Burbo Bank–One Of Ed Davey’s Follies

via NOT A LOT OF PEOPLE KNOW THAT
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By Paul Homewood

In Jillian Ambrose’s naive little piece yesterday about offshore wind, she stated:

As I pointed out about another similar claim that she made, these contract prices, guaranteed under the CfD mechanism, are at 2012 prices. This is because the system was originally set up during 2013. By sticking to the same base year of 2012, all contracts can be directly compared.

Because all CfD contracts are index linked, Burbo’s price has now increased to £161.71/MWh, almost four times the current wholesale price.

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Burbo is rated at 258 MW, generating 904 GWh a year, assuming loading of 40%. Based on current prices, it receives a subsidy of £119.11/MWh, which equates to £108 million a year, guaranteed for 15 years. In other words, a total of £1620 million, all to be paid for on electricity bills and passed onto Burbo’s owners, DONG.

Burbo was one of eight contracts awarded by Ed Davey in April 2014. So desperate was he to get these projects built that he agreed extortionate prices, without even going through an auction, and in the full knowledge that costs would soon start going down if he were to wait a little longer.