{"id":344739,"date":"2024-10-01T07:52:39","date_gmt":"2024-10-01T05:52:39","guid":{"rendered":"https:\/\/climatescience.press\/?p=344739"},"modified":"2024-10-01T07:52:44","modified_gmt":"2024-10-01T05:52:44","slug":"renewables-subsidies-hit-new-august-record","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=344739","title":{"rendered":"Renewables Subsidies Hit New August Record"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From The Daily Sceptic<\/a><\/p>\n\n\n\n

By\u00a0David Turver<\/a><\/p>\n\n\n\n

The Low Carbon Contract Company (LCCC) manages the Contracts for Difference (CfD) subsidy scheme and publishes data<\/a> to show how much it costs us. The data is usually published about 10 days in arrears and sometimes is adjusted. Now, we have the full data for August 2024, and it has settled down enough for some reasonable analysis.<\/p>\n\n\n\n

Overall Subsidy Levels Rising<\/h3>\n\n\n\n

The headline is that overall CfD subsidies rose sharply in August 2024, recing a total of \u00a3237 million \u2013 the third highest total on record and by far the highest level for the month of August (see Figure 1).<\/p>\n\n\n\n

\"\"
Figure 1 \u2013 overall CfD subsides by month and technology (\u00a3)<\/figcaption><\/figure>\n\n\n\n

The total is up \u00a384.2 million from July\u2019s total. The main driver of the increase is offshore wind, which is up \u00a374.5 million from a month ago. This August\u2019s total is also up \u00a3123.8 million from August 2023. Since August last year, offshore wind subsidies are up \u00a372.3 million, biomass conversion \u00a335 million, biomass with CHP up \u00a310.2 million and onshore wind \u00a35.1 million.<\/p>\n\n\n\n

There are several factors driving the increase in subsidy since last year. First and most obviously, more wind farms have now activated their CfDs since last year. Moray East and Hornsea Project 2 offshore projects came online earlier this year, as did the Sneddon onshore wind farm. Moreover, the CfD part of Drax biomass plant was not used at all last August, but it attracted \u00a325.6 million in subsidies in August 2024.<\/p>\n\n\n\n

Load Factors<\/h3>\n\n\n\n

However, the number of turbines claiming subsidy is not the only driver of increased subsidy. Load factors are also up. This means that both onshore and offshore wind farms produced closer to their theoretical maximum during the month (see Figure 2).<\/p>\n\n\n\n

\"\"
Figure 2 \u2013 calculated load factor by month for active windfarms (%)<\/figcaption><\/figure>\n\n\n\n

Using the nameplate capacity recorded by LCCC for each installation, we can calculate the load factor for each project and aggregate it by technology. In August 2024, CfD-funded offshore windfarms achieved a load factor of 34.7%, the third highest August on record, the highest since August 2020 and up three percentage points since last year. Onshore wind achieved 24.9%, the second highest August load factor on record and up from 16.7% last year.<\/p>\n\n\n\n

More wind means more generation and, other things being equal, more generation means more subsidy.<\/p>\n\n\n\n

Subsidy per MWh<\/h3>\n\n\n\n

The other things that drive the levels of subsidy are the CfD strike prices and the reference price used to calculate the subsidy level. For offshore wind, the weighted average strike price has fallen by \u00a323\/MWh from about \u00a3178\/MWh in August 2023 to \u00a3155\/MWh this year. This is because of the aforementioned addition of Moray East and Hornsea Project 2, which both have lower strike prices than the earlier offshore wind farms. The strike prices for onshore wind are up a few pounds from last year to \u00a3113\/MWh, and solar is up \u00a34 to \u00a3110\/MWh.<\/p>\n\n\n\n

However, the Intermittent Market Reference Price (IMRP), which is used as the baseline for the price that renewable electricity was sold for in the market, is down significantly on last year. The average IMRP, weighted by generation, has fallen about \u00a325\/MWh from \u00a376\/MWh in August 2023 to about \u00a351\/MWh in August 2024.<\/p>\n\n\n\n

The subsidy per MWh is calculated as the difference between the strike price and the IMRP. The upshot is that the subsidy per MWh for offshore wind is up a bit since last year and is up sharply for onshore wind and for solar power (see Figure 3).<\/p>\n\n\n\n

