for something that doesn’t work?
Must be from the Government, then.

Chaswarnertoo
Reply to  fretslider
April 19, 2022 4:48 am

No, it won’t. It will use this data to act against us.

Dave Fair
Reply to  fretslider
April 19, 2022 10:09 am

Socialism manages shortages. Capitalism provides what people want and need.

Chaswarnertoo
April 19, 2022 4:45 am

Everything wrong in this country can be traced back to Bliar.

Ben Vorlich
Reply to  Chaswarnertoo
April 19, 2022 5:39 am

The foundations for Blair were laid by the Thatcher Governments she was the most divisive PM in my memory 1955 election Tories 50.1%, SNP 0.5%, 1974 Tories 24.7% SNP 30.4%. The trend continued afterwards, 2015 (Cameron coalition) Tories 14.9% SNP 50%. During the Blair years SNP support never rose above 30%.

In certain parts of the United Kingdom of Great Britain and Northern Ireland Thatcher’s legacy is long lived. I’ve no idea how the Red Wall will react to the Bunter situation now that Brexit is done.

Just for completeness I’ve never voted for the SNP or Labour although I’ve only missed one election in 50 years although in the last few it’s been “none of the above”

Drake
Reply to  Ben Vorlich
April 19, 2022 9:39 am

It always amazes me that the conservative governments are always “the most divisive”!

The HATE continuously spewed by the liberals in the US and in the UK, as well as everywhere else in the world is THE reason for divisive politics.

Just look at the latest attempt to get more money for China Virus response in the US. The Republicans wanted ONE amendment brought to the floor of the Senate, that to stop the Brandon administration from ending title 42 blocking illegals requesting “asylum” from staying in the country while their appeals play out. With a 50-50 Senate, the Democrats refused to allow even debate, knowing SOME democrats would vote for the amendment. Immediately after their measure failed due to refusal to allow the amendment, the Democrats hit the complicit media outlets blasting the Republicans for blocking the “needed” funds, you know, killing MORE people.

And as Joe has said, NOONE in the US would have died from Covid if it were not for TRUMP!’s mishandling of the whole thing. I do agree that TRUMP! screwed up the Covid response, he didn’t fire Fauci early on.

patrick healy
Reply to  Chaswarnertoo
April 20, 2022 6:46 am

it is spelled B-liar

DaveS
April 19, 2022 5:25 am

A glimmer of hope, or (more likely) wishful thinking?

https://www.telegraph.co.uk/politics/2022/04/18/government-might-scrap-green-levy-adds-153-average-energy-bill/

But I suspect that all that would happen if the subsidies were removed is that unit prices would rise to make up the difference.

The government is also now free to remove the 5% VAT from energy bills but I doubt they’ll want to do that (even if good politics) given that the country is broke. Given the rise in unit prices they could, at least, drop the rate to 3% (or whatever) and maintain the same tax-take.

Krudd Gillard of the Commondebt of Australia
April 19, 2022 5:35 am

Boris is proving a big disappointment. Is he a CINO?

Frank from NoVA
Reply to  Krudd Gillard of the Commondebt of Australia
April 19, 2022 6:11 am

Depends how you define ‘conservative’ I suppose. Here in the US it’s confusing as many conservatives aren’t really opposed to government intervention if it advances their objectives. The alliance of Neo-Cons and Progressives to dump Trump is illustrative.

Rhoda R.
Reply to  Frank from NoVA
April 19, 2022 9:41 am

Isn’t it AMAZING how all the republicans running for office come out boldly with conservative positions? Sick making. They lie as badly as the democrats.

patrick healy
Reply to  Krudd Gillard of the Commondebt of Australia
April 20, 2022 6:49 am

Well he/it/her/qwerty was born in New York New york if that is any help.

Gras Albert
April 19, 2022 5:46 am

Ed Milliband’s lasting legacy, the 2008 Climate Change Act, is the single most effective piece of legislation to pass through Parliament in the last 300 years at transferring money from the poor to the rich, since the poor pay the subsidies and the rich (land owners) receive them.

It’s not only Bliar’s commitment to the working classes that has failed the test of time.

Peta of Newark
April 19, 2022 7:49 am

Just a few minutes ago, the BBC put up a story about a failed (haha) Energy Company
I have no sympathy, those folks are simply parasites and the were put out of business by the Government, the same one that promised ‘good money’ and subsidies, funded by taxpayers
Then Gov realised their foul-up and imposed the Energy Price Cap and that is why these haha Energy Companies collapsed. They couldn’t track the rapidly rising prices of gas and electrikery.

