Yesterday, the Chancellor used his Budget to announce how much of our money will be allocated to renewables in Allocation Round 6 (AR6). This was positioned as “major backing” to the renewables sector.
The overall budget will be set at £1,025m in 2011-12 prices, which equates to over £1.4bn in today’s money (using the inflation factor of 1.3956 in the budget notice). This represents a 352% increase on the final budget for AR5 (see Figure 1).
To put this in context, £1.4bn is around £50 per household. It is almost as much as the £1.6bn spent on CfD (contracts for differences) subsidies up to late February in the current fiscal year (see Figure 2). The AR6 budget is also around two-thirds of what Ofgem forecasts the existing CfDs will cost in the next financial year. However, the current and next fiscal years cover all allocation rounds since 2017 and yesterday’s announcement is for just one round.
The overall budget has been split into three pots. Pot 1 allocates £120m to: Energy from Waste with CHP, Hydro, Landfill Gas, Onshore Wind, Sewage Gas, Remote Island Wind and Solar. Pot 2 assigns £105m to Advanced Conversion Technologies, Anaerobic Digestion, Dedicated Biomass, Floating Offshore Wind, Geothermal, Tidal Stream and Wave power.
The lion’s share of the budget of the budget is allocated to Pot 3, with £800m earmarked for offshore wind. Up to the full £800m could be allocated to what are termed “Permitted Reduction” projects. These projects are those that won contracts in earlier rounds and have now admitted that they cannot deliver for the price they agreed. The wording of what this means exactly is somewhat opaque:
This process has allowed projects to withdraw a maximum of 25% of their original total project capacity from their CfD contract and now use that reduced capacity to bid into AR6 as a standalone project.
Does it mean that if say, a 1GW project won a contract in AR4 can now withdraw up to 250MW from that project and bid it in AR6, or does it mean that the project can be reduced to at least 750MW and the whole reduced project can be bid into AR6? Either way, projects awarded at low prices in earlier rounds can now apply for an extra bung which rather makes a mockery of claims than wind is nine times cheaper than gas.
An amount up to the full £800m can also be allocated to new offshore wind projects.
Big Increase in CfD Strike Prices Confirmed
As has been discussed previously, no offshore wind projects won contracts in AR5 because the prices on offer were too low. Accordingly, the Government has taken the opportunity to confirm the strike prices on offer for AR6 will be considerably higher than in AR5 (see Figure 3).
In 2024 money, offshore wind prices rise 66% from £61/MWh in AR5 to £102/MWh in AR6. Onshore wind goes up 21% to £89/MWh and large-scale solar increases 30% to £85/MWh. All these prices are notably above the average reference price so far in February 2024 of around £59/MWh used to calculate existing subsidies. Typically, this reference price is set by gas, so guess what, all these new renewables are going to be considerably more expensive than current gas-fired generation. Electricity bills are never coming down, and it seem ministers don’t care and they are on a death wish to kill the economy and further impoverish the poor.
Conclusions
The Government may try its best to position this as ‘major backing’ for the renewables sector. What it really means is it is massively undermining the energy consumer by adding another £1.4bn to electricity bills. It claims it is shielding us from volatile fossil fuel prices, but at the same time, it extended the windfall tax on energy companies, thus ensuring investment in new sources of supply falls and either we import more gas or the price goes up.
And remember, these CfD strike prices are index-linked, so the nominal price will go up each year with inflation, permanently baking in high electricity prices. What the Government giveth with a cut in National Insurance, it taketh away in subsidies for renewables. Consumers have been sacrificed on the altar of Net Zero, again.
David Turver writes the Eigen Values Substack page, where this article first appeared.
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Customers?!
FFS!
If they don’t buck their ideas up I’ll use another department for my State Pension!
Yes, HMRC use “customers” also as if you have a choice.
That comes from some very expensive management consulting …
As an ex-employee I can confirm that DWP policy, and it certainly was and is policy is to refer to anybody claiming benefits as a “customer.” I refused. I never ever referred to a claimant as a “customer,” they were ALWAYS claimants.
My logic, repeated frequently was…
“Well they are not going to take their business elsewhere.”
This is the sort of garbage rhetoric that is embedded in the Civil Service and for the vast majority of staff they see no other logic. The majority are woke and extremely lazy.
Huxley you are a very unusual individual. In a good way. Much respect.
Many thanks MAk. Very kind of you.
Yeah that’s like “thanks for your patience” – as if I had an option!
I was on hold on the phone to HMRC today with their interminable musical loop being regularly interrupted by messages telling me that me that my call was important to them. Clearly it wasn’t at all important or they would have answered me sooner,…!
I was amused rather, after a blue light episode, to be asked if I would recommend the hospital to family and friends for emergency care?
As it happens the care I received was excellent and I’m still here as a result, but I did ask them where else I might have gone under the circumstances… no response, so far!
For emergency care?
I would have expected that there wouldn’t be the time to ponder.
The problem isn’t where they work, it’s that there’s nothing that requires them to work or that can be easily done to replace underperformers. Those that want to do minimal work can do so.
It’s also that they’re protected from consequences by the system.
A few years ago I had to call DVLA for something. As it happened I had time on my hands, so was able to hold… for nearly an hour. Long story short; I complained to my MP and, when the answer came it was to say that all calls to DVLA are answered within 10 seconds and therefore there was nothing that needed attention, everything is hunky dory… so, the moment your call is ‘answered’ and you go into the queue is all they measure. I imagine this kind of jiggery pokery is rampant through every facet of the civil service?
