The Future of Power Generation in Great Britain
Discussion
Condi said:
The Australian problem is nothing like you have portrayed - they have a price cap of $300AU/MWh (£170/MWh), and with the price of coal and gas going up the cap is below the cost of generation, so generators have simply switched off. It's not that they have insufficient generation, it's that the price cap makes it unviable to generate.
In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
Who would have thought that perverse incentives would result in perverse outcomes. In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
Blib said:
So, there are very few advantages to the country that produces the gas?
There are advantages to security of supply, but it doesn't insulate the consumers from the worldwide gas price fluctuations. In an extreme situation the country could theoretically be cut off from the world by imposing export restrictions and thus creating an artificial price here, but that wouldn't incentivise many companies to invest and do business here.
We are already seeing it in the very short term markets that UK gas is incredibly cheap compared with Europe as we have a plentiful supply from LNG, and continental shelf supplies, but prices only detach for a short while and then converge again.
Condi said:
The Australian problem is nothing like you have portrayed - they have a price cap of $300AU/MWh (£170/MWh), and with the price of coal and gas going up the cap is below the cost of generation, so generators have simply switched off. It's not that they have insufficient generation, it's that the price cap makes it unviable to generate.
In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
Market interference obviously doesn't help but are you saying it is purely coincidence that blackouts are happending when the wind drops?In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
irc said:
Market interference obviously doesn't help but are you saying it is purely coincidence that blackouts are happending when the wind drops?
The reason why coal and gas are not generating is that the cost of fossil fuels is too high for them to generate below the price cap. If you had a lot of wind generation then the least efficient coal sets wouldn't be required anyway, as they energy would come from wind, and it is the least efficient ones which will become unprofitable at the price cap first, so the 2 things are somewhat related, but the underlying reason is that the cost of fossil fuels are too high compared with the price cap, not that it's not windy. Equally if coal and gas prices keep going up until even the very efficient sets are not profitable then it can be as windy as it likes, but the coal and gas sets are still not going to dispatch while there is a cap of $300AU/Mwh if it costs more to produce than that.
The problem is the cost of fossil fuels, not the availability of generation.
Edited by Condi on Friday 17th June 13:51
Hereward said:
The sun is shining and the wind is blowing...I see we are currently at 60.5% of demand being covered by Renewables. I assume this must be close to the national record?
Its an increasing common situation. Wind alone has passed 60% of demand at times.The National Grid ESO app lists the zero carbon record (i.e. including nuclear and hydro but not biomass) as 85.2% on 17 August 2020.
Some regions routinely have 100% zero carbon days. South Wales and South England tend to be the areas holding the nation back.
Hill92 said:
Some regions routinely have 100% zero carbon days. South Wales and South England tend to be the areas holding the nation back.
South Wales being home to the largest gas powerstation in Europe,In future perhaps floating turbines will help, traditional turbines aren't suited to the depth and movement of the Bristol channel and Celtic sea.
May be of interest to some, update on HPC construction: https://www.youtube.com/watch?v=j7QLjvc1YY8
Gives a good idea of the scale of the place.
Gives a good idea of the scale of the place.
irc said:
Condi said:
The Australian problem is nothing like you have portrayed - they have a price cap of $300AU/MWh (£170/MWh), and with the price of coal and gas going up the cap is below the cost of generation, so generators have simply switched off. It's not that they have insufficient generation, it's that the price cap makes it unviable to generate.
In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
Market interference obviously doesn't help but are you saying it is purely coincidence that blackouts are happending when the wind drops?In the UK £170/Mwh would not be considered very high at all really, it's probably below the cost of power for the next 12/18 months.
The issue is that governments want a "free market" energy system which encourages competition, and they put rules in place to "protect" consumers, but then they don't like that companies make logical economic decisions for themselves, rather than doing things for the good of the country or the market. You see the same thing here with the huge number of retail businesses which have gone bust - they went bust because the government rules prevented them from charging more than the price cap, even though that was less than the cost of wholesale power. If you force them to operate at a loss they'll close down, simple as that.
Blib said:
Condi said:
Blib said:
But, if we produced our own gas then we wouldn't be at the mercy of other producers?
We have an abundance of it. Surely, it would be cheaper to get it from under our feet thsn to import it?
