Last week, Energy Secretary Ed Miliband announced the Administrative Strike Prices for the upcoming 7th auction round for the Contracts for Difference subsidy scheme. These represent the maximum prices he is willing to pay for each technology type. Or I should say, the maximum he is willing for consumers to pay, since it is us and not him that does they paying. Not only have the contracts been extended from 15 to 20 years, but the new maximum strike prices, the highest in over a decade, are eye-watering.
This should finally end the claim that renewables are cheap, since even at the first order level, that is the subsidy, they are likely to be higher than the cost of generating electricity using gas. Even for solar which is the cheapest of the lot.
We have suspected for some time that AR7 was going to be expensive. The Government delayed the issue of the methodology while it consulted on various changes to the contracts and budget setting, the outcome of which clearly prioritises volume over value. And we know that with the Clean Power 2030 targets just about all of the projects will need to secure contracts meaning there will be little or no price tension in the auction.
And we also know that turbine makers have increased their prices significantly, driven by a combination of factors: tightening warranties after years of claims hurt their balance sheets, passing though higher raw materials and financing costs and increasing profitability after years of losses, and, more recently, the impact of US tariffs, particularly on steel.
A report by developer Ørsted found that the costs of offshore wind have increased by 50% since 2020. Vestas has increased its average selling price for wind turbines from €0.75m /MW in 2018-2020 to €1.24m /MW in Q1 2025, and increase of 65%. It’s clear from the chart that this is a persistent rising trend, with no quarter since the start of 2021 being close to the average price over the previous three years. It is therefore difficult to justify an assumption that prices are falling or will fall in the near future – the trend shows the exact opposite.
So what are the new Administrative Strike Prices (“ASPs”) and how do they compare with previous years?
The cleared auction prices for the previous auction rounds were:
These are quoted in 2024 money (£2024) since this is the new indexation the Government is now using (from £2012 previously). The new ASPs fort AR7 compared with AR6 are below. There is an additional column showing an estimated 12% uplift which is roughly the value of the contract extension, so in order to compare like with like, this adjusted column puts the AR7 ASP onto an equivalent tenor basis:
When compared with the actual wholesale power price in 2024 (average of the N2EX day ahead prices), it can be seen that solar and onshore wind priced slightly below gas-based electricity generation while offshore wind was 13% higher. That apparently was too low for some, as Ørsted later cancelled the flagship Hornsea 4 project. The new ASPs are, except for solar, significantly higher in AR7 than AR6, but all of them are higher than the gas-based wholesale price of electricity last year.
“One of my major battles in the Department was getting them to work out the true cost of renewables. Ed’s scrapped that work. The entire government machine and surrounding ‘independent’ bodies are working off of completely bogus numbers that don’t reflect the true costs. And we will all pay the price,”
– Claire Coutinho, Shadow Energy Secretary
Of course for a proper price comparison it is necessary to add the full system costs to the renewables, that is the costs of backup for when it’s not windy or sunny, the costs of connections which are higher for renewables given their lower energy density (more wires are needed for the same MW), the costs of curtailment where windfarms have been built behind grid constraints so their electricity cannot be used, and the costs of real time balancing, which are increased by the real time intermittency of wind and solar – gusts of wind and clouds create real time output variations.
The offshore wind prices are also significantly higher than the levelised cost assumptions made by the Climate Change Committee in its 7th Carbon Budget.
Surely this is proof renewables are not cheap
If these ASPs are any indicator of where the auctions will clear, and we have to believe they are, otherwise why would they have increased, then it is likely that the cleared strike prices will be higher than in AR6, which extends the rising trend since the low of AR4.
AR4 is widely thought to have been unrealistically low – developers re-bid their maximum volumes in AR6 after AR5 failed for offshore wind attracting no bids at all, and also petitioned the government for additional economics in the form of tax breaks.
But since AR6 prices more or less at or above the gas-based wholesale price of electricity, anything higher will fully undermine any arguments that renewables are cheap. If the first order cost – the subsidy – is above the price of generating electricity with gas (after the addition of carbon costs) then clearly the all-in system costs including backup, connections, curtailment and balancing will be far higher.
The Conservatives and Reform smell blood in the water. How can Ed Miliband possibly sign 20-year contracts with headline strikes above the current wholesale price? How can he continue to claim renewables are cheap? And how can he honour Labour’s promise of a £300 reduction in bills when such a subsidy hike would see bills increase?
However if he does not sign these contracts he will be unable to deliver the renewable capacity increases required for his Clean Power 2030 Plan.
“We estimate that the net costs of Net Zero will be around 0.2% of UK GDP per year on average in our pathway, with investment upfront leading to net savings during the Seventh Carbon Budget period,”
– Climate Change Committee
This may well be make or break for Miliband. Keir Starmer is showing signs of concern over energy costs, and when the £300 savings will emerge since this was such a high profile campaign promise. Yet it seems to have escaped everyone’s notice that the Climate Change Committee has contradicted these claims saying there will likely be no net zero savings until the 7th carbon budget period in 2038-2042, ie not in 2030 as Miliband claims. Starmer may well step in a prevent AR7 clearing at the expected high prices on the basis that it will make the £300 promise impossible to deliver.
This would likely cost Miliband his job. It’s hard to see how he could remain in post if he has to choose between a failed auction or much higher strike prices, and it’s hard to see how Starmer can avoid sacking him if he pushes electricity prices up rather than down.
The omens are not good. Turbine prices are clearly higher, as are financing costs. And industry gossip was suggesting even higher prices, above the offshore wind ASP, which may well exclude some projects that might have bid if the ASP was set higher.
Miliband has staked everything on renewables being cheap. But with subsidy levels increasing and with a good chance of being materially above the cost of gas-based generation for wind if not solar, it will be hard to defend that message. Perhaps a failure to close AR7 at a reasonable price will force Starmer to remove his Energy Secretary, despite his popularity with Labour members, and install a more moderate replacement who will re-set energy policy based on evidence rather than ideology.
We can but hope.
Can we assume the gas price will remain constant?
The gas price is falling. By the end of this year new LNG will have fully replaced Russian gas. By the end of the decade the global market will be long gas
Last July the price was US$ 2 /BTU and this July US$3.2 /BTU. You cannot compare the strike price of wind and solar (capex and operational costs) against the market price of gas (just operational costs). With electric demands likely to double over the next 10 years you have to compare like with like, ie also include the cost of new gas stations. Even a strike 13p/KW hour is well below average electricity prices of about 30p/KWhour that most people are paying.
The $2/MMBtu price was the result of Biden imposing delays on LNG liquefaction and export facilities so there was a surplus of gas and depressed prices. The current UK price of 78p/therm is about $10.50/MMBtu, leaving an ample margin for liquefaction and shipping and regas against the $3.20/MMBtu quote. NG futures prices are quoted out 12 years ahead and peak only slightly above $4/MMBtu, still leaving ample margins against NBP futures. The US domestic market is expected to be in better balance, but with no shortage of export supply which has been increasing the arbitrage margin.
Relying on gas is possibly the most short sited idiocy since those who resisted Churchill’s transition of the Navy to oil.
Europe doesn’t have any gas supply. We’re also at the end of any pipelines that supply Europe. Shipping of LNG is highly unstable, and security pundits warn of war (have you seen LNG explosions?)
In the event we had a Reform govt after 2029 is there anything to stop them copying the attack on North Sea production by bringing in windfall taxes on the profits of windfarms?
Yes, there is a make-whole clause in the contract to compensate for any change in law
It is simply extraordinary how deliberate obfuscation, obduracy and denial can steamroller irrefutable fact for so long and at such cost to the nation.
Surely the Treasury would have had to sign off on this and thus I would say Reeves and by default Starmer stands square behind it. The mission headline is creating a green energy superpower which this defacto does in their eyes but it wont cut bills for sure but none of these assets will be built much before 2030 if at all.
I would also speculate that they will now further rig the price of gas although with us rejoining the EU carbon trading scheme at some point in the future is going to increase the gas cost as well as conveniently generating more revenue for the exchequer.
Coutinho has found her voice and is coming at it from a far more sensible angle compared to maverick Tice but given she couldn’t even get either of her two colleagues to turn up at the last weeks DESNZ select committee meeting to put in some challenges im not hopeful they are going to get very far.
No, it has nothing to do with HMT because the costs are recovered through bills, not taxes
Thats still a burden on the economy and thus has potential to impact consumer spending and the vaunted growth story so I just can’t see HMT not being involved.
I think it does go before Cabinet. But Miliband seems to have largely had his own way on most energy policy issues so far. I struggle to think of any minister who could put up convincing arguments on alternative energy policies: Miliband’s latest Parliamentary statement in support of net zero was tone deaf, but completely supported by Labour MPs. Really only Esther McVey and Lee Anderson and Andrew Bowie (standing in for Claire Coutinho) seriously questioned it.
Isn’t the reason “by the end of the decade the global market will be long gas” that we will have plenty of renewables to displace the gas?
You’re the expert and I’m not, but could we have predicted in 2019 the trajectory of gas prices to 2024? If not, can we now predict the same to 2030?
Please would you explain what the Administrative Strike Prices are. For example are they the minimum price the producers will get for the wind energy produced or are they the price they will get for every MWh they generate irrespective of the pool price or is it something else
They are the maximum prices at which the auction can clear, providing a cap on the actual strike price
I need to rephrase the question. Will a company who say bids £90 MWh receive £90 for all energy produced or during peak demand when the spot price is say £120 MWH will they receive more?
What they receive is determined by the difference between the Day Ahead Market prices (defined as to how it is calculated in the contract and known as Intermittent Market Reference Price – IMRP) for each hour and their strike price. Where IMRP is negative they will get no compensation at all, and thus have an incentive to self-curtail. Where the price is below their strike price they will be topped up to the strike price, and where it is above they pay back the difference. The LCCC that administers the scheme tot up the payments daily for each CFD, and you can download and examine them for every CFD in operation since they started in June 2016. There is a delay of a few days while metered output data are collected, and minor historical adjustments when metered outputs are revised subsequently (as the contracts adjust for some transmission losses that can only be calculated once more meter readings are collected).
CFD holders are in fact free to sell on any basis they choose, but if they sell either directly via the Day Ahead market or on terms that use those prices then the net subsidy payment will ensure they effectively get the CFD strike price without any risk. Most choose to do so, although company holding structures may show abnormal pricing for the actual company holding the CFD, with contracts with holding companies within the business: what matters are the contract prices for sales outside the group to third parties. The result is the only time they care about market prices is if they are negative – or if their CFD bid was at too low a strike price, and they have yet to actually commence their CFD as they recoup higher revenue on average by selling at market prices instead. For AR7 the option to delay the commencement of the CFD has been largely removed, with the LCCC now able to decide when the wind farm is effectively complete and commercially operational.
Thank you both for taking the time to provide these explanations. I now understand how both the bidding and day to day charging works
Different wind projects make different bids during the auction.. But the Low Carbon Company and government decides how much budget for estimated subsidies that consumers will have to make available, look at the bids and calculates what the “strike price” needs to be to stay within the budget constraints. Then everyone who bid lower or the same as the “strike price” will get a contract for the “strike price” which is the same for all companies bidding the same thing e.g. offshore wind to be installed in a particular year. That is irrespective of what these project initially bid.
So lets assume the auction “strike price” for the CfD AR7 offshore wind ends up as £91/MWh, announced in December 2025. £91/MWh is what the company bidding £90/MWh will now get. If it had bid £92/MWh it would miss the cut and not get a contract at all.
The £91/MWh is uplifted each year by CPI inflation. Lets assume the uplifted sum is £98/MW by 2028 and all the offshore wind farms bidding in the auction go live in that year.
This bidder will initially be paid the wholesale price for a particular period by the NESO. Lets say on two separate hours in 2028 the average price for wind supplied is £70 and £120. In the £70 hour the wind farm will be given another £28/MWh by the government Low Carbon Company (which recovers the money from consumer electricity bills through the energy suppliers), so ends up with £98/MWh. But in the £120 hour the wind farm will have to repay £22/MWh to the Low Carbon Company and consumers so still ends up with £98.
In other words, the CfD strike price uplifted by CPI inflation of £98/MWh is actually a fixed price contract, though a variable amount of money comes from the NESO and then the Low Carbon Company and the wind farm make payments either way to ensure the fixed price is always received by the wind farm.
There are a couple of twists I haven’t included, so as not to make the explanation more complicated than it already is. But if you take the trouble to understand the above, then that will tell you what happens nearly all the time.
NESO are only involved in the Balancing Mechanism and ancillary services, and in the case of wind farms that is almost exclusively for curtailment payments. Normal sales by wind farms are made either on framework contracts with large consumers or retailers, or via the Day Ahead market either via the auctions that set IMRP where Nordpool and EPEX Spot stand as the counterparty to cleared bids and offers, or via direct third party spot sales often facilitated by brokers. The purchasers are typically retailers or gas generators who use cheap wind offers to meet previous sales made on a forward basis to retailers as hedges demanded by the OFGEM cap. Sometimes they may include traders exporting via interconnectors.
Framework contracts allow wind farms to nominate their expected production close to real time e.g. day ahead, rather than committing to provide a fixed supply, buying in from elsewhere if they are unable to generate sufficiently (which are the normal terms for forward sales by nuclear, gas and biomass). In exchange, the price basis for those with CFDs is usually IMRP based (wind farms on ROCs may opt for a different basis). That allows both purchasers and sellers to adjust positions without risk of losses against market alternatives: e.g. a factory on shutdown can resell power it doesn’t need at the price it is paying for it under the framework contract.
Good information. Thank you.
Thank you both for taking the time to provide these explanations. I now understand how both the bidding and day to day charging works
There is a plan for long duration storage with 8 pumped storage schemes in Scotland and 1 in Wales providing some 5 GW of capacity to the 2.8 GW we have at present. Compare the operational costs of Dinorwig at 1.8 p/KW hour with the operational costs of gas.
The main operational cost for pumped storage is the round trip loss, which averages just under 25% of the cost of electricity purchased for pumping. Of course, margins between purchases and sales have to pay for the costs of financing each scheme and for the rather lower costs of maintenance, and the operations and management teams.
Kathryn is picking worst case on worst case to try to make a case against wind and solar. But most of the decisions are arbitrary – they may convince the anti-green brigade, but not anyone looking at the big picture. The main issues are:-
1). The fact turbine prices went up in an era when steel and copper prices were increasing is not a guarantee they will continue to go up now such commodity prices have reduced. A much more likely outcome is that turbine prices will revert to the mean in constant currency.
2) Kathryn picks 2024 wholesale prices because she knows these are the lowest around. However, the average prices for the 12 months July 2024 through the end of June 2024 are considerably higher. They average £83/MWh from https://electricinsights.co.uk/#/dashboard?period=1-year&start=2024-07-01&&_k=yl9mbo. Allow maybe 2% for 7 months inflation (from an “average 2024” price, and the wholesale price is still over £80/MWh.
3) Kathryn is claiming “proof” by assuming that solar and onshore and offshore wind AR7 CfD strike prices are going to hit the bid cap (“administrative price cap”) ceiling. Of course there is no such certainty, and the most likely outcome is a 20% discount on the bid cap ceiling. One good “political” reason for this is that governments like to have a good tale to tell on how much the competitive CfD auction process for each successive CfD auction has saved on the bid cap price. And there is zero desire to have yet another failed auction. The net of all this is that the bid cap prices are likely to be set higher than lower.
4) It is hardly valid to claim renewables are more expensive just because the contract terms have been extended to 20 years instead of 15 years, with an estimated saving of 12%.
The reason is that there is no means of calculating the wind farm revenue for years 16 through 20 in the absence of a CfD contract. The reason CfD contracts are efficient in reducing wind and solar costs is mainly the revenue certainty they provide.
5) Kathryn’s argument for a 12% uplift on AR7 prices contains the seeds of its own destruction. Let us assume it is true and see what happens. If N is the new AR7 price and W is the wholesale price or power in years 16 through 20, then she is claiming that the revenue under the old CfD 15 year contract of (N / 0.88) x 15 + W x 5 is less than N x 20, which multiplies out to 17N + 5W < 20N.
This leads to the condition that 5W < 3N, In other words, ignoring the effect of revenue certainty, for the new contract to be worthwhile in real terms, the wholesale price in years 16 to 20 must be less than 60% of the strike price for the CfD contract.
And, of course, it doesn't even take account of the fact that the increased revenue in years 16 through 20 has to be discounted by a factor to take account of the fact revenue in 15 years is worth considerably less than revenue earned now, even though all revenue is uplifted by CPI inflation each year. If you factor that in, you get a significantly lower wholesale price for 15 years in the future.
This would surely be good news – it means the 2030 Clean Power plan would succeed in meaningfully bringing down wholesale prices, or at least not increasing it. That is the likely the opposite of what Kathryn is hoping would happen. But it follows inexorably from her assumption that it is a fair comparison to uplift AR7 CFD prices by 12%.
Of course the obvious way out of this dilemma is that Kathryn is wrong, and that it is invalid to pretend that the estimated cost reductions in AR7 strike prices are due to anything more than the increase in the duration of revenue certainty.
I rest my case.
We should all revisit this in December, when the results of the AR7 CfD auction are known.
In the meantime, just remember that there is a lot of cherry picking going on in the article above, plus assumptions that seem to lead to their own destruction once you work the numbers through.
One big picture aspect is that the big prices obtained in AR7 will not reflect the true cost to the consumer because of the need to fund storage and enhanced network stability kit to maintain frequency a high levels of usage of intermittent energy sources. These storage requirements are massive as they have to cope with northern Europe wind droughts. There have been three since winter 2010.
• Big Freeze (Dec 5, 2010 start)
• 2016–17 calm (Dec 5, 2016 start)
• 2021 calm (Sep 1, 2021 start)
The Big Freeze of winter 2010/11 is considered to be a worst-case scenario. My own research of Dukes data shows that the winter 2010/11 had far less wind that 2016/17. The average power factors for 42 days commencing 5 December are circa 0.063 and 0.107 respectively. This compares with the long term average offshore wind factor of circa 0.4
The simulations show that less than 280 GWh of UK battery storage is required to meet most short duration time shifting situations, and it is no longer expensive. In addition you need despatchable backup for the longer duration gaps in wind and solar.
Batteries first.
In the December 2024 PowerChina auction for 16 GWh of BESS capacity, the average bid price was (the equivalent of) $66/kWh. So 280 GWh would be $18.5bn, or £14bn. This is one third of the current capital cost of the new Hinkley Point C nuclear plant, for enough storage for 87 hours of its output. Yes this is real money, but hardly unaffordable.
In terms of the long duration gaps, the NESO has recently contracted all the existing UK CCGT/OCGT gas plants in a T-4 capacity contract (meaning for 2029) for £60-kW year. However, the simulations seem to be predicting another 5 GW would be needed for the 2030 Clean Power grid. The capacity contracts for such new plants could likely be at the same rate, but would need to be for 15 years to be worthwhile. So the total 32 GW of gas plants would be costing around £2bn per year – also real money but not a show stopper.
This solution would cope with lulls in wind power of any duration, including those you listed. After a certain time, the gas plants would be migrated to green hydrogen fuel, produced by electrolysis from surplus wind and solar power, and stored in depleted oil and gas wells of a suitable depth to store 300 atmospheres of hydrogen (so the pressure of the surrounding rock must exceed this at the depth of the storage).
