‘Affordable Offshore Wind’?–The Real Facts Greenpeace Don’t Want You To Know!

As I noted last week, the GWPF has complained to the Advertising Standards Authority about a highly misleading advert about offshore wind power, placed by a group of wind farm interests and left-wing green outfits.

The posters, placed at some London Underground stations, specifically states:

The price paid for electricity from offshore wind farms has fallen by 50% over the last five years.

I have now had a chance to put together the actual figures, which tell a completely different story.

In the last full financial year, 2016/17, offshore wind produced 16.4 TWh.

Nearly all of this, 16.2 TWh, was subsidized via the Renewables Obligation mechanism, under which all licensed electricity suppliers in the United Kingdom must either source a certain proportion of electricity from renewable sources or pay for Renewable Obligation Certificates, ROCs, currently priced at £45.58.

Offshore wind farms receive a greater allowance of ROCs than, for instance, onshore wind. This is intended to reflect the higher costs of the former. Most offshore operations now receive 2 ROCs per MWh.

In total during 2016/17, offshore wind farms were awarded 30,753,577 ROCs, worth at current prices £1401 million. This equates to £86/MWh.

On top of this subsidy, of course, the wind farms also get paid for the electricity they produce, for which the current market price is £46.40/MWh.

In total then, offshore wind farms are paid £132.40/MWh, nearly triple the market price. All of this is funded by electricity bill payers.

The RO was closed to all new generating capacity on 31 March 2017 and replaced by Contracts for Difference (CfDs). These guarantee a price for all electricity sold, index linked for 15 years. Contracts are awarded via auction, and the government tops up the market price received by the operator to the guarantee. (If the market price is higher, the producer refunds the government). CfDs are only open to low carbon generation.

Again, these prices are all funded through electricity bills.

There is currently a total of 4058 MW of offshore capacity contracted through CfDs, all either under or awaiting construction, and due to commission between now and 2021. (This includes a small amount commissioned since April 2017). The full list is below.

Various strike prices have been agreed, but weighted by capacity, the average is £142.85/MWh at 2017 prices.

In other words, the price paid to these new projects coming on stream between this year and 2021 is actually increasing from £132.40/MWh to £142.85/MWh.

https://lowcarboncontracts.uk/cfds

It may be that prices for new projects coming on stream after 2021 will be cheaper, but bill payers will still be paying the cost of these earlier contracts for many years to come.

There is one other factor which must also be taken into account – the cost of intermittency.

In 2015, the Committee on Climate Change estimated in their Fifth Carbon Budget that this likely amounted to about £10/MWh:

https://www.theccc.org.uk/publication/power-sector-scenarios-for-the-fifth-carbon-budget/

So the cost to bill payers for the new offshore capacity being added between now and 2021 will actually be £152.85/MWh.

By 2021, offshore wind is set to be generating about 30 TWh a year, but the cost to bill payers will be enormous, around £3.1bn, equating to £115 per household.

These are the facts that the offshore wind industry and Greenpeace want to stay hidden

SOURCE: https://www.gov.uk/government/statistics/energy-trends-section-6-renewables

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