Posts Tagged 'Subsidy Junkies'

STOR scandal: Putting the scale of the theft from us into context

Following on from our previous post about the emerging STOR scandal, it would be helpful for people to understand just some of what this means in monetary terms.  To what extent are energy consumers and taxpayers being ripped off to make expensive diesel powered electricity generation worthwhile for ‘investors’ and big businesses to provide to the grid?

So lets put it into context, in the words of an energy company:

National Grid (2011b) sets out reserve tender outcomes and RWE npower has estimated that the price paid when stand-by generation capacity is called for by the short-term operating reserve market mechanism was £180-280/MWh in 2010. There is also a payment of around £7-10/MWh.

This is worth around £30,000-45,000/MW per annum to an owner of stand-by generation (RWE npower, personal communication).

That is roughly eight times the industrial tariff for power. As demand for operating reserve increases, shown in Figure 8, the price will rise and the incentive to participate will grow stronger.

Indeed, by 2015, National Grid (2011b) estimates that the utilisation payment will have risen to £544/MWh, and by 2020 the figure is £685/MWh, all in real terms in 2010/11 money. That is an increase of 96 per cent in ten years providing a strong incentive for new owners of generation to participate. Across the whole market, the total payments for being available and for generating could reach £945 million per annum by 2020, up from £205 million in 2010. That is an increase of 350 per cent in ten years.

There are profitable opportunities to be seized and they are open to existing generation assets which have already been paid for and sometimes even depreciated.

While the firms benefit, society does too. The mechanism allows the market to find the cheapest way to maintain an uninterrupted power supply whichever scenario the UK finds itself in. It will be to the benefit of all consumers if stand-by generation is put to its best possible use.

Source: nPower

It is interesting to note that over on the Bishop Hill blog, Andrew Montford points to a conclusion that no fossil fuels are subsidised in the UK, in rebuttal to the imbecilic climate alarmist mouthpiece, Bob Ward.  However, STOR clearly shows there is subsidy being made available for diesel powered electricity generation at peak times – albeit to back up virtually useless wind power.

STOR scandal: The establishment conspiracy to fleece energy customers by design

A story broken by Christopher Booker in the Telegraph and Richard North on EU Referendum on Saturday evening heralds one of the biggest consumer rip off scandals in UK history.

This concerns the existence of a vast network of standby diesel generators, which make up what is known as a Short Term Operating Reserve (STOR), that can be called upon by the National Grid in the event of a shortfall in electricity should electricity generating capacity go offline.

The theory is simple.  When there isn’t enough power being generated to meet demand, this network of diesel generators can be brought online within minutes to provide gigawatts of electricity to keep the lights on.  Booker and North detail the system and how it has been hidden in plain sight for years – which explains the confident performance of energy minister, Michael Fallon in his interview with Andrew Neil last week when he said the lights would stay on, even as power stations close without replacement and wind turbines fail to deliver power reliably when it is needed.

STOR brings into sharp focus three major issues that are unlikely to be pored over by the media. First and most immediate of these for energy customers is the cost of running this system that will be passed on to them.  As Booker explains in his piece:

These new power sources are far from cheap; the current wholesale cost of electricity is around £50 a megawatt hour (MWh). Thanks to the subsidies levied through our electricity bills, we are already paying nearly £100 per MWh to the owners of onshore wind farms and £150 for those offshore. But, as the National Grid reveals, the tender prices submitted by those signed up to the STOR scheme can be as high as £400 per MWh, eight times the market rate. The average payment in 2011 was £225 per MWh, plus a fee of £22,000 for every megawatt of their capacity (for these fees in 2010-11 alone we stumped up £75 million).

This is another subsidy gravy train run in the interests of corporations at the expense of hard pressed customers, and businesses whose costs are driven up accordingly and are passed on in the price of most goods and services.  The evidence of this is detailed by Richard in his piece when he explains:

Under normal circumstances using this back-up capacity is not an economically competitive form of generation; it is generally only called upon in emergencies when price rises can cover the costs of generation. But as we lose power stations from the system, there will be no option but to use it as replacement capacity and, in particular, as back-up when the wind is not blowing.

So lucrative is this option that it is being regarded as a major investment opportunity, “anticipated to experience significant growth due to increased reliance on reserve sources of power to meet fluctuations in electricity.

Investors are told that the “significant upward trend in the requirement for reserve services” is due to “decreased power supply following from the decommissioning of ageing nuclear power plants” and “increased volatility of power supply caused by increased reliance on renewables (due to the high proportion of wind power, renewables are not a consistent source of power) “.

The second is yet another example of fear being as a tool to condition people into accepting a grotesquely expensive ‘solution’ that shouldn’t be required in the first place.

Make no mistake the emergence of the STOR story, and its revelation of the gigawatts of failover capacity that are available to the system, shows us that the current focus on the energy gap being played out in the media with suitable dramatic effect, is a contrived narrative designed to worry people about power cuts and blackouts so that when they are asked to stump up significantly more money to keep the lights on via diesel generators, they will grit their teeth and pay up – the metaphor that sums this up being ‘they’ve taken my arm and cut off my leg, but thank God it means I’ve been able to stay alive’.

