By Paul Homewood
A story emerged the other day that a judicial review application had been made against the government’s latest Contracts for Difference auction, due to be completed next month.
Business Green now reveal that it has come from an onshore wind company:
Banks Renewables, a subsidiary of energy infrastructure business Banks Group, has confirmed it is the firm behind the legal challenge that threatens to stall an auction for a fresh round of government clean energy contracts .
Banks Renewables revealed today it is the company that has lodged an application for a Judicial Review against the government’s flagship Contracts for Difference scheme (CfD), under which renewables developments such as offshore wind, wave and tidal power, and certain biomass energy projects can compete for price support contracts.
The firm is claiming the scheme’s exclusion of onshore wind and other renewables such as solar is unfair and does not comply with UK or EU law.
While onshore wind and solar have previously been allowed to compete in CfD auctions as ‘Pot 1’ technologies indicating their status as ‘mature’ renewables, the current auction is only open to so-called ‘Pot 2’ technologies which cover ‘less mature’ renewables such as offshore wind and tidal stream. The previous 2017 auction was also only open to Pot 2 technologies.
The challenge builds on long-standing accusations from across the onshore renewables industry that the most cost effective forms of clean energy were being ‘locked out’ of the auctions, ultimately leading to higher costs for billpayers.
Banks Renewables said it believes the current exclusion of fully consented onshore wind farms from the CfD process is "against the public interest, prevents consumers from benefiting from the lower energy prices that would result from inclusion and, from a legal perspective, does not comply with either EU or UK law".
The company boasts three operational onshore wind farms backed by CfDs won in the first auction in 2015. But the failure to stage subsequent auctions for mature renewable technologies means the firm also has two consented but unbuilt onshore projects in Scotland with a combined capacity of 150MW, "which were not permitted to compete in the recent Round 3 CfD auctions".
We have known for a while that new investment in onshore wind farms has dried up to a trickle, since subsidies via ROCs and CfDs were removed from them, even though the wind lobby keeps insisting that onshore wind is the cheapest form of new electricity generation.
The three operational wind farms, Kype Muir, Middle Muir and Moor House, bragged about by Banks all earn a guaranteed, index linked price, currently of £93.92/MWh, nearly twice the market rate.
It is easy to see why Banks cannot afford to build their two outstanding projects without a massive subsidy.
Annual power prices are currently £53/MWh, having ranged between £49 and £61 in the past 12 months.
The wind industry claims it can get close to these costs, but this misses the point. Intermittent wind farms cannot guarantee power a year, or even a month, ahead. Consequently they have to compete in the spot market, ie Day-ahead.
As such, their product is intrinsically worth much less most of the time.
As at 31st July for instance, Day-ahead prices were down to £41.75/MWh, and have been even lower at times this year:
Sometimes, of course, Day-ahead prices peak much higher, for instance at times of high demand in winter.
But as Catalyst comment, “Day-ahead power rose for the first time since December 2018, growing by 6.2% to average £41.9/MWh in July. The contract also peaked on 15 July, hitting £48.8/MWh, the highest since 22 February as wind output was forecast below 1.0GW the following day”.
In other words, spot prices to tend to be highest when wind output is low, and vice versa. Which would be extremely bad news for wind farms, if they did not have guaranteed prices to fall back on, courtesy of CfDs.
via NOT A LOT OF PEOPLE KNOW THAT
August 16, 2019 at 07:45AM