Colin
Yesterday, the Chancellor used his Budget to announce how much of our money will be allocated to renewables in Allocation Round 6 (AR6). This was positioned as “major backing” to the renewables sector.
The overall budget will be set at £1,025m in 2011-12 prices, which equates to over £1.4bn in today’s money (using the inflation factor of 1.3956 in the budget notice). This represents a 352% increase on the final budget for AR5 (see Figure 1).
To put this in context, £1.4bn is around £50 per household. It is almost as much as the £1.6bn spent on CfD (contracts for differences) subsidies up to late February in the current fiscal year (see Figure 2). The AR6 budget is also around two-thirds of what Ofgem forecasts the existing CfDs will cost in the next financial year. However, the current and next fiscal years cover all allocation rounds since 2017 and yesterday’s announcement is for just one round.
The overall budget has been split into three pots. Pot 1 allocates £120m to: Energy from Waste with CHP, Hydro, Landfill Gas, Onshore Wind, Sewage Gas, Remote Island Wind and Solar. Pot 2 assigns £105m to Advanced Conversion Technologies, Anaerobic Digestion, Dedicated Biomass, Floating Offshore Wind, Geothermal, Tidal Stream and Wave power.
The lion’s share of the budget of the budget is allocated to Pot 3, with £800m earmarked for offshore wind. Up to the full £800m could be allocated to what are termed “Permitted Reduction” projects. These projects are those that won contracts in earlier rounds and have now admitted that they cannot deliver for the price they agreed. The wording of what this means exactly is somewhat opaque:
This process has allowed projects to withdraw a maximum of 25% of their original total project capacity from their CfD contract and now use that reduced capacity to bid into AR6 as a standalone project.
Does it mean that if say, a 1GW project won a contract in AR4 can now withdraw up to 250MW from that project and bid it in AR6, or does it mean that the project can be reduced to at least 750MW and the whole reduced project can be bid into AR6? Either way, projects awarded at low prices in earlier rounds can now apply for an extra bung which rather makes a mockery of claims than wind is nine times cheaper than gas.
An amount up to the full £800m can also be allocated to new offshore wind projects.
Big Increase in CfD Strike Prices Confirmed
As has been discussed previously, no offshore wind projects won contracts in AR5 because the prices on offer were too low. Accordingly, the Government has taken the opportunity to confirm the strike prices on offer for AR6 will be considerably higher than in AR5 (see Figure 3).
In 2024 money, offshore wind prices rise 66% from £61/MWh in AR5 to £102/MWh in AR6. Onshore wind goes up 21% to £89/MWh and large-scale solar increases 30% to £85/MWh. All these prices are notably above the average reference price so far in February 2024 of around £59/MWh used to calculate existing subsidies. Typically, this reference price is set by gas, so guess what, all these new renewables are going to be considerably more expensive than current gas-fired generation. Electricity bills are never coming down, and it seem ministers don’t care and they are on a death wish to kill the economy and further impoverish the poor.
Conclusions
The Government may try its best to position this as ‘major backing’ for the renewables sector. What it really means is it is massively undermining the energy consumer by adding another £1.4bn to electricity bills. It claims it is shielding us from volatile fossil fuel prices, but at the same time, it extended the windfall tax on energy companies, thus ensuring investment in new sources of supply falls and either we import more gas or the price goes up.
And remember, these CfD strike prices are index-linked, so the nominal price will go up each year with inflation, permanently baking in high electricity prices. What the Government giveth with a cut in National Insurance, it taketh away in subsidies for renewables. Consumers have been sacrificed on the altar of Net Zero, again.
David Turver writes the Eigen Values Substack page, where this article first appeared.
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Net Zero = No gas from Russia.
We’re paying for their futile attempt at regime change.
After the failed Syria invasion vote in 2013, the establishment realised the public wasn’t going to put up with any more fake hot wars. So their regime change antics now have to be satisfied through economic war.
Same people pick up the bill though. Us.
Everything our “leaders” do is paid for by us. Everything.
But electricity prices had more than doubled before the Ukraine war. Prices started to rise immediately after the Climate Change Act in 2008 when this country decided it wanted more and more unreliable wind. Rises have been in the order of 10% 12% 15% etc per year to pay for all of the pretend to save the planet stuff. ———Here is a very interesting fact I learned just the other day. For all of the emissions the UK has reduced since 2008 the rest of the world overtook that in only 140 days. Which really confirms what most people who do not just blindly accept climate propaganda already knew, and what Tony Blair who was Prime Minister in 2008 said recently that Nothing the UK does will make the slightest difference to global climate. If that is the case and we all know that it is, why did we have the Climate Change Act in 2008 (Miliband)? And why do we have an even more draconian Net Zero (2019) ?——-The answer is so simple. —Because it is NOT about the climate and never was.
So minimise the tax you pay as much as you possibly can. Starve the beast.
I am now firmly of the opinion it is the duty of all citizens to avoid paying tax wherever possible and if we cannot avoid then try to assist those we are dealing with to escape paying taxes.
NetZero is looking more and more like a Chinese made trojan horse and the more I see of this modern version of cockney rhyming slang, the more I suspect he is a paid goon for the Chinese. His wife clearly has strong ties to the CCP.