The BBC story tells of the boss of one of the biggest of these haha companies ‘apologising’ – while still on a £250,000 salary so as he might ‘help‘ the poor clients of his failed haha company.

Within 3 minutes of the story being put up on the BBC News frontpage, with comments allowed, the comments were closed
Go see, somehow I don’t think the conversation was going the way that the haha company, the BBC, BREXIT Remoaners or the Government wanted/expected
https://www.bbc.co.uk/news/business-61149569

BBC Bulb Comments.JPG
It doesn't add up...
Reply to  Peta of Newark
April 19, 2022 5:05 pm

Bulb consistently made large losses as a proportion of turnover. I’m amazed its bankers didn’t pull the plug on it several years ago. One of these “new paradigm” companies.

April 19, 2022 9:19 am

What does ROC stand for?
Renewable Oligarchs Club?

Ed Zuiderwijk
Reply to  Phil Salmon
April 19, 2022 10:38 am

Russian Olympic Committee. Eh, not here.

Renewables Obligation Certificate = shovelling money from the poor to the rich.

D. J. Hawkins
Reply to  Phil Salmon
April 19, 2022 10:41 am

Renewables Obligation Certificates.

Here in NJ we have a similar scheme called Renewable Energy Targets (RET).

Alan the Brit
April 19, 2022 9:28 am

I know I have said this before, but I had a Socialist acquaintance who thought it was wonderful that wealthy landowners were paid by taxpayers through their energy bills to have useless windmills & solar arrays on their land, giving said wealthy elitist landowners pots of taxpayers’ money to unreliable energy!!! It’s a wing-ding money making scheme, an absolute win-win situation. Who says the World has changed, the wealthy ruling elites are reeling that cash in, & the relatively poor are paying for it!!! All for free-enterprise but it is supposed to be for all, not just the few. BTW has Al Gorical’s & Obama’s $4Million dollar houses slid under the sea yet, after all the oceans are rising like crazy!!! My two-storey apartment starting at first floor is ever so damp because of the sea-level rise, err oh no it’s isn’t, my bad!!! Please folks, I beg you, stop allowing people to refer to Climate Change, it’s Globul Warming nothing more nothing less, that’s what the warmistas have promised, that’s what they MUST deliver!!!!!!! NONE of this Globul Warming causes Globul Cooling crap, please!!!! Remember the reason why they changed the scary story from Globul Warming to Climate Change, just in case the temperature stopped warming & started cooling, that way it never matters which way the temperature goes, the manipulators & controllers (Socialists) must win one way or the other!!!!!!!!! Lenin, Stalin, Hitler, Mao, Pol-Pot, they were all wonderful Human beings, Putin being the latest embodiment of such benign behaviour!!!

Lil-Mike
April 19, 2022 10:10 am

Clearly the ROC scheme was poorly designed from the outset” … surely you jest Mr. Bond.

Really Paul, do you think this was an accident? I think it was a feature, and a damn good one. I wish I could be so smart as to draft and implement such a good scheme to print money. Turn over a bit of soil, and you’ll see there’s a vast network of ants building and profiting from such marvelous schemes.

Robert of Texas
April 19, 2022 11:04 am

Green Energy being forced on us making huge subsidized profits at the expense of the consumer? This sounds criminal. But as long as some of the money makes its way to the politicians, it will never end.

Mike Maguire
April 19, 2022 4:46 pm

This is something they consider a big plus………to stimulate as much investment from big energy players in fake green energy.
Big money will go to where their investment pays off the most.

If the world had been using fake green energy for most of its electricity during the last 50 years and fossil fuels were recently discovered and there was no fake climate crisis, along with a fair playing field………guess where almost all the new money would go?

It would almost all go towards developing the energy that is available 24 hours/day. Is it’s own battery(the energy is stored in the fossil fuel with no losses when you transport them or store them for long periods).
Is abundant and can be transported across the globe to places without much wind or solar.
Extremely dense! It took millions of years to pack, what started as diffuse solar energy and photosynthesis into our fossil fuels buried under the ground.

Doesn’t take up massive amounts of land above ground. Or require cause near the negative environmental impact, that includes killing many millions of birds each year and excavating for raw materials.

It would be a huge no brainer in favor of the fossil fuels……….even if we had to reconfigure the massive infrastructure to accomodate them.

