Comment by djhworld
9 hours ago
....that being said, when you see stuff like this page and news articles about cheap renewable power etc, there are A LOT of negative reactions to it (even evidenced by the comments on here!) because for most people in the UK they never really see any direct benefit - energy prices seem to keep going up and a lot of people are on contracts with fixed rates that rise often.
I'm not sure what the solution is, I know that the price of electricty is dictated by gas so maybe decoupling that will help - but that probably has complications with balancing the grid.
The tariff I'm on (Octopus Agile) suits me as I WFH, have an EV and it's just me living in the house, I can move my usage outside of hte peak periods quite easily and I built a website to help me find the cheapest charging periods for my car based on the prices for the next day. The other day my average unit rate was like 2p per/kWh and I dumped like 30kWh into my car lol
Yes - the wholesale price of electricity can sometimes be very low (or negative), particularly when there is a lot of wind. And some tariffs pass that on to consumers. But I don't see how it works at scale.
This is because the wind farms don't get paid the wholesale price. They get paid their guaranteed, index-linked CFD strike price. This means that, for every £1/MWh drop in the wholesale price, they get an exactly matching extra £1/MWh to top them back up to their strike price. They can bid a low price into the market safe in the knowledge they'll get paid their CFD price.
And that top-up has to be paid by somebody: either other bill payers, or the taxpayer.
That wouldn't be so bad if the strike prices were low. But they're not. The recent "Allocation Rounds" guaranteed offshore wind farms in excess of GBP100/MWh, index linked for at least 15 years.
To put it in context, these numbers are higher than the wholesale gas price - even with an uplift for carbon externalities - for all but the worst period of the Ukraine invasion a few years back.
But it gets worse: on top of these extremely high fixed prices for wind, we also have to pay for the installation of tens of billions of pounds (if not more) of new grid connections, because the wind farms are nowhere near the centres of demand. This cost is also added to bills.
It doesn't end there. Readers may be aware that the wind doesn't always blow. Which means we need something that's able to spin up or down on demand. In the UK, that means gas. So we have the ridiculous situation of having to pay the gas plants to sit around doing nothing, just so we can call on them at minimal notice when needed. And remember: there can be long periods with basically zero wind or solar (the famous 'dunkelflaute' phenomenon in winter).
This means we need non-wind capacity pretty much equal to peak winter demand, in order to be safe during the week or so some years when there's no wind.
So we're paying to build and maintain TWO generation systems in parallel.
This is why electricity costs in the UK are on an ever-upwards trajectory: all these 'policy costs' are added to the wholesale price, and are a large and growing component of the _retail_ price that most consumers pay.
Depressingly, 'storage' doesn't fix this. Indeed, it's a fun exercise to calculate how much electrical energy is consumed in the peak of winter in the UK over a one- or two-week period and then figure out how much the necessary battery capacity would cost... or, even more fun, how many Welsh and Scottish valleys we'd need to flood to create the pumped-storage capacity. We're talking tens of trillions of pounds.
I fear the UK has, with the best of intentions, made a mistake of generation-defining proportions with its bet on wind :(
In other words, betting on wind (or sun) where there is little wind (and sun) is not an optimal choice. But folks on HN were telling otherwise. Who might’ve known…