Financing offshore wind
&quot;on the basis of ongoing market prices, without any medium term revenue stabilisation mechanism.&quot;<p>This looks clever when market price is 50 per MWh, but when Putin decides to cut off the cheap gas you were using to make a lot of electricity and the market price rises to 500 per MWh, suddenly revenue stabilisation looks very different.<p>The UK has a bunch of wind farms which are quite old (up to about 30 years), and so even if they were subsidised when built the subsidy has expired but the wind farm is still there and still making electricity (typical design life is 25 years, in most cases as lifespan approaches the owners want to build a taller wind farm). However today the market price they&#x27;re selling electricity for is far higher, as much as ten times. Newer wind farms have a Contract for Difference as revenue stabilisation, with the actual price they&#x27;re paid fixed (a &quot;strike price&quot;) and of course those strike prices are <i>far</i> lower than today&#x27;s gas shortage market prices.<p>So there&#x27;s pressure for government to agree that old wind farms get a CfD, with a price lower than today&#x27;s market price but higher, perhaps much higher than future market prices, since now stabilisation is supporting a different government policy (don&#x27;t let voters starve or freeze to death) rather than the original one (subsidise &quot;green&quot; energy solutions)<p>The irony is that if a previous UK government had built more wind power in the early 2000s, using more subsidies, that would actually save money today, even though it would have outraged fiscal conservatives at the time who imagined it would never pay off.