[ta545]

My understanding is most wind was bought at a guarenteed price by the government at the time of construction, so a wind farm producing 1MWh gets paid say £40 regardless of the cost of electricity on the grid - even if marginal cost was £20/MWh

As users are then paying £90/MWh for gas, does the excess £50 go to the government or to the wind far owner?

[tialaramex]

The government. The mechanism is called Contracts for Difference, and as the name implies they work by ensuring the difference between an agreed strike price and the actual price - in either direction is paid

However, notice two further considerations:

1. Such contracts eventually expire. Exactly when varies. But the wind farm is still there, just now the energy price all goes to the operator.

2. Older government subsidies were not CfD. Ten years ago if you built a wind farm you got a direct subsidy. The CfD schemes come into existence from about 2014. They're one of a small number of good ideas the Tories had. They're in line with Tory ideology, but they also actually make sense in the world that actually exists.

[youngtaff]

Even suppliers who sign CFDs can delay the start of the contract - Orsted are doing this for one of their recently commissioned wind farms

[midasuni]

I think the cfds were a Lib Dem idea. Like other good things from the coalition (equal marriage, working people tax cuts etc)

[RobinL]

See here! https://news.ycombinator.com/item?id=33922390