In more ways than you’d think.
China is watching as the US and Europe wear themselves down and bankrupt themselves even further fighting against Russia.
They just sit quietly in the background buying cheap Russia gas and oil and wait patiently to pick up the pieces once it’s all over.
The stupidity and incompetence of the people who call all the shots on our behalf is staggering.
The stupidity and incompetence of the people who call all the shots on our behalf is staggering.
As always, this suggests that these decisions pay off for the people who make them as people don’t usually desire to hurt themselves. Some percentage of these subsidies will certainly directly float back into the pockets of the people who command the political muscle to get them implemented.
Yes, I’m sure scraps of it float back to them in the form of posts in NGOs, corporate boards, government agencies and the like.
That is how awful they are. They sell the public out and further enrich the already massively wealthy to boost their miserable little post politics careers.
Paying for our own impoverishment and destitution. What a suitably diabolical idea. Next they’ll be getting us to pay for our own extermination…oh…er…hang on……
Paying money to useless producers to promote poverty. Hunt is human excrement almost as bad as Cameron.
If you think it can’t get any worse, think again. Two or three years of Starmer, Rayner, Miliband, Reeves, Lammy and Cooper et al and the country will be broken beyond repair for the foreseeable future, certainly a generation or more. Thank you Mr Blair and your self-appointed heir.
Don’t make the mistake of thinking that the politicians decide anything.
Things are decided and run by a giant bureaucratic blob.
Politicians just sell the predetermined policies of the blob to the plebs in exchange for nice jobs afterwards within the blob.
I realise decisions are made upstream from them (WEF), and that they’re just a ‘shop front.’ My point being the system is so broken that the the six I named are likely to be chosen to enact the charade. I surmise that Starmer hasn’t yet published a manifesto, because he’s waiting to be briefed by Klaus on the the way forward. What a state of affairs!
But we are not a Nation anymore. We are just a Region of the International Community. Our politicians work for them not for us, so they are complicit in our impoverishment with Net Zero and the mass immigration that destroys the Nation State and its culture.
Ergo, would I take the King’s shilling and sign on the dotted line as I did in ’69 to altruistically protect Monarch, Country, family and pals. No I bloody wouldn’t! As I’ve explained previously in posts on here, seeing Blair’s direction of travel and not liking the look of it, we upped sticks and emigrated in 2001. I thought the problems looming were serious. Little did I realise how serious and how swiftly they would impact. My sole consolation, such as it is, is that I’m in the ‘departure lounge’ of life, thank goodness.
“The Departure Lounge” !!. ——–Yes if life was a petrol tank I would need to be starting to look for a garage myself. Life was so great when I had 3 quarters of a tank but alas I am down to a quarter.
I’d settle for a quarter. Three score and ten went by a good few years ago!!
Who knows your tank may hold more than you assume…Enjoy what you have left because as my old dad used to say “You are a long time dead”
“Yesterday, the Chancellor used his Budget to announce how much of our money will be allocated…”
It’s not our money anymore. They demand that we pay them, threaten us with jail if we don’t pay, and the moment it leaves our accounts and enters theirs, it belongs to them, to be blown away on whichever idiotic scandalous way that they choose. It’s their money.
I wonder how many chums and family members Jeremy Chunt has in the ‘renewables industry’, know what I mean?
Corruption on a gigantic scale. Chunt and his communist party wife are laughing all the way to the bank, you can see it on his face.
Fossil fuels are all the Devil Incarnate but Renewables all Sweetness and Light——-Only in the phony pretend to save the planet world that is.
While Chancellors tinker about with tuppence here and thruppence there, the great big elephant in the room goes unnoticed ——It is called Net Zero. ——–The budget is like a watering can on the garden when we all know that 99% of the watering gets done by the weather. We are about to spend maybe 3 trillion quid on Net Zero costing every one of us 10-20 thousand quid so that the tuppence off National Insurance will make not the slightest difference to our prosperity, and neither will any other part of these silly budgets as long as our politicians are determined to pretend they are saving the planet.
I find it totally bizarre that only 21 people see fit to pass comment on the most damaging issue facing the western world today. ——The issue of energy and climate where prosperity and freedoms are being removed and people will sit and argue about 2 pence reductions in some little tax, when the elephant in the room is NET ZERO that is costing us all tens of thousands each. ——–So if Daily Sceptic readers are showing apathy on this crucially important issue how can we expect the rest of the population to boil over with anger about it? ——We can’t and therefore we probably deserve all the impoverishment coming our way.
There is not much really much to add to all the sentiments already provided.
I would only say we should not blame the Chinese for our own stupidity: they certainly benefit from it but why should they not?
And if someone could convince my brother that the Earth is not about to boil then please go for it because I have given up! The UK/western propaganda machine is too strong.
The Reform Party contract with the electorate (see website) says that this will all stop quite quickly. If all the Right vote Reform it will stop, yet some cannot see that this is the last chance. They belittle the leader, and Nigel, they say that they cannot win any seats etc. Well they cannot if all Right thinking people vote for the Con-uni-party can they? Vote with your senses, it can still be stopped, just! Conservative Woman should be renamed, it is conservative women or preferably People who want Reform, because all readers do!