by David Turver
The Low Carbon Contract Company (LCCC) manages the Contracts for Difference (CfD) subsidy scheme and publishes data to show how much it costs us. The data is usually published about 10 days in arrears and sometimes is adjusted. Now, we have the full data for August 2024, and it has settled down enough for some reasonable analysis.
Overall Subsidy Levels Rising
The headline is that overall CfD subsidies rose sharply in August 2024, recing a total of £237 million – the third highest total on record and by far the highest level for the month of August (see Figure 1).
The total is up £84.2 million from July’s total. The main driver of the increase is offshore wind, which is up £74.5 million from a month ago. This August’s total is also up £123.8 million from August 2023. Since August last year, offshore wind subsidies are up £72.3 million, biomass conversion £35 million, biomass with CHP up £10.2 million and onshore wind £5.1 million.
There are several factors driving the increase in subsidy since last year. First and most obviously, more wind farms have now activated their CfDs since last year. Moray East and Hornsea Project 2 offshore projects came online earlier this year, as did the Sneddon onshore wind farm. Moreover, the CfD part of Drax biomass plant was not used at all last August, but it attracted £25.6 million in subsidies in August 2024.
Load Factors
However, the number of turbines claiming subsidy is not the only driver of increased subsidy. Load factors are also up. This means that both onshore and offshore wind farms produced closer to their theoretical maximum during the month (see Figure 2).
Using the nameplate capacity recorded by LCCC for each installation, we can calculate the load factor for each project and aggregate it by technology. In August 2024, CfD-funded offshore windfarms achieved a load factor of 34.7%, the third highest August on record, the highest since August 2020 and up three percentage points since last year. Onshore wind achieved 24.9%, the second highest August load factor on record and up from 16.7% last year.
More wind means more generation and, other things being equal, more generation means more subsidy.
Subsidy per MWh
The other things that drive the levels of subsidy are the CfD strike prices and the reference price used to calculate the subsidy level. For offshore wind, the weighted average strike price has fallen by £23/MWh from about £178/MWh in August 2023 to £155/MWh this year. This is because of the aforementioned addition of Moray East and Hornsea Project 2, which both have lower strike prices than the earlier offshore wind farms. The strike prices for onshore wind are up a few pounds from last year to £113/MWh, and solar is up £4 to £110/MWh.
However, the Intermittent Market Reference Price (IMRP), which is used as the baseline for the price that renewable electricity was sold for in the market, is down significantly on last year. The average IMRP, weighted by generation, has fallen about £25/MWh from £76/MWh in August 2023 to about £51/MWh in August 2024.
The subsidy per MWh is calculated as the difference between the strike price and the IMRP. The upshot is that the subsidy per MWh for offshore wind is up a bit since last year and is up sharply for onshore wind and for solar power (see Figure 3).
Gas prices are lower this year than they were last, so that explains some of the reduction in IMRP, because gas often sets the market rate of electricity. However, adding more uncontrolled renewable generation can also affect the IMRP. There were two days in August when the weighted IMRP for offshore wind fell below £20/MWh and three occasions when the weighted IMRP for solar fell below £10/MWh. Provided the price stays positive, this does not matter to the generators; they just make up the difference with extra subsidies. If the price goes negative for a time, then some wind farms are not paid curtailment fees.
Conclusion
The addition of the newer, cheaper offshore wind farms has not had a significant impact on the subsidy per MWh. The reduction in average strike price has been overwhelmed by a combination of the indexation upwards in April and cheaper gas prices since last year. Even if gas prices stay at the current elevated levels, we are unlikely to see a significant reduction in the subsidy per MWh because increased generation from renewables pushes down the IMRP, thus increasing subsidies. For the generators it is heads they win, tails the consumer loses. We can expect more record subsidies between now and February 2025 as the seasonal load factors creep back up and Drax is kept running to replace our last remaining coal plant, which shuts shortly.
David Turver writes the Eigen Values Substack page, where this article first appeared.
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Maybe make a note that this is for the UK.. Some people might not realise it.
It is extraordinary that SO, SO much money is being wasted on this idiotic venture.
I doubt the UK can ever recover.
How do you wake up the voters, that are obviously oblivious to what is happening to their country.