Are you sure about the lull of 5 December 2010 for 42 days? According to https://electricinsights.co.uk/#/dashboard?period=1-month&start=2010-12-04&&_k=y31hsi the average wind generation for the first month was more than half of the average for the whole of the 12 months starting that day. Then the next couple of weeks were above the annual average. It doesn’t look like a worst case to me. There was 5.2 GW of wind installed, of which 1.3 GW was offshore wind, according to the Google AI. So the 1.2 GW average output in the first month is a capacity factor of 22%, rising thereafter to around 40% for the next two weeks.
The December 5th 2016 wind lull seems to have been for just a day – most of the rest of December was above average.
I’m not saying you don’t get such periods, just that December 2010 and December 2021 weren’t one of them. The September 1st 2021 lull for 3 weeks is surely a better example though.
William Thank you for your reply; I wish to respond to your comment about the scale of the wind drought in 2010. I used daily load factor data from Dukes extracted using Chat GPT. The analysis is describe in the link below which also provides a link to the complete ChatGPT dialogue. I accept that Chat GPT could have made a pigs ear of the calculation of the load factors. https://docs.google.com/document/d/1nvEfwOm_3GmL_G_fs3P3-210kLRy4d6kCIPBtSEo3CU/edit?usp=sharing
In terms of numbers I list the average load factors which I manually calculated
Average Load Factor Winter 2010 Winter 2016
November 0.240 0.328
December to January 0.093 0.125
42 day drought 5/12 0.063 0.104
February 0.253 0.287
o
Alan,
It was me, Peter Davies made the comment, but it didn’t post first time, and I may have forgotten to amend the Name field by the third time I was trying it. The web site is supposed to retain the last name posted, but that doesn’t seem to work!
This rwads as though the reply is actually from Peter Davies on a hijacked ID. I recognise numbers he has previously cited. As I have previously pointed out to him Zenobe are investing in three major battery parks in Scotland at a cost of over £300/MWh. If they could do it for $66/MWh they would have cancelled those projects, so I doubt the basis of his claim which is unlikely to be full cost, and might just be an artifact of bankrupt stock clearance following disappointing demand from the EV sector. Lithium prices appear to be rebounding, having moved up from 8.50/kg to over $10/kg in a month.
We wait to see what happens in the next capacity market auction, but my assessment is that the volume to be procured will turn out to be too low, and the requirement for any new generation to be capable of net zero compliance via CCS or hydrogen will mean that no new capacity will be procured, while the lust of soon to be retired plant grows, and will create a crunch and require much higher prices to rectify.
I don’t think anyone is proposing to store hydrogen at 300bar in geological formations. Every project I have studied uses or plans much lower pressures for a variety of reasons. Stublach is planning on an operating range between 30 and 80 bar, whereas their methane storage goes to 100bar in the same salt formation. This matters because it multiplies the volume of storage that must be supplied. Let’s leave aside that hydrogen projects are dropping like flies because they are hopelessly uneconomic, and no-one trusts government to maintain adequate subsidies at consumer expense.
IDAU said “This reads as though the reply is actually from Peter Davies on a hijacked ID. I recognize numbers he has previously cited.”
Absolutely correct – except the ID wasn’t hijacked. I think the server is getting confused. It is supposed to be filling in my ID, not William Birch’s. Is there someone of that name who posts here?
It took me more than one attempt to post, as the firewalls didn’t like something about my configuration. Likely on the second or third attempt I wasn’t that careful about making sure I overwrote the wrong name and email. Sorry about that.
Switching browsers seems to fix the problem.
IDAU said “As I have previously pointed out to him Zenobe are investing in three major battery parks in Scotland at a cost of over £300/MWh. If they could do it for $66/MWh they would have cancelled those projects, so I doubt the basis of his claim which is unlikely to be full cost”
The PowerChina bids were real and for complete BESS systems, but in China. My assumption is we will see similar costs here by 2030 – 5 years out. It does take time for such pricing to percolate through.
IDAU said ” don’t think anyone is proposing to store hydrogen at 300bar in geological formations.”
You are probably right. The UK Rough gas storage used to operate at 250 atmospheres, but they are reluctant to take it so high now. However there are depleted gas wells expected to become hydrogen stores, potentially at over 200 atmospheres. See https://www.sciencedirect.com/science/article/pii/S001623612203856X?via%3Dihub
However, the exact pressure isn’t that important, even though you need higher volume at lower pressure. The UK offshore is swimming with depleted gas wells, and the cost of retrofitting them to store hydrogen isn’t that high. Most of them have residual methane cushion gas which could potentially cause a problem with hydrogen uses requiring pure hydrogen. However, for CCGT/OCGT grid backup the exact mix of hydrogen and methane is not likely to be a big issue.
IDAU said “hydrogen projects are dropping like flies.”
Some are dropping out (e.g. a couple from Fortescue recently). But, as you will be aware, there are a huge number of flies in the world and likewise a large number of hydrogen projects which are not dropping out. Yes government subsidies are required to pass through the Valley of Death to mass market economies of scale, but it is going to happen before too long. New technologies always need subsidies to get them to economy of scale.
I don’t think you should count the US hydrogen projects dropping out. This is just due to Trump political pressure rather than any change of basic economics.
I think you’ll find you are the one cherry-picking data to support your own narrative.
1) Turbine prices increases are not only driven by raw materials costs, they are driven by financing costs, tigher warranties and a desire for higher profitability. OEMs have said so clearly and it is widely believed that these price increases will be maintained.
2) I used 2024 because it is the most recent full year. If anything, prices are expected to fall (and the forward curve is downward sloping). By the end of this year all Russian gas will have been replaced by new LNG and by the end of the decade the global market will be long gas.
3) Since AR7 is explicitly volume maximising tather than cost reducing, the discounts to the ASPs are likely to be smaller. The lack of price tension in this auction would tend to suggest prices will be closer to the ASP than in the past. In any case, why increase the ASP if you don’t think the strikes will increase?
4) I did not say 20-year CfDs make wind more expensive. I said that to compare apples to apples with AR6 (15 years), we need to adjust for duration. That is methodologically correct.
5) Your financial logic is flawed. What you’re actually showing is that the value of the extra five years depends on post-CfD wholesale prices being low, which contradicts the “wind is cheap” narrative. Investors want 20-year contracts precisely because they don’t trust the merchant tail to be strong enough. That doesn’t support your point, it supports mine.
Of course we will wait until the results are out, but I think you have completely missed the point. Turbine cost increases have already shown duration and the fundamentals around OEM profitability indicate they are here to stay. We KNOW this auction lacks price tension, so past discounts of the strive vs ASP are unlikely to hold, and higher ASPs in themselves strongly suggest higher cleared prices
KP said ” Turbine prices increases are not only driven by raw materials costs, they are driven by financing costs, tigher warranties and a desire for higher profitability.”
Financing costs will be a lot less for a turbine than for a wind farm, because the turbine maker will presumably be making all the components for one turbine at roughly the same time, assembling it, delivering it then getting paid for it – all within a window of months. So interest would not be a major factor in the cost as it is likely to apply for only a few months.
But for the wind farm as a whole a lot of preparators costs are required up front – such as contracts to make the foundations, likely in a batch up front. Foundations are then installed well before the turbines are delivered. And even once a turbine is delivered, the wind farm may go through testing for quite a while. This could involve a few years of interest payments.
KP said ” I used 2024 because it is the most recent full year. ”
There is nothing magic about calendar years. The most recent 12 calendar months is surely a much better guide.
KP said “If anything, prices are expected to fall (and the forward curve is downward sloping).
This isn’t being reflected in average wholesale prices for full year 2024 vs the 12 months July 2024 through June 2025. Wholesale prices are still mainly set by natural gas prices. The more the EU squeezes Russian pipeline gas out of EU countries, the higher TTF European gas prices are likely to go.
KP said “3) Since AR7 is explicitly volume maximising rather than cost reducing, the discounts to the ASPs are likely to be smaller. ”
This is surely just a matter of opinion. If the government does some sort of risk analysis of success (which they didn’t on AR5), then you would expect a similar ASP discount to normal ie. a minimum of 20%.
One of us is going to qualify for bragging rights on this in December 2025 or whenever the result is announced.
KP said “I did not say 20-year CfDs make wind more expensive. I said that to compare apples to apples with AR6 (15 years), we need to adjust for duration.
You have never adjusted CfD prices downwards for duration just because ROCs were 20 years and CfDs only 15 years. So for consistency of methodology you shouldn’t do it for a change in duration in CfD contracts either.
In practice, there have been a number of tweaks to CfD contracts along the way to AR7 – all designed to ultimately reduce costs for consumers. These include:-
– No ability to bid negative
– No payment when prices go negative
– No ability to sell wind farm output at merchant prices and defer the CfD contract start, if merchant prices happen to be higher than the CfD strike price.
– Projects will now be allowed to bid even if they don’t have all the necessary regulatory permissions yet. Previously they could not.
And the legal ruling that existing wind farms can’s sue if another wind farm “steals some of their wind”.
Surely the key thing is the costs consumers pay – that is what it is all about. And there isn’t much doubt will lower consumer costs for at least 15 years. Personally I have doubts the reduction will be as much as 12%, because of the logic in my comment above.
KP said “Your financial logic is flawed. What you’re actually showing is that the value of the extra five years depends on post-CfD wholesale prices being low, which contradicts the “wind is cheap” narrative. ”
I have some sympathy for you on this. However, if wholesale prices really are going to be that low in 15 years time, then consumers bills will be that much lower than now – because the wind costs won’t change between then and now. So the government of the time will be able to sell that they have brought bills down.
KP said “Turbine cost increases have already shown duration.”
Over the medium term, larger turbines have always brought down total project costs, because the balance of system costs is then proportionately lower. The trend to larger turbines has continued steadily. AR3 projects initially expected to install with no bigger than 12 MW turbines, but now we are at 16 MW. Again, it is consumer bills which matter, not turbine prices, and it is consumer bills which is your major complaint in this article.
KP said “We KNOW this auction lacks price tension, so past discounts of the [strike price?] vs ASP are unlikely to hold”
The auction is also highly competitive. Compare the zero volume in AR5 and low volume in AR6 with the huge increase in seabed licenses a few years ago. These projects must be coming up to bid time now. All these projects are not only going to want to bid, but also to recover the costs spent so far. So they are more likely to go for reasonable profitability and hope the strike price ends up considerably higher than their bid because of other, higher, bids, than to bid high and risk being shut out.
At a guess I would assume even if Miliband sets budgets for 11 GW of offshore wind at a reasonable price, far more than that (150 to 200%) will be bidding. That is surely a consequence of being allowed to bid before accumulating all the necessary regulatory permissions.
With the high financing costs of wind farms, we have to ask if it were better to get smaller turbines manufactured and the installed individually, such that dead time between purchase and full operation is reduced. Isn’t one of the major problems with wind farms is that we are paying for years of financing, when there is nothing there to produce power?……..What is the financing cost of all that income that the treasury has generated through leases on crown property, that ends up on our electricity bills………paying for land that this country owns, paying the finance cost of that land as well, then put it through the National Grid wringer to get even more costs added into the system, with every step (added cost) having profit margin added every step of the way. Power generator, National Grid, Utility company.
It’s as if the government don’t understand how compounding of costs occurs in supply chains, such that everyone, every vested interest gets their ………10% or 20% or 30%, and the price of goods doubles.
Why do people want to fly direct between regional airports, direct to their destination……..cost and time. Does any government do efficiency?……….Doesn’t look like it!
I guess if we don’t have a system where each farmer is automatically allowed to site one wind turbine within a certain size range, with a minimum distance constraint from local housing, it’s not surprising that planning and consent takes a fortune to do, plus the spacing of turbines to stop wind shadow effects.
Just think, from all the seabed leases, the government is enabling several companies in the supply chain to take profit from the cost of those leases.
A farmer wouldn’t have to pay for their own land, just the turbine and its installation costs.
Of course, if a farmer rents their land to a utility company, it’s no different to seabed leases. Can’t we get some costs out of the system, instead of building more in?……..more costs at each step, and compounding of profit, it’s how things get relatively more expensive, not cheaper.
The elephant in the room is that, howsoever and whysoever the CFD price cap is escalating, it is nonetheless for a technology which features 65% downtime and requires 100% duplication and back-up from reliable sources. Nobody would build this voluntariily any more than they would buy a car that ran less than half the time and requiring a taxi on tickover at the bottom of the drive.
The elephant in the room is that, howsoever and whysoever the CFD price cap is escalating, it is nonetheless for a technology which features 65% random downtime and requires 100% duplication and back-up from reliable sources. Nobody would build this voluntariily any more than they would buy a car that ran less than half the time and required a taxi on tickover at the bottom of the drive.
None of this is true.
The capacity factor of new UK offshore wind is likely to average around 55%, so the “downtime” is less than 45%. That means it will be generating a least a reasonable fraction of its nameplate capacity much of the time. The Dogger Bank windfarms going live soon will likely have a capacity factor averaging 60%, according to the Global Wind Atlas at https://globalwindatlas.info/en/.
Further, you don’t need 100% capacity backup for a few reasons.
1) You only need as much despatchable generation as is required to match the inflexible load peak hour demand.
2) Some loads, such as EAFs (electric arc furnaces) don’t need any backup power at all – they can simply schedule a batch for a time when there will be ample wind and solar to complete the batch.
3) Because there will be up to 50 GW/280 GWh of grid batteries, you can start backup generation in advance of peak hour and before the output is required to meet actual demand, to ensure the batteries are fully charged for peak hour. When wind and solar output is low for an extended period, peak hour demand is then satisfied from the combination of batteries and despatchable generation.
Likely, with sufficient batteries, only 40 GW of despatchable CCGT generation would be needed to meet a 50 GW inflexible demand peak.
RG said “Nobody would build this voluntarily any more than they would buy a car that ran less than half the time and required a taxi on tick over at the bottom of the drive.”
If renewables + batteries + despatchable CCGT are the cheapest solution (including likely future carbon costs for fossil fuel generation) to reliably meet UK variable demand, then that is surely the way to go.
Strange the DESNZ do not agree with you. Their capacity factor assumptions have historically been described by them as being over optimistic in order to prevent any accidental overspend of CFD budgets. For AR6, the assumptions were 62% for offshore wind, 56% for floating wind and 45% for onshore wind. The assumptions have been heavily pruned for AR7, at 49% for offshore, 48% for floating and 36% for onshore.
Dogger Bank A now has 3 operational BMUs. I see no evidence that they are outperforming other nearby wind farms. Perhaps they will in stormy weather, as they are supposed to keep generating in winds of up to 30m/sec, compared with 25-27m/sec for earlier ones. KNMI data suggest such wind speeds only occur a tiny percentage of the time
https://www.knmi.nl/research/observations-data-technology/projects/knw-atlas
There are several factors that may account for the change. Wind theft is now an increasing issue, and likely contributed to the decision to cancel Hornsea 4. Global stilling is also a risk factor. Q1 wind output was almost 10TWh lower than in 2024. There have been repeated messages that we are running out of space in the North Sea and that we will be forced to opt for much more costly floating wind in other areas. Certainly the Crown Estate has gone out of its way, including chipping in a hidden subsidy by offering to take a stake in floating wind, and ensuring the ASP is at a much higher level. Perhaps DESNZ no longer care about subsidy budgets.
There is alot of Hopium about the degree to which demand can be flexed. Last winter the peak contribution from DFS was less than 200MW. If you expect EAFs to operate only on windy days you lack a basic understanding of economics. We would end up saving their entire demand because they would locate elsewhere.
IDAU said “Strange the DESNZ do not agree with you. Their capacity factor assumptions have historically been described by them as being over optimistic in order to prevent any accidental overspend of CFD budgets.”
At one point the CfD budget took a bloodbath when the DESNZ predecessor grossly underestimated the capacity factor of a large offshore wind farm.
I go by the capacity factors on the Global Wind Atlas.
IDAU “For AR6, the assumptions were 62% for offshore wind, 56% for floating wind and 45% for onshore wind. The assumptions have been heavily pruned for AR7, at 49% for offshore, 48% for floating and 36% for onshore.”
I would have thought floating offshore wind should always be bigger than bottom fixed offshore wind. Or there is no point in incurring extra expense at the moment for floating. And 45% is far too high for UK onshore wind in any location other than Remote Island Wind on the Shetlands maybe.
Which ever of the bipolar cycles DESNZ is in, the AR6 projects are not operational yet, so DESNZ has no evidence from AR6 on which to based AR7 capacity factors. So you can’t really trust DESNZ figures which clearly have a large political content.
That is why it makes sense to use the Global Wind Atlas figures.
IDAU said “Dogger Bank A now has 3 operational BMUs.”
Last time I looked at Dogger Bank A it clearly wasn’t properly operational and there were no lessons to be learned from it until the BMUs are fully populated with turbines. The BMRS capacity figures aren’t adjusted frequently enough to tell you the actual capacity of turbines installed until then, so it would be impossible to calculate CFs.
IDAU said “ey are supposed to keep generating in winds of up to 30m/sec, compared with 25-27m/sec for earlier ones. KNMI data suggest such wind speeds only occur a tiny percentage of the time”
I agree. Besides, it is irrelevant. Because if winds are strong enough in one local area to cause turbines to be shut down, everywhere else there is going to be a huge glut of wind nationally.
IDAU said “Wind theft is now an increasing issue, and likely contributed to the decision to cancel Hornsea 4. ” I doubt it. The effect is pretty small in most cases – a few percent. And typically only kicks in for specific wind directions (which could still be the strongest vector on the wind rose, of course)
IDAU said “Global stilling is also a risk factor. Q1 wind output was almost 10TWh lower than in 2024.”
That is surely just the natural variability of weather. If the average is going to change significantly, this will happen over decades, not 12 months. And likely it would just result in the latitude of the strongest winds changing a little. The mechanism for the stronger offshore winds is usually associated with momentum of rising air at the equator, then descending further north and south carrying most of the same speed as at the equator, which results in wind blowing faster than the earth’s rotation, but in the same direction as the earth’s rotation.
IDAU said “There have been repeated messages that we are running out of space in the North Sea.”
I assume you mean space where the depth allows bottom fixed offshore wind to be installed.
By far the best wind is north of Scotland, ideally north west of Scotland, according to the Global Wind Atlas.
IDAU said ” If you expect EAFs to operate only on windy days you lack a basic understanding of economics. ”
Since most days are windy for long enough I doubt that I misunderstand the economics. A simple model for such processes is that output materials costs are 1/3 capital costs, 1/3 power costs, and 1/3 input materials costs. If you can halve power prices by operating only 70% of the time (because solar will help out too and correlates negatively with UK wind), then you should be quids in.
IDAU said “Last winter the peak contribution from DFS was less than 200MW.”
Sure, but the whole demand response and V2G shooting match hasn’t really got going yet. If you look at the Octopus web site info on V2G for instance, you can only enrol if you have either a Nissan Leaf variant (but not mine) and a V2G charger that isn’t made any more, or a new V2G charger that has only been tested with one not very popular brand and model of BEV (not Tesla). Octopus promise to test the new charger with many other BEVs, but it is taking them quite a while.