The third of the two issues is how this theft has been engineered by the establishment by its utterly illogical and nonsensical policies on energy.  Whereas common sense would dictate this country’s government to have an energy strategy to meet the needs and demand of powered infrastructure, businesses and residential customers using the most reliable forms of power generation, the strategy has been designed around the unworkable goal of relying on unreliable and intermittent wind energy to meet our baseload energy supply, coupled with ‘demand management’ – namely the forced reduction in energy demand through increased cost.

Businesses and households are being priced out of using tomorrow the same amount of energy they already find difficult to afford today; and this scenario is being compounded by purposely built-in scarcity through the policy of closing down generating capacity without reliable replacement, so the gap between total reliable energy supply and peak energy demand has narrowed to a dangerously small percentage.  Instead of replacing conventional power in need of decommission with nuclear power to provide our baseload energy, and topping that up with coal and gas which, already spinning below capacity but not wasting what is being generated, can quickly be called upon to meet additional demand when it peaks, we are getting subsidy chomping wind turbines that provide only a fraction of their potential and rely on intermittent weather conditions.

At the end of this trail of state driven larceny is a special interest collective of subsidy farmers, corporates and big money investors who reap a huge return in profits at our expense for our substandard and flawed-by-design energy infrastructure.  An infrastructure that is forced on us by a deranged sustainability agenda that is sponsored and nourished by those special interests who hoover up our money, and the anti-progress environmentalists who are determined to de-industrialise the world and enforce untold misery on billions of people.

As you can see, this is not just a story about carbon emitting diesel generators being used to keep our lights on.  It runs far deeper and is far more disturbing than that.  The question that needs answering is will the media step up and educate people about this, or will it look away to continue sucking up to those influential and ‘powerful’ people of ‘prestige’ who are calling the shots to enrich themselves by robbing us blind?

The wind energy subsidy farmers are looking to boost their harvest of our cash

A couple of weeks ago after John Hayes made his comments about enough being enough when it comes to onshore wind turbines, I listened with incredulity to the radio as the bandwagon jumping opportunist, Dale Vince (founder of Ecotricity) claimed that in 2011 support for onshore wind turbines cost consumers only £5 per year on their energy bill.

While I should have written about it at the time I was busy with other things and let the moment pass.  However now is an ideal moment to bring this deception back to the fore.  Firstly to correct the falsehood promulgated by Dale Vince, a man with tens of millions of pounds worth of vested interest reasons to spin a lie.  One commentator on the Bishop Hill blog puts it nicely in context:

Looking at ROC’s [Renewable Obligations Certificates for the UK] rather than any other costs, that’s £1.3 billion, which, if we assume 24 million households gives us £54.17 per household p.a. or around 15p a day. Further into the report they [Ofgem] state that out of the 24.9 million ROCs issued, 7.7M were for onshore wind, so applying that factor to our figures would still leave us somewhere north of 4.5p per day per household just for ROCs and only for Onshore wind.

Colour me sceptical, but I call bullshit on the 2p figure, unless someone wants to point out where I’ve gone wrong in the above maths and can also explain how, other than ROCs, wind power costs absolutely nothing.

And of course, wind power does cost the taxpayer a lot more than that because ROCs are not the whole cost of renewables.  Not even close.  Vince and the various lie machines at the heart of Ofgem and the Department of Energy and Climate Change (DECC) are deliberately leaving out other costs to the taxpayer to make their subsidy farming seem almost inconsequential for the hard pressed taxpaying consumer.

The reality is that the amount paid in wind power subsidy during the coming year is expected to be over £1 billion, with just 10 companies between them set to get £800million of our tax pounds through subsidies over the next 12 months.  That figure is not included with the ROC direct charge on our energy bills.  Nor is the cost of paying over the odds for energy produced via Feed-in Tariffs.

A look at DECC’s own figures (pg 64) show they admit the cost of renewables policies alone has already added 15% to the retail price of electricity (£/kWh) and this will rise to 27% by 2020 – and wind subsidy is a signifcant part of that. £5 per year?  Give over.

So why is this background timely now?  Because in the media we are seeing comments from the likes of John Selwyn-Gummer (aka Lord Deben) hinting at a change in focus to offshore wind power.  Earlier this year the cost of offshore wind was £150–£169 per MWh and the most optimistic projections don’t see offshore wind close to £100 per MWh until at least the 2020s.  How does that compare to other energy generation?  Well, why not let the Secretary of State at DECC tell us

Reports by ARUP and Parsons Brinckerhoff [External link] commissioned by DECC in 2011, found that the cheapest onshore wind has a cost of £75/MWh, which is around the cost of nuclear at £74/MWh.

Given these costs you can be certain that if the amount of subsidy doled out for onshore wind is staggering, the billions of pounds of subsidy that offshore wind will attract will be mind blowing.  Which is why the wind subsidy farmers are content to dial down onshore wind and position their behaviour as conceding to people pressure to stop scarring our landscape.

There is an evident financial vested interest in doing so and the taxpayer is going to see the amount of money diverted to offshore wind dramatically increase, both in visible ROC charges on bills and government spending that uses more of our tax pounds to make the proliferation of offshore turbines attractive for private business that will make huge sums as a result.

Do not be fooled into thinking the gradual shift in focus from onshore to offshore wind that is underway and will become more prominent in weeks and months to come is any form of victory for taxpayers and residents.  A bigger and more lucrative opportunity has been identified.  The wind energy subsidy farmers are not backing off, they are actively looking to boost their harvest – and their crop of choice is our cash.


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