\"\"
Figure 3 \u2013 subsidy per MWh by technology (\u00a3 per MWh)<\/figcaption><\/figure>\n\n\n\n

Gas prices are lower this year than they were last, so that explains some of the reduction in IMRP, because gas often sets the market rate of electricity. However, adding more uncontrolled renewable generation can also affect the IMRP. There were two days in August when the weighted IMRP for offshore wind fell below \u00a320\/MWh and three occasions when the weighted IMRP for solar fell below \u00a310\/MWh. Provided the price stays positive, this does not matter to the generators; they just make up the difference with extra subsidies. If the price goes negative for a time, then some wind farms are not paid curtailment fees.<\/p>\n\n\n\n

Conclusion<\/h3>\n\n\n\n

The addition of the newer, cheaper offshore wind farms has not had a significant impact on the subsidy per MWh. The reduction in average strike price has been overwhelmed by a combination of the indexation upwards in April and cheaper gas prices since last year. Even if gas prices stay at the current elevated levels, we are unlikely to see a significant reduction in the subsidy per MWh because increased generation from renewables pushes down the IMRP, thus increasing subsidies. For the generators it is heads they win, tails the consumer loses. We can expect more record subsidies between now and February 2025 as the seasonal load factors creep back up and Drax is kept running to replace our last remaining coal plant, which shuts shortly.<\/p>\n\n\n\n

David Turver writes the <\/em>Eigen Values<\/a> Substack page, where this article first appeared<\/a>.<\/em> <\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

The Low Carbon Contract Company (LCCC) manages the Contracts for Difference (CfD) subsidy scheme and\u00a0publishes data\u00a0to show how much it costs us. The data is usually published about 10 days in arrears and sometimes is adjusted. Now, we have the full data for August 2024, and it has settled down enough for some reasonable analysis.<\/p>\n","protected":false},"author":121246920,"featured_media":344741,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691818270,691819239,691830742,691818154,691818181],"class_list":{"0":"post-344739","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-contracts-for-difference-cfd","9":"tag-green-subsidies","10":"tag-low-carbon-contract-company-lccc","11":"tag-net-zero","12":"tag-renewable-energy","14":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2024\/10\/0philippines-renewable-energy-continues-to-boom.jpg?fit=1024%2C684&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-1rGj","jetpack-related-posts":[{"id":360575,"url":"https:\/\/climatescience.press\/?p=360575","url_meta":{"origin":344739,"position":0},"title":"CfD Subsidies Hit Record High In\u00a02024","author":"uwe.roland.gross","date":"01\/05\/2025","format":false,"excerpt":"CfD subsidies hit a record high of \u00a32362 million last year, beating the previous record set in 2020, when market electricity prices were exceptionally low because of lockdowns. 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The Chair of the Low Carbon Contracts Company, sponsored by Ed Miliband\u2019s Department for Energy Security and Net Zero, would earn \u00a3102,500 a year to work two days a week.","rel":"","context":"In \"Energy Secretary Ed Miliband\"","block_context":{"text":"Energy Secretary Ed Miliband","link":"https:\/\/climatescience.press\/?tag=energy-secretary-ed-miliband"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/03\/00LCCC-logo.jpg?fit=1091%2C606&ssl=1&resize=350%2C200","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/03\/00LCCC-logo.jpg?fit=1091%2C606&ssl=1&resize=350%2C200 1x, https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/03\/00LCCC-logo.jpg?fit=1091%2C606&ssl=1&resize=525%2C300 1.5x, https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/03\/00LCCC-logo.jpg?fit=1091%2C606&ssl=1&resize=700%2C400 2x, https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/03\/00LCCC-logo.jpg?fit=1091%2C606&ssl=1&resize=1050%2C600 3x"},"classes":[]},{"id":363795,"url":"https:\/\/climatescience.press\/?p=363795","url_meta":{"origin":344739,"position":2},"title":"Record \u00a32.4 Billion in CfD Subsidies Paid Out in 2024","author":"uwe.roland.gross","date":"01\/29\/2025","format":false,"excerpt":"Hot on the heels of the record payments made under the Feed-in-Tariff scheme in the year to end March 2024, the data is now available for subsidies paid under the Contract for Difference Scheme (CfDs) in calendar year 2024. 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