A price too high Ed Miliband is pressing on with his net zero quest, and it is making us poorer
The price the Energy Secretary is willing to pay for more offshore wind farms is too high
WHEN it comes to the real cost of renewables, the cat is well and truly out of the bag.
Ed Miliband can carp on all he likes about how his precious net zero revolution is going to magically lead us down the merry path to cheaper energy bills but he can’t change facts, and his green dreams continue to collide with reality in the most damning fashion.
The latest devastating blow to his clean energy fantasy comes once again in the form of wildly unaffordable offshore wind power after the Energy Secretary unveiled the prices the Government is willing to pay for yet more offshore wind farms to be built in UK waters.
When Claire Coutinho, the shadow energy secretary, describes them as “eye-watering”, she isn’t exaggerating.
International developers are being wooed with a maximum guaranteed price of up to £113 per megawatt hour for the power they generate from the farms – far above the wholesale price of power, which last year averaged about £72. The price has been confirmed ahead of the latest round of subsidy awards for developers.
You might think Miliband had learnt from past débâcles, such as 2023’s auction, which was such a catastrophic failure that there wasn’t a single bid despite seven contracts to build new farms being put forward.
True, it was late 2023 when Labour was in opposition, but still. That was such a shambles it was obvious that the economics of offshore wind were evaporating faster than it takes a giant spinning metal blade to turn a passing gull into mincemeat and feathers.
The guaranteed prices on offer were so low that Tom Glover, the chairman of energy company RWE’S UK arm, warned that no more offshore wind farms would be built unless the Government increased the guaranteed long-term prices by as much as 70pc.
By Glover’s calculations that would have meant promising developers between £65 and £75 per megawatt hour (MWH) for the power generated from wind farms, as opposed to the £44 that was actually on the table.
And yet look where we are today, less than two years later. The strike price for offshore wind in the subsequent round actually turned out to be even higher than Glover’s demands, at £82. Now Miliband is willing to pay up to £113 in the upcoming round, a 38pc leap from that and a whopping 57pc more than the wholesale price of electricity last year.
He has clearly allowed the disastrous cancellation of several major wind projects to spook him into being even more generous this time around.
The biggest of these was the vast Hornsea 4 wind farm, which was abandoned earlier this year. The reason? Because it would never be profitable, Danish developer Ørsted said a mere nine months after it was awarded the contract. It was even willing to fork out €500m (£423m) in “break-away” costs to relinquish itself from the burden.
This was the moment when Miliband’s grand vision for Britain to roughly quadruple its wind capacity to between 43GW and 50GW by the end of the decade came crashing down.
Hornsea 4 wasn’t just one of Britain’s largest clean energy projects, it was the most significant wind farm being built in British waters, slated to provide enough electricity to power 2.6 million homes. The £85 per megawatt hour subsidy on offer from the Government was too low, Orsted said, and if the world’s pre-eminent offshore wind
‘The case for wind power has been built on the premise it will get cheaper, but that is patently not true’
specialist can’t make the numbers stack up then what chance do others have?
After all, it wasn’t the only project to bite the dust. Swedish energy giant Vattenfall shut down development of the Norfolk Boreas site, designed to power the equivalent of 1.5 million British homes, in 2023. With the costs of construction spiralling by 40pc, “it simply doesn’t make sense to continue this project,” said Anna Borg, Vattenfall’s chief executive.
With these and others like it seen as essential for Britain to hit its ambitious renewables and decarbonisation targets, what chance do we have of ever meeting them?
What’s the alternative if we don’t? Is it more unproven mini-nukes, a greater number of very-difficult-to-build interconnectors, more pylons blighting the landscape? We need answers.
The case for wind power has always been built on the premise that it will keep getting cheaper, but that is patently not true – the opposite is clearly happening.
What’s more, as experts such as Kathryn Porter point out, these subsidies exclude all of the additional system costs of green energy such as the costs of back-up power sources, connections, curtailment and real-time balancing – all of which end up being tacked onto our bills.
The same goes for hidden costs such as “wasted wind” as Coutinho describes it – the absurd situation where Britain must pay huge sums of money to turn wind farms off.
The lengths that Miliband is prepared to go to in his quest to ensure the UK hits a series of self-imposed and entirely arbitrary net zero targets appears to know no bounds.
From plans to impose green levies on gas bills so that heat pumps are cheaper to operate, to proposals that will allow back garden wind turbines and solar panels to be erected without planning permission, he will stop at nothing it seems. Until recently, we were turning a blind eye to solar panels suspected of being made with forced Chinese labour and from coal-powered energy.
What is most worrying is that Miliband appears increasingly prepared to make us all poorer in the process.
Britain already has the highest electricity costs in the industrialised world, though perhaps we will not be in that grouping for much longer because it means deindustrialisation in this country is happening at turbospeed. Those costs are only going to keep going up, rather than down as we were all promised.
Labour’s pledge to cut household bills by £300 always looked implausible. But once upon a time, you might have said that it had simply over-egged its numbers during the heat of an election battle. Today, voters are entitled to wonder whether the wool has been deliberately pulled over their eyes.