Thursday
Feb262015
by 
Bishop Hill
Bishop Hill Quote of the day, corruption edition
Feb 26, 2015 Energy: wind Ethics By far the biggest beneficiary of the contracts awarded without competition last year was Danish energy giant DONG Energy, which owns three of the five offshore wind farms and stands to reap £7.8bn in subsidies.
Benj Sykes, head of its UK wind business, said he did not know whether his company’s projects could have been built more cheaply but he insisted the subsidy price was not “in any way giving us any sort of return that is not justified”.
The scale of the corruption that the government has brought upon us is sometimes rather startling. Read the whole thing.
Reader Comments (34)
Just think of how many teachers, doctors, nurses, policemen that amount of money could have provided!
Mailman
Mailman its not funded by taxes but by higher electricity bills, so you will be paying directly dependant on your Electricity usage.
Do not worry, Ed Davey is very proud of what he has done whilst running the DECC and says so often.
His achievements (at 2014 - http://www.renewableenergyworld.com/rea/news/article/2013/06/uk-reveals-renewable-energy-strike-prices)
Off-shore wind power strike price of £155/MWhr - a bargain at twice the price
Large scale solar PV strike price of £125/MWhr
On-shore wind power strike price of £100/MWhr
Biomass strike price of £105/MWhr
Hydro strike price of £95/MWhr
Nuclear strike price of £97MWhr - assuming they ever built any
These are huge prices next to more conventional methods of generation which have proven to be highly efficient. Furthermore, the DECC sidesteps the issue of backup (inefficient) electricity generation since these renewbles are so unrealiable. We will be stuck with these strike prices for many years AND they will make little difference to our emissions.
Given Ed Davey's total opposition to nuclear energy prior to the last election, is anyone surprised that the rate of nuclear development is glacial. I would use the word criminal to describe what Ed Davey has done.
Ask the company what plan it has for the next generation of wind? I was told by the MD of a large scheme currently under construction that it is intermediate technology and there areno plans to replace it in twenty years time. Read that another way, "without print yourown subsidies, this is rather uneconomic".
An article that does not give the last paragraph to WWF, FoE or Greenpeace. Isn't that illegal or something?
> An article that does not give the last paragraph to WWF, FoE or Greenpeace.
> Isn't that illegal or something?
Emily Gosden has printed quite a few 'anti-renewables' articles since she started.
CQ: Don't forget the even more eye-watering subsidies paid to small-scale generators through the FiT, not to mention the Capacity Mechanism and STOR. Heads should roll. UKIP would abolish DECC, but too little, too late. The damage has been done and will be with us for years.
I read this article when it first appeared and have just gone back for a refresh. It is interesting to see that many of the commenters to it are relatively new to Disqus and of these, the vast majority seem to be pro-wind greenies: One of the most common themes seems to be that 'wind is free!'.
I figure this is the flavour in so many sceptic blogs (like many WUWT threads being immediately derailed by trolls banging on about Willie Soon) and MSM reports this year - you could call it 'la stratégie de Paris'
Wind is free like oil is free: Both exist in nature without human intervention.
What can be done with these 'free' things is the question.
Oil gives us plastics for everything- our computers, our phones, our clothes, our lives, fuel for our cars, petrochemicals that yield our drugs, fertilize our foods, to name a very few.
Wind gives us wind storms that damage our homes and lives intermittent energy at great cost and high profits to insiders who get the political favors.
...he insisted the subsidy price was not “in any way giving us any sort of return that is not justified”.
Um - how about getting paid the market rate for produced energy. The idea here is surely the "product" - electricity. Dong (what a wonderful name) is not getting paid because the windmills are aesthetic objects or because there's a bounty on seabirds or migrants. If they are so good, wind is free, etc, then they don't need a subsidy. The wind investor will make a fortune just by selling the goods at the market rate.
The gov't's three-legged strategy of cheap, reliable and low-carbon energy ought to have one of its legs snapped off, I reckon. No prize for guessing which one.
Amazingly, and for probably the first time in living memory, the BBC managed this yesterday also - Longannet power station may close in a year.
However, the link to the page was soon buried on the Lothian & Fife page, and normal service resumed with a pro renewables story at the top of the Scotland page - Scottish wind farm projects secure contracts. So no need to worry about what happens when Longannet closes and the wind doesn't blow...
Does "Renewables" actually refer to the income stream, rather than source of power?
It does not seem to matter how much it costs, paid by so many, to so few, for providing so little, for most of the time, the money just keeps flowing.
Free energy has never been more expensive.
It is amazing how many of the beneficiaries of the renewable money market, have surplus cash available to support the political ambitions of those who fabricated the market in the first place.
Point of order 1. The article is not £ its free
2. No comments show up (Im abroad on Android mobile)
Maybe I need to force it to desktop mode
D.O.N.G. stands for Danish Oil & Natural Gas. They are more interested in renewables...
stewgreen - up to 20 Telegraph articles a month are free, after that you have to subscribe (£60 a year?), or delete some cookies...
let me fix that for you, D.O.N.G. stands for Danish Oil & Natural Gas. They are more interested in renewables SUBSIDIES $$$
Disqus comments only show in desktop mode in chrome.
Does "Sustainable" actually refer to the income stream, rather than the source of power?
Describing Miliband as a successful Market Rigger, might imply he helped traders sell their products to customers in a favourable environment, using bits of string and tarpaulins.
