Where Did All the Money Go?
Far, far away…
Posted on 26 Jan 25
by Mark Hodgson
I wrote Where Power Lies because I was shocked by the extent to which the UK’s energy infrastructure was owned by multinational companies and foreign investors. I fear that, if anything, the situation will only have deteriorated over the three years and more since I wrote it.
I felt moved to return to the subject today when I read David Turver’s latest excellent piece about subsidies paid to renewables companies, with particular reference to Contracts for Difference (CfD). I was struck by the sheer scale of these payments in 2024, together with the fact that even were common sense to return to the DESNZ tomorrow (it won’t) so that the drive to renewables was slowed and future CfD rounds scrapped, we will be saddled with these payments for very many years to come. I have also written about the CfD regime before, but the situation seems to have deteriorated since then (for the taxpayers, but not for the – largely foreign – recipients). As David Turver says:
As well as 2024 being a record year overall, offshore wind received more subsidy than in any other year with £1.9bn paid out. Biomass conversion, a euphemism for burning trees, received £309m and biomass with combined heat and power (CHP) received a further £90m. Onshore wind received £73m and the two solar farms with active CfDs received just over £1m.
Incidentally, in December 2024, £260.3m was paid out in subsidies, the second highest month on record, with April 2024 being the highest at £269.8m.
Supporters of renewables often point out that when the market price of electricity is above the CfD strike price, then generators pay money back. This is true, but that was only significant in 2022 when a net £346m was repaid and compares to the net cost of the scheme of £9.6bn since inception.
The top thirteen CfD subsidy days all occurred in 2024, and a total of 16 days from the same year all appear in the Top-20. The day with the highest subsidy payments was 22 December 2024, with over £20m paid out in a single day. Offshore wind was the main recipient of this Government mandated largesse on that day, getting over £18.3m and biomass receiving over £1m.
The record subsidy days in December last year came despite elevated gas prices pushing up the reference price. The annual indexation of CfD strike prices with inflation means that as each year progresses, we are likely to see many more record subsidy days, especially if gas-prices fall back to more normal levels.
Let’s take a look at the recipients of the greatest sums of money.
https://cliscep.com/2025/01/26/where-did-all-the-money-go/