"We" don't own it - Shell, BP, Total etc own it and they will sell to whoever pays the most, be that here or abroad. It would be cheaper to drill for it here than import it, but only as much as the cost of transporting it to Europe over a longer term. In terms of wholesale price, prices move up and down across the world and we wouldn't disconnect ourselves from the general market movements. We have an abundance of it. Surely, it would be cheaper to get it from under our feet thsn to import it?
The government are looking to give more licenses to drill, and we have plenty of gas left to look for, but that is more for energy security than for cost reasons. As I posted earlier, US gas prices have more than doubled and they are a big exporter, a long way from their export markets. If they are not insulated with their huge (and very cheap to access) gas reserves, then we stand no chance of insulating ourselves from world prices.
NRS said:
The blackouts are linked to flooded coal mines etc earlier in the year. Wind only produces around 10% of energy in Australia, how can it dropping off cause blackouts?
I believe it may be due to the fact that the windpower is not evenly distributed across the country. South Australia has 60% wind and solar. https://reneweconomy.com.au/south-australia-achiev...
Lack of wind isn't the whole but part of it according to the Australian grid operator
"AEMO said the current problems are due to planned and unplanned outages at power stations, an early start to winter, low output from wind and solar farms and planned outages in transmission infrastructure."
https://www.abc.net.au/news/2022-06-18/energy-cris...
As wind and solar capacity increases gas or coal overall become less economical as they have fewer hours to run to cover costs. Wind and solar need near 100% backup from other sources which are still there at night when the wind drops. It stands to reason than having double the capacity will cost more however you cut the cake.
"The minister, a member of the Greens party, added that bringing back coal-first power plants was “painful, but it is a sheer necessity”."
https://notalotofpeopleknowthat.wordpress.com/2022...
Have we got any mothballed coal plants we could start up?
Edited by irc on Monday 20th June 15:41
We're paying EDF to keep coal generation going; apparently doing the same for nuclear is too hard/would have required thinking about, so we're as bad as bloody Scholz.
EDF to keep coal online.
EDF to keep coal online.
hidetheelephants said:
We're paying EDF to keep coal generation going; apparently doing the same for nuclear is too hard/would have required thinking about, so we're as bad as bloody Scholz.
EDF to keep coal online.
Is that why GridWatch shows a constant sort of 1%, i.e. Coal Fired Stations ticking over ready to ramp up if demand goes up and the wind isnt blowing, sun isnt shining ?EDF to keep coal online.
J4CKO said:
hidetheelephants said:
We're paying EDF to keep coal generation going; apparently doing the same for nuclear is too hard/would have required thinking about, so we're as bad as bloody Scholz.
EDF to keep coal online.
Is that why GridWatch shows a constant sort of 1%, i.e. Coal Fired Stations ticking over ready to ramp up if demand goes up and the wind isnt blowing, sun isnt shining ?EDF to keep coal online.
https://terravolt.co.uk/uk-grid-visual-mobile-frie...
Condi said:
There are advantages to security of supply, but it doesn't insulate the consumers from the worldwide gas price fluctuations.
In an extreme situation the country could theoretically be cut off from the world by imposing export restrictions and thus creating an artificial price here, but that wouldn't incentivise many companies to invest and do business here.
We are already seeing it in the very short term markets that UK gas is incredibly cheap compared with Europe as we have a plentiful supply from LNG, and continental shelf supplies, but prices only detach for a short while and then converge again.
Surely this is dependant on whether your country is a net importer or exporter. By having your own supply of gas and being a net exporter you can subsidise the cost of gas locally against the price you are providing it to the international markets. It is not just a question of security but you can also control the worldwide price somewhat by controlling the production (think OPEC for oil) .In an extreme situation the country could theoretically be cut off from the world by imposing export restrictions and thus creating an artificial price here, but that wouldn't incentivise many companies to invest and do business here.
We are already seeing it in the very short term markets that UK gas is incredibly cheap compared with Europe as we have a plentiful supply from LNG, and continental shelf supplies, but prices only detach for a short while and then converge again.
Owning production and storage can insulate customers from "worldwide" price fluctuations as "worldwide" is just a collective term for individual countries and their own supplies. The converging of prices has more to do with companies (and countries) maximising profits - and by convincing fewer countries to use their own resources makes controlling those prices that much easier. There is a lot of money to be made convincing countries not to exploit their own resources.
Jinx said:
The converging of prices has more to do with companies (and countries) maximising profits
Unless you're advocating some state control of prices and extraction then any company will sell to the best buyer, be that here or abroad. In a free market economy then the only difference between gas in one place and gas in another is the cost of transporting it from A to B. Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff