Debunking the Cheap Renewables Myth
Last week, I decided to write an X post to summarise how much we are paying for renewables.
It got far more traction than I anticipated, so I thought it would be helpful to convert it and extend it a little to make an article that can act as a succinct response to all those who still insist on claiming renewables are cheap.
Debunking the “cheap” renewables myth
We keep getting told that wind and solar renewables are cheap, yet our bills keep going up. So, what’s going on?
In the UK, renewables are subsidised by three different schemes. Feed-in-Tariffs fund mostly solar power. The latest report… pic.twitter.com/Z9Dyc1paFm
— David Turver (@7Kiwi) May 11, 2024
In the U.K., renewables are subsidised by three different schemes. Feed-in-Tariffs (FiTs) fund mostly solar power. The latest report for 2022-23 shows the scheme cost over £1.7bn and average total payment was around £193 per MWh, about three times the current cost of gas-fired power at around £65 per MWh (see Figure A).
Contracts for Difference (CfDs) fund a range of technologies, but most of the subsidy goes to offshore wind. Latest data from the LCCC shows the subsidy per MWh fell dramatically during the energy crisis, but is now back at £95 per MWh for offshore wind, £73 per MWh onshore and £60 per MWh for solar.
April 2024 was a record month for overall subsidies with £268m paid out with average strike prices at £146 per MWh for offshore wind, £113 per MWh for onshore and £110 per MWh for solar power (see Figure B).
The CfD subsidy for burning trees in biomass plants rose from about £7 per MWh in March to nearly £60 per MWh in April. This encouraged more biomass generation and the total subsidy paid for biomass jumped from £2m in March to over £34m in April 2024. The total CfD subsidy paid for the last 12 months is over £2bn, and the trend is clearly upwards.
By far the biggest subsidy scheme is Renewables Obligations Certificates, costing over £7bn per year. This scheme awards certificates for each MWh generated, a different number depending upon technology.
April reference prices for intermittent renewables have been around £53 per MWh, meaning the average price paid for offshore wind under the ROC scheme has been £176 per MWh, onshore £118 per MWh and solar £146 per MWh including the value of the certificates (see Figure C).
Future renewables are also going to be more expensive than current market rates. The Government’s announcements of prices for their Allocation Rounds are often quoted in 2012 money. In 2024 money, Allocation Round 6 (AR6) is offering £102 per MWh for fixed offshore wind, £246 per MWh for floating offshore wind, £89 per MWh for onshore and £85 per MWh for solar power, all far higher than current market prices (see Figure D).
It should be noted that FiTs, ROCs and CfDs are all index-linked, so prices will continue to rise with inflation. It is clear our bills are going to continue to rise for the foreseeable future as cheap gas is forced out in favour of expensive renewables.
In addition, we pay extra for balancing the grid when the wind is not blowing (or blowing too hard) and the sun is not shining. In the year ending March 2024, these balancing services cost £2.46 billion. Most of these costs should be attributed as a cost of intermittent renewables. That’s a total of over £12bn being paid to or because of renewables each year.
More costs are coming down the line as the National Grid ESO has announced £54 billion of spending on the electricity network infrastructure up to 2030 and a further £58 billion in the 2030-2035 period, a total of £112 billion, or over £10 billion per year for more than a decade.
I hope it is clear to all now that renewables are not cheap and are never going to be.
See more here Daily Sceptic
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There are no renewables without coal, oil and gas. Tell the simple truth and what I said is the simple truth.
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