By Paul Homewood
h/t nickrl
As expected the government has caved in to the wind lobby:
The UK government has increased the strike price caps for the upcoming Contracts for Different round and committed to an offshore wind-only pot.
The Administrative Strike Price for fixed-foundation bidders in Allocation Round 6 will be £73 per megawatt-hour, up 66% on the £44/MWh in AR5 that failed to attract any entries.
Floating wind’s price ceiling will be set at £176/MWh, up 52% on the £116/MWh in this year’s tender that also did not result in any bids from eligible developers.
The measures, which are being promised following an “extensive review” of the auction regime, will ensure projects can be “sustainably priced and economically viable to compete”, the government said.
London has also committed to establishing a separate pot for offshore wind “in recognition of the high number of projects ready to participate”.
Offshore wind fought it out with onshore wind and solar in this year’s failed auction.
https://renews.biz/89521/uk-hikes-offshore-wind-cfd-price-cap-by-66/
The prices, needless to say, are at 2012 levels. At today’s levels they work out at about £105/MWh.
By the time any new projects are commissioned, indexation will probably have pushed the figure up to £130/MWh.
Floating wind projects are even more horrendously prices at around £250/MWh at today’s prices.
This decision will add about £8 billion a year to energy bills, compared to the previous auction prices. (Based on increasing offshore capacity from 15 to 50 GW, the target for the mid 2030s).
The myth of cheap offshore wind power has now been conclusively blown out of the water. Far from it being nine times cheaper than gas, as was misleadingly claimed a year ago, it is now actually dearer than gas power, even before you add in the wider system costs of intermittency.
The latest BEIS levelised costs for new CCGT at £54/MWh, excluding the “carbon costs”, which are not a cost at all:
https://www.gov.uk/government/publications/electricity-generation-costs-2023
These costs are based on a gas price of 64p/therm, reflecting the long term pricing assumed by the BEIS. Even at current prices of around 100p, the CCGT cost would only rise to around £80/MWh.
Although the power market price tends to be set by the cost of CCGT generation, this is inflated by the carbon cost and the inefficiencies caused by intermittent operation.
This decision by the government will inevitably lead to permanently high electricity prices for the public.
via NOT A LOT OF PEOPLE KNOW THAT
November 16, 2023 at 04:03AM
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