Goverment rethinking prices for new Offshore CfD

[Countrypaul]

https://www.bbc.co.uk/news/business-67430888

Maybe they have realised not enough was offered last time

[ecogeorge]

https://www.bbc.co.uk/news/business-67430888

Maybe they have realised not enough was offered last time

or how much they have to pay for nuclear !
George

[Moxi]

Well considering they (the government) get paid the difference if the price is above the strike price and they have to contribute the difference if its below I imagine they thought it was another cash cow to screw the public.

Set a CfD so low you never have to pay into it and sit back and rake in the difference................ oh and dont forget to continue to fleece the public at all other opportunities.

They just forgot about the cost of actually building wind farms and the fact that the owner operators need to survive as well. Or did they simply get greedy

Now the shoe is on the other foot again with them having to take a risk at setting a CfD thats competitive to the companies for making some profit but possibly could result in the government picking up the bill for the difference. Being risk averse to putting their hand in their pocket maybe they would like to consider the option of a nationalised power generation company ? Now there's a topic to discuss further

Moxi

[Yuff]

Well considering they (the government) get paid the difference if the price is above the strike price and they have to contribute the difference if its below I imagine they thought it was another cash cow to screw the public.

Set a CfD so low you never have to pay into it and sit back and rake in the difference................ oh and dont forget to continue to fleece the public at all other opportunities.

They just forgot about the cost of actually building wind farms and the fact that the owner operators need to survive as well. Or did they simply get greedy

Now the shoe is on the other foot again with them having to take a risk at setting a CfD thats competitive to the companies for making some profit but possibly could result in the government picking up the bill for the difference. Being risk averse to putting their hand in their pocket maybe they would like to consider the option of a nationalised power generation company ? Now there's a topic to discuss further

Moxi

Perhaps the government got greedy…….lol like they are there for the voters…..
This lot have excelled themselves, with greed, over the last 4 years

[Mart]

£73/MWh max bid price should fix it.

Looking at round 4 v's round 5 (the last one) bid prices went up a lot:

On-shore wind was £42.47 with a bid max of £53, and in R5 it was £52.27 against a max of £53.
PV was £45.99 with a bid max of £47, and in R5 it was £47 against a max of £47.

Off-shore wind was £37.35 with a bid max of £46, and in R5 it was no bids against a max of £44.

In fairness to the off-shore industry, they did warn the Gov well before the auction that the £44 limit was too low.

It seems the impact on construction, steel, transport etc has been way ahead of general inflation*, as gas/fuel costs have hit the construction industry massively. This will have a similar impact on nuclear, but amplified through the longer financing phase, and of course gas generation, through the cost of the fuel.

Fingers crossed, we can get back on track. I wonder if the Gov will add the lost capacity from this years auction, to the next?

*The prices given are the 2012 baseline figures, so the actual figure they get is uplifted by inflation, (for example the £37.35 figure is now actually £45.37, and the HPC £89.50 is now £128.09) but that was simply not enough to cover the industry specific increases.

[nowty]

On-shore wind was £42.47 with a bid max of £53, and in R5 it was £52.27 against a max of £53.
PV was £45.99 with a bid max of £47, and in R5 it was £47 against a max of £47.

Off-shore wind was £37.35 with a bid max of £46, and in R5 it was no bids against a max of £44.

Thats an interesting strike price for a CFD.

With an On-shore wind farm some of us are interested in coming online in the near future.

[Mart]

Sorry Nowty, you've lost me completely. Could be due to a LC (long Covid) brain-fog spike at the moment, but I suspect I'm just being a bit thick, or missed some new, news?

Googled 52.27, and found a great quote from the Quran, that seems really fitting for AGW:

(So Allah has been gracious to us, and has saved us from the torment of the Fire.) meaning, `He has granted us a favor and saved us from what we feared,'

But I suspect, that's not what you meant.

[nowty]

Sorry Nowty, you've lost me completely. Could be due to a LC (long Covid) brain-fog spike at the moment, but I suspect I'm just being a bit thick, or missed some new, news?

Googled 52.27, and found a great quote from the Quran, that seems really fitting for AGW:

(So Allah has been gracious to us, and has saved us from the torment of the Fire.) meaning, `He has granted us a favor and saved us from what we feared,'

But I suspect, that's not what you meant.

Don't worry Mart, it was meant to be as cryptic as possible and not really meant for your thread.

There could be some news coming and I was happily surprised that the strike price for Onshore wind CFD was more expensive than Offshore wind CFD.

[Moxi]

Nowty, mission successful that was as cryptic as the Times crossword !

Moxi

I should note at this point that I tend to struggle with where is wally puzzles

[Mart]

Sorry Nowty, you've lost me completely. Could be due to a LC (long Covid) brain-fog spike at the moment, but I suspect I'm just being a bit thick, or missed some new, news?

Googled 52.27, and found a great quote from the Quran, that seems really fitting for AGW:

(So Allah has been gracious to us, and has saved us from the torment of the Fire.) meaning, `He has granted us a favor and saved us from what we feared,'

But I suspect, that's not what you meant.

Don't worry Mart, it was meant to be as cryptic as possible and not really meant for your thread.

There could be some news coming and I was happily surprised that the strike price for Onshore wind CFD was more expensive than Offshore wind CFD.

I kinda want to be right (don't we all), but sometimes it's great to be wrong - many years ago I said (on MSE I think) that off-shore wind is brilliant, and really important, but 'of course' it will never get as cheap as on-shore wind ....... boy did I get that wrong. The tumbling CfD bids, in line with the far, far higher cf's (capacity factors) than was expected, shocked me. Then 'they' built even taller WT's, gaining further from the faster wind's higher up, and so on.

A massive victory for the UK, in investing in off-shore wind. I wonder if the extremely high CfD's for floating wind, will also lead to an economically viable industry. Off-shore wind CfD's started at £150/MWh before steadily sliding down to £37.35, so everything is possible.

Going back to the R5 results, had off-shore wind needed the same %age increase in prices* as on-shore wind, then it would have worked out just a smidge under £46/MWh, but the Gov cut the max bid to £44. Doesn't mean any bids would have been made, but for a OCD number freak like me, it would have been nice to know.

I really hope the bids in R6 won't be close to the new £73/MWh bid limit, as that would be quite a retrospective step. Maybe the above normal inflationary impacts will now be coming back down too, as the CfD's have also had a large rise from the index-linking they enjoy? I've got my fingers crossed for £50/MWh or less, just to shut up the trolls who got really excited about rising wind costs a year or two ago - such as the lady behind watt-logic who's job is to help the roll-out of gas generation.


*Due to the massive inflationary impacts on steel, transport, construction etc, thanks to the invasion of Ukraine.