Most of the domestic use for demand response will be for BEV smart charging or for heat pumps with either batteries (what I am planning) or thermal storage (not really commercially available yet).
In other words domestic demand response will be huge when it comes, but will take a while. Industrial demand response is likely to take off sooner. In the US, pool heaters are a big thing, of course, but not here!
IDAU said “We would end up saving their [EAFs] entire demand because they would locate elsewhere.”
This is highly unlikely. Almost every country regards steel making capability as a strategic facility, such as making steels for nuclear subs or warships, for instance, or turbines for engines for military planes.
It is clear now that Miliband knows exactly what he is doing. He is clearly wishing to sabotage our industrial capability. What I don’t understand is why
Isn’t the whole idea to get away from burning gas not that it is cheaper?
Great work as ever. I think if these figures were spoken about in the msm and Starmer was challenged on the cost to consumers, the impact on jobs and the economy with the follow on impact to services every time he was interviewed this would surely collapse the false claims and Net Zero policy. It’s being interesting watching president Trump slam wind turbines in front of Ursula von der Leyden and no real challenge to that, at least I haven’t seen any.
Von der Leyden can just ignore Trump and just carry on with an EU strategy for reducing fossil fuels using wind power etc.
Anyway, the only reason Trump doesn’t like wind power is NIMBYism – he claims the offshore wind farm off the coast spoils the view from the Trump golf course in Scotland near Aberdeen.
I think you’ll find Trump has expressed several other reasons for being against wind, with the cost of subsidies (which he is cancelling in the US) and the costs of intermittency being at the top of the list. He also sides with the Save the Whales campaigners for the New England offshore area, and is opposed to the high costs of those projects for consumers. Most residential consumers pay less, and most industrial customers do.
https://www.chooseenergy.com/electricity-rates-by-state/
Many projects are being cancelled: Equinor just took a $1bn write down on US wind. It’s instructive to look at the recent US offshore wind prices which had been at or above the AR7 ASP.
You are confusing Trump’s reason for disliking offshore wind with his rationalisations intended to convince others.
There are plenty of articles on the web debunking Trump’s arguments against wind power.
Suffice it to say that red state Texas is huge on onshore wind power, and just as big on solar nowadays, expected to overtake California soon. Not to mention battery storage.
Whales are not at risk from offshore wind farms. The key thing is to ensure that curtains of air bubbles are used to reduce the escaping noise from pile driving foundations.
US offshore wind supply chains are very immature as yet, which is why US offshore wind is costly.
The US president is pretty powerful, though a complete moron who will cost US electricity consumers a lot of money by reverting to fossil fuels. The US won’t be making any progress with offshore wind until he is gone. That won’t stop the rest of us though.
DESNZ/Ofgem can always make renewables cheaper than gas by increasing the carbon tax. The infamous DESNZ ‘Electricity Generation Costs 2023’ document has a carbon tax of £60/MWhr. DESNZ/Ofgem never take into account of course the costs of the necessary national grid upgrades to deliver the renewable electricity from the North Sea or the necessary local grid upgrade from the current 1-2 KW/household (continuously) limit to enable the full electrification of transport and heating. As there is no plan for grid-scale electricity storage it will be necessary to either run a full parallel hydrocarbon system for grid stability and backup or use DSR (aka rolling blackouts) to enable demand to match supply. But the DESNZ/Ofgem argument for renewables has moved on from one of cost, which they know is undefendable, to one of security saying that British wind and sunshine is more secure than gas imported from unreliable petra states, ignoring that North Sea gas is still 50% of our supplies and we then get 30% from Norway and 10% from the USA. Plus of course we still have our own gas if we fracked. On security they also ignore that it is not secure to rely upon China, a state described by our security services as “hostile” for our energy infrastructure (wind turbines, solar panels etc) and the metals and minerals for electrification. Neither is it safe to put all our energy eggs into one energy basket, electrification, making our national and local grids the worlds biggest hacking targets. Or safe from a Carrngton event. Neither is is safe to deindustrialise so we cannot make steel and our own munitions. Nor to spread our energy infrastructure out over half the North Sea and consequently unprotectable from cheap, effective above and below water drones.
PS : And our solar estates are entirely unprotected and could all be taken out overnight by co-ordinated gangs armed with hammers.
I see the wind lovers are trying to knock down Kathryn’s logic and are suggesting that bidders may offer below the cap. Time will tell, but many accepted low bids from the last auction have not materialised, no doubt so they can get more this time. Unfortunately we have another 3 years of auctions before a general election, so plenty of time to pressure Miliband to increase the subsidy even more if he thinks he’s losing his 2030 target.
I think you will find all generating plant (combustion, nuclear) will have increased by a similar if not larger cost [1] (its called Bank of England assisted inflation by keeping interest rates unnecessarily high and inducing austerity). As combustion with fossils is folly considering the state of climate warming except for the last 5% of infill and much of that could be renewable methane/hydrogen, renewables are the way forward. Nuclear will always be too late, too expensive, too dangerous.
[1] (2025 update: we are seeing much higher equipment prices, by as much as 10%, as OEMs are reaching capacity output.) https://gasturbineworld.com/gas-turbine-costs-kw/
As one of those criticising Kathryn’s logic, I am just going to point out to you that the AR6 CfD auction offshore wind strike price was 19% below the cap. See table (F) of the results at https://assets.publishing.service.gov.uk/media/66d6ad7c6eb664e57141db4b/Contracts_for_Difference_Allocation_Round_6_results.pdf.
In fact, I believe that there was only one case of the strike price being at the bid cap price, and that was for solar.
There has been a lot of disruption to offshore wind supply chains caused first by the coronavirus epidemic, and more recently by the war in Ukraine. Like the Borg in Star Trek, offshore wind supply chains can adapt, but it does take time. The government stupidly trying to squeeze offshore wind costs in the AR5 auction didn’t help supply chains either, and it was crass stupidity to set the offshore wind cap below the caps for both solar and onshore wind.
What is really needed is at least a medium quantity of wind capacity (4+ GW) to be contracted now, to pave the way for a much larger quantity in AR8, at a significantly lower price.
If I was Miliband I would push the target date from 2030 to 2031, rather than pay huge subsidies for a single auction when the price is likely to come down to the mean within a couple of years anyway.
The AR6 clearing price turned out to be too low for at least Hornsea 4. I think you are setting a very low bar in calling for just 4GW this time. OEUK have been calling for more than twice as much, and give a rather Delphic comment on the strike prices and prospects for grid connection here
https://oeuk.org.uk/oeuk-responds-to-ar7-strike-prices/
I think Miliband is being unrealistic if he expects manufacturing and installation capacity to be ramped up to meet a self inflicted peak. It would certainly lead to much higher prices, not only to outbid other countries for capacity, but also to provide insurance against a subsequent demand bust post peak.
There are dangers that the offshore ASPs are too low. Being committed to keep operating for 20 years is a contractual risk. At the back end, maintenance costs start to increase and may no longer be justified on the basis of the remaining asset life of other parts of the system. If the price is high enough that risk can be covered, but early years profitability needs to be good enough to create a reserve. It may be that the economic price for a 20 year contract is the same as for a 15 year one, or higher. Also we have bottomed out on the commodity cycle for many key metals, and for some basic availability is uncertain: see Chinese restrictions on rare earth exports. These will only increase in price. Manufacturing in Europe/UK is not getting any cheaper, and CBAM could impose a large import penalty on supplies from China. I admire your optimism, but I do not share it.
IDAU said “The AR6 clearing price turned out to be too low for at least Hornsea 4. I think you are setting a very low bar in calling for just 4GW this time.”
4 GW was in the context that the offshore wind bids were all bumping up against the ASP. Better to ramp more slowly and cheaply rather than fast and more expensive, in times of turmoil if that is the case.
My money is on 7-11 GW of offshore wind at a 20% strike price discount on the ASP. We shall see.
I think Miliband is being unrealistic if he expects manufacturing and installation capacity to be ramped up to meet a self inflicted peak.
There’s no indication European offshore wind installs will stop once the UK 2030 Clean Power target is reached. The Google AI (not fact checked) said:-
“The EU is aiming for a significant expansion of offshore wind capacity, targeting 86-89 GW by 2030, 259-261 GW by 2040, and 356-366 GW by 2050.”
IDAU said “There are dangers that the offshore ASPs are too low. Being committed to keep operating for 20 years is a contractual risk. At the back end, maintenance costs start to increase and may no longer be justified on the basis of the remaining asset life of other parts of the system.”
And yet the Danish government has just been giving out lifetime extensions to some of the early Danish offshore wind farms who requested them. The 165MW Nysted (live 2003) gets another 10 years (to 35 years) and 40MW Middelgrunden (2001) another 25 years (to 50 years?), following the 23MW Samsø extension by 10 years to 35 years. See https://www.windpowermonthly.com/article/1923600/denmark-grants-lifetime-extensions-its-two-oldest-offshore-wind-farms.
The two with 35 years are more or less in line with the FID for Dogger Bank C which says “up to 35 years”.
IDAU said “Also we have bottomed out on the commodity cycle for many key metals, and for some basic availability is uncertain: see Chinese restrictions on rare earth exports.”
Niron Magnetics already has a pilot plant for iron nitride permanent magnets and is expecting to complete a volume production plant by the end of this year. Its iron nitride permanent magnets are cheaper and have superior strength compared to rare earth magnets, at normal operating temperatures. It has been supplying samples for some time. Permanent magnets are the main use for rare earths, but it looks like this use will soon be on the way out. See https://www.nironmagnetics.com/.
And that is just one reason to be optimistic.
Most of the bulk metals used have come down in price recently. Copper can usually be substituted by cheaper and lighter (but higher volume) aluminium as a conductor with a given resistance, except for domestic wiring (due to DIY connection issues). Lithium ion batteries look like they will be replaced within a few years by sodium ion batteries for stationary use (e.g. grid batteries) where weight is not an issue.
It is going against the long term trends to suppose that the green technologies will get more expensive, rather than cheaper.
It seems to me that many of you contributing to this blog GREATLY underestimate the extent and cost of additional infrastructure (balancing and back-up) that will be required to support even a small penetration from wind and solar which currently contribute less than 6% of UK primary energy use. (the latest DUKES figures for 2024 are due any minute but they won’t have changed much from 2023).
I should add… that 6% wind and solar hasn’t actually achieved anything. All we’ve done is exported our emissions to places like China because high energy (and other) costs are driving our manufacturing broad.
Hang on! Of course, we have successfully wrecked thousands of square miles of precious landscapes, if that can be described as an achievement. You should be proud!!.
I think the big picture people are really looking at is of having the “green” approved low carbon – with its disproportionate added costs of extra electricity transmission and energy backup (gas powered or energy storage) added to their bills.
The cheapest form of energy storage is high temperature thermal – coming in at under £5/KWh (£5m/GWh); this technology (adaptable from the steel industry) could be directly swapped into gas turbine based generators so, for example a 1GW gas powered plant (coming in at about £1b) would require (nominally) 100 hours of storage (for £0.5B) . So any stranded assets (by dash from gas) would still have value.
And improvements using closed cycle inert gas (argon or nitrogen) could only improve the performance and cost of the gas turbine component.
Hydrogen fuelled turbines still need to be developed (https://www.sciencedirect.com/science/article/pii/S0360319924023681 – “A techno-economic analysis of future hydrogen reconversion”. And, as Kathyrn has pointed out elsewhere, gas turbines, and associated steam turbines, have maintenance issues if used intermittently and sparingly
The government seems to have redefined LDES (long duration energy storage) to be for 4 hours! – certainly they are not worried about the vagaries of weather around the British Isles (which can result in days of windpower at < 10%) – and potential future blackouts.
As regards short term energy storage (batteries) at £200/KWh so a 1 MW Wind turbine (costing £1m) would cost an extra £200k – for an hours worth of storage – which would help smooth supply – and perhaps could be integrated into offshore wind power islands?
Interestingly I looked back at the government performance over the years. The best UK build was 8 years, I believe – with the "greens" saying it would never be built in time– yet wind-power still seems to lack the storage or backup – without relying on expensive batteries or gas fired generation.
I must admit that I think that energy storage could benefit investors in gas fired generation – by providing security of investment – but would require guarantees of regular consumption or appropriate constraint payments for any stored energy used.
So I believe Kathryn's arguments are very likely correct but I think that the issues of wind intermittency and security of supply are relevant to me (and the belief that there is a "green" idea of wind power and batteries being the (only?) desired solution – without too much thought about affordability
Household energy bills are dominated by the cost of gas, which is still 3 times the cost before Russia invaded Ukraine. During winter peaks, the Grid will normaly use the 2.8 GW of storage from the four 50 year old pumped storage hydro (PSH) schemes that paid for themselves after about 10 years and now have operating costs of 1.8p/KWH. After that the only option is gas turbines. For long-duration storage, various studies have shown that PSH is the least cost option. Nine schemes have planning permission but await a cap and floor scheme to attract investors. In addition there are some 20 locations where abandoned quarries and closed open cast coal mines below hills could provide new schemes of 7GW capacity in depressed areas providing technical and semi-technical jobs. At the same time batteries, and particularly vanadium and sodium iron batteries are becoming cheaper. In the long term, this will prove a less expensive option than importing LNG.
We are in danger of forgetting that the point of all this expensive upheaval is to reach zero emissions from electricity production.
To achieve this almost no gas can be run as backup. To have a plan that requires 30-40 GW of gas backup and to rarely use it is economic and engineering nonsense.
To match gaps in wind and solar by substancial (50% or more) demand flexibility (rationing) makes engineering sense but is economic, cultural and political madness.
To fill these gaps with only 280 GWh of battery backup is wishfull thinking. Some simple sums matching max and min wind and solar output with max and min customer requirements shows that the day to day storage requirement is at least 1500 GWh. If interseasonal storage is required it is many times greater. The cost of that is at GDP levels.
We are not looking for the cheapest solution but one that achieves zero emissions at optimal cost. The cheapest solution is irrelevant – 100% gas is the cheapest. Using gas as backup will also reduce a solutions cost but will not produce zero emissions.
RM said “To achieve this almost no gas can be run as backup. To have a plan that requires 30-40 GW of gas backup and to rarely use it is economic and engineering nonsense.”
The NESO modelling shows 5% supply from backup gas for the 2030 Clean Power grid.
Since you need such backup for weather-dependent wind and solar, it is hardly nonsense to provide it. The question is of economics.
We now know the cost. The recent NESO T-4 capacity contract (i.e. for 2029) was for £60/kW-year, so 33 GW of gas backup capacity would cost £2.1bn per year – not insignificant, but hardly a showstopper either.
RM said “To match gaps in wind and solar by substantial (50% or more) demand flexibility (rationing) makes engineering sense but is economic, cultural and political madness.”
BEV charging, with 100% of BEVs on the UK roads, will eventually add 40% to 2019 UK electricity demand. Heat pumps to replace gas boilers might add another 70%.
But a BEV with 300 mile range and a typical 30 mile daily round trip commute has 7 days of flexibility in when it can be smart charged, though some vehicles must be charge more regularly or immediately if on a long journey.
Heat pumps can be supplemented with a domestic battery, to avoid drawing power at the normal evening peak times caused by the existing, inflexible loads. Something like 10-12 kWh of battery storage would be enough to run heat pumps off the cheapest power available within any 24 hour period.
50% demand response across all loads would be a tough ask, but it may well end up 30% of the new loads are very suitable for demand response, without anyone really finding any huge downsides.
RM said “To fill these gaps with only 280 GWh of battery backup is wishful thinking. ”
No one is proposing a single tier storage solution of just 280 GWh of batteries. But what you would probably find from the modelling is that 280 GWh of batteries and an appropriate quantity of demand response would fill in 70 to 80% of the gaps (by GWh) in supply from wind and solar. That would leave only 20-30% of gaps by GWh to be filled by long-duration backup e.g. natural gas fueled CCGT in the 2030 Clean Power solution and green hydrogen fueled CCGT in a successor net zero UK grid.
RM said “The day to day storage requirement is at least 1500 GWh. If inter-seasonal storage is required it is many times greater.”
300 GWh of batteries fills most of the short duration gaps. 1500 GWh/24 hour in a day is 60 GW average demand not satisfied. But the aim of batteries is not to fill all gaps in demand – just most of them.
Interseason storage, such as green hydrogen storage, would indeed need to be in the range of 30-60 TWh, which is around 20 x the storage volume of the UK “Rough” natural gas storage when it was at its maximum volume in the past. UK has a lot of depleted oil and gas wells, and this is not an infeasibly large volume.
Our current PSH has a storage capacity of under 30Gwh. If I’ve read it right The Royal Society in their Sept 2023 report estimated that we would need at least 60Twh to support a doubling of current electricity demand (to around 40% of UK primary energy consumption) with a heavy reliance on wind and solar. That’s current PSH times 2000!
SD said “a doubling of current electricity demand (to around 40% of UK primary energy consumption)”
It doesn’t work like that. Now that UK power generation has dropped from top to 4th emitting sector, two of the biggest emitting sectors are road transport and building space and heating.
However, electrifying both of these improves their efficiency by around a factor of x3, as follows.
For road transport, most petrol vehicles are at best 25-30% efficient, while a BEV is around 85-90% efficient. Diesels can get above 40% efficient. Converting road transport from petrol and diesel to pure battery electric will reduce the primary energy needed for road transport by 60-65%
Similarly, a heat pump used for building heating has a COP (coefficient of performance = efficiency) of x3 or x4 – in other words it is 300 to 400% efficient. You put in 1 unit of electricity to drive it, and it moves 3 or 4 units of heat from a source at ambient temperature (for an air source heat pump) into a building, at a temperature of 50 to 55 degrees C. For once, you are on the right side of the laws of thermodynamics.
Similarly, electrified industrial processes tend to be far more efficient in total energy use than those driven from fossil fuels (where most of the primary energy applied tends to disappear up the chimney).
A summary of all this is that, if UK electrifies enough uses of energy to double grid use, then electricity will become 80 to 90% of the primary energy used by the UK.
SD said “The Royal Society in their Sept 2023 report estimated that we would need at least 60TWh [of long duration storage] to support a doubling of current electricity demand”.
Something like that. The NESO simulations are showing gas backup will be around 5% of supply in the 2030 Clean Power grid. Current UK electricity demand is around 300 TWh/year, so 5% would be 15 TWh. Double the size of the grid and that crudely makes it 30 TWh. Assume a further doubling for infrequent but very long gaps in wind and solar output, in very exceptional years, and you get 60 TWh of long duration (often described as “seasonal”) storage. So one assumption might be that the energy is mainly stored in summer, but mainly has to be used in winter.
60 TWh isn’t impossible. The Norwegian hydro system stores 88 TWh in lakes behind dams, for instance. In the case of the UK the front runner long duration storage would be green hydrogen, produced by electrolysis using surplus wind and solar power. It could be stored in depleted oil and gas wells, then used in backup CCGT plants with burners modified to be suitable for hydrogen.
Although the power to gas to power round trip is no more efficient than 45%, if only 5% of supply is from long-duration backup, then the losses are 5%/0.45 – 5% = 6.2%.
