Energy news in general

JKenH · 1 March at 3:59PM

Yes, of course, the wind farm operators would have done their own CF calculations and not relied on DESNZ figures.

If one were being cynical one might say the change to assumed CFs was just a way to facilitate meeting the 2030 targets which the government was in grave danger of missing. It was in the interests of DESNZ and the wind farm operators to assume/adopt lower CFs. Using a lower CF means a wind farm will in theory generate less so the budgeted cost (the estimate of how many £s the government will have to pay out over the contract) will be lower. For the same amount of money (AR7 offshore wind budget £1.79bn) the DESNZ has more headroom to grant more contracts/more capacity. This enables DESNZ to make up for the shortfall in previous auction rounds and reach the target of 50 MW by 2030. As the wind farm operators are getting considerably more per MWh they will be delighted and keen to sign up.

Miraculously the government is able to announce:

“Record 8.4GW of offshore wind secured in Europe’s biggest ever offshore wind auction - enough clean electricity to power the equivalent of over 12 million homes

as Britain races to cut bills and meet growing energy demand, price for offshore wind agreed at 40% lower than the cost of building and operating a new gas power plant

puts the country firmly on track to deliver the mission for clean power by 2030, taking back control of its energy, and lowering bills for good”

https://www.gov.uk/government/news/record-breaking-auction-for-offshore-wind-secured-to-take-back-control-of-britains-energy

Scot_39 · 2 March at 2:57PM

Sorry @michaels - yes your right - the issue isnt the immediate issue CfD awards or past pricing being wrong.

As suppliers do their own pricing and return on investment projections - the govt only sets a cap initially.

Its risk to us going forward in the implicit admission of greater excess total capacity required for winds share of net zero generation if figures really capacity factors

[In recent times - winds "intermittent" delivery has ranged from 1% to 75% (0.25 min Jan - record c24GW max output in Dec) - the lower average allowed numbers give more periods that range will be above the planning nominal - the 61% now 44.6% for offshore. Youd need distribution data to work out how more often that would represent currently - but could be significant. And the good news for 95% target etc - how less frequently your at risk to miss it if build to the 44.6%]

And so if capacity factor its an explicit admission need far more new rated capacity - more turbines of a given size to meet predicted increading net zero related demand. In current short term planning - for next 5 years - the 95% of total demand by 2030 and beyond as predicted demand grows rapidly.

For offshore drop from 61% - if generation capacity factors - 37% more rated capacity.

A clue to the scale needed to meet that 95% target - things like the recebt record 8.4GW offshore wind alone in ar7 - or even more so across all technologies - a recent Neso figure was for iirc 132GW total new capacity grid connections by 2030 iirc.

So I suspect in terms of the govt auctions its just easier now for govt to set higher caps - to accept that industry pricing (if were on a like for like basis - they are now 20 yr not 15 yr CfD contracts). Helping to avoid any more "embarassing" failures - say repeats of ar5 offshore complete failure or even maybe even ar6 Hornsea 4 "cancellation" (depending on real commercial reason) after bid - derailing their path to target.

Renewables operators on CfD I suspect dont like overcapacity - more so as renewables reaches ever higher levels in the generation mix - and so overall imbalances in total mix generation vs demand - as it risks potential for increased negative pricing. And adjust their bid CFD price requirement accordingly.

Agile tariff users love negative wholesale periods - renewables suppliers on CfD I suspect dont. As they dont I believe get CfD top up payments when that happens.

As contracts - at least since ar2 - contain negative price protection clauses.

Ive not seen the actual contracts - but perhaps if as simple as described in overviews in simplistic terms - if really a simple £0 cut off - at £1/MWh whopesale rates - top up to full CfD agreed price, -£1/MWh (from ar4 even for each hour) no top up.

And maybe another potential future retail cost consequence - as we know its a DESNZ acknowledged fault to just think in wholesale terms - even more future grid / connection costs needed.

QrizB · 5 March at 7:14PM

The BBC has noticed that fixed tariffs are becoming scarce:

https://www.bbc.com/news/articles/c3ewwej0p13o

Scot_39 · 5 March at 7:45PM

Hardly surprising - given the way some were burnt last time.

And immediate after for a while - many offered no fixes for several months.

A sibling had a 2 yr fix over the Ukraine spike - it was with SP - so paid a small c3% premium - for the stability - both costs roughly doubled when it ended - unit rate just and standing charge (slighty over double).

The energy companies "had" to eat those costs no doubt for millions on fixes (if not 100% hedged).

(And if suppliers hedged - were fossil based generators themselves)

Just as they would have to eat others currently - like the largest of recent "individual" changes of £66 extra on network costs coming in Apr - mainly the RIIO-3 plan and costings revision (that in one earlier mid 25 proposal iteration - Ofgem had forecast to rise as high as £104 by 2030/1 before the next normally 5 yr revision)

Its also perhaps another bad sign that Octopus is reintroducing exit fees on latest deals.

"Octopus said it has "temporarily" introduced exit fees because of the wholesale price spike, meaning new customers leaving its fixed tariff before the end of their contract will have to pay to do so"

molerat · 5 March at 7:55PM

EonNext have just released a 1 year fix of £1799 at the cap use against the 15mth MSE fix rate of £1559. My daughter fixed at the weekend at £1565.

Chrysalis · 6 March at 5:52AM

https://forums.moneysavingexpert.com/discussion/comment/81844716#Comment_81844716

To me its quite simple.
If prices are increased to pay for the infrastructure, whether thats via government policy, or a jacking of standard fee's by the operator, then the customer's are paying for it, without having the benefit of owning the infrastructure, now I do understand this is standard capitalism, and in almost everything we accept this method of paying for things, but I have an issue when its been applied to critical national infrastructure during a cost of living crisis.
To me if the owners were paying for it, it would be an injection of equity to fund the works, with no assurance of recovering the money, no increase of regulated revenues.
If I am not mistaken there has been adjustments made by Ofgem to compensate NG for required works on expanding the grid.

To me a middle ground is the government subsidising the works required, in return for a % of equity, and funded via general taxation instead of energy bills.

Chrysalis · 6 March at 5:59AM

https://forums.moneysavingexpert.com/discussion/comment/81846647#Comment_81846647

This is going to end up like double glazing.
We will get to the point where a mass of homes have double glazing, new insulation, heat pumps, and then it will be treated as if its universal, whilst there will be properties that leak air like crazy, old single glazed wooden framed windows/doors etc.
Its very predictable as all the current and past schemes for improving homes have a lot of exclusions, especially in the private rented sector. None of them have double glazing, weird rules like if the property has ever had gas in its history it doesnt qualify etc.
A owner occupier qualifies for a grant, whilst a landlord and tenant between them have to fund it themselves.
Even if someone qualifies under financial and status rules, not all properties themselves are eligible, Octopus e.g. told me the way my property is built means they cant do insulation improvements. So the flaw with these schemes is they target individual homes instead of regional/society wide cost relief.