Where’s the hard evidence that working from home is related to productivity?
Motivated people will work wherever they need to or can. Well supervised people will work wherever they have to.
This article is about the DWP staff who are apparently neither motivated nor well supervised and will leave customers on hold for unreasonable amounts of time.
I know what it’s about, what I can’t see in the excerpts is any reference to hard evidence that current poor productivity is related to working from home.
tof, if you have never worked in the Civil Service you will never understand that it really is another planet.
I can imagine. I know a couple, one county council and one Whitehall, who work hard and are intrinsically motivated, but probably they are the exception. One is a socialist and has devoted his life to the public sector, the other is decidedly not a socialist and is actively working on starting his own business or moving into the private sector – not a surprise but a shame as he’s exceptionally bright.
Elcom (Electoral Commission) are still I believe “working” from home and boy can they give people the run around on the ‘phone. An absolute shower.
PS I’ve just logged off work (at home, 5 days a week) – not done tons of hours today, just my standard 7.5ish, spread out a bit so I can fit other things in that make me happy and a better worker when I am working. Whenever I am on calls and there are people in the office there’s a cacophony of noise from chatting – how anyone can work in that environment is beyond me!
When I visit the office every so often I am a lot less efficient. My work requires focused concentration for long periods of time, and my excellent boss understands this. When I am in the office I often arrive late in the morning so I can then stay late and get some work done after everyone has gone home and I can be certain I am not going to be interrupted.
Working from home is what everyone used to do, let’s face it.
But yes, an ill-motivated and ill-managed individual will find a way to avoid work wherever they are. The worst offenders in my experience are the “managers”. Where the Civil Service is concerned, I imagine this effect is multiplied many times – other people spending other people’s money on what other people tell them are other people’s problems, so no-one cares about quality service or product and they don’t care how much it costs.
This is why state must be as small as possible. Where’s Maggie when you need her?
100% agree
I look back on my early days of commuting into London and working in the office with fondness, and perhaps for some of our younger staff who choose to do that it’s the same now (we have a lovely office available for people who prefer it, as many or as few days as they choose), but at my advanced age I find my lovely home in a more rural setting (or wherever I am with my laptop) much improve my quality of life. Horses for courses. If your staff are valuable to you, look after them as long as they deliver the work.
We did internal studies – WFH was a mess. Office productivity measured in outputs, alignment, and meeting KPIs was achieved by being in the office. GDAD (geo agile projects) also suffered from failure – about 60% failed in some way (failure needs clear defining).
Interesting. Overall it has made little difference to us – some have been more productive, others less. What aspects of WFH do you think made the difference?
During the earlier lockdowns my whole department (bar one) worked from home. We did all the usual stuff to the usual schedule, occasionally popping in to the office for the odd day when necessary and delivering paperwork to each others homes as necessary. I’m sure some of my staff didn’t work exactly office hours, though I did (plus some as I didn’t have to commute), but we all achieved the same output as normal and management accounts were published on time.
I guess, as a small team, we after motivated to do what we always did. I suspect that the behemoth that is the Civil ‘Service’ doesn’t have the same motivation…
That chart… ‘Annual change in productivity growth‘.
Change in growth? Rate of a rate? Really?
So in Q1 2021 there was a -10% change in growth of productivity compared with a year before – or 90% of the growth in productivity from the year before? No mention of a decline in productivity at all?
“Not a word has been spoken about what’s in the interest of the child. The reality is if you’re holding down a job, it’s very difficult to spend adequate time with the child”
Best to get another government department or an expensive stranger to look after your children. Longer term, it’s easier to get them wearing masks and be vaccinated without the burden of parental consent.
What we have to be aware of is that this collapse in civil service productivity, productivity which I would argue is largely immeasurable, is deliberate. All our public services are being collapsed:
The police pick and choose who to arrest and similarly arbitrarily pick and choose what they might deem arrestable offences depending on lots of factors – skin colour, religion, height, weight, sex or lack thereof, length of time to end of shift.
Most of the above can be applied to the NHS although here the game is to make lots of noises while doing F A except creating waiting lists.
ELCOM – absolutely brilliant at knowing nothing and doing less while sending you round in circles and all while we interrupt their watching of ‘Flog It’ or some such crap.
We are deliberately being led and manipulated in to believing we are a Third World shit hole and within a couple of years we will be.
The tory Party has undergone a controlled demolition orchestrated from within. The same demolition processes are being applied to all the mechanisms of state. Kneel is already overturning Parliamentary traditions eg rearranging the David Amess Bills Day and other procedures.
The country is being dismantled from within. Our history is being rewritten such that the glories of Empire are now the greatest sins the world has ever seen. There will be no let up. Why do we think the Khant was installed in Londonistan on the back of 1.2 million votes? He has been placed there to do precisely what he is doing – destroy the greatest capital city in the world.
So the crap of working from home is just one small element in the whole and that is the demolition of the United Kingdom.
Everything is linked.
“We are deliberately being led and manipulated in to believing we are a Third World shit hole and within a couple of years we will be.”
Perhaps that’s why there’s been a trend over recent years of eateries with a run-down look so that people get used to it before it stops being a choice.
Yes more than likely.
E-mail to all staff: “A failure to return to work on Mondays or Fridays will be construed as indication of your wish to terminate your employment…”