You would need a volume of hydrogen storage of around 20x the current UK Rough natural gas storage for such a backup use, but UK has many depleted oil and gas wells. “It Doesn’t Add Up” has pointed out that projects tend to use a lower hydrogen pressure for such storage than they do natural gas pressure, so that assumes 150 atmospheres pressure rather then 300 atmospheres. In its heyday, Rough was operated at 250 atmospheres.
It is all feasible though, both technically and economically. You might need around 280-300 GWh of grid batteries to get backup CCGT use down to 5% of supply.
I think you have a new record for the ratio between the length of your reply and the comment to which you are replying. You really should establish your own blog where you could develop your thoughts at any length you thought might attract readership: you could link to your articles and stand a better chance of engagement.
I’ll admit your habit of ever longer spam posts dragging in ever more peripheral items has led me to judge that few if any will read them, and therefore there is no point in debating your often highly spurious claims when your previous claim has already been shown to have dubious foundations.
I am grateful to Dave for taking the time and trouble to comment based on real professional knowledge on the prospect for subsea hydrogen storage from a technical angle. It is time you acknowledged that there are people with far more expertise than you.
There isn’t much to be gained by a conversation consisting of you saying “green energy costs money” [with no or fallacious evidence supporting the statement] “no it doesn’t” “yes it does” “no it doesn’t” “yes it does”.
The fact is that it takes more words to rebut a fallacious statement than it does to make it in the first place.
I agree not everyone who subscribes here is going to be interested in changing their mind based on detailed evidence, rather than just going with the echo chamber flow. But some will, and that is enough.
I quite agree, I’ve been very interested in the comments from everyone, from all the different perspectives. Filling gaps in my knowledge and being thought provoking as well.
With Carbon Capture and Storage, against Hydrogen Storage, one has to wonder how one is more feasible than the other. Surely dealing with the explosive nature of hydrogen and the inert nature of CO2, and the leakiness of H2 compared with CO2, that if we expect CO2 to be able to be stored, there must be some conditions under which H2 can also be stored that might be more demanding….. choose your well carefully, from all aspects of seabed to reservoir geology, and the challenges of materials selection, but if it can work, don’t we overcome some of the economic challenges? And like space exploration, the possible technology spin-offs and possible new business opportunities could be enormous.
With Hydrogen, it might not eventually be used for everything, but what if it finds a niche that supports many jobs and careers? What if, like drilling test wells for oil, the old wells need to be tested for hydrogen storage and well permeability? Not an assumption that it’s impossible. What if the seabed around the wellhead needs a bit of re-engineering with a cap, or new sealants around the metal/plastic/alloy bore need to be tested and developed. Or not a single pipe system but something more complex such as a lined pipe, with different materials on the inside and outside, or even a triple layered pipe with three different materials, a metal layer sandwiched between two plastic layers. Or what if there is a new material such as Niron being used for something unrelated that actually has better hydrogen stability, lower permeability/reactivity, non-brittling than any previously know material?
It’s the technical challenges that make it all so interesting.
Peter, even under your scenario of doubled electricity demand to match doubled wind output the frequency and extent of periods of over-supply and under-supply will be greatly increased meaning much more requirement for storage. I’m running with the Royal Society analysis for the moment.
Peter, sorry my last post may not have made a lot of sense. However I was interested in some of the points raised in your response to my original post.
I understand your reasoning which leads you to say 90% of UK energy could be catered for with just a doubling of current electricity generation. However, I question whether your improvement in efficiency ratios in heating and transport can be achieved by a switch to electricity generated largely by wind/solar bearing in mind the inefficiency of generation reliant on so much additional infrastructure plus the energy losses incurred in the storage and conversion processes.
And even if 60Twh of storage is feasible I suggest it will be a) many decades before it is in place and b) incredibly expensive. Meanwhile the gap between maximum wind output and low demand at 3am on a windy winter’s morning will greatly increase, as will the reverse gap when the wind doesn’t blow and the sun doesn’t shine at 6pm on a frosty evening.
SSE have managed to get the Scottish government to race through planning permission for their giant 4.1GW Berwick Bank project that would connect to Dunbar (near Torness nuclear) and Blyth (in competition with or for export via North Sea Link, and South of the B6 major constraint boundary). It will be the 800lb gorilla in the AR7 auction which SSE announced they hope to use to secure a CFD, so I guess they are happy to proceed on the basis of the ASPs announced. It is rather hard to get any useful information on what they think it might cost, and the FID is in the future so they don’t entirely know themselves. But in 50+m water depth you have to suspect it would be closer to East Anglia Project Two’s £4bn/GW than Inchcape (mainly supplied ex China) £3.2bn/GW. They won’t benefit from the Crown Estate equity injection being offered for floating wind, and the Clean Industry Bonus is worth a derisory £27m/GW.
A couple of comments.
First, if I recall correctly the strike price for Sizewell C was a tad below £90/MWh, which would seem to make AR7 wind, both onshore and offshore, more expensive than new nuclear even before the transmission, storage and stability costs wind imposes on the grid are added.
Second, as someone who’s spent more time working the UKCS that he cares to remember, the prospect of using deleted oil and gas wells for hydrogen storage can politely be called laughable. Hydrogen is a notoriously finicky gas to work with; it is stupidly explosive relative to natural gas; and worms its way out of even the smallest leak. All the wells, wellheads and pipelines were designed and built for natural gas, not hydrogen and, anyway, there’s been so little new investment on the UKCS is recent years that much is approaching end-of-life.
Injecting a fluid into a reservoir, whether deleted of hydrocarbons or not, requires compressing it to a pressure exceeding the hydrostatic pressure of the reservoir formation. In the Southern North Sea gas province, which I presume is the target, that’s anywhere between 20 and 40MPa (200 to 400 bar). Reusing existing wells is a non-starter. You really can’t afford a tubing leak in a gas injection well; besides loosing the gas you’re trying to inject, it has nasty, explosive consequences. I’d humbly suggest that attempting to pressurise an inject hydrogen at the scale needed is a recipe for a very large bang. I was offshore on the Piper Alpha relief well drilling rig immediately after it happened; you don’t forget.
If you can list 20x Rough capacity in reservoirs that will take hydrogen with infrastructure capable of handling it I’d be so enormously surprised I’d even apologise for calling the prospect laughable.
It seems to me that the fundamental problem is that proponents of wind are only now beginning to realise the limits of the technology in the context of the fully electrified society that net zero implies and, rather than accepting reality, are flailing around for solutions to problems that can and should be avoided. If we accept,, as I suggest we should, that climate change is an existential threat to our energy intensive civilisation, then we should concerned to use technologies that we know don’t impose stumbling blocks on the road to net zero. Wind has too many. Why spend the time and effort attempting, and may be failing, to solve problems — storage, long distance transmission, grid stability to name but a few — that we don’t need to solve? We know the solution to reaching net zero and, more importantly generating sufficient energy to both maintain it and power an energy hungry society. Nuclear. We have the science; we have the engineering; we just don’t have supply chain. Stop faffing about instead invest the money we are spending by the truck load in building an indigenous nuclear industry. We need it now, and we’ll certainly need it for the next few hundred years.
Sorry about the typos, “deleted” should read “depleted” in a couple of places and I can’t find an edit button!
Spot on David, nuclear power is the only realistic solution to our fast growing need for more electricity. But many idiots are trying to stop this rapidly evolving field of power technologies from delivering our future economic growth and energy security. These idiots would rather we revert to the stone age!
D said “First, if I recall correctly the strike price for Sizewell C was a tad below £90/MWh”.
All I can find is “between £86 and £100 a megawatt-hour” with no reference to the year of the pounds used as units.
D said “Second, as someone who’s spent more time working the UKCS that he cares to remember, the prospect of using deleted oil and gas wells for hydrogen storage can politely be called laughable.”
A few years ago Centrica was putting a case to government for restoring the UK “Rough” storage to its maximum historical volume. And pointing out it could be repurposed to store hydrogen. So there’s at least one company with depleted oil and gas well experience who disagrees with you.
D said “Hydrogen is a notoriously finicky gas to work with”
Air Liquide in Texas and many other operators have been working with hydrogen storage in Texas for years. You have to follow the rules.
And “town gas” used in UK and elsewhere was 50% hydrogen for a number of years with no record of extensive problems.
D said “[hydrogen is] stupidly explosive”.
Only if mixed with air. And it is far lighter than air, so will disperse upwards rapidly. The key thing is not to have concave surfaces impeding its path upwards to collect it and allow mixing with air.
D said “All the wells, wellheads and pipelines were designed and built for natural gas, not hydrogen”
So was the existing UK natural gas grid, and yet Tony Green, who used by be the NG Hydrogen Director, said 70% of it was re-usable for a hydrogen grid.
D said “Injecting a fluid into a reservoir, whether deleted of hydrocarbons or not, requires compressing it to a pressure exceeding the hydrostatic pressure of the reservoir formation.”
Sure, but this is something you can choose by dpicking the depleted wells you employ. And there have been huge volumes of natural gas extracted from the North Sea, compare with a much smaller volume of hydrogen now required to be stored, so the numbers are surely workable.
D said “Reusing existing wells is a non-starter. ”
There is no obvious reason why. Cushion gas mixing with hydrogen isn’t an issue for use as a backup fuel for CCGT generation – the hydrogen does not need to be pure. Some components must be replaced, but by no means all.
D said “losing the gas you’re trying to inject, has nasty, explosive consequences”
There’s no reason why this should happen more frequently with hydrogen than with natural gas, and the volume of hydrogen to be stored is not huge compared to extracted natural gas from the North Sea.
D said “list 20x Rough capacity in reservoirs that will take hydrogen with infrastructure capable of handling it ”
Not much so far, but there are quite a few projects planned globally, so clearly it isn’t a major issue.
Globally, storage of hydrogen in depleted wells isn’t a new proposal. There has been serious work on it for well over a decade.
D said “It seems to me that the fundamental problem is that proponents of wind are only now beginning to realise the limits of the technology in the context of the fully electrified society that net zero implies and, rather than accepting reality, are flailing around for solutions to problems that can and should be avoided. ”
This is a total distortion of the facts. Grids have been working on developing seasonal storage of wind power for far more than a decade. The requirement is so blatantly obvious that your statement can only be derived from pro fossil fuel FUD talking points.
The real issue is that the fossil fuel companies are running seriously scared, because it now looks like many of the things they have been saying are impossible with green technology are now about to be done – with the rest following shortly. This is surely the reason why there has been a huge increase in the anti-green FUD generation – we are now approaching the end game.
In terms of nuclear, the UK is likely to transition to a net zero grid (via the 2030CP plan followed by green hydrogen tier 2 storage) before Sizewell C goes live. As EV charging and heat pumps will steadily increase demand that doesn’t rule out Sizewell C. But there is no point in pretending it can’t be done mainly with wind and solar – it will be increasingly obvious that it can.
Your comment casting doubt on the use of depleted gas wells so that they might store hydrogen is most interesting. And it stresses the point that engineering issues need to be addressed before “visionary” solutions are considered for funding – i.e. need for “a miracle to occur”.
There is a general lack, in the UK, of visible to the public, discussion of putative technologies – so this blog is very interesting in that it attracts considering and interesting comments. (eg storage for hydrogen at large scale)
If Great British Energy were to host such discussion blogs it might be most useful – taking a leaf from Joseph Paxton who used (extant) innovative technologies to deliver an affordable build under time and under budget. Perhaps energy storage and nuclear power could benefit from this approach – rather than going for the traditional , off-the shelf technologies ; “safe” and very expensive. – and, of course slow (though some could be to do with the regulatory and legal processes)
Interestingly if the “day ahead market” was replaced by a week or month ahead then that might align vendors of “solutions” more to with what the consumers need – and so to include some form of storage/backup
David – your second point about repurposing gas fields was very pertinent – I have quoted you in the section Repurposing Gas Storage in this paper I was writing at the time this blog was developing. https://bit.ly/UKEA-Coping-with-the-Dunkelflaute
Sorry about the typos, “deleted” should read “depleted” in a couple of places and I can’t find an edit button!
Kathryn’s excellent post details the high costs of AR7. Many commentators and politicians are begining to highlight the costs of the current renewables plan but few are demonstrating that the plan will not result in near zero emissions – which is surely its sole purpose.
The current plan is an unanalysed but superficially persuasive narrative – a story, a fairy story. This all pervasive narrative features the saviour of intermittent wind and solar with the resulting feast and famine hopefully resolved with storage ( inc H2, V2G & huge volumes of domestic batteries), demand response (rationing – “not all the gaps will be filled”/ people living their lives to the requirements of others) and interconnector trading (exporting will make us rich but silence on resiliance and imports). I have modelled each of these “solutions” but none achieve the desired result. EV charging is particuarly problematic let alone V2G. A huge issue that we are blindly walking into.
NESO is a salesman/cheerleader for this popular narrative. “Clean Power 2030” introduces the new undefined concept of clean power rather than net zero or zero emissions. Their modelling shows that a near exponential future increase in renewables investment results in an asymptotic (near zero) decrease in emissions. A few strange sentances have crept unedited into their text expressing puzzlement at this. They have seen the trend but have not yet understood its profound significance. In the real world, data shows gas at 30% in 2024 with 2025 currently showing no reduction. The incedible reductions obtained since 2010 are no longer being achieved despite ever increasing wind and solar capacity. Realistic modelling makes the reasons obvious. Even NESO modelling is beginning to show this.
For how long will we persist with a plan that is clearly not working? Time is running out as is the essentisal political concensus.
RM said ” I have modelled EACH of these “solutions” but none achieve the desired result. ”
And hereby lies the flaw in your approach. None of these solutions on its own will solve the problems of both short duration and long duration/seasonal gaps in wind and solar.
The optimum cost solution involves a roughly optimised mix of all or most of the technologies you list.
RM said “In the real world, data shows gas at 30% in 2024 with 2025 currently showing no reduction. The incredible reductions obtained since 2010 are no longer being achieved despite ever increasing wind and solar capacity. Realistic modelling makes the reasons obvious. Even NESO modelling is beginning to show this.”
NESO modelling shows that hitting 2030 targets for wind, solar and grid batteries should reduce supply from gas backup to 5%.
You don’t need to model to see qualitatively that wind in particular can much reduce gas generation. Just look at separate hourly supply by fuel type from samples from https://electricinsights.co.uk/#/dashboard?period=1-year&start=2024-08-04&&_k=l96m2n. Then mentally work out what would happen to gas generation if the wind supply was doubled – which would require fixing many of the Scotland to England transmission constraints.
This is also in the context that the NESO has now contracted for ample grid stability services in the absence of any active gas generation, so gas can happily go to zero.
As I said earlier there is already some 32 GWh of storage in existing pumped hydro schemes and a further 40GWh in waiting in 9 schemes with planning permission. Return trip losses with the improved turbines are about 20% not 25% and the infrastructure so far has lasted 55 years. There are some 20 closed quarries and open-cast pits in England and Wales close to hills where bunded reservoirs could provide further storage whilst providing additional societal benefits. These would be skilled and semi skilled jobs in mainly depressed areas, additional storage in times of drought and high level water storage for forest and hill fires with most inputs being domestic. EVs will mainly be charged at night and, with most journeys less than 20 km, can also contribute to energy storage for evening peaks. Whilst talking of the unreliability of wind we should also consider the unreliability of gas prices.
In a constant cycle of feast and famine everyone on average has sufficient to meet their needs. The current highlighting of energy rather than power is itself focussing on an average.
NESO modelling has elements of averaging. For example wind output has a much reduced range. Their modelled minimum wind output is many times that seen in practice.
When NESO model a complete year smoothing tends to occur that eases intermittancy issues. When NESO (NGESO) modelled a single cold, calm & cloudy winter day they barely got it to work (A day in the life 2035). They never attempted to model the next day or the following six or seven days.
5% gas by 2030 is a modelling chimera.
Wind farms………mmmmm. They could have just asked farmers to install a wind turbine on each farm, helping the farmers who have very small margins to gain extra income, instead of paying utility companies for wind farms. Farmer gets cheap power and extra income from diversification. No massive profit for the crown estates for off-shore wind, locally provided power with no need for massive grid upgrades as the power is produced where needed (if the wind is blowing), but some grid upgrading might be needed locally, cheaper maintenance, and longer lasting with being onshore and not in a salt environment.
95,000 farm businesses, 1MW each, gives 95GW….would we need that many? small occasional wind turbines around the country. Highly reliable, because they are not the >10MW that need extra maintenance because of the mega-sizing that reliability starts to decrease. Under £2M installation, and only £15,000 annual maintenance. About 2-3GWh output per annum…….£160,000-£240,000 income per annum at 8p/kwh. How cheap do you want your locally produced electricity? Of course, the turbines could be designed with a viewing platform/room just below the nacelle, for visits/extra income.
There are always different strategies that could have been used.
I find it interesting that people say that renewables aren’t cheap, when they need to actually specify the installation strategy. Any renewables installed by the end-user are cheap, much cheaper than Utility Company produced electricity. Isn’t it time that the government woke up to some basic economics and got behind end-user installations, rather than utility company installations, with all the subsidies they get, gaming the system for excess profits etc etc. If only the government had concentrated on getting the gas burning back-up to be as efficient as possible by getting it redesigned as CHP, and not separate CCGT. The National Grid takes 1.5p-2p/kwh gas, turns it into 8p/kwh electricity and increases the cost to 20p/kwh. It is about 40% efficient distributing electricity, but only 10% efficient using gas. But then the government loves all that inefficiency. Trump is right about all the wind farms, but does he have the knowledge to not stand in the way of end-user installations?
Do you anticipate that these end users will be connected to the grid?
If the answer is No then
1) what will they do when the wind is low for hours on end? (a load factor of 20-25% can be expected for onshore wind)
2) how will they maintain the frequency within the tolerance expected by their electrical kit?
3) how will they deal with short-term situations where demand is not met by their wind turbines?
4) what will they do if their wind turbines fail or are undergoing scheduled maintenance or are temporarily feathered because the wind it too strong?
I suggest that most self-generators will need a grid connection so they have access to electricity at a steady voltage and frequency 60/60/24/365 and on the rare occasions there is a power failure the response times by the grid operator are monitored by a regulator. That service needs to be paid for and the cost is shared by all consumers.
Just because self-generators generate some electricity does not mean that can avoid the cost associated with reliability
The whole point of end-user installations is that they are connected to the grid, generating electricity not only for themselves, but for others.
What it means is that when they are generating, they could pay the wholesale price, they take some of that output directly for themselves, which means that they are not having to pay the 20p/kwh all the time, so they get a significant discount for some of the time. If someone pays 8p/kwh for 25% of the time that a wind turbine is working and 20p/kwh for 75% of the time, that gives them a overall price of 17p/kwh. A 15% discount overall. Or if they don’t take very much, they could charge themselves 0p/kwh, and get their electricity for free, so their overall price would be 15p/kwh, a 25% discount, if they can get enough income from the exports to pay for the turbine. This is what the government are missing, the whole point of renewables and a shift to end-user generation economics in the electricity industry. Yes there are other costs for balancing, stabilization of voltage and frequency, which may be higher than centralised coal and gas, but by having every end-user as a supplier gives them a significant period where they are getting cheap electricity. It is the essential part of the new economics.
