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Budget seems a bit paltry...

https://www.offshorewind.biz/2023/03/16 ... ogies-pot/

It's barely a few coppers down the back of the sofa when you consider public sector spending is set to be just over 1000Bn for 23-4.
A couple of billion wouldn't be any sweat to the treasury but would create quite a few jobs. They could have taken a leaf out of Bidens book and offered a greater tax relief for onshore sourced equipment.

Fuck all chance of that...............

Desp

Need to see the estimates of deployment capacity this will 'buy' before I jump to any conclusions, but we need to remember that the budget pot is the subsidy element. So as the CfD strike price gets ever closer and closer to the average wholesale price*, the subsidy element reduces. Effectively less money goes further.

Eg, (but oversimplifying) if the CfD strike price was £51/MWh, and the average sales price for that energy is expected to be £50/MWh, then £1 of subsidy equals 1MWh of generation. If the average selling price is estimated at £41/MWh, then it takes £10 of subsidy to effectively buy 1MWh of generation (by encouraging the RE capacity buildout).

*Not quite as simple as looking at the average annual price of leccy, since we need to take into account when the generation takes place. For instance PV generating mid day on a very sunny day, may be selling into a market with low prices, as might off-shore wind at night. Whereas wind blowing between 4-7pm will sell into a high priced market, possibly paying back into the subsidy pot.

The rapidly falling cost of offshore wind means that falling subsidy pot allocations, have been 'buying' ever large capacity deployments each round.

Hope this makes sense, but almost certainly is too general/oversimplified, and the reality of these pots and CfD rounds, is far more complex.



Question (but I will go looking), is it reasonable to assume that the subsidy pots per round will now be smaller, since the Gov is moving to an annual CfD auction, rather than biennial?

Just looked at the budget allocation for the last CfD (round 4) and it was:

The Budget Notice sets out the parameters that apply to CfD Allocation Round 4. Eligible projects will compete for an overall budget of £285 million in delivery years 2023 to 2024 and 2024 to 2025 for Pot 1, and 2025 to 2026 and 2026 to 2027 for Pot 2 and Pot 3.

In round 4, the biggest winner was offshore wind, with winning contracts adding up to ~7GW.

Mart your maths makes sense on both counts - the "subsidy goes further" argument, and the fact that it's now an annual fund.

Let's not get too down on this stuff, with our current Government it's a surprise they're still continuing it at all and haven't reverted to a "dash for gas 2.0"

dan_b wrote: ↑Sun Mar 19, 2023 5:37 pm Mart your maths makes sense on both counts - the "subsidy goes further" argument, and the fact that it's now an annual fund.

Let's not get too down on this stuff, with our current Government it's a surprise they're still continuing it at all and haven't reverted to a "dash for gas 2.0"

Yep, it's weird, each time I see the pot figures now, I think 'come on, you can't be serious', but then I see the amount of capacity contracted, and I scratch my head in confusion. But the subsidy stretches towards infinity, as the strike price gets ever closer to the average wholesale price that, that technology sells at.

If we look at offshore wind which has fallen from £150* down to £40/MWh (2012 baseline prices) then it looks really impressive regardless. But if the average selling price is £35/MWh (remember those days!) then the subsidy falls from £115 down to £5/MWh, and goes 23x further, and all within a decade(ish).


If anyone's interested, you can see the administrative strike prices for CfD round 5 in the following document, page 4. But remember these aren't the prices that will be paid, but the maximum that bids can be submitted for. This year the max for offshore wind is £44/MWh (down from £46 last year), and the winning bids in the last auction were awared £37.35/MWh (approx £48 index linked .... before April's massive uplift!)

Also, don't be shocked at some of the very high figures, these are typically for immature technologies, and small pots of monies, to help them get going.

Methodology used to set Administrative Strike Prices for CfD Allocation Round 5



*Edit - Interesting to see floating wind's figure of £116/MWh. Yes it looks very high, but it's less than off-shore wind started at, and that's now our cheapest source of leccy.

No idea if the UK will get many 'floaters' in our seas (pun intended), before we reach levels of generation that exceed our needs and export potential, but worth pondering floaters for their essential role in the future for other countries that don't have shallow, near shore potential for fixed offshore wind - such as Japan, or the US's west coast. Floaters could be massive, if the cost comes down enough.

There is a pilot project to investigate the feasibility of offshore wind to produce clean hydrogen.

https://ermdolphyn.erm.com/p/1

As I understand it, they are in the design phase of the pilot project with a 10MW wind turbine.

Mart wrote: ↑Mon Mar 20, 2023 11:03 am
*Edit - Interesting to see floating wind's figure of £116/MWh. Yes it looks very high, but it's less than off-shore wind started at, and that's now our cheapest source of leccy.

No idea if the UK will get many 'floaters' in our seas (pun intended), before we reach levels of generation that exceed our needs and export potential, but worth pondering floaters for their essential role in the future for other countries that don't have shallow, near shore potential for fixed offshore wind - such as Japan, or the US's west coast. Floaters could be massive, if the cost comes down enough.

Doh! Should have thought of this before.

I just checked the round 4 results, and whilst the bid max for floaters was £122, so this year's figure of £116 is a nice steady reduction, it's worth noting that the contracts were issued at a strike price of £87.30. Whilst that's more than twice the 'normal' offshore wind figure, it's actually very impressive compared to where offshore wind started at, with contracts at £150/MWh.

Definitely one to watch, and much sooner than I realised.

Mart wrote: ↑Mon Mar 20, 2023 11:03 am
*Edit - Interesting to see floating wind's figure of £116/MWh. Yes it looks very high, but it's less than off-shore wind started at, and that's now our cheapest source of leccy.

No idea if the UK will get many 'floaters' in our seas (pun intended), before we reach levels of generation that exceed our needs and export potential, but worth pondering floaters for their essential role in the future for other countries that don't have shallow, near shore potential for fixed offshore wind - such as Japan, or the US's west coast. Floaters could be massive, if the cost comes down enough.

While the floating offshore figure sounds high, floating installations are often further out in deeper water, so cost a lot to build. There's also the issue of the ~5,000 tonne floating foundations, which are governed by commodity prices, and unlikely to improve significantly due to economies of scale. At least floating foundations can be towed back to port for scrap at the end of the turbine's life. I guess there also aren't currently many floating installations, so the early subsidy is seen as a springboard.

As an aside, one proposed floating installation I looked at was expecting a 60% capacity factor!

It looks like there are a few floating projects in the medium term pipeline. https://www.offshorewind.biz/2022/01/18 ... ow-so-far/

I wonder if any of the future floating units will be built from concrete ?

moxi

Some info about different types of floating ones here,
https://www.iberdrola.com/innovation/fl ... shore-wind