So the market has to incentivize the crappy, fake green energy interests with economic payoff schemes just like the one in this article or the no brainer choice would be to stick with fossil fuels.

And they have to twist the current climate optimum for life, into a climate crisis in order to justify doing so using a “Save the Planet” narrative (even as the planet greens up….not despite the climate optimum but BECAUSE OF IT).

Chris Nisbet
Reply to  Mike Maguire
April 19, 2022 8:46 pm

Another good thing about FF is that they apparently warm the world up a little bit.
I’m unconvinced it’s enough to notice, but every little bit helps.

RickWill
April 19, 2022 5:18 pm

The Australian electricity supply system is somewhat different to the UK. The eastern network coving most of the Australian population is termed the NEM (National Electricity Market)

Watching the evolution of the market as it digests ever increasing amounts of intermittent generation provides a lesson in unintended consequences and why intermittent generation adds enormous costs.

Over the last 4 years, the wholesale price of electricity has declined. However the retail price has increased. If you realise that the wholesale price only includes the energy component then you can appreciate while retail prices are rising as service costs spiral upward. This is the latest market operator report:
https://aemo.com.au/-/media/files/major-publications/qed/2021/q4-report.pdf?la=en
There are now costs for FCAS, directions, RERT, constraint curtailment. These costs did not exist before intermittent generators were permitted to connect.

The subsidies for “renewable” energy is mentioned briefly in the report with regard negative prices but are not part of the wholesale price. The cost of LGCs and STCs are added by retailers.

The other costs above the wholesale price are for transmission and distribution and associated hardware like synchronous condensers. The transmission network is being massively expanded so intermittency can be better distributed and the cost burden shared more evenly across the network. Also to get power from remote generators, batteries and pumped storage. Low capacity factors for intermittents is consistent with poorl capacity utilisation of the poles and wires – so massive capital that is poorly utilised.

One interesting and unique factor in Australia is that everyone who owns a roof can become an intermittent generator and the rooftop sector is now the most significant contributor to the death of coal – page 20 of the report (Distributed PV). The lowest cost option for suburban home owners on the mainland is to go off-grid. Intermittent generation offer no benefit of scale and the cost of distributing the power makes it more expensive than when generated and stored at the load. Sunlight is ubiquitous and reasonable across all seasons on the mainland.

griff
April 20, 2022 1:28 am

But!

Renewables companies have to pay back the cash they get over their strike price!

I’m surprised Paul doesn’t know this -surely he isn’t deliberately misleading us?

Renewable energy projects typically receive payments from household energy bills to top up the earnings from the energy market to an agreed level, or “strike price”, But in return they are expected to pay cash back to consumers when market prices outstrip the set subsidy level.

Paybacks from UK renewables could cut £27 from bills by end of winter | Energy industry | The Guardian

patrick healy
Reply to  griff
April 20, 2022 6:59 am

Wow! £27 per year? now that is a big bonus on a £2000 annual bill

It doesn't add up...
Reply to  griff
April 20, 2022 8:22 am

I’ve a feeling it will go to retailers who have been making massive losses thanks to the OFGEM cap. But the reality is that only £39m will be repaid

As of today (12 January 2022), the expected net payments from generators over the quarter total £133,667,990, whilst the TRA for Q4 2021 was £208,986,765. The TRA for Q1 2022, which is set at £303,432,348, is netted off against the Q4 2021 numbers, which means LCCC’s forecast total reconciliation payment is £39,222,407.

It’s small beer compared with the sharply higher balancing costs, and it isn’t getting any bigger. Moreover, the claim by SSE made in the article seems deeply disingenuous. The reality is that since wholesale prices moved sharply higher last summer, 2 new wind farms have come on stream without exercising their CFDs, thus securing market price rather than £73.71/MWh or £94.81/MWh that the CFD would have secured. Low price CFDs are optional, and it’s being proved right now.

Balancing and CFD.png
Stephen
Reply to  griff
April 21, 2022 3:19 am

As ever, Griff posts something that is far from the whole truth.

What he is talking about are CfD (Contracts for Difference) which replaced ROCs – but only for new RE deals. A lot (probably most) of the CfD deals signed have yet to start delivering power.

All of the older deals are on ROCs, hence the piece says

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” (emphasis added)

ResourceGuy
April 20, 2022 11:24 am

Policy distortions take time to get pumped up to crisis stage. Then they are re-labeled unintended consequences.

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