Green, ethical, energy issues in the news

Not good news.

No subsidies for green power projects before 2025, says UK Treasury

Companies hoping to build new windfarms, solar plants and tidal lagoons, have been dealt a blow after the government said there would be no new subsidies for clean power projects until 2025 at the earliest.

The Treasury said it had taken the decision to “protect” consumers, because households and businesses were facing an annual cost of about £9bn on their energy bills to pay for wind, solar and nuclear subsidies to which it had already committed.

The revelation that there will be no more money for projects before 2025 could dash hopes for pioneering projects such as the proposed £1.3bn tidal lagoon in Swansea, which has a mooted launch date of 2022.

In a Treasury document on carbon levies published on Wednesday, officials said: “On the basis of the current forecast, there will be no new low-carbon electricity levies until 2025.”

I think this is very unfair, and also very misleading. Yes the £9bn impacts bills, I'd suggest around £110 per household based on domestic demand being about 30%.

But .... renewables have helped to reduce peak prices, and estimates suggest that this equates to nearly 2/3rds of the subsidy costs.

Also, the cost of subsidies per MWh has dropped massively. Look at PV, which is estimated to add around £10 to a household bill, but subsidies have fallen 90%, so rolling out the same again would cost £1 more. Or look at off-shore wind, in today's money the earliest schemes are about £162/MWh, whilst the latest is £60/MWh - if you deduct the wholesale price of about £40/MWh today (£50 when the new schemes come on line) then the subsidy per MWh has fallen from £122/MWh down to £20/MWh.

But this bit could save the day:

Some industry figures took comfort from Treasury language suggesting that some contracts might be allowed for renewables if the price were so low as to be effectively subsidy-free.

Sometimes PV and on-shore wind just needs the security of a guaranteed price, so let's say it gets a CfD contract of £45/MWh, which at £40/MWh wholesale means it receives £5/MWh, but later at a £50/MWh wholesale price means it repays £5/MWh, that means it's not subsidy free today, but it is 'net-subsidy free' today across the 15yr contract term.

We are so close now, why hamstring the whole renewables industry till 2025?

NigeWick wrote: »

I presume the government will stop subsidising nuclear, coal and gas then?

TBH, I can't quite tell from the article.

Certainly they are helping gas and what coal is left by freezing the carbon tax. So less carbon tax is technically a subsidy.

The government also announced that until 2025 it was freezing a carbon tax on dirty energy generators. Big energy firms, including SSE, have been calling for the tax, the carbon price floor, to be strengthened to encourage new investment in greener energy.

Recent research by energy analysts suggested that without an increase in the tax, coal power plant owners would enjoy a last hurrah in the early 2020s before they hit a government deadline for the closure of all coal-fired stations by 2025.

What I can't tell from the article is if HPC is included, since the contract has been issued, but it isn't expected to start till 2025, and is already nearly 2yrs behind schedule. The article is a bit vague, possibly deliberately about HPC.

It is understood the policy will only affect projects generating electricity before 2025, so would not stop firms signing contracts for power stations coming online after 2025. That means the backers of new nuclear power stations are unlikely to be affected by the decision, because none was expected to be built by then. But it could be a blow for the companies wanting to build solar farms, onshore windfarms and other clean power plants at an earlier date.

Perhaps I shouldn't kick HPC whilst it's down, but the approx £46bn subsidy would work out at £3bn pa for 15yr RE contracts, so that's 1/3 of the whole subsidy budget, and that's before considering just how small the new subsidies are now compared to the earlier ones.

zeupater wrote: »

Hi

Considering that large scale solar & wind schemes were specifically mentioned then I'd hope that a level playing field would mean that all other new nuclear build would be included too ...

HTH
Z

Hi Z, can you check some assumptions/calculations for me, as my brain went another ponder whilst out for a walk.

Assumptions:-

1. HPC in today's money is to get £97/MWh, and the latest NAO predictions (page 39) for 2025 onwards is around £50/MWh for wholesale leccy, so the subsidy is £47/MWh (average).

2. Generation per year will be approx 3,200MW x 24hrs x 365 days x 0.92%cf = 25,789,440MWhs (26TWh's).

3. The subsidy payments will be approx £1.212bn pa (£47/MWh).

4. The latest off-shore wind contracts are approx £60/MWh in today's money (£57.50 2012), and on-shore wind and PV should be comfortably under £60/MWh based on German contracts falling to around £40/MWh but not including all infrastructure costs.

5. So the big 3, on-shore wind, off-shore wind and PV should be £60/MWh or less, so would require £10/MWh (or less) subsidy, going forward.

If these assumptions are fair enough, then that means the big 3 could generate a MWh for each £10 of subsidy support. So £1.212bn would buy us an annual generation of 121,200,000MWhs = 121TWh's, or roughly 33% of the UK's annual leccy consumption, v's 7% from HPC.

The reason I've asked/pondered this is because the economics of RE v's nuclear appears to have moved massively these last few years, and also compliments earlier discussions we've had about how much seems to have changed or fallen into place this year.

All the best.

This article starts out nice, but ends even better.

A Third Of Power Capacity Added In India This Year Is Solar

Around 10,140 megawatts of renewable energy capacity has been added during this time, which puts solar’s share at an impressive 57%. India added a net power generation capacity, across all technologies, of 17,011 megawatts in the first 10 months of the year. 34% of this came from solar, and 26% from wind, with the total share of renewable energy at 60%. This is in stark contrast with the current share of renewable energy in the total installed capacity of the country. Renewable energy capacity of 60.1 gigawatts forms just 18% of the total installed capacity of 331 gigawatts.

So capacity (note, not generation) has been 60% renewables, and only 25% thermal, but it gets better,

Coal catching up with renewable energy, or solar, seems a bit difficult. Coal-based capacity contracted during the third quarter as several ageing power plants were retired.

so whilst there has been a lot of new coal built, at least a lot of old coal is closing too.