Most British voters have no idea of the size of the subsidies which wind and solar power receive in Britain. In fact, many of them are under the illusion that wind and solar power is cheap. The vast majority of the British media has a complete news blackout on any story which shows how expensive wind and solar power actually are. We are doomed.
It has to be published on the front page of the newspapers and TV news that the general populous voter read and view.
It might sink in, BUT!
Won’t happen as these news outlets are all pro renewables
It is regularly stated in mainstream media that renewables are considerably cheaper than gas, as if a single spot price some time in 2022 was some physical constant. Rising prices are therefore due to not enough or quick investment in renewables, and is said without any challenge.
Of course, it may well be that UK government manage to mangle the gas market sufficiently that it does indeed become permanently true.
“ the newspapers and TV news that the general populous voter read and view.“
I think the symbol ‘£’ preceding the monetary amount in the text of the article gives it away that its about Britain.
As do names like Moray East and Honsea but it might be worthwhile to make it obvious in the title. (For those not familiar with the name Moray, it is pronounced Murray.)
You mean Moray in Kansas? And it is Hornsea.. not Honsea
Like the Murray eel? 🙂
I am pretty sure many UK citizens are wiser than often seems the case. Following the agenda is a requirement to being woke and so publicly people may appear to be that way inclined but, more and more as the stupidity of the agenda becomes more and more obvious, these same people privately shake their heads in despair and realise just how truthful the anti-Woke elements have been and are.
Our politicians are mostly liars fixed up for five year terms (thanks to Lib Dem.madness) and so they see no purpose in reacting to short term adverse publicity, such is the longer term likelihood that they and their followers will have forgotten most of the bad stuff they recover like many celebrities do. That;s the frustrating part, well that and our unfit for purpose electoral system which is the only reason Starmer came out on top..
“CfD” = Cash for Distopia
As European wind turbines reach the end of their life after only 20 years* owners face the problem of replacing them with much bigger more powerful turbines together with concomitant larger foundations cabling substations along with added maintenance and risks of failure.
The failure of a 20 MW turbine presents a far greater financial risk than for the earlier 2 MW versions “adding significant layers of complexity to their ongoing viability and financial success.”
* As for nuclear power: “20 reactors, representing more than a fifth of the nation’s fleet, are planning or intending to operate up to 80 years. More are expected to apply in the future as they get closer to the end of their operating licenses.”
Those clever reactors, planning and intending. Not only do they produce nuclear power but they can also think. Or is it just that more and more people have less and less idea how verbs work?
“less and less idea how verbs work”
Funny that you should choose to insult Chris because you don’t like the way he phrased something. “Surely human beings don’t do that.”
Chris has taken a direct quote from the link. Perhaps if you bothered to read the link you would realise that the reference is to “the reactor and the company running it”.
“less and less idea how verbs work”
Or is it just that more and more people have less and less comprehension … you are a fine example.
Says the person who believes climate change “causes” extreme weather…
“20 reactors, representing more than a fifth of the nation’s fleet, are planning or intending to operate up to 80 years. More are expected to apply in the future as they get closer to the end of their operating licenses.”
No person speaking English as a first language would assume the author of that quote also speaks English as a first language.
The Kincardine Floating Offshore Wind Farm comprises 5 Vestas V164 9.5MW turbines plus a 2MW turbine. It only achieved fully commissioned operation in September 2021. Since then two of the turbines have been towed to Rotterdam for repairs, and a third has just had its generator replaced in situ, after a wait of almost 10 months since it went U/S. A 20 year life is looking optimistic for larger machines, which are subject to much bigger stresses.
On the BBC Today programme we have just had Justin Rowlatt and Baroness Bryony Worthington (the author of the Climate Change Act) crowing with delight at the closure of the last coal fired generator and the last blast furnace in the UK and salivating at the prospect of closing gas generation in 6 year’s time.
All in their proposition that the rest of the world will follow the UK into economic suicide.
Their seeming level of ignorance as to where their replacement wind turbines and solar panels come from, that they are produced using mainly coal fired units and are not able to power the production of their replacements when they reach the end of their working lives.
Meanwhile there is no comment as to where the steel, copper and composite to make all the extra wind generators, grid extension and substation replacements needed.
At present most of them come from outside the UK, in particular China.
The new ‘Green’ well paid jobs are turning out to be pie in the sky.
