So, electricity price freezes seem to equal offshore wind freeze

Posted on Updated on

Ever since Ed Milliband announced that he planned to freeze Britain’s electricity prices for a couple of years if he got elected some things have been clear. Chief among them has been that offshore wind would be in big trouble, though not that many people have either recognised or acknowledged this.

This is obvious when you realise that the price offshore farms need, in £/MWh, is roughly what people pay for their electricity. It is also significantly more than what industrial consumers pay for the stuff. Plus you have to pay for transmission and all those other things.

So, all things being equal, expanding offshore wind while freezing electricity prices will have to hit the profit margins of utilities, and probably quite hard. So, something has to give. And that something is probably investment in offshore wind.

Today, SEE did a good job of confirming this. Freezing electricity prices for a couple of years, and also withdrawing from three offshore wind farms. SSE however is not the only company holstering its guns when it comes to offshore wind. As a result the chances of the UK meeting its renewable energy targets for 2020 are receding further and further every day.

Advertisements

2 thoughts on “So, electricity price freezes seem to equal offshore wind freeze

    Dan Olner (@DanOlner) said:
    March 27, 2014 at 1:19 pm

    I thought they were set until 2019 with the government’s guaranteed strike prices? If the paid price is guaranteed, someone might lose money but it won’t be the people building offshore capacity…?

    Like

    Robert Wilson said:
    March 27, 2014 at 1:43 pm

    Dan

    The problem is that the strike price is paid out of electricity bills. It is true that the people building offshore wind farms aren’t directly losing money. However a lot of these companies also sell electricity to consumers. SSE might build a wind farm and get a fixed price for it, but their retail electricity wing will then take a hit due to the price fix.

    Milliband is being rather unprincipled here. He once made it clear that electricity prices will have to rise if we want to decarbonise, but now he wants to eat six impossible things before breakfast.

    Like

Comments are closed.