The cost for reliability is not avoided at all, it’s there in the times when they have to pay 20p/kwh, but they are also generating income from the output that has been generated. Reeve’s has done a huge disservice to farmers and they are long-term businesses, that only should be taxed at higher rate when the business is sold to someone else, not when being passed to another generation to manage the risks of crop failures, cattle diseases etc, and the tiny margins that most farms have had that have meant that they have had to diversify to survive. They don’t get central European support, Brexit hit many farmers hard.
Unfortunately Kathryn’s right about centralized renewables, to make it work you have to significantly adapt the economic model that is used. A post-industrial economy has to be efficient and give the end-users and population greater efficiency, i.e. lower costs, which means involving the government in thinking through exactly how end-users can save money, which means looking at every alternative installation strategy.
But with the huge borrowing that the government has attained, they are taking as much tax as they can, creating a very expensive system for all users. It’s what they call economic growth, but it is significant inefficiency and increased costs for everyone.
Tim thanks you for explaining your things behind end user installations, they were interesting to read. I have given them quite a bit of thought.
This included analysing recent UK wholesale prices for the period July 2024 to June 2025. I used the EMBER dataset for hourly data and the daily average; these are the unit prices for an hour which are averaged for the day. At times of peak demand say the early evening peak the MW demand is much higher than MW demand in the early hours of the morning so the average wholesale cost of electricity in a day is higher than the average daily price. For example on January 22, 2025 electricity consumed in three peak hours cost between £680 and £912 per MWh.
For the 12-month period from July 2024 the average and median wholesale daily prices were £85.8 and £84.0 per MWh. However, in January 2025 the average price per day was around £122 MWh with 6 days more than £170 MWh, twice the 8.5p per kwh in your post.
The hourly price exceeded £170 MWh 116 times in the year (8760 hours). The majority (96) were in January and February (1488 hours); for 25 hours the cost exceeded £300 MWh.
On January 10 between 8am and 8pm the wholesale price did not fall below £170 MWh and for seven hours exceeded £300 and reached a peak of £564. On January 22 between 8am and 8pm the wholesale price did not fall below £170 MWh and for one hour reached £912 with the shoulder hours at £680 and £750.
The average consumer takes their demand every hour of every day and the pricing mechanisms and markup result in a retail price that is based on the average annual costs.
The ends-user-installer, in particular those with solar, draw little power from the grid in the summer with the exception of peak periods if their demand exceeds their installation capacity. However, in the winter, they will be consuming expensive grid electricity where wholesale prices may exceed the retail price. Economists call this freeloading. [the free-rider problem is a type of market failure that occurs when those who benefit from common pool resources do not pay for them or under-pay]
My price analysis is here: https://docs.google.com/spreadsheets/d/1r10MVliWDsv4K7wbCobsfOv-fr3c7tBQ/edit?usp=sharing&ouid=102248822409479604141&rtpof=true&sd=true
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There is an operational consideration. The transmission network operators (TSO) cannot see the self-installed capacity but have to plan the day ahead for its existence without knowing the detail of its possible deployment. On the actual day the TSO has to manage the second-by- second demand without any knowledge of the generation being produced in the distribution networks. A network hiccup might cause a cluster of them to trip-off if they do not have ride-through protection so a sudden loss of hidden minor generation needs to be planned for and the necessary back-up services paid for.
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The perceived free-loader problem and extra TSO costs of self-installs could be accommodated in the standing charges. These would be subject to oversight by the Regulator.
Have you ever asked why those periods are so expensive?
If you have some very expensive kit, namely a CCGT facility that only gets used 10x per annum, £750/kw capital cost to install, you have to charge significant sums per kWh/MWh when it is needed. £1000/MWh would not surprise me. But this isn’t a fault of renewables, it has always been like that, we have always had the higher demand in winter and lower demand in summer, and yes we get to some extreme peaks of electricity pricing in winter, because of the peak in demand.
Yes, renewables will make those additional costs worse as the CCGT gets used less, which gives even greater reason to deal with it, to change it to reciprocating engined CHP with £250/kw installation cost.
This is because of a failing to understand the basic need for synergies in the system. You cannot have 5GW or 10GW or 20GW of CCGT sitting around for most of the year doing nothing. If that peak capacity were integrated into the economy as CHP, just at those winter peaks occurred, when there is most demand, they would have been activated anyway for heat demand. The problem is that instead of the government going from 60-70% boiler efficiency to 90-95% efficiency, we should have gone to 70% heat efficiency + 25% electrical efficiency. The lack of synergies, the dedication of a few Billions of pounds of CCGT kit to running very infrequently pushes the electricity prices to those extreme highs, especially as the market is so dysfunctional where the electricity price is always pushed to the price of the highest bidder, (cartel pricing methodology) and everyone else makes HUGE profits because of it. It is the market pricing mechanism, it is the lack of synergies in the system, do not blame the renewables, which only need to be paid at a set rate per MWh to keep profitable, or as an end-user generator avoiding the higher price of National Grid electricity.
Can you get the hourly pricing for 1980, 1990, 2000 before renewables were significant?
Regarding ride-through of faults, people are starting to put battery storage at home to get better use of their electricity, they are starting to go more OFF-GRID than supplying to the grid during the day so a reduction in the variability of their supplying to the grid, but possibly only taking electricity at off-peak times.
There is no free-loading if the government and regulator would actually price the electricity properly, and not enable excess profits by the generators. Of course, the stupidity of negative pricing is yet another indicator of poor market design.
The government and National Grid haven’t made the necessary changes to the market pricing mechanism or the way the peak capacity (back-up capacity) is installed. We’re all paying for that lack of planning and understanding of how to make things work efficiently.
TS said “You cannot have 5GW or 10GW or 20GW of CCGT sitting around for most of the year doing nothing. … If you have some very expensive kit, namely a CCGT facility that only gets used 10x per annum, £750/kw capital cost to install, you have to charge significant sums per kWh/MWh when it is needed. £1000/MWh would not surprise me. ”
The UK has decided on how to approach this. The NESO recently signed T-4 (i.e. 2029) capacity contracts with the 27 GW of existing UK gas plants to provide capacity going into the 2030 Clean Power plan, at the (standard for all fuel types) capacity cost of £60 per kW-year. Add maybe 7 GW of new gas plants required within a few years to meet increased demand peaks (EV charging, heat pumps) during low wind and solar, and the total requirement is for around 34 GW of back gas plants, expected to be used only 5% of the time.
So the total figure works out at about £2.1 billon per year for providing this capacity. Having forked out for the capacity, you might expect the grid contracts to stipulate that generation would be at a fixed profit margin relative to spot gas prices, rather than plants bidding against each other and possibly making a killing on the actual generation too, though it is not clear how this would be handled.
£2.1 billion per year is hardly a show stopper to provide backup capacity which is seldom used, assuming the raw price of wind and solar power fall long term, as has been the case without wars.
While I agree with most of what you say, there is an increasing trend to install air conditioning in the UK. National Grid estimated it as creating peaks of 37 GW by 2050, with 18 million A/C units installed by then vs 1 million right now.
An obvious way of shaving the summer A/C peaks is to have lots of rooftop solar PV with 4 hours of batteries around. Days with peak A/C demand correlate perfectly with days with peak solar PV output, as both are caused by clear summer skies. The 4 hours of batteries would make sure that the cooling can continue after dusk without increasing the load on the main transmission networks.
Given this likely development, it is likely that those with rooftop PV aren’t freeloading on the transmission grid arrangements at all, but providing an essential service to shave summer A/C peaks to the benefit of all electricity consumers. Further, if they do have 4 hour batteries, these can also be used to reduce their own domestic demand in the winter evening peak hours, which would also apply if they installed heat pumps as well.
Thus without significant analysis, it isn’t readily possible to determine the true costs or benefits to others of rooftop PV + batteries.
Note that we don’t fully understand the 2050 parameters yet anyway. Would most buildings use only heat pumps for heating, or would there be hybrid systems where 90% of winter days use only the heat pump, but the other 10%, the bitterly cold days, would provide heating from a combination of a heat pump and a small hydrogen boiler, fed by a conversion of the gas mains to green hydrogen. This choice has not yet been made, and might determine the final grid facilities and capacity needed to meet both summer air conditioning load and winter peak heating load.
There’s actually one really bad point of a market economy, and accepting offers for supply business. It is when there’s one last supplier available, and there is no other choice, they can really put their prices up and make a killing……..scarcity of supply, drives prices higher, especially when it is a captive customer, who HAS TO BUY YOUR PRODUCT.
If the winter peak was dealt with by CHP, and there was an excess of CHP on the system, the price would remain low. But as soon as you have only CCGT, and a scarcity of suppliers, it gives that supplier the opportunity to punish the purchasers of their product, to wring them dry, take them for all you can……..it’s a market economy, not a UK benefit society, they are companies empowered under the directors legislation to make as much money as possible (profit) for their companies. A Free-Market!!!
And when there is cartel pricing methodology, no other supplier in the market would complain.
But what is the government and regulator doing?
You have to design the market right, with excess suppliers all the time, to ensure that there is significant competition, to keep the price low.
Supposedly the UK spent £800 million on wind farms to shut down in the first half of the year. From my example above, that could have paid for 400MW of new installations. But the government and National Grid just love the inefficiency! With farms getting cheaper electricity, and at times there is an excess, would encourage the development of storage solutions, where they would not be paid for electricity that isn’t exported. Store it or lose it, the only way to get appropriate storage created.
Various studies have shown that pumped storage hydro (PSH) schemes are the lowest levelised cost for long-duration storage. We currently have four fifty-year-old schemes with 4.8 GW capacity with a 1.8p/kWh operating cost. There are some 10 (PSH) schemes with a 9GW capacity and planning permission, of which there are 9 in Scotland. All parties are waiting for a decision on financing through a cap-and-floor system. The UK also has some 20 old deep quarries and open-cast coal pits next to hills that could also be mid-sized schemes. With pipe connections rather than tunnels, they could be operating relatively quickly in areas of deprivation and unemployment, such as South Wales.
Renewables not cheap? Take solar PV for end-users. If say it takes 10 years to repay the capital from savings with installing renewables by an end-user, when the gas price is around say 3p/kwh. What happens when the gas price spikes to 10x, 20x that 3p/kwh or more, and the uncapped electricity price goes to £2 per kwh? The repayment time due to savings shrinks to just 1 year, due to the avoided cost. This means that you’re only paying for maintenance thereafter. CAPEX has been paid off in full by the huge savings in electricity costs. In ONE YEAR, not 10 years still, not 20 years or whatever the utility companies are still charging us for, just ONE year and they are fully accounted for. That leaves just OPEX for the rest of the system life………..1-2p/kwh? End-user installations bring in far different economic considerations than utility company installations, especially if you are generating just enough electricity for yourself.
If you set up to repay a certain amount of borrowing per month on CAPEX, even paying some interest, if the cost of the energy spikes significantly, then that effectively reduces the pay-back time of that borrowing. It is only if the cost of borrowing (the interest rate) spikes and not the energy cost, that the capital pay-back (pay-off) time increases at a set repayment rate.
You just wish that the government and National Grid had some sense of what needs to be done, and could understand the differences in the economics of end-user and utility company installations.
There are huge financial benefits for the population with END-USER RENEWABLES. Tell the government, tell your neighbours, get it in the press, and stop whinging that renewables are not cheap. Utility Scale renewables are not cheap, End-User renewables are financially the best thing that everyone can do.
Tim, I question your economic argument concerning solar. The end user only receives a return when they are producing electricity and the return is priced at 20p kwh is which what they avoid paying for grid power.
There is little return in the winter which is probably when they consume the most electricity per month. They could be considered as freeloaders paying 20p per kwh retail when the wholesale price is at times higher.
There may benefits to the UK if the self-installs included battery storage that could be utilised by the Distribution Network Operator or Supplier to smooth peak demand.
The economics of avoided cost. I installed an LPG system on my car, the payback period was 18,000 miles, over which period if the car was written off, my investment of £1500 would not have been paid for by using cheaper fuel, 50p/litre LPG instead of £1.10 petrol, after that time I have made greater savings of over £10,000 through doing many more miles………I spent £1,500 to avoid £10,000 cost of fuel over many years. I could have invested in another more economical car to achieve the same effect, but that would have cost £10,000 or more at the time, so in spending £1,500, I have achieved a real saving of £10,000.
If I were a taxi company, and many did install LPG on their cars, (economical, reliable Toyota prius’s) they would see either greater profit, or be able to give cheaper pricing to their customers, which is how they would see the results.
The use of capital expenditure to reduce fuel/energy cost gives a payback time/distance period, it only comes into effect when you are deliberately reducing your fuel/energy cost. The price of LPG increased up to 88p/litre (although I have paid £1.11 per litre for LPG on one occasion) and £1.88 for petrol at various times, whenever the price of the fuel that you were using increases significantly over the cost of the new fuel, reduces that payback period of capital expenditure……the return on the investment through reduced costs……..AVOIDED COSTS.
Going from 15p/kwh electricity to £1.50/kwh electricity, means that any capital expenditure by an end-user is paid-off in terms of the avoided fuel/energy cost in a shorter period of time if they install renewables. This only works for end-users!!!! Not for utility companies, not for the National Grid, not the government, except insofar as they install renewables themselves for their own use.
The cost of the fuel in WIND is ZERO. The cost of LIGHT in solar PV is ZERO. This gives a significant financial advantage to the end-user if the price of electricity or gas or coal, or uranium, any other fuel increases periodically to multiples of their usual value……..it happens.
The government cannot understand why we are not getting economic growth. The answer is that people are having to really push for economies of fuel usage because things are getting more expensive, housing costs are 6-7x your average wage for two wage earners, not 3-4x just one salary as it used to be. The economy has changed. Many people are having to watch every penny, and more people are having to do so.
Cost of solar PV for end-users. Say you install a system for £7,000 and have £1000 per annum electricity cost, which is reduced to £300 with the solar PV. You might say, that’s terrible, you’ve paid £7,000 and it’s going to take 10 years to get that saving back. And there’s the loss of interest, the loss of opportunity cost, etc, etc.
But you pay off £700 per annum with reduced electricity bills, 10% return in year 1, £700 in year 2 from £6300 is a 11% return, £700 in year 3 from £5600 is a 12.5% return, £700 in year 4 from £4900 is a 14.3% return, £700 in year 5 from £4,200 is a 16.7% return, £700 in year 6 from £3,500 is a 20% return, £700 in year 7 from £2,800 is a 25% return, £700 in year 8 from £2,100 is a 33% return, £700 in year 9 from £1,400 is a 50% return, £700 in year 10 from £700 is a 100% return.
The return on your investment is not linear. It is a non-linear dynamic system. The payback of your capital, from the capital invested doesn’t occur in a linear way in terms of % return with remaining investment, as the capital is repaid.
So what happens after year 10, when it’s all paid off?
What is the cost of electricity in real terms?
An inverter every 15 years…..£1500, equivalent to £100 per annum. Reduced output down to 80% at year 30. Washing the panels. If say a system produces 3000kWh per annum, going from year 10 to year 30, with the cost of one inverter change, would generate 60MWh for £1500. Shall we say £3000 to allow for panel washing.
60MWh for £3000………let me think about that………3000/60000……….5p/kwh…….NOOOOOO! It cannot be, that can’t possibly happen, electricity cheaper than now?………..IMPOSSIBLE, my sums must be completely wrong………….RENEWABLES ARE NOT CHEAP, THEY HAVE TO BE MORE EXPENSIVE THAN GAS GENERATED ELECTRICITY…………really?
What if the price of just gas is 10p/kwh in 30 years’ time? What if it’s 20p/kwh or spiked to £2/kwh?
Savings from year 10 to year 30, 60MWhs
National Grid Electricity @20p/kwh = £9,000 or @40p/kwh = £18,000
Does anyone else want 20%, 25%, 33%, 50% OR 100% RETURN on capital investment?
Why doesn’t the government want the population to have cheap electricity?
Why does it favour utility companies?
SpADs? Lobbying? The Exchequer? The Office of Budget Responsibility? The Treasury?
The obsession with Foreign Investment?
The government could do Loan Guarantees for individuals for solar PV and farmers for wind turbines, and could get manufacturing in this country.
Who wouldn’t want 5p/kwh electricity?
Sorry, savings for paying 5p/kwh for electricity instead of National Grid electricity
20p/kwh Grid electric gives 15p/kwh saving, 60MWh, gives £9,000 saving
40p/kwh Grid electric gives 35p/kwh saving, 60MWh, gives £21,000 saving
60p/kwh Grid electric gives 55p/kwh saving, 60MWh, gives £33,000 saving
80p/kwh Grid electric gives 75p/kwh saving, 60MWh, gives £45,000 saving
£1/kwh Grid electric gives 95p/kwh saving, 60MWh, gives £57,000 saving
£2/kwh Grid electric gives £1.95/kwh saving, 60MWh, gives £117,000 saving
A £7,000 initial investment buys significant protection against fuel price spikes/surges, with a bit of extra OPEX annually and around year 15
It’s a 25-30 year price fix for a substantial amount of your electricity.
A return (savings) of £117,000 from £7,000 is a 1670% return.
So what is the return on £10,000 investment, you never get any money back……….no it doesn’t provide cashflow, but it possibly stops you from paying HUGE sums of money for energy. It allows you to spend your money on other things, other than ENERGY, but only with that initial investment, that activation energy to get you over the energy hump, to a better state on the other side of the reaction, just like any chemical reaction requires a spark, an input of energy to become self-sustaining.
The problem with these savings, is that you are dealing with virtual money, what ifs, planning, contingencies, pricing risks. To put money in to save money, a return through AVOIDED COSTS.
Anyone prepared to bet on the price of GAS in 10 years’, 20 years’ or 30 years’ time?
If the sums add up now, how well will they add up between years 10-30?
What is the total cost of that 30 years of electricity?
90MWh, £10,000 total cost………11p/kWh……….just over the Average Wholesale price of electricity now. How many people want cheap electricity?
If governments and advisers only think in terms of profit and cashflow, and the huge tax that they can get out of the population with the “economic growth” we’re stuffed!!
Addressing the winter peak and sudden fluctuations can be from two sources: pumped storage, batteries or gas
turbines. Currently, there is 2.8 GW available in PSH, such as Dinorwig, which has an operating levelised cost of 1.8 p//KWh or gas with a market price some 5 times more but an exploitive price many times greater. Currently, there are some 9 PSH schemes, capacity 6 GW, with planning permission that can soak up excess and provide much cheaper peak electricity if there is a cap and floor price. That agreement is waiting for government’s decision.
The four existing UK PSH plants provide 27GWh of storage. Pumped storage does not run for more than 20 or so hours flat out so the storage in planning will add ~120GWh at best, say a total of 150 GWh
A typical average winter demand is 30GW. The installed and planned PSH would run out of stored energy in 5 hours assuming 100% efficiency and could not be replenished until the wind blew again. Sometime wind lulls last for weeks.
PSH is not a suitable long-term back-up for wind, (neither is BESS)
The UK will not be able to rely on Interconnectors through which we import up to 20% of our electricity if there is a multi-week drop in wind over Europe. This happens every few years during the winter. The UK will have to depend on its own resources but can we do it?