It all makes one very depressed for the future.
Even sadder is the fact that many of the people who watched that programme will have believed what they were told.
There is no chance of gas generation ending in six years. In fact, I forecast that more electricity will be generated from gas in 2030 than happens today.
In case people are puzzled by the IMRP, this is from perplexity.ai, which I find really useful for getting a concise summary of such matters:
Calculation Method
Role in CfD Payments
Why is this comment given a minus? Is what he says not correct? If people think a comment is incorrect, I wish they would say so, and give their reason.
It is correct. The nice thing about Perplexity is that it will do a concise summary of an issue for you, saves a lot of time structuring the summary yourself, and also saves you from missing out some important detail.
I am not connected with Perplexity in any way other than as an occasional user.
My post about uBlock Origin is also correct, and I am similarly not connected to it or its developers. I guess that one is down rated because some people would rather everyone had no way of filtering out their rants and was obliged to read them. Sort of spoils the party if you know that your remarks are not going to be read. Tough!
I guess the point many (most?) people are making is…
you are not OBLIGED to read them.
Indeed not, and that is why I have taken steps to make sure I do not read them. I am not telling anyone else what to do. This is not an attempt at cancellation. It just says, I do not wish to see anything XYZ posts. Your mileage may vary. By all means carry on reading it if you want, its nothing to do with me.
What is there to object to in that?
The interesting question is, why it bothers people enough to downrate? And who does it bother? Personally, but your mileage may vary, it seems to me the posters I am screening out get a sort of weird satisfaction from knowing they are posting stuff which most people find irritating and objectionable but which they mostly don’t bother to screen out or don’t know how to.
So its probably very frustrating to be told that no matter how much you fulminate, you are not getting what you want….
My policy is simply to tell everyone who I am not seeing, that seems only polite. Wouldn’t want them to think they are being read when they are not.
So you are basically a coward, just like Mickey Mann.
Sad you are so pathetic that you need to create a “safe space” / bubble for yourself. !!
Reading these comments I’m struck by how wonderful uBlock Origin is!
There are apparently 8 comments, but using it with the custom filter it has blocked all but three of them, my own, and two sensible contributions to the discussion.
If you want to try it yourself, install uBlock, and then add the following filter:
wattsupwiththat.com##.comment-author-NameofCommenter
One line for each commenter you want to blank. The usual rule seems to apply, 85% of the garbage is being left by 15% of the commenters. Or fewer. So its pretty easy to make the comments section readable again.
Its like waking up and what used to be a thistle infested jungle is now a well manicured lawn with some nice flower beds.
“and two sensible contributions to the discussion”
You should also block your own comments
They are those of a woke cowardly little worm.
A monkey with its hands over its eyes and ears… pathetic.
Me, I like to see what namby-pamby little gits write, so I can laugh at them. 🙂
I seriously wonder if Brice2000 is a real person. Almost all of its comments contain insulting language. Surely human beings don’t do that. Anyway, most commenters seem to be able to leave comments which don’t include insulting language. So Brice2000 is probably a machine that is programmed to write such comments.
Another whinging woke leftist.. Hilarious.
That is a major problem today, too many people needing “safe spaces”
Look at the first post in this topic.. see any insults.
Little mich has had a whinge at me more than once in the past because, like you, he can’t handle a forthright comment.
Easy-peasy. Skip past and ignore the commenters you don’t like. otherwise, you/re part of the problem.
I could point out that blocking commenters you don’t want to see is very much a Mickey Mann trait ! 😉
And a trait of most leftist blogs.
Pretty soon he will be in his own little echo box.
He tries to highjack another comments thread to assuage his paper-thin skin.
You are free to censor…but you may miss good content 😉
I suspect he prefers to read only his own tomes.
He has, of course, now painted a target on his forehead. 🙂
Whining to get others to join his little killfile crusade is beyond pathetic.
Millivolt promised a £300 pa reduction in Electricity bills based on his Nut Zero vision. How does that work when the subsidies are ramped up.
What you pay on your bill is not the same as what you pay in taxes or the inflationary effects of too much government largess.
In the UK it all goes onto the consumers bill, the energy companies pay the subsidies that the Govt mandated that they pay and just pass it on directly including the cost of the new pylons and transmission lines. Hence why we pay more than anyone else already for electricity.
