Wind farms paying back through the Contracts for Difference (CfD) scheme due to high power prices could now pay back £25 to each household from this October.

According to new analysis from the Energy and Climate Intelligence Unit (ECIU), the process for these payments reaching bills was previously unclear and the benefits delayed. But a change made by Ofgem in June means that CfD payments can now bring down household bills quicker, starting this October when the new price cap comes in.

Given this change and the continued high wholesale power prices, CfD projects are now predicted to pay back £25 this winter, and around £45 a year to each household from next winter. This is set to continue to grow as more low cost windfarms come online.

“This is a small but very welcome dividend from cheap renewable energy producers, where the prices are now miles cheaper than the spiralling costs of gas,” said John Penrose MP.

“The good news is that, as more giant offshore wind farms plug into the grid over the next few years, this bonus should grow.”

The price cap is now predicted to hit nearly £3,500 in October. According to the ECIU, this means that so called ‘green levies’ – which fund the CfD scheme – will drop to just 2% of the average dual fuel bill.

Jess Ralston, senior analyst at ECIU, said: “With the high gas price pushing up the average energy bill by at least £2,000 this wind power saving is modest, but with gas prices predicted to stay high for many years, we are reaching the turning point where renewables subsidise bills rather than the other way around.”

The most recent CfD auction saw offshore wind farms agree to a fixed electricity price four times cheaper than the current cost of gas power stations. Auction Round Four saw the five offshore wind projects win contracts to secure a strike price of £37.35/MWh.

In July, the ECIU estimated that the CfD contracts awarded in this auction round would save £7 billion on electricity costs under wholesale prices seen in the current crisis.

Earlier in 2022, the Low Carbon Contracts Company estimated that CfD projects would pay back £1.3 billion in the 18 months from Q4 2021. With wholesale prices continuing to rise since then, and expected to stay high for the foreseeable future, the ECIU now estimates they will pay back around £1.5 billion over the same 18 month period to Q1 2023.

If a similar gas crisis were to hit in 2030, when Britain is aiming to have 50GW of offshore wind, there would be a payback of £34 billion a year, the equivalent of £500 a home.