AFAIK▸ the price is not truly fixed at the oft quoted £92-50 per MWH, but is "fixed" at £92-50 PLUS INFLATION.
My understanding also. The whole thing is utterly baffling. That £92.50 per MWH has been described by some as an illegal state subsidy, while £155 per MWH for offshore wind, which was the case in for new plants opening in 2014, £100 per MWH for what few onshore schemes were built and £125 for solar, were not. Now, I'm no Harry Redknapp when it comes to accountancy, but that doesn't seem right. New offshore wind has a much smaller strike price, with two developers agreeing to £57.50 per MWH a couple of years back and thus scooping the pool in the sea, as it were. The next round of auctions is due next year - I think.
The energy suppliers don't get the strike price as a subsidy, but are paid a top-up to it if the wholesale price is lower. If wholesale prices go above the strike price, the companies have to pay the excess to the Low Carbon Contracts Company, which admnisters the scheme. The wholesale price fluctuates widely. At the time the Hinkley price was agreed, it was over £50 per MWH, and had been as high as £90 back in 2008. If it goes back to that by the time Hinkley C opens, then the subsidy will be minimal, and at least partially paid for by the profits of the newest offshore wind operators. The current electricity wholesale price is around £35 pMWH, meaning that practically every renewable energy producer working under a Contract for Difference receives a subsidy.
The various strike prices are published in the
CfD register which I looked at for the first time an hour ago. Inflation means that Hinkley C is now at a price of £101.99 pMWH. That sounds a lot until you remember that it will not be paid anything until it actually produces electricity. More expensive plants exist - there are a number of offshore wind farms working at a strike price of £170.03 pMWH. This means that for every megawatt hour they produce, they are paid £35 by the electricity companies and £135 in subsidy. Hinkley C, with its "illegal state subsidy", is positively cheap in comparison. There are other technologies - Drax biomass power station has a strike price of £113.65. It burns around 7.5 million tonnes of biomass annually, most of it wood pellets imported from the US and Canada, a quantity that would require some 12,000 km
2 of forest to sustain, and which doesn't sound particularly green to me. There are still new onshore windfarms popping up, mainly in Scotland, with strike prices around £93.
The highest proportion of our electricity is produced by combined cycle gas turbines these days, and the low price of gas is what is keeping wholesale electricity prices down. We produce just under half of our gas, import around 47% from Norway and Europe, and import around a tenth as liquefied natural gas from Qatar. A high electricity price would benefit government greatly, as it would reduce the subsidies, but that wouldn't help us consumers much. Solar was excluded from the last round of contracts for difference, possibly bevcause it is now seen as cheap enough to manage on its own. Onshore wind doesn't produce the volumes seen at sea and annoys people in the areas where it is sited. Both types require constant maintenance, offshore much more so. The design life of a 100 metre wind turbine is 25 years, but few will make it that far, usually becoming uneconomic to repair by 17 years. The power output is variable, so is not to be depended upon for the base load, formerly provided by coal. Nuclear power stations run best at full power, producing a much flatter graph than wind, and still working in the dark, unlike solar. Hinkley C has a planned operational life of 60 years. Hinkley B has been running for 43 years so far.
For the future, it looks like more nuclear is on the way for base load, with wind and solar backed up by
CCGT▸ supplying most of the rest, unless someone comes up with a new technology that works. New homes are built to a higher standard of energy efficiency, but there are still millions of draughty old ones. That needs a proper plan to sort it out, and there shouldn't be an incandescent light bulb shining anywhere. But the whole issue of energy policy is a total dog's breakfast, and we seem a lot less prepared for the future than a lot of other countries, although we have practically ended coal-fired generation. That is in contrast to America, where a quarter of electricity is produced by coal, or Germany, at around 40%. China is reported to be building two new coal-fired plants per month.
The rush to renewable energy has had unintended consequences. The
BBC» news reported today on the rise of sulphur hexafluoride - SF
6 - in the atmosphere. This is used in electrical switch gear to suppress arcing and prevent fires, and the rise of relatively small scale power generators has meant a big rise in its use. It leaks occasionally, is thousands of times more potent than carbon dioxide as a greenhouse gas, and doesn't degrade. As we solve one problem, so we cause another.
.