Not all. Yes, a lot goes on the bills, but there are other subsidies which do not. Paul Homewood has done the sums. The last I noticed his total was £450 or so per year per household. He updates the number on his site every so often.
Are you positive that the energy companies aren’t getting tax breaks or other indirect subsidies to offset the expensive of the mandates? Low interest loans, accelerated depreciation allowances and more?
Miliband’s understanding of economics is as non existent as his understanding of electricity production and Net Zero
Energy generation subsidies should have been cancelled years ago.
The subsidies make renewables the cheapest energy eveh! 🙃
Except for taxes and inflation.
“Provided the price stays positive, this does not matter to the generators; they just make up the difference with extra subsidies. If the price goes negative for a time, then some wind farms are not paid curtailment fees.”
I can’t figure out what this means. What do negative subsidy numbers mean on the charts shown?
What a waste of time, money and resources.
“Figure 2 – calculated load factor by month for active windfarms (%)”
Implies the existence of inactive windfarms.
If the word does not have the simplest meaning, that inactive windfarms have never been used yet or that they have been retired from future use, then data could be categorized in a way that made the same windfarms active and inactive at different times to optimize appearance or revenue.
How can the subsidy per MWh be over £100 for offshore wind when the CfD price agreed was just £82?
Puzzled.
Because those wind farms won’t even be built for several years: the ones that are operating are on guaranteed prices that average about £150/MWh on a production weighted basis.
The author reports: The strike prices for onshore wind are up a few pounds from last year to £113/MWh, and solar is up £4 to £110/MWh.
However, the Intermittent Market Reference Price (IMRP), which is used as the baseline for the price that renewable electricity was sold for in the market, is down significantly on last year. The average IMRP, weighted by generation, has fallen about £25/MWh from £76/MWh in August 2023 to about £51/MWh in August 2024.
The subsidy per MWh is calculated as the difference between the strike price and the IMRP.
Comment: “sold into the market”. That must be the wholesale market. What is the retail price for consumers? Does industry pay the same price as residential customers? Here in Cali the residential retail price is $0.40/kWh ($4.00/MWh)
Retail prices are much higher, because they include all the network and balancing costs and green subsidies and bailout fees.
https://notalotofpeopleknowthat.wordpress.com/2024/09/27/britain-paying-highest-electricity-prices-in-the-world/
The article covers industrial prices, and there’s a nice graphic on consumer prices in the comments. £1=$1.33 so multiply p/kWh by 4/3rds to get ¢/kWh.
Kiss my ass Hardy I see no subsidies here-
Concerns over renewable energy clean-up bill turns some off wind turbines in rural communities (msn.com)
Translation: Has our carefully constructed corporate shell wind factory got a rent not buy deal for you!
Ahh the joys of fickle energy-
Electricity retailers label complex power prices ‘perverse’ as industry goes to war with itself (msn.com)
The dumb schmucks aren’t supposed to understand how much they’re getting biffed by fickles. Just quit their bellyachin and bask in the warm inner glow that they’re sharing in a noble cause.
UK 50 MW Kincardine floating wind system was placed in service on October 2021
It produced 144 GWh in 2023
It was predicted to produce 200 GWh
CF = 144000/(8766 x 50) = 0.329, a far cry from 0.457 predicted by proponents
.
Located 15 km off the coast of Aberdeenshire, Scotland, water depths 60 to 80 m
It has five Vestas V164-9.5 MW and one V80-2 MW,, each installed on WindFloat® semi-submersible platforms, designed by Principle Power.
https://www.offshorewind.biz/2021/10/19/worlds-largest-floating-offshore-wind-farm-fully-operational/
.
Operating results in year 2023:
All numbers are in UK pounds
.
Cost = Finance 30 mil, Admin 5 mil, Other 46 mil = 81 mil
Production cost 81000000/144000 = 562/MWh
.
Income =Tax credit 6 mil, Subsidy 31 mil, Sales 13.3 mil = 50.3 mil
.
LOSS without subsidies = 81 – 13.3 = 67.7
LOSS with subsidies = 67.7 – 37 = 30.7
.
It operates under a PPA at 92/MWh and receives subsidies at 125/MWh, for a total of 217/MWh.
https://x.com/adissentient/status/1840690466477535685