The UK Government’s Clean Power 2030 Action Plan includes a target for 4-6 GW of Long-Duration Energy Storage (LDES) which is defined as being runnable for at least 8 hours. 6 GW or new plant would provide about 48GWh of energy at a capital cost north of £5billion.
AS7, the current New Renewables tendering round, is part of the UK Government’s plan to deliver 95% of its electricity from renewable sources. When our prime energy sources are wind and solar then the UK will require an estimated 20,000 to 60,000 GWh of multi-week energy supply during Dunkelflautes (weeks long periods of no wind). For example, a typical 30GW winter load for just 2 weeks (336 hours) will require 10,000 GWh. This energy demand is some 200 times the amount that NESO propose. The Clean Power Action Plan seems silent on truly long-term storage.
Weeks-long electricity storage providing tens of thousands of GWh has NEVER been built anywhere including China. The delivery of this storage is thus unproven and fraught with technical risk. There is also the risk to the investor for what would be a brand-new market full of technical uncertainty. By implication the delivery of storage at scale would have a lead time in excess of five years AFTER a government commitment to fund it. It would therefore appear that the UK has no credible strategic plan to cope with a Dunkelflaute.
Dunkelflautes and UK plans to deal with them are further discussed here: https://bit.ly/UKEA-Coping-with-the-Dunkelflaute
AJ said : The UK will not be able to rely on Interconnectors through which we import up to 20% of our electricity if there is a multi-week drop in wind over Europe.
UK will not be dependent on any of the new long duration energy storage facilities you refer to.
The main way of dealing with UK Dunkelflaute won’t change – the UK has contracted with all 27 GW of existing grid gas plants in 2029, with NESO T-4 (2029) capacity contracts costing £60/kW-year. Add another 8 GW of new gas plants for additional demand, to take the UK total up to 35 GW, and the cost will be £2.1bn per year. This solves the problem completely of course, though interconnector power would be expected to be cheaper than actually running the gas plants much of the time. Likely by 2035, the gas plants would be converted to green hydrogen fuel to remove fossil fuel generation completely from the UK grid. The green hydrogen would be produced by electrolysis and could be stored in depleted oil and gas wells, of which UK has plenty.
By 2030, UK will be a net exporter of power (typically from wind) – the reverse of the current situation.
Many UK connectors are not supplying energy from wind.
With 88 TWh of hydro electricity storage, Norway’s main constraint is the total hydro water, so sending Norway surplus wind power will help ensure there is more hydro energy available in low wind conditions, also subject to Norway’s total generation capacity.
A possible Icelink connector with Iceland would supply geothermal and hydro power, though it seems unlikely to be developed now.
The French interconnectors are a means for France to export its nuclear power, not wind power.
AJ said “When our prime energy sources are wind and solar then the UK will require an estimated 20,000 to 60,000 GWh of multi-week energy supply during Dunkelflautes (weeks long periods of no wind).”
The NESO simulations are saying that the long-duration backup from gas plants will need to supply around 5% of demand – which would be 15 TWh (15,000 GWh) based on current demand of 300 TWh. The contracted gas plants can keep going indefinitely, of course.
One reason for the discrepancy with your top end figure is that the 2030 Clean Power plan specifies 20-30 GW of grid batteries with a few hours duration. Because most low wind conditions are short, that takes care of most of the gaps by GWh.
AJ said : The UK will not be able to rely on Interconnectors through which we import up to 20% of our electricity if there is a multi-week drop in wind over Europe.
UK will not be dependent on any of the new long duration energy storage facilities you refer to.
The main way of dealing with UK Dunkelflaute won’t change – the UK has contracted with all 27 GW of existing grid gas plants in 2029, with NESO T-4 (2029) capacity contracts costing £60/kW-year. Add another 8 GW of new gas plants for additional demand, to take the UK total up to 35 GW, and the cost will be £2.1bn per year. This solves the problem completely of course, though interconnector power would be expected to be cheaper than actually running the gas plants much of the time. Likely by 2035, the gas plants would be converted to green hydrogen fuel to remove fossil fuel generation completely from the UK grid. The green hydrogen would be produced by electrolysis and could be stored in depleted oil and gas wells, of which UK has plenty.
By 2030, UK will be a net exporter of power (typically from wind) – the reverse of the current situation.
Many UK connectors are not supplying energy from wind.
With 88 TWh of hydro electricity storage, Norway’s main constraint is the total hydro water, so sending Norway surplus wind power will help ensure there is more hydro energy available in low wind conditions, also subject to Norway’s total generation capacity.
A possible Icelink connector with Iceland would supply geothermal and hydro power, though it seems unlikely to be developed now.
The French interconnectors are a means for France to export its nuclear power, not wind power.
AJ said “When our prime energy sources are wind and solar then the UK will require an estimated 20,000 to 60,000 GWh of multi-week energy supply during Dunkelflautes (weeks long periods of no wind).”
The NESO simulations are saying that the long-duration backup from gas plants will need to supply around 5% of demand – which would be 15 TWh (15,000 GWh) based on current demand of 300 TWh. The contracted gas plants can keep going indefinitely, of course.
One reason for the discrepancy with your top end figure is that the 2030 Clean Power plan specifies 20-30 GW of grid batteries with a few hours duration. Because most low wind conditions are short, that takes care of most of the gaps by GWh.
AJ said “the UK Government’s plan to deliver 95% of its electricity from renewable sources.”
Why are you not including non-renewable nuclear power in the 95%? Nor are you mentioning that the Drax bioenergy is despatchable – and will be negative emissions by 2030 (at least 2 Drax units if not all 4).
AJ said “For example, a typical 30GW winter load for just 2 weeks (336 hours) will require 10,000 GWh [of LDES].”
Except it wouldn’t be that much, would it, because you aren’t taking account of nuclear + Drax.
AJ said “This energy demand is some 200 times the amount that NESO propose. The Clean Power Action Plan seems silent on truly long-term storage.”
The 2030 CPP includes the gas plant backup for long gaps in wind and solar, which is all that is necessary. There is no point in making the 2030 CPP dependent on a set of LDES technology which hasn’t been proven yet. The CPP is quite rightly limited to proven, grid-scale technologies. LDES can be introduced on top as and when it becomes available at scale.
AJ said “Weeks-long electricity storage providing tens of thousands of GWh has NEVER been built anywhere including China.”
This is only half true. Norway’s hydro storage provides a capacity of 88 TWh, which is enough to power the whole of Europe for 10 days, of course, or the whole of Norway for most of the year.
AJ said The UK has no credible strategic plan to cope with a Dunkelflaute.”
Not true. We cope with these fine at the moment, and not much UK generation is expected to be decommissioned between now and 2030 – just a few GW of nuclear. UK will likely build a few GW more gas plants to compensate.
p.s. I think this is the first time the web site has correctly stored and re-used my name and email address!!@greenenergytransition.info
p.p.s Except it gave me a security error instead and I had to post on another brower!
They are two different situations. The winter peak is about 8GW for about 5 hours so a further 5 GW for 5 hours would cover it. For long-duration storage a far higher storage is required for which the mature technology is pumped hydro according to various studies. The ESA now have satellites that can predict wind speeds several days in advance so can more accurately plan storage use.
David I am not sure which post you are replying to.
FYI the peak demand for winters 20/21 to 24/35 as defined by the Transmission System Demand Triad ranged from 44.2 to 47GW; NESO is projecting a 60.6GW max demand in their 2025/6 Winter forecast (I have no idea why it is so big). I do not know what your figure of 8GW refers to
I had previously investigated large multi-day storage using ChatGPT prior to today – its analysis was that none of the large PSHs currently installed would run flat out at their installed capacity for more than a day. On reading your comment about pumped hydro I cross-checked my work using Google Gemini. Gemini did not identify any plant providing flat out GW capacity for more than a day. Please wouold you provide details of the PSH which can run at their rated GW capacity for more than a day.
The winter peak is during the perion of 5pm to 10pm and normally shows on the demand curve as a 8 GW hump requiring about 35GWh storage. Below that could be wind, solar and nuclear (for base load). Studies have shown that there could be some 200 possible mid sized PSH sites in UK The Benefits of Long Duration Electricity Storage, BEIS Research Paper Number 2022/019 concluded that PSH was the only mature attractive for LDS especially if using existing infrastructure such as lakes, reservoirs or abandoned quarries now filling with water (there are some 20 in England and Wales adjacent to high hills). This is only part of the requirement and other options for LDS could become attractive.
There has been much discussion of the technical as well as financial options; both need to be resolved (especially the subsidies, direct and indirect, be transferred to storage – with preference given to long term (circa 100 hrs) energy storage;
I believe that Kathyrn has mentioned (elsewhere) the issues with low usage of gas turbine systems – which makes it difficult to cope with meteorological large scale periodic calms.
The language that National Grid and the BEIS use is biased to short term storage (eg MW rather than MWhr and pumped hydro eg Dinworic is only 4hrs) and not appreciating the opportunities for Energy Storage as opposed to Electricity storage.
For example if energy is stored as heat then it may also be used for heating or cooling (remember the gas powered refrigerators?) as well as CHP (via heating networks) – which should, I would think, improve the economics – as part of a thinking including a systems approach.
It might be worth considering that a CHP use of gas turbines could include external gas (working fluid – not necessarily combustion) heating (so enabling stored hydrogen or high temperature heat stores to be utilised – hence reducing risk of investment in such generating capacity).
Having said that I am unsure that, even for the cheap thermal energy storage, if the cost of grid scale long duration (not the rather pathetic government definition) would be low enough to be affordable.
As for localised (or domestic) energy storage I suspect that the economies of scale do not work well for such small electricity generators and they could become expensive freeloaders – though I would be happy to be proved wrong and that cheap (enough) gas turbine systems and absorption based chillers are available that they might contribute in periods of negligible wind or sun.
“Techno-Economic Comparison of Electricity Storage Options in a Fully Renewable Energy System” see https://pure.tudelft.nl/ws/portalfiles/portal/177830478/energies-17-01084.pdf “- but thermal storage is limited to those low temperatures suitable for steam turbines.. note cost of generation and cost of storage……
https://gasturbineworld.com/gas-turbine-costs-kw/ – includes costs (CAPEX) for simple and combined cycles….”Multi-shaft configuration rated 1,083MW and 59.4% efficiency, $958 million total (950 $/kW installed) and 12.20 $/kW fixed O&M cost.”
Confirming, contrary to popular misconceptions the UK does have quite a lot of PHS Pumped Hydro Station potential, albeit expensive potential.
The University of NSW, Rob Blakers, did a world wide first look at places that pumped hydro storage PHS could potentially be installed :
These are building a new high “small” dam and reservoir linking to an existing water body/or new lower dam.
It’s only the raw potential, a lot of sites would be ruled out for various reasons but roads, villages and towns have been moved before.
The mapping is online “Access our Global Pumped Hydro Atlas here” :
https://re100.eng.anu.edu.au/global/
They are mostly in Wales and Scotland … you will need to turn the “globe” to go to the UK, then select the outputs.
There are a lot of sites with 15 GWh at 18 hrs storage
Dinorwig Power Station is 9.1 GWh.
Looking at the map
sites with 15 GWh at 18 hrs storage
1 Northern Ireland
16 Wales
>50 Scotland
If you zoom in you will see the 2 dams and connectors.
GIS mapping estimates :
Area (ha)
Volume (GL)
Dam Wall Height (m)
Dam Length (m)
Dam Volume (GL)
Water/Rock Ratio
Distance between dams
GWh
PS We also have the high density fluid PHS pumped hydro storage from RheEnergise that are building a demonstration PHS. Hills 2.5x lower than a project using water. https://www.rheenergise.com
One thought on the price of fuels and metals/minerals. If the price of metals/minerals goes through the roof, compared with the price of gas/oil, it will make burning gas/oil/coal cheaper than installing wind turbines and solar panels for the end user. It’s all about price ratios. With the advent of AI and with data centres and expanding the push to install Hundreds of Billions of worth of Renewable power generation capability as fast as possible, the cost effectiveness of wind turbines and solar panels might not last very long if it pushes the demand too high and fast for metals and minerals………..or will it? How good/capable are the supply chains, from mine to product?
If everyone is pushing for growth to pay off all that national debt (or to make it a smaller percentage of GDP), it may be self-defeating!!…….oh the unintended consequences of it all!!!!
TS said ” If the price of metals/minerals goes through the roof, compared with the price of gas/oil”
This isn’t very likely because there are a lot of substitutions available for the key metals/minerals.
Sodium ion batteries are perfectly suitable for grid use, though a little heavy for top-end BEVs. No lithium.
Aluminium is an good substitute for copper as a conductor in cables, motors, generators and transformers. Generally there is a cost and weight saving, though not a volume saving. Aluminium wound transformers, motors and generators are already available. All overhead power lines are aluminium on a steel core. The main snag with aluminium for undersea/underground cables is a larger bending radius when carrying on supply ships.
Niron Magnetics iron nitride permanent magnets are cheaper and perform better than rare earth based permanent magnets.
Modvion is developing a range of wooden onshore wind turbine towers. Wood is an excellent substitute for steel in towers, with a number of advantages.
Mainly answering John Dalgliesh,
I checked the University of NSW survey and found many of the sites in Wales were damming large rivers, such as the USk and flooding villages. I did my own survey and found about 55 sites in England and about 55 in wales where existing reservoirs, lakes or abandoned quarries/open cast coal tips could be linked, mainly by pipes for speed of implementation to bunded reservoirs on flat hilltops. We have about 440 large dams in the UK (higher than 15m)The most attractive were the abandoned quarries, about 20, that are filling with water and would typically generate about 200MW for 15 hours. Many were in depressed areas, such as the S Wales valleys and could provide technical and semi-technical jobs to provide livelihoods, reserve water supply during drought, and emergency high-level fire-fighting water.. Most other options dont have social and environmental benefits,
I worked in S Wales making slag heaps safe after Aberfan. One of the collieries in Bedwas was 1000m deep and is filling with warm water between 30 -40Deg. C. This could provide a combined PSH and heat project for homes, industry and winter agriculture. The latter could be viable due to 50% of winter vegetables coming from Spain where they have a drought, have mined groundwater down to uneconomic levels and are now developing expensive desalination for greenhouses. Also, Brexit has added a premium. We have something like 4000 deep shaft mines in UK so the potential is enormous.
Hi David. Interesting that you mention other uses of energy storage.
When I contacted the BEIS about a call for comments they opined that LDES was only for electricity and other applications (such as use of “waste” heat) would be precluded from consideration. I felt that this was myopic and did not appreciate that additional applications from the storage would, effectively, reduce costs of electricity storage as well as providing additional benefits (such as local or industrial heat networks or, as you mentioned agricultural and aquaculture & Pisciculture ).
I think that making sustainable use of waste heat in the food supply chain does not seem to have rated mention – but, then again, siloed thinking is far too common in government and lobbying organisations ;-{
All this reminds me of the development of the Railways. Followed by the Beeching Cuts in the 1960s. From Wikipedia “an objective of stemming the large losses being incurred during a period of increasing competition from road transport and reducing the rail subsidies necessary to keep the network running.”
Subsidies………shouldn’t be necessary at all, and the government aren’t questioning it.
The railways really took off in 1840s, so it took 120 years when passenger numbers were declining for the rationalisation of National Railways (British Rail) to occur, so we’ll be rationalising the National Grid around 2120. You never know, it might be earlier with the rate things change these days.
When people get tired of higher prices of National Grid electricity, they’ll go off-grid as much as possible if they have the technical know-how, that’s my plan.
Although, the government appears to justify its existence by subsidising everything these days for some section of the population. When did self-reliance, pride in earning/paying your own way go out of fashion, where obtaining a subsidized life is now a life-style choice, just like the electricity industry.
If the government looks for foreign investors, is that the new mentality? We can’t do anything for ourselves any more, even the government looks for subsidies from foreign investors.
How much longer will foreign investors be willing to invest in the UK, if all that happens is that the government just keep handing out more and more subsidies, but is that the problem, the subsidies are going abroad?……..where does all that money from the subsidies end up?
Increasing competition from abroad for products we could manufacture or services. We just have to hope that the service industry can keep the country afloat.
When are the population and government going to grow up and stop this infantilization?……..its becoming an epidemic.
Railways are an interesting similar system. Through a cross parties politicians’ conceit (Beeching and especially Barbara Castle closures only exposed by the obvious insanities of the Serpell report) ignored the claims of non-urbanites (based around the Parliamentary trains) and the ignorance of the railways’ origins in the need for freight (commuting a much later thing) ; this still continued with Andrew Adonis’s focus on the London needs for HS2.
However this seems to be analogous to the current approach of neglecting rural economies and needs – pretty much as the electricity lobbyists seem to be imposing their needs on rural communities (I have yet to see plans for hydropower and giant wind turbines in London!) without benefits – such as infrastructure or employments.. (It is worth noting that HS2 was the most disliked project by Tory voters)
Rail is thus and interesting analogy.
Going off the grid is only for the well heeled – especially if they are disconnected, so as to avoid freeloading on the electricity consumers. But the need for making such technology affordable and useful would be most welcome (if, of course, the government departments/quangos would support such innovation and research…
Rural communities could do with some of the wealth spread around, but usually it only ends up inflating house prices. As I suggested earlier, if each farm, and manufacturing businesses too if they have a suitable site, were given a right to erect one turbine and got the income, that would help with “levelling-up”, where instead of foreign investors, and wind farms, it would spread the wealth around the economy more liberally. It would also give businesses and farms cheap power, and extra income.
For all the words of the Conservatives saying “levelling-up” and the actions by Labour, now wanting to take Council tax from the South to invest in the North, or property taxes that end up mostly on the South (like redistributing Council tax from the South to up North) , they could have gone for an installation strategy that automatically puts significantly more of the economic flow through the North, liberally spread around farms and businesses up North and rural communities. If they start double taxing the South based on asset values, to help boost the house prices in the North, they really will damage the economy.
Not wind farms, but individual turbines, sited to benefit the local population, both in terms of lower electricity bills and income into each area…….the manufacturing boost that is needed. Letting them have the wholesale price from the power they generate, or free if they don’t take very much, but getting the income and profit.
A missed opportunity that could have almost free-of-charge, could have helped manufacturing especially. They’ve spread various government functions around the country to help the different parts of the country, getting government jobs, that has helped many local economies.
But as long as there is a huge disparity between house prices and income, helping a few businesses or farms with extra income would be no good, unless that enabled them to pay their staff more. But as long as there is a housing shortage, prices will inexorably head higher and higher and slowly become unaffordable for more and more people.
Governmental myopia?
This is why you really start to question who is advising them?
If there are government jobs, tax offices, NHS hospitals, schools, naval air and army bases, universities, i.e. huge income for all around the country supplied by taxation……….footballers on mega money, various international companies, how much more do they want…….isn’t that enough? more than 50% of the GDP.
How much more subsidy do various parts of the country need if there is huge national income and taxation already flowing through those “deprived” areas? Can’t they create some worthwhile manufacturing or service industry jobs, and give them cheap power instead of taxing the South?
It’s almost like they don’t understand that there are poor people down South as well, just as deprived as those up North……..try living on minimum wage down South.
The outcome will be levelling down, not levelling up……..just you wait and see. Policies based on prejudice and jealousy never do any good.
