By Irina Slav
A while ago, in May, I wrote a post headlined “Get out of wind now”. The reason I wrote it was that signs were multiplying that the wind power industry was having difficulties sustaining itself.
Now, two months later, the industry itself has given away the game of cheap renewables. Not that a whole lot of people won’t pretend nothing happened and won’t continue to claim wind is both cheap and clean. Not that a whole lot of other people won’t buy the claims and then, a few years from now wonder what the hell happened with their money. Oh, well.
Here’s what happened this week and many thanks to Azra Dale and Stephen Heins for sharing the info on their substacks. So, three renewable energy lobby groups in the UK wrote to the government basically demanding first, more money, second, a preferential treatment with regard to CfD auction prices, and three, more money. Openly. With no small amount of frustration with the government’s stinginess.
According to RenewableUK, Energy UK and Scottish Renewables, “The current emphasis on securing renewable capacity at the lowest possible strike price – minimising expenditure rather than maximising benefit – risks creating a less attractive investment environment in the UK.
The race to the bottom on strike prices incentivised by the current auction process is at odds with the reality of project costs and investment needs, jeopardising deployment targets.”
Shall we all agree that it is a lovely little example of trying to spin a pretty desperate situation. And failing. Miserably.
Because the moment you say that low price is not the most important thing, you bust the myth of cheap renewables and “costs are falling.”
Because the moment you say “the current auction process is at odds with the reality of project costs and investment needs, jeopardising deployment targets” you admit that the power you produce is not cheap and is only getting less cheap by the BoE rate hike.
As if giving away the game in general was not enough, the three associations propose specific ways, in which the government must give them more money. First, they propose a fatter budget for the next offshore wind power tender.
“The budget for fixed-foundation offshore wind alone would need to be at least two and a half times higher than its current level to maximise the capacity which could now be secured in this year’s auction.”
Well, isn’t this just the definition of affordable and costs-are-falling-and-wind-is-now-cheaper-than-everything-except-perhaps-solar? And this is only the start of the toddler industry’s demands.
The associations also propose special budgets for emerging technologies such as floating wind and tidal power, with those budgets to be used “to accelerate cost reductions and build up supply chains.” Aww.
They also want guarantees for those budgets and guarantees that the technologies will be deployed regardless of, well, everything: “This could be achieved by setting clear deployment targets and ringfencing budgets for each technology, to ensure that each secures a minimum amount of new capacity.”
The analogy that comes to mind is, for instance, tomato farmers telling the government it must mandate that people buy at least 1,000 tonnes of tomatoes every year otherwise they won’t be able to survive and that’s just not fair, so what if people don’t want tomatoes, and life’s too hard so give us some money.
The third demand, I mean proposal, is almost fit for Baldrick’s cunning plans. It says that future “CfD parameters should reflect their economic environment more closely in terms of supply chain costs and interest rates.” Ahem.
Let me translate: in an extension of the first demand, the industry wants guarantees that their future bids will not be judged on prices, which is how all bids everywhere are normally judged (excluding bribes and stuff like that), but on… I don’t know what, really.
I don’t know but Net Zero Watch does. In a release calling out the three wind associations, Net Zero Watch said that the third proposal comes down to “a revision to the auction rules so that the winners are not determined by lowest bids but by an administrative decision that weights bids according to their “value” in contributing towards the Net Zero targets.”
In a final burst of arrogance, the industry bodies say that “The trade associations conclude that the definition of the value of CfDs to consumers should be fundamentally reframed to reflect the UK’s net zero targets and to maximise the amount of renewable capacity which could be delivered at a lower cost than new gas projects.”
Yes, they seriously said that. Industry associations seriously demanded that the government of a country give businesses from the industry guarantees that there will be a big and comfortable market for their products and that their profits will be ensured. And I thought Ørsted’s CEO was arrogant.
Here’s how Net Zero Watch summed the whole thing up:
This would in effect not only increase total subsidy to an industry that was until recently claiming to be so cheap that it no longer needed public support, but also provide it with protected market shares, all but entirely de-risking investors at the expense of consumers. It would also be an open invitation to graft and corruption.
Why, I must have been wrong about not-really-advising people to get out of wind. If the UK government caves, profits will be a certainty. Well, until either the government or the people go broke because of all that support for cheap wind power.
I see some pretty significant moral and ethical concerns right there but what do I know. These aside, if the wind industry gets its way and it may just do, I have to wonder how it will not set a precedent for other industries to demand the same treatment.
For example, farmers could demand the same guaranteed market for their produce whatever the cost at a comfortable minimum prices, of course, to be shouldered by the government if there’s not enough demand.
Or carmakers could demand that the government makes sure their cars will sell whatever the cost — at a comfortable minimum price, of course, to be shouldered by the government in case there’s no demand.
That certainly looks like free enterprise and free market to me.
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