Hi from Oz. 7.8billion pounds in subsidies!! Geez you Poms must be well off to afford that. We poor Aussies can't, so we abolished our "climate tax". Got it?
Does describing an energy source as "Sustainable AND Renewable" double the guaranteed income, and still not guarantee the production of anything?
mailman on Feb 26, 2015 at 9:05 AM
"Just think of how many teachers, doctors, nurses, policemen that amount of money could have provided!"
Or even Engineers, creating the equipment that those mentioned above require in order to do their jobs.
Gordon Brown's private office was funded by Geoffrey Robinson MP using, allegedly, £7 million obtained by the Transtec fraud, the company set up in 1990 by Robinson and Robert Maxwell. In 1997, Robison, who became PMG, was there to provide the strategic thinking of which Brown was incapable. Robinson persuaded Brown to get the PFI contracts, also to the windmill subsidies to enrich W. Midlands 'businessmen' on the inside track. Capital ripped out of industry was invested in country estates, windmills and PFI. Later on, Robinson funded via the Smith institute Ed Balls. Tory and Lib Dem politicians are equally in the frame. I knew the businessman, now dead, who created the UK's largest renewables' corporation on the back of this outrageous financial scam
If offshore wind is 'free' then CCGT makes a profit of £54 per MWh according to the levelised costs in table 1 here...
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/65713/6883-electricity-generation-costs.pdf
Round 1 CfD allocations were announced by DECC this morning at 7am (a good time to bury bad news). Prices ranged from £50.00 to £119.89/MWh. The future costs to the UK electricity consumer are horrendous.
See here.
Does anyone else feel that they have woken up in a Kafkaesque world which they seem powerless to escape?
@Dung: we have been dragooned into the new post-Capitialist Society, international Crony Capitalism with Totalitarian government so those who are politically favoured become rich without having to work for it.
If these pseudo-Marxist, really Fascist creeps like Ed Davey think this is superior, and they or their relatives aren't benefitting from it, they're stupid.
Oh, isn't it the case that Ed's brother works for the Energy Industry?
DONG gets bigger with Miliband's help.Something he will be proud to display as part of his CV.
Feb 26, 2015 at 1:30 PM | Registered CommenterDung
Yes.
Also, I assume that these people who think wind is free are fighting like mad against these subsidies?
Philip Bratby:
Once again, CFD prices are in 2012 funny money to disguise the extent of the subsidies. You can probably add 20% for inflation indexing at the start of these contracts - and then annual inflation baked in thereafter.
I do wish that even an 'anti renewable' article would stop referring to 'green investment'. Me buying shares in Cuadrilla would be an investment. If they found that there was actually no economically recoverable gas in the shale then I loose my investment. 'Green investment' is me 'investing' in a company that has a government guaranteed minimum return. No gamble, I will receive X% over the next 25 years regardless of the real viability of the scheme. It isn't investment. It will fail but the failure will be dissipated throughout the (taxpaying) population just like 'derivatives' trading.
DONG is Danish oil and natural gas, as others have pointed out before me. Obviously they see the benefits of a guaranteed income from UK taxpayers is preferable to taking chances on the oil and has market.
By the way, I've visited their biofuel power station in Denmark. Even with the highest consumer electricity prices in the world, they told me it costs more to run than they can make off it.
Charming quark
You quoted a variety of prices for different power sources.
Have you got like for like costs for coal, gas and oil fired power stations? It's difficult to know how expensive the costs you quoted are without this comparison
Tonyb
Tonyb:
You can get a handle on fuel costs quite easily. For coal, API2 is a marker price basis CIF Europe, with a GCV of 6,000kcal/kg, or almost exactly 7MWh/tonne: currently it is around 63$/tonne, or 9$/MWh. Old coal fired plant is inefficient (modern plant can do much better - even 50% efficiency): for simplicity assuming efficiency of conversion at one third makes the cost of power 27$/MWh, or under 18£/MWh (£1=$1.54 when I last looked).
For CCGT, take the NBP gas price in p/therm (48p/therm currently), allow for 50% efficient conversion (the most modern plant can achieve almost 60%) to get power at 96 p/therm, and convert by dividing by 2.93 (or 3 to be rough and ready) to get a little over 32 £/MWh.
In both cases, there are additional costs for operations and maintenance, and for plant depreciation and finance, adding perhaps 15£/MWh for new plant or rather less for old plant, assuming a baseload type operation (obviously largely fixed costs increase per MWh generated as average plant utilisation falls when used only to provide peak power, or backup for renewables). On top of that are the explicit and implicit green taxes. The Carbon Floor price is a little under £20/tCO2, while there can be hidden charges in things like grid connection costs that are subsidised for wind farms and penalised for fossil fuel plants.
Of course, costs are one thing, and prices achieved for sales another. Power prices vary dramatically over the course of a day, reflecting the difference in demand. Power supplied or dumped at the margin when forecast demand and supply don't match in practice can be at eyewateringly high (STOR), or even negative prices (paying windmills not to produce). To get a flavour of normal pricing outside the balancing mechanism, you may find the following useful:
http://www.nordpoolspot.com/#/n2ex/chart
http://www.nordpoolspot.com/Market-data1/N2EX/Auction-prices/UK/weekly/?view=chart
Of course, renewables get the benefit of subsidies via Renewables Obligations - which in future will be converted to CFD price guarantees that we have been discussing here.