Just think, they could have set up a few wind turbine manufacturing plants where the old coal mines used to be and there is a need for jobs. Many more smaller 1MW turbines……..that would really have killed off any possible objection to wind turbine installations especially with significant manufacturing here in the UK.
UK self-sufficient for power through our own efforts and manufacturing, and other businesses getting cheap power………what’s not to like?
I fear that we are veering off topic; though interestingly. Though I was considering parallels with the railway system and political attitudes. it should be remarked that UK government seem to believe that opportunities (such as design and build of appropriate wind turbine technology) will be realised in the UK this has not been the case (and similarly for other energy technologies – they are developed elsewhere and imported (at cost).
IRENA director-general Francesco La Camera opened, in Bonn, The Innovation Summit (organised by the International Renewable Energy Agency. June 2025) By saying that
“in industrialised countries, “innovation often means upgrading legacy systems, modernising grids, integrating artificial intelligence and scaling up digital platforms to manage complexities. It is all about acceleration.”
Also “He added that “in emerging, developing economies, innovation can also take on a different shape”.
In England the rural economies were those that developed radical and disruptive innovations; this is no longer the case, ;-{
So where are the innovative energy technologies – both at grid scale and domestic (local grid) to be developed if there is no governmental or local interest in resourcing them (i.e. like green technologies – there are subsidies but they are not for advanced or exciting new technologies or research); they are not helping form the innovative new companies – because they are focussed on incremental improvements to legacy technologies. (and large foreign companies)
Back on subject then: There are a number of wind turbine manufacturers in the UK. At least they got most of the manufacturing set up in this country, for wind again effectively in rural areas, along with the maintenance jobs. Helping GDP, employment and balance of payments. Great work!!
But there are a considerable number of power companies as well around the country. …….
I think Boris said “The Saudi Arabia of wind”. Saudi Arabia give their whole population really cheap energy, along with the massive exports. With our National Grid and the huge costs added to the wholesale price, and certain aspects of the wholesale price itself, when are the government actually going to work out how to give the population cheap energy?
They are failing on the second part of the deal, unless you install solar PV yourself, but as many rightly point out that’s only helpful for 6-9 months of the year. You have to find ways to get the wholesale pricing to the end-user, not with a massive mark-up and profit for separate companies in the UK.
In Saudi Arabia, they don’t tax the internal country use of petrol, etc, we have fuel duty. For electricity you have to pay for the distribution, i.e. the National Grid, but we don’t need:
1) Centralised power where it could be installed by the end-user or 2) cartel pricing for electricity.
These are the two most significant changes that could be done to reduce the cost of electricity.
The third one is starting to use CHP, that could be adapted to run on hydrogen in the future, not separate CCGT. Getting every bit of waste out of the system.
Do we want to be the Saudi Arabia of wind or not?……..it appears to be another broken promise by those in power. If they can’t achieve their promises, then they prove themselves to be liars, or just incompetent.
As I have said, if the government won’t do it, I’ll certainly have a go at it myself.
I’m just working on a basic price of 5p/kwh electricity, same price as gas with CHP, but I’ve got to work out how much capital investment it’ll need, and the pay-back/risks………is it a mirage or an attainable destination?
Wholesale prices of 5p/kWh are not a mirage, but it is too much to expect domestic bills to come down to that level. Or to be able to supply rooftop solar power at that cost, as it is invariably a lot more expensive than utility-scale solar.
Solar availability of only 6-9 months per year isn’t a huge issue, if you can export it and get paid money to offset your mid-winter bill.
In the grand scheme of things, air conditioning installations are expected to grow hugely in the UK as global warming leads to periods of extreme heat. Once you install air conditioning you are likely to use it for a lot more of the summer than you will have bought it for. And days of solar PV correlate perfectly with days when air conditioning is needed. Add a battery of a couple of hours or so to ensure evening coverage too.
So installing domestic solar PV + battery alongside air conditioning provides great synergy in keeping summer demand versus supply balance in check.
And I was thinking, with 2 or 3 small heat pump units (£2000 installation cost each) around the house, with 5p/kwh self-generated electricity, I’ll be down to 1.5-2p/kwh for heat for a proportion of the output…………cheaper than gas heating. Not like paying for 20p/kwh electric to get 7p/kwh heat, more expensive than gas, that the government wants us to do. 5p/kwh, might just be worth doing direct electric heating with 3x £50 heaters.
But when do you get to the point of ultra-efficiency, where any capital expenditure just doesn’t give any more financial gains, even if you get an extra 10% or 50% energy efficiency gain?
It seems unlikely that you would get better efficiency out of multiple smaller heat pumps than a single larger heat pump. And, as in my other response, you want a lower temperature, higher flow, rather than the opposite.
https://greenporthull.co.uk/what-we-do/siemens-gamesa
https://www.vestas.com/en/media/company-news/2024/vestas-to-repurpose-isle-of-wight-factory–uk–to-manuf-c4080778
If you can’t get all manufacturing in this country, at least get as much as possible. If you’re building massive off-shore turbines, you can only have manufacturing on the coast.
But the Vestas factory is heading for onshore blade manufacture……..at last!!
Government estimates are that £2-3 billion PER GIGAWATT of offshore wind installed is added to the UK economy, and offshore wind exports are running around £2.5bn per year, even before UK starts to develop significant surpluses. That is from page 11 of https://assets.publishing.service.gov.uk/media/68920c9066bdd4490c610990/industrial_strategy_clean_energy_industries_sector_plan_accessible.pdf.
Supply chain development is just as valuable as direct subsidy of new technology development, as it enables British firms to compete for offshore wind business across the world (not turbines, but rotor blades, cables (high value), foundations etc. etc.)
If the government hasn’t got manufacturing in this country, or gas supply for that matter, what happens when you need £4,500 of imported products (two inverters at £1,500 each and £1,500 of panels over the life-time) to generate 90MWh of electricity, instead of 180MWh of gas working at 50% efficiency?
If you have gas at
1p/kwh, gives £1,800 of imports
2p/kwh gives £3,600 of imports
2.5p/kwh gives £4,500 of imports
3p/kwh gives £5,400 of imports
4p/kwh gives £7,200 of imports
5.6p/kwh gives £10,000 of imports
10p/kwh gives £18,000 of imports
So, without manufacturing in this country, if the gas price stays below 2.5p/kwh, then importing gas gives better balance of payments, but as soon as it goes above that 2.5p/kwh, installing that solar PV in your home for £7,000 helps to improve the trade deficit over the long term……please notice I have stated over the long-term.
But of course in this case, it might affect the calculations to a smaller extent whether it is installed by a utility company or the end user.
If we were being self-sufficient in this country, doing all the manufacturing ourselves, then the improvement in the balance of payments would be far better.
Just hope it isn’t foreign workers, (economic migrants) (you know the ones turning up on the beaches) take the worst case scenario of exporting 100% of their wages who are doing the installing, because then if that £7,000 was all going abroad, shall we make it £10,000 for the lifetime example as well above would take the necessary gas price to go above
either the 4p/kwh (for £7,000)
or 5.6p/kwh (for £10,000) to mean that the installation of the solar PV has improved the balance of payments.
Saudi Arabia can afford to employ economic migrants, because of their huge balance of payments excess (income in their favour), with all their oil exports.
But of course, without manufacturing in this country, you’ll be exporting a considerable amount of your wealth over the short term to become self-sufficient for power……..much faster than for importing gas.
Self-sufficiency, that much underrated quality.
TS said “So, without manufacturing in this country, if the gas price stays below 2.5p/kwh, then importing gas gives better balance of payments, but as soon as it goes above that 2.5p/kwh”
It is unlikely that wholesale gas costs + carbon costs will ever now go below 2.5p/kWh again.
I don’t know why you think that. Henry Hub is comfortably below 3$/MMBtu or 1¢/kWh today. Forward NBP gas markets show prices of 60p/therm in 2031 – or around 2p/kWh. The next government is likely to abolish carbon taxes.
Carbon taxes……another stealth tax…….just like adding VAT to fuel, but you call it something else. Adds the cost onto the low paid, the poor, but, hey ho, that’s how it goes with governments……..£50 Billion raised annually in the UK from carbon taxes supposedly, but if the National Health Service needs it, why not. Although, it’s almost as if the governments of all flavour have been adding more tax burden, but keep coming up with “blackholes” to fill……..it’s almost as if none of them know what they are doing. But if they keep needing to hand out subsidies, and pay for poor market and contractual arrangements, I’m sure they’ll need to keep coming back for more, as they make things overly complex for them to even understand it themselves.
Somehow, I don’t see how, whatever the next government is, that they’ll be able to abolish any tax……..our debt per unit GDP is still growing……….£50 Billion less carbon tax would be another £50 Billion blackhole to fill. I can only see the next government increasing the carbon tax, if they can’t tax the richest people because they just emigrate.
Labour has shown that it is unwilling to control spending or income tax (it looks so bad to them), so raising other taxes on average people is the only way out.
Henry Hub may have import prices less than 2p/kwh, but just add on the extra carbon tax that they’re going to have to do, there’s almost nowhere else left to tax.
Taxing energy lowers overall tax take because it kills jobs that pay taxes and enables people to spend which also leads to more tax payments. Getting energy costs down would be a big boost for the economy. People would have more to spend if they don’t have to pay the taxes hidden in the price. It’s not the only tax area that has been pushed into diminishing returns on the Laffer curves. Others include taxes on tobacco and alcohol, CGT (allowance reduced, discouraging crystallisation of gains), North Sea oil and gas, self employed NICs (it is likely that overall NICs will fall soon once special offers to top up missing payments come to an end), bank levies. I suspect that several other taxes have lower inflation adjusted yields, and some will soon be suffering that fate (e.g. SDLT because housing transactions have fallen off a cliff, particularly at the top of the market).
It’s tricky to know how certain things are going with the tax take trends, but the fundamental problem is that house price to wage ratios are so high, that if more and more of people’s income goes on housing costs, the rest of the economy shrinks, the fundamental economic problem that needs to be fixed is the housing shortage, which many children are solving by living with their parents for much longer. (We’re getting back to multi-generation households). The interest rate increases haven’t helped with some people with free-cash to spend, it’s just sucked more money out of those with mortgages. It might go to those with savings, but if inflation is high, you can’t spend the money if it’s just keeping your assets value up with inflation, so cashflow through the economy decreases, unless you’re getting higher gains from other assets is working……..higher tax receipts than expected?
The carbon tax has achieved exactly as you have said, but with North Sea Oil and Gas revenues drying up with the lack of investment, they almost had to shift from a production based tax to a consumption based tax to maintain the revenue stream……..one has to ask, if they are losing certain revenue streams with the switch to renewables and cutting down on oil and gas, what are they replacing it with?……..other taxes are bound to go up to replace it, if they don’t increase the carbon tax as less and less gets used.
You don’t have to get energy costs down per se, you can get people to use it more efficiently per unit of output – mile travelled, items manufactured, hours of production, heat output used to warm your home, light output, to reduce costs…..an efficiency drive has the same effect. Many people have achieved the easy gains through the change in products available – LED bulbs, downsizing the car to a more economical one, house insulation, energy efficient appliances……..why else has the UK electricity demand reduced by 30% from its peak, even when GDP has increased by 25%…………productivity per unit energy has increased……..by 50%? The economy isn’t in a bad shape, it’s just that the politicians just can’t seem to stop borrowing. Subsidies and borrowing.
The government can’t understand why productivity hasn’t increased…….they’re measuring the wrong productivity measure, productivity per unit of energy has increased 50%…….a certain sign that the family finances are under strain.
But if people are having to get inventive to increase their efficiency, it means that they are having to find ways to spend less overall.
More and more people aren’t having children or fewer children, the natural feedback of high living costs. It means that if they get their parent’s assets, more and more just don’t need to work……..the only way to solve the housing shortage by depopulation, if enough houses aren’t built.
The only good thing about renewables that will stop the government over-installing are the power companies themselves. If they start to get feedback that they can’t get a return, they won’t invest, they won’t install, and if they find that prices keep going negative because people have stopped needing their output, it’ll be self-limiting.
The government may keep pushing for more, at higher and higher ASPs to push to get to NET ZERO in the next 5 years, but eventually, there will be no takers, even if we haven’t got to NET ZERO. Whatever level the ASPs get to, with expensive electricity, it’ll still be worth installing your own renewables or doing co-generation……..perhaps it will self-correct anyway, even if the government are making a hash of it.
They’ll just have to claim all the assets of those who die without children to pay for their extravagance, else they are going to put more and more onto harder and harder pressed families, as they can’t stop their taxing, borrowing and subsidies.
Carbon taxes are very clearly in a different category to income tax, NICs and CGT. Carbon taxes represent a proportion (currently rather less than 100%) of the cost of the damage which burning fossil fuels is likely to do to the world economy, accumulated over time. Because they don’t apply to all forms of energy use, they ensure that the cost seen by the energy purchaser reflects the true cost to society, and not just the partial cost of extraction, processing and transport.
So the intent of a carbon tax is to push consumers into forms of energy which don’t carry carbon taxes, eventually resulting in no one paying any carbon taxes at all (because they don’t use unabated fossil fuels at all). But it doesn’t carry the impact you predict for the economy, because there are other forms of energy with a lower total cost to society, and it is this which must be optimised (minimised), to get maximum long term economic growth.
Taxes on smoking are in the same category – to persuade people to stop smoking.
Taxes on drinking are to both raise revenue continuously and to contain drinking to ensure susceptible individuals can’t just get themselves blotto all the time and die young.
Income tax, NICs and CGT are entirely to raise government revenue, and there is no prospect they will ever disappear.
But then it does depend on how fast you go for all that installation. If you have really got to get it installed in the next 5 years………just expect the balance of payments to get much worse before it gets better. If you are installing it steadily, there’s no problem, it goes at roughly the same rate as the gas imports anyway on average over the long-term.
Also, if you’ve got a bad balance of payments, you really don’t want more people (economic migrants) making it worse………it’s the same principle as having other people look after your aged parents………you export your wealth, personal family wealth by paying someone else to do it for you……..Can we afford it? Or you expect someone else to pay through the taxation system. Can we not afford to do renewables? What are the overall economic effects? Just as we should ask the question, am I paying my own way, so too should the country.
Or are we having to support more people who want a subsidized life from other countries……….economic migrants who take advantage of the benefits system.
And when you consider that the electricity from that £1,800 gas at 1p/kwh is going to cost you at least £30,000……..how much do the utility companies pay for that gas? How much of your wealth do you want to export because of their inefficiency?…….partially enhanced inefficiency by the politicians choices (policies).
Please note, these are just rough calculations, but you get the drift.
You can probably see that if Free-Trade means that certain countries are pumping their wealth abroad due to balance of payment deficits, through not being self-sufficient enough, the borrowing per unit of GDP would only get worse…….if they’re not printing money. If you want hyper-inflation, then start printing the money.
Foreign investors only really work if they improve EXPORTS (the income of the country). or the half-way house is reducing IMPORTS enough, such that other EXPORTS make up for the profit that they export. (Donald Trump and his Tariffs) a very good shove to get a better balance. Otherwise they are just exporting wealth, and making the balance of payments worse, and the borrowing per unit of GDP increases for the country as we try to pay for national services……the standard of living.
Are we really earning the standard of living to which we are becoming accustomed, or are we just getting subsidies to maintain our profligacy and self-entitlement our childlike qualities?
Of course Labour increase taxes to export the wealth of the richer to the poorer in society a worthy cause for many less fortunate people…….but sometimes it is to support the profligacy of some people like some politicians themselves with their bad decision making, and others who want that subsidized life.
Sometimes governments start doing things in which they should never have got involved, or at least, should have more carefully considered how they should be involved and the effects of certain decisions and policies, where someone will pay for it in the future, if we aren’t paying for it already.
Choose wisely.
Did I say non-linear dynamics?
Try this one. Say you have an electricity price spike to £2 per kwh in YEAR 1, paying off all that capital expenditure, what happens to the price of electricity for solar PV system, 87MWh over 29 years, shall we say £4000 for the midlife inverter change + panel washing……….drum roll……..4000/87000……4.6p/kwh…….but it is sensitive to panel washing costs, so if you do it yourself………..
£1500/87000……………1.7p/kwh…….now what was the price of that gas?
again, can anyone please tell me what the price of gas is definitely going to be over the next 30 years………….else how am I to know what to do?
How about the price of electricity…….
In a system of punctuated equilibria, where there are periods of stability and periods of rapid change, where would you place your bet? your £7000 bet?
Does anyone really know how to do sensitivity analysis, or real world comparisons, instead of the idealistic LCOE calculations?
When is the National Grid ever going to give me 1.7p/kwh?…….but I know the condition when I would achieve it for myself.
Spending £7,000 isn’t just about paying for electricity. In this world, things are greater, much greater than the sum of their parts, which is not how most people treat things. They see an object and its physical form, perhaps the current financial calculations, but miss all that extensive virtual reality and virtual financial fluidity of non-linear dynamics. A solar PV system that has an element of an insurance policy as part of the purchase price, not an insurance policy, like car insurance, where you have to go to a broker or insurance company, but actually inherent in the solar PV system only after it is constructed, where if you have control over certain parameters yourself, you can change things by MAGNITUDES!
Of course, the price of gas could collapse, and yes the price of electricity could come down……..but how would that happen if there is huge employment in the electricity industry, paying for the lease of land of farmers or crown property, the profits required by the power companies, the national grid and the utility companies the government’s subsidies, carbon pricing?…….All compounding to increase the price of electricity………British Rail in 1960s……are we actually there now, not 2120 as I previously suggested? I think the peak National Grid occurred around 2000-2010.
Even a humble solar PV system is greater than the sum of its parts.
We could start in South Wales, where people don’t mind wind turbiles alongside slag heaps on their hills, They have over 600 deep coal mines with water between 30-40 deg.C that could be combined for pumped hydro and heating, and deep open cast coal pits filling with water next to hills some 200m higher for larger pumped storage.
It’s great to see so many brilliant ideas being put forward by contributors on this blog. It wouldn’t take much extra energy to get the temperature up to 60 oC with a heat pump. Could they just dig deeper and go entirely for geothermal?
https://www.gov.uk/government/news/landmark-mine-water-heat-scheme-goes-live-in-wales
There are some good things going on around the country.
Heat pumps work most efficiently if the temperature difference is as small as possible. It would be better to distribute the ex coal mine heat at 30-40 deg C (because the heat loss would be lower), then raise it to 50 deg C for domestic use, rather than 60 deg C. That does require decent insulation or an approach which doesn’t involve radiators (underfloor heating, air flow heating). A large flow at a lower temperature is thus desirable rather than a smaller flow at a higher temperature – so no microbore pipes.
Another important design factor is to keep the temperature of the building constant, so you don’t have to raise the flow temperature well above normal to heat it to a specific temperature for, say, two specific periods per day (e.g. morning and evening).
Re – economics of austerity – current Labour government policy
Workers have been ripped off by neoliberal /neoclassical economics/politics for the last fifty years. The vast majority of the population can see that life is worse – real wages stagnant or declining, cost of artificial market based energy up, cost of the supermarket shop up, housing cost or rental up, essential services – water, energy, up, privatised health costs up, education costs up with permanent privatised loans, poor public transport services and suburban sprawl requiring 4 car families to move around.…. i.e. declining standards of living for the vast majority.
