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Monday, August 8, 2022
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HomeNewsLow-cost power pledge is blown away by the wily wind farmers

Low-cost power pledge is blown away by the wily wind farmers

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THE Government’s strategy to deal with the energy price crisis has already failed.  

Ministers promised that a new generation of ‘low-cost’ wind farms would get bills down, and there are indeed several gigawatts of offshore wind farms, either under construction, or newly completed, in the North Sea. These have all agreed to sell power to the grid at low fixed prices under the Government’s Contracts for Difference (CfD) scheme. 

But there’s a problem. Since the start of the energy price crisis, newly-completed wind farms are delaying taking up their CfDs, probably because they can earn much higher prices on the open market.  

Moray East, a huge wind farm off the Scottish coast, recently reached full operational capacity, but then announced that it was delaying taking up its CfD until 2023. As a result, consumers will potentially have to pay this one wind farm an extra half a billion pounds in its first 12 months of operations. 

In fact, since energy prices soared last autumn, no new renewables capacity has been added to the CfD scheme; every renewables generator that was supposed to take up a contract in 2022 has now delayed until next year. 

There is no suggestion that anyone is doing anything illegal. CfD contracts allow a great deal of flexibility on start dates, with delays of up to three years possible. The contracts are therefore extraordinarily generous to developers, with all of the risk taken by consumers and none by the wind farms themselves. 

In terms of the Government’s strategy to reduce electricity prices, there is a chicken and egg problem. Low-priced CfD wind farms are supposed to lower consumer prices, but no wind farm will take up its CfD with market prices so high. 

When Darren Grimes broke the story on GB News yesterday afternoon, he poked fun at ministers and officials, whose feeble response was to plead for the industry to play fair with the public.  

As Steve Baker MP put it, it amounted to an admission of another extraordinary regulatory failure. There are more to come. 

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Andrew Montford
Andrew Montford
Andrew Montford is Deputy Director of the Global Warming Policy Forum GWPF does not accept funding from energy companies or anyone with a significant interest in an energy company.

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