Nice Darts, Your Majesty

King Charles redirects £1bn windfarm profits towards ‘public good’

King Charles has asked for profits from a £1bn-a-year crown estate windfarm deal to be used for the “wider public good” rather than as extra funding for the monarchy.

I doff my cap to you sir. I have been moaning about this set up and its lack of publicity for two years. You have not got enough publicity for this public spirited gesture today. To deny that would be crass and disingenuous.

I have even created a label (https://nickbrowne.coraider.com/search/label/Wind) that you can use to see what I have written about this before, you lucky people.

Marginal Pricing

The energy market consultancy Cornwall Insight calculates more than £40bn of the estimated £100bn of the proposed energy price cap could be swallowed up in excess profits.

The energy companies concerned, mostly renewable and nuclear businesses, have agreed at least in principle to accept new long-term contracts at fixed prices well below current rates.

The energy price cap was only introduced in 2019. It's not like it is ancient history. After taking time off to watch Prime Minister's Questions lunchtime yesterday I am very far from convinced that either Liz Truss or Kier Starmer have got a scooby about the millstone we have tied around our own necks either.

Breaks down like this: Marginal pricing refers to electricity prices being set by the variable cost of the marginal plant, i.e. the most expensive plant that is required to serve demand. This is the way electricity prices are determined on short-term wholesale markets, such as the day-ahead market. All generators receive and all consumers pay the same price. A uniform price.

This is genuinely insane. Think about solar and wind power for example. once the capital costs have been defrayed they are, to all intents and purposes, free. What lemon negotiated a contract in which they get paid the same amount per kilowatt hour as it costs to burn Putin's gas? It wasn't me.

There's a hint of rhetorical exaggeration above, but not much. Not very much at all.

Bring on the Severn Barrage!

Update: I just thought of another way to explain this, using Peter's birthday dinner at Avanti yesterday evening. He walked there from his flat and was content with a bowl of spaghetti served with a simple tomato sauce, along with a jug of tap water and finished  with a coffee. I got a cab there and back and grazed on multiple small plates of exotic tapas guzzling copious quantities of good red wine all the while. The "market clearing price" for the evening would be what it cost me to attend (taxi, grub, booze), so - if the contract had been negotiated by Her Majesty's Government - that is what everyone else who went would have been charged as well. Point of order Mr Chairman: I picked up the tab though, for all that, my lucid economic parable is still valid.

I am too tired to be frightened

The Crown Estate published its annual results a couple of days ago, might as well have put them on a bonfire in the garden for all they attention they attracted.

Capital value: The value of the Marine portfolio increased by 22% to £5.0 billion, driven largely by offshore wind, in particular leasing Round 4.

I wrote about this twice in February 2021 (by yer, and over by yer). The Queen owns, and can dispose of as she sees fit, all the rights to offshore power generation in UK territorial waters. Tony Blair's government ceded this to the Crown in 2004. And nobody except me seems to think it was outrageous! It is not as if all the North Sea oil was hers, it is a precedent set comparatively recently for all it sounds medieval. The value of this "gesture" to Her Majesty increased by a billion quid last year. (OK strictly 0.9 billion but you get the point.) Where are the headlines? 

Before I get back down off my soapbox, let's raise the small matter, once more, of the Government's insane half a billion pound investment in the OneWeb satellite constellation (74 employees at the time the money was spunked up). I have been banging on about this for two years now. They launched their satellites from Russia’s Baikonur Cosmodrome in Kazakhstan. Oops, what with Russian sanctions, Russian retaliation 'n all. Chalk another one up to Dominic Cummings, strategic genius.

the wind of change

This week, the Crown Estate sold seabed rights to six offshore wind developments for £879m.

The £879m of option fees are paid to the Crown Estate to secure the rights to lease the seabed in each year that the wind farms are in development. They equate to £110,000 per megawatt per year, compared with £20,000 the last time a leasing round was held in 2010. More than £8bn could be paid to the Crown Estate over 10 years.

When the wind farms begin generating electricity, these option fees stop and developers instead pay 2pc of gross turnover to the Crown Estate as rent.

The Queen gets something called the Sovereign Grant in exchange for surrendering all profits from the Crown Estate  to the government. Every year, the Queen is given an amount of money equivalent to 25% of the Crown Estate's profits. 

The Sovereign Grant for 2020-21 is £85.9 million. That is now due to be boosted by 220m per year.

An increase in the grant to from 15% to 25% was approved by Parliament in March 2017, to help lay for a £369 refurbishment of Buckingham Palace.

I ranted about this earlier this week (see Icons passim). I am astonished that it is not more controversial.

On the day of the sale "Empty shelves: No custard creams for Brits in Belgium" was the lead business story on my BBC News home page

The Crown Estate

 THE MARINE ESTATE

The CEC manage 55% of the foreshore of the UK and almost all the seabed out to the 12 nautical mile territorial limits, and have in addition the vested rights to explore and utilise natural resources of the UK continental shelf areas, which extend to the 200 nautical mile limits. These rights include the sub-soil, minerals, and substrata below the surface of seabed, but exclude the rights to oil, gas and coal. The CEC license the generation of renewable energy on the Continental shelf within the Renewable Energy Zone out to 200 nautical miles under the Energy Act 2004. They lease sites for undersea storage of gas and carbon dioxide under the Energy Act 2008.

That's right, the Queen owns, and can dispose of as she sees fit, all the rights to off shore power generation in UK territorial waters. Tony Blair's government ceded this to the Crown in 2004. 

Offshore Wind Leasing Round 4 anybody?

This is a disgrace.