Subsidised wind farms are being required to pay millions of pounds back to the state amid a jump in electricity prices that has made them more commercially lucrative.
Renewable power developers have paid back almost £4m since April last year, marking the first time they have paid any money back since 2017, when the Exchequer received only £595.
The figures, from official data analysed by Cornwall Insight for The Sunday Telegraph, provide a window into the protection for consumers under a flagship green energy subsidy system.
It comes as the Government is planning a similar system to subsidise a massive ramp up in hydrogen production as it races to hit climate goals.
The £4m paid by generators dwarfs the £6.2bn they have received from the subsidy system, known as Contracts for Difference (CfD), since 2016.
Frank Gordon, director of policy at the Association for Renewable Energy and Clean Technology, said: “The CfD scheme is designed to deliver a fairer system, replacing previous policies which would have a fixed generation fee, irrespective of the wholesale prices.
“While not perfect, this data illustrates how the CfD responds to wholesale prices (i.e. generators sometimes have to pay back to the ‘pot’) and therefore should offer more value for those who fund it.”
Designed to promote a huge ramp up in renewable power, the CfD scheme sees developers guaranteed a certain price for the electricity they sell from new projects.
When the wholesale price is below this guaranteed price, the developer is paid the difference, funded by suppliers via a levy on electricity bills.
When the wholesale price rises above the guaranteed price, the developer pays the money back to the state, via the Low Carbon Contracts Company counterparty.
Over the past 12 months, the wholesale price of electricity has more than doubled to about £110 per MwH.
Meanwhile, the price guaranteed to offshore wind developers in particular has fallen significantly since the first auction round, meaning newer sites are likely to need to pay back.
The Cornwall Insight data shows generators paid back £970 in 2016, £595 in 2017, nothing in 2018 and 2019, £3.4m in 2020, and £267,894 between April and early August this year.
Despite the increase in payback, James Brabben, head of assets and infrastructure at Cornwall Insight, noted that the amount wind generators receive from the scheme could be set to increase.
This is because the amount they receive depends on the hourly wholesale price, which can be low when wind output is high.
He added: “Overall, we still see a net cost to the scheme in the current and upcoming quarters – but the level of this top-up has reduced slightly with high wholesale prices.”

SAS Volunteer

We publish content from 3rd party sources for educational purposes. We operate as a not-for-profit and do not make any revenue from the website. If you have content published on this site that you feel infringes your copyright please contact: webmaster@scotlandagainstspin.org to have the appropriate credit provided or the offending article removed.

0 Comments

Leave a Reply

Avatar placeholder

Your email address will not be published. Required fields are marked *