Warning from UK’s biggest energy generator comes after latest bidding round received no offers to build new farms. He said: “We need to see a materially higher price. 

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

h/t Philip Bratby

So now we get an actual figure on it!!

From the Telegraph:

No new wind farms will be built off Britain’s shores unless the Government lets operators earn more money from the electricity they produce, the chief of the nation’s biggest generator has said.

Tom Glover, country chair of RWE’s UK arm, said the price offered by the Government to wind farm operators must rise by as much as 70pc to entice companies to build.

Developers must be offered between £65 and £75 per megawatt hour (MwH) for the power generated from wind farms, Mr Glover said.

That compares to the £44 offered in the most recent government-run auction.

His warning follows the disastrous result of the last offshore wind allocation round in September, which ended in a humiliation for ministers with not one company offering to build new offshore wind farms.

Mr Glover called the incident “clumsy” and said a failure to increase the price offered to developers risked a repeat.

https://www.telegraph.co.uk/business/2023/10/25/electricity-prices-rise-70pc-pay-wind-farms-energy/

A number of commentators have rightly criticised this article as being pro-renewables, putting the blame on government. All they did, of course, was to believe the wind industry’s own propaganda about rapidly falling costs.

In particular, the article fails to point out that the prices mentioned are at 2012 prices, which incidentally should be dropped entirely in future auctions, as they are of no relevance and are highly misleading.

£75/MWh, for instance, equates to £95/MWh at current prices. This is an important omission by the Telegraph, because one commenter pointed out that since the current market prices is £100/MWh, offshore wind must still be a bargain!!

The whining of the wind lobby about inflation is also not really valid.

At last year’s auction, offshore wind projects such as Dogger Bank won contracts at £39.65/MWh. This year the govt set the bar at £44/MWh, thus handing a 10% price increase straightaway. And in the year just gone, about another 10% has been added on via RPI indexation.

So RWE and co are already being offered 20% more than projects were signing up for last year.

It may be that some of their costs are rising faster than general inflation, but any competent business builds in contingencies for things like that.

Also with inflation seemingly remaining stubbornly high, the index linked price will be much higher still by the time these projects are commissioned in a few years time.

The undeniable reality is that offshore wind never was viable at the fanciful prices signed up for last year and before. The cheapest offshore wind being sold via CfD is from Triton Knoll, which is being paid £97.82/MWh.

There never was any intention trigger those contracts, instead wind farm owners always planned to sell at much higher prices on the open market.

In the latest auction, this loophole was closed by the govt, leaving the wind industry between a rock and a hard place, with their bluff having been well and truly called.