ROC profits topped £923m UK, December 2021 – Up on that?

NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

I have updated ROC returns, using the most recently available data for December 2021:

I have written before about how renewable generators are benefiting from the Renewable Obligation program. I now have generation data from December 2021 to quantify how much.

In short, as we know, electricity prices started to skyrocket last fall. Prices the day before rose to more than £200.MWh in December, up from a historic level of less than £50.

https://www.ofgem.gov.uk/energy-data-and-research/data-portal/whorors-market-indicators

Under the Renewable Obligation program, renewable generators are subsidized by the ROC. Last year, subsidies totaled more than £6 billion, all of which is added to our energy bill.

Of course, besides this subsidy, the generators also receive an income from the sale of electricity.

Almost all of our onshore wind production, around 95%, is subsidized through our Renewable Obligation Certification, ROC. Something like two-thirds of offshore wind and half of solar output are covered as well.

BEIS has now released generation data for all ROC programs for last December, as shown in the table below.

We also have daily market price data for the month, provided by Low Carbon Contracts Company, which they use to calculate CfD program subsidies. Obviously these are average prices, not actual prices received by individual generators. However, they calculate what they call the Interrupt Market Reference Price for each type of interrupt generator, so they are clearly robust and accurately reflect revenue.

Biomass prices are lower, as most of the baseline will be sold under Futures at a lower price. They will probably increase after a period of time.

So, for example, we are currently paying £317.53/MWh for offshore wind, an inappropriate amount when a third of this is a subsidy.

When the ROC plan was set up in 2002, it was never thought that the market price could go so high. It’s clear to see that renewable generators can generate a healthy profit with a market price of around £50/MWh.

Now, not only are they benefiting from sky-high electricity prices, but they are receiving their beautiful subsidies.

It was clear that the ROC’s scheme was poorly designed from the start, but Blair was so keen to promote renewables that he was oblivious to its glaring flaws. Now we are all paying the price.

In December 2021 alone, profits from wind, solar and biomass were £923 million. This is a higher profit and above the market price of £50/MWh. Beyond that, of course, ROC grants amount to £502m.

As I commented a few weeks ago, it is clear now that there is an unsolvable case for a drastic revision of the ROC’s plan. There are bound to be legal challenges. However, if these prove to be uninsurable, the government should instead levy taxes upwind. Of course there is precedent for this.