Neoliberal economics – market good, small government, libertarian ideology of Mont Pelerin Society, Hayek, Friedman et al, was supposed to deliver growth… well it has not. The financialisation of western economies, liberalisation of the FIRE sector (Finance, Insurance, Real Estate), privatisation, money making money, QE asset price inflation,… over the last 50 years since Reagan and Thatcher has benefited the wealthy at the expense of the lower and middle classes.
This is an inherent feature of a free market system, that over time wealth accumulates with the wealthy unless redistributed. Picketty, the French economist has shown this by analysing empirical data over centuries, Steve Keen can show this in his systems dynamic monetary modelling program Minsky/Ravel, and Michael Hudson ex international balance of payments economist at Chase Manhattan by analysis and logic.
So…
– recognise that the finance sector is a cost of doing business and should not dominate the economy as it now does in most western economies
– off shoring industry has been bad for the vast majority (but corporates did nicely until China is now out competing them)
– over time in a market based economy wealth accumulates with the wealthy unless redistributed
– MMT (Modern Monetary Theory) is a fair description of how central banks create money
– Private banks create new money when giving a loan by double entry book keeping
– buying bonds are a charade for hiding how central banks create money from thin air (they do serve other purposes as helping to pay for running the bank system)
– bonds are a safe investment that is required by the finance sector, pension funds, etc.
– public investment helps grow the economy and does not crowd out private finance
We do have solutions but the mainstream economics, the advisors to politicians and politicians ignore the advice. Why … they ignore emperical evidence, not trained in difficult maths (equilibrium vrs system dynamics modelling eg Minsky /Ravel), a genuine belief that neoliberalism reaches an economic nirvana, free markets are best, status quo suits the wealthy and their political minions,
See Richard Werner on how to reverse the neoliberal nightmare….
– lots of small non profit local banks lending to business,
– direction from Central banks to private banks to lend more for the real economy (not financial speculation),
– rebuilding industry and green infrastructure (reduce climate crisis impacts for future generations) and
– putting wealth to work (pension funds savings to invest in the real economy not financial speculation),…
but also
– Taxing Wealth Report 2024 (Richard Murphy Tx Research/Funding the Future) using existing taxes, £90bn possible
– debt jubilee (Michael Hudson/Steve Keen)
– reducing house prices without homeowners loosing equity (Steve Keen)
– house loans at max 10 times rental income (Steve Keen)
– housing not financed by new money creation ie. funded by deposits in building societies
– tier the Central Bank Reserves interest rates (a standard practice in the ECB and Bank of Japan, this is not some mad theory), and you can guarantee saving £7Bn minimum
– put the FIRE sector (Finance, Insurance, Real Estate) back into its box.
– use the excess capacity in the economy for the government to invest in the country via its own bank whilst keeping inflation under control
– offer bonds or other types of investment directly to the public that the government can use to invest in a Green New Deal, NHS, social housing, etc. that develops real GDP not speculation and skimming off of profits by the finance sector
– monopoly public services such as water, electricity to be better regulated / brought under public ownership
And also protect democracy against authoritarian / fascist moves
– bring in proportional representation vote eg. Single Transferable Vote (STV)
– roll back restrictions on non-violent protest
– proscribe only real terrorists groups
As we can see in the USA disillusionment of a large core of voters has lead to populism creating binary differences and scapegoating with a return of authoritarianism / fascism (it fills the political vacuum as the left has moved rightward).
See heterodox economists Steve Keen (The New Economics: A Manifesto. Minsky Ravel economic modelling software), Richard Murphy (Taxing Wealth Report 2024, Green New Deal) , Richard Werner (Princes of the Yen), Michael Hudson (J is for Junk Economics,…) , Clara E. Mattei (How Economists Invented Austerity & Paved the Way to Fascism) , Abby Innes (Late Soviet Britain)
An interesting post from someone with a greater understanding of economics than myself. The driver towards the transition to renewables is the effect of fossil fuels on climate change. For the last 7 years, as a Water Resources Planner and Engineer, I have been working with the Asian Development Bank and World Bank on making poor communities resilient and adaptable to climate change. In the case of drought, village-level storage and micro-irrigation for diversified and nutritious crops. For flood management, the use of temporary and floodplain storage, the introduction of nature-based solutions for riverbank and slope stability, amongst other interventions. It is clear that the current world financial system, as dominated by the US and some other Western countries effectively makes the rich, richer and is not fit for purpose for future climate risks. The 2008 financial mess showed it’s vulnerability. Some 50% of investing is based on short-term and non-asset backed gambling. To make the world’s population resiliant and adapted to climate change, and get beyond net zero to significant CO2 reduction, will require a complete change in the global financial structure that prioritises the most vulnerable.
Whilst I have mainly worked in South and South East Asia, my main concern is the hot countries in Africa, and particularly the Sahel. In the seventies I worked in the very north of Nigeria, building small village dams during the drought. At that time the area had staple and export crops (groundnuts), agriculturalists and transhumant pastoralists communities got on, the area was relatively peaceful and safe for volunteers like myself. I would not go there now due to Boko Harem, interethnic warfare between Hausa farmers and Fulani herdsmen, kidnapping and inter-religious fighting. This is happening right across the region making any development interventions improbable. Instead of strife, they need peace, cooperation and funding to protect catchments, soils and water for irrigation for multi-cropping to provide sustainable livelihoods for farmers and downstream industries. Solar panels and batteries, solar stoves and bio-digesters would reduce firewood collection and deforestation whilst improving inside air conditions and help educate girls. The money wasted on Rwanda could have been used to stabilise some 20,000 farming families. When I was there Nigeria had a population of 60 million. It is now 233 million. How will they, and other Sahel countries from Senegal to Somalia, that have similar social and security problems, cope when the West puts more finance into selling them weapons than cooperative development? With a likely rise in temperature of 2 deg, C and rising, without development investment, the current illegal migration to Europe will become a flood.
As a Civil Engineer, I looked up the number of civil and electromechanical engineers in the current parliament. It’s one of each, yet some 31% is spent on infrastructure including power projects.
A very sobering post.
We in the first world spend a huge amount of time/effort/emotion arguing as to how to distribute the UK enormous wealth across its 60 million of so population and we tend to forget the many hundreds of millions in 3rd world countries struggling to deal with climate change that that they have not contributed to.
We no longer have enormous wealth. We have liquidity – which is borrowed – at increasing cost. And borrowed on terms which are unrepayable. We are in a clinch with international bond markets where the markets are feeding our habit and accepting risk premium yield and hoping not to be the last investor in musical chairs. We simply cannot afford the over-distribution we are making in social payments and loss-leading, debt financed, subsidy of global CO2 emissions. Bloggers here and in MSM speak of re-opening UKCS oil and gas and, alternatively and in conflict, of CCS and hydrogen generation and storage. These are pipe dreams. Capital demands a return. There is zero global impact on CO2 via local CCS and the only return is feom more unaffordable subsidy – and nobody is going to go long on risk on drilling the mature basin that is the UKCS – because they have been relentlessly legged over for decades. We cannot afford fantasy.
CCS, an expensive non-productive, make work programme. Although, it’s no different to storing nuclear waste, except for the volumes involved, or Council tip landfill. Farmers store things like grain, silage, feed, fuel, manure. Shops store clothes, food, parts. Things we need for later, that can be recycled. Hydrogen storage is a different economic proposition than CCS, hydrogen from water back to water. When did we start hating the idea of trees…….I suppose when the UK was cleared of its Oak and other trees that had been used for buildings, ships, fuel, transport, etc, for farm land instead…….we’ve lost our way in terms of going with the cycle of nature.
But I just love the economics that we buy loads of goods from China, then borrow the money from China to pay for more goods from………………… China. Those “cheap” imports are a bit more expensive than they otherwise appear. Wind turbines and solar panels, clothing and food. When will the international investors stop lending or punish us with higher and higher interest rates?……..are we really borrowing from loan sharks?….where is that interest rate going that the UK pays for all that borrowing?
It’s what happens when there is a 2% balance of payments deficit per unit GDP…….pumping wealth out of the country………how long does a country last financially pumping its wealth out?……..uncontrolled globalisation. Well at least it helps the poorer countries around the world like China, who have previously never had such wealth thrown at them. Import/Export imbalance of 2% GDP per annum, at least 20% of wealth gone in 10 years……..30% in 15 years……..it doesn’t take long, with relatively small imbalances.
https://www.youtube.com/watch?v=NzAU0OgTUqY
https://www.bbc.co.uk/news/articles/c4gmnpg31xlo
https://www.cfr.org/blog/iphone-imf-and-chinas-balance-payments
Somethings come with a virtual price tag (cost) that isn’t stated on the price tag of the original item depending on where it is made……..but no one else is adding up those other (virtual) costs.
The current politicians don’t appear to have a clue, except Donald Trump for some ridiculous reason……….I’m just as surprised as every one else……but the economic relationship of America and China, is much worse than ours, because of the size of the the American economy. Americans buying iPhones, paying for the Chinese navy, etc. What would McCarthy think?……..the irony that if America and China go to war, that the Americans have paid for China’s armament…….a few times over. And the possibility that the hi-tech companies who have set up manufacturing in China have transferred their technology and knowhow……just in time for a war?
But I love the way that China has changed its accounting of its surplus, to make it look smaller, after all, all the politicians know that trade balances have to be maintained for world financial stability…..or in favour of those we wish to support, like charity really.
If we haven’t got or won’t extract the hydrocarbons, we have to be self-sufficient or exports have to make up for the imports we need, else we are a failing nation, and will be borrowing more and more……..back to being poor peasants anyone?
If the rich won’t pay for the medical bills of the poor through taxation because the wages are so bad, or the borrowing, if the rich won’t set up manufacturing in this country for jobs for the poor, and prefer to do it abroad.
How that wealth is then distributed is another question. The French Revolution was against those in power, with the wealth, the Aristocracy. When will there be a revolution against the new “Capitalist” aristocracy?…………do we ultimately get to communism anyway, by those who do not share in the vast wealth that a very tiny number of people have, because they have to to survive, having been reduced back to peasants?…….or is it easier/less risky to just gain a subsidized life?……..the “Civilized Revolution”, to act as a rich person with everyone else doing the work and then getting all of the same benefits without having to do any real work……….Is there any difference now between the richest and the poorest?
Kind Capitalism = Communism
We have to go forward with Net Zero and beyond as the cost of not doing so, in terms of disaster, will spiral out of control. During the last inter glacial about 150,000 years ago the temperature was 2 ᵒC above what it was in 1880 but CO2 at 300 ppm. Sea levels were 6.5 m higher according to geologists. We are now at 425 ppm and 1.3ᵒC above 1880. By 2050 we could be at 600 ppm. Who knows what temperature and sea level balance will be reached or wild fires, hurricanes, droughts and migration from hot climates will happen. But we need practical and economic solutions. CCS and hydrogen are not the answer, although hydrogen will still be needed for some chemical processes and perhaps for long distance flight. CCS should be in CO2 rich environments such as cement manufacture and used to grow lndian Hemp or produce carbon fiber (https://carbonengineering.com/, https://www.nanos.tech/blog/like-magic-converting-co2-to-carbon-fibre-materials-we-use-in-everyday-life). Indian Hemp can be used for medicines, and hempcrete grown in long greenhouses and absorbs 22 times the volume of CO2 than trees (https://www.ukhempcrete.com/) which has high fire retardance for insulating high rise buildings and the insulation of walls for housing. Carbon fiber as reinforcement is 3 times the strength of steel which takes 1.5 tons of CO2 release to produce 1 ton of steel. Concrete sections can be thinner and lighter, as that will reduce CO2 in concrete manufacture (0.24 tons per m3 of concrete). Storing electricity should be in mature efficient systems such as batteries for short duration needs and pumped storage for longer duration.
This is simply untrue.
1. The UK is responsible for 0.8% of global GHG emissions. Net zero in the UK makes zero difference to the global climate
2. The target refers to territorial production emissions. We’re meeting it through offshoring which results in HIGHER global emissions as we offshore manufacturing to places with dirtier energy and then ship goods back, incurring shipping emissions
3. Global net zero efforts are not working – carbon dioxide concentrations are increasing
What we are doing now is pointless. But it is also expensive and dangerous in that it puts energy security at risk which the Iberian blackout showed, cost lives.
1. Indeed we are responsible for <1% of global emissions but we have a far bigger leverage in influence. We have proved we can cut electricity carbon content in half in a decade, so others can too.
2. Actually, the effect of offshoring is surprisingly small. To quote from Hannah Ritchie, editor of 'Our World in Data', "In the UK, GDP per capita has increased by around 50% since 1990. Domestic emissions have halved. Consumption-based emissions – those that adjust for 'offshoring' – have fallen by a third. [Not The End of the World, Vintage, 2024, p83]
3. What would global net emissions have been without climate action? It's absurd to say efforts aren't working. They're working, just not yet well enough. We're close to peak emissions now, and peak concentration will follow not too far after. Unless we decide we're not up to the task.
I work in car reviewing. For the vast majority of drivers EVs are silent and smooth and quick and easy to drive – all the things people wanted from petrol cars but never got. And for most people they're cheaper to own too. So why not switch? Remember Edison after he invented the light bulb: "In future only the rich will burn candles."
1. We are small but influential. We halved carbon content from our grid in 10 years. We are showing other countries they can do it too.
2. At least from a carbon PoV, offshoring isn’t so pernicious it turns it. You’ll know Hannah Ritchie’s work. “In the UK, GDP per capita has increased by around 50% since 1990. Domestic emissions have halved. Consumption-based emissions – those that adjust for offshoring – have fallen by a third.”
3. Global per capita emissions peaked a decade ago. Population rise is slowing. Growing economies will likely skip carbon-intensive generation just as they skipped landlines and went straight to mobiles. Electric cars (I review cars for a living) are just what people always wanted from their petrol cars: fast, smooth, easy to operate and silent. So CO2 reduction needn’t be living hell.
The world is on course to level out the concentration of CO2 in the atmosphere. Not fast enough, but we know how to do it, and blogs like yours don’t seem to take into account the cost of climate-change mitigation.
KP said “1 The UK is responsible for 0.8% of global GHG emissions. Net zero in the UK makes zero difference to the global climate”
China consists of 35 or so administrative regions (provinces plus the largest cities), each of which has very similar emissions to the UK. Clearly if it is not worth the UK doing anything about its 0.8% of emissions, then it is not worth any of the Chinese administrative regions doing anything about their 0.8% share either.
So congratulations – you have just solved the issue of action on global warming by dividing up the world into small enough regions that each can argue its contribution is too small to make a difference, so none of them need bother.
Of course this makes no sense at all. Global warming is a serious issue and EVERYBODY has to do something about it.
Further, the Chinese installed 356 GW of wind and solar in 2024 – more than the rest of the world put together. It has a population 20x the UK and a GDP 6x that of the UK. So UK’s pro rata contribution should have been around 18 GW or 60 GW depending on your criteria. But UK installed only a few GW of wind and solar in 2024. In other words UK isn’t pulling its weight compared to China.
Further, China, with 1.4 bn people is responsible for less than 15% of cumulative historical emissions, while UK with 70m is still at more than 4%. So on the ethics of who caused the problem, the UK should be doing far more on a per capita basis than China – but it isn’t.
KP said “2 The target refers to territorial production emissions. We’re meeting it through offshoring which results in HIGHER global emissions as we offshore manufacturing to places with dirtier energy and then ship goods back, incurring shipping emissions”
The UK government publishes CONSUMPTION-based emissions every few years, and these have been coming down over time too. See the document https://assets.publishing.service.gov.uk/media/68220ff3db6463b14cd81916/Summary_of_Methods_2025_final.pdf.
Note that UK consumption emissions peaked at 975 MT in 2006 but were down to 740 MT in 2022 on the likely most accurate assessment.
This directly contradicts your statement above.
KP said “3. Global net zero efforts are not working – carbon dioxide concentrations are increasing.”
Clearly with net zero emissions targets of 2050 or 2060, CO2 concentrations at this stage will still be increasing. What you should be looking at is the second derivative of CO2 concentrations, not the first derivative (the change in rate of growth of CO2, not the growth in CO2).
Emissions are not yet falling, so clearly the message should be that we should bust a gut to ensure emissions fall as fast as possible.
KP said “What we are doing now is pointless.”
The three planks of fossil fuel lobby policy nowadays are Doom, Delay and Distraction. “Doom” says “it’s all too late so we shouldn’t bother”. But that just isn’t true – if for no other reason that China is the big swinger and and is currently taking very serious action on its CO2 emission – resulting in Chinese CO2 emissions down around 1% over the last 12 calendar months.
KP said “But it is also expensive and dangerous in that it puts energy security at risk which the Iberian blackout showed, cost lives.”
You have no evidence for this statement whatsoever. The UK NESO has been planning and contracting for high penetrations of wind and solar for more than 5 years now, which Spain hasn’t (or at least nothing has been published about it). To cite the Spanish blackouts and pretend the UK is in the same situation is an entirely superficial analysis.
There are two important things to add to all this. There is only a certain, limited amount of fossil fuel left in the UK territories, whether we burn it or turn it into plastic, or any other use. The faster we burn through it the faster we will need to get onto renewables or alternative energy supplies anyway, were importing most of our energy now. Is it better to burn through everything much faster or, where it is economic, to use fuelless energy, and recyclable technology?
End-user installations achieve that objective. This country could have no need to burn gas for 6-9 months of the year, no problem, and it is actually possible not with IBRs on the National Grid system, but where everyone goes OFFGRID. Technically possible now, economic now. Many people are choosing to do so with solar PV and batteries, where for at least half of the year they could have no demand from the grid.
I understand that the Perovskite solar PV panels were developed in the UK and are now ready for production, with the technology being licensed to the Chinese as a start and then looking for somewhere else possibly in the UK for production, which we desperately need to help the balance of payments.
With the addition of proper grid voltage controls and a better system of technical control, the UK shouldn’t have a problem. Arguments like using Chernobyl, an individual accident, as an example doesn’t do anyone any good, the same is applicable to car accidents, aircraft crashes.
I can just about remember the power cuts of the 70s……when there was plenty of coal in the ground, everything was working, except the workers…….no thank you. Economically it is far better to be independent, self-sufficient to prevent it. Do you really want to depend on supplies from other countries, not even workers in this country?……..NO THANK YOU. Just ask yourself the question……….who do you trust, absolutely, who can you depend on ABSOLUTELY?………If you have never been betrayed, or let down, you have been very lucky.
By the way, I am installing 3kw of solar PV panels, just for heating hot water. The £2000 investment will be paid back in 6-7 years, and I will reduce my gas consumption by 20%……..I won’t be using any gas for about 6 months of the year………free hot water for 6 months of the year thereafter, except £10 per annum electricity cost for control circuit – no inverter needed. saving £300 per annum…….but it will be saving more in 10, 15, 20, 25 years time.
With solar PV, it’s not just about cutting down on electricity, but also the direct consumption of gas for heating water, economically.
I will then upgrade to go off-grid for 6-9 months for electric as well………economically. saving another £400 per annum
The easy low hanging fruit as they say.
End-user installation economic NOW, no subsidies needed……….£700 saved and a whole lot of CO2 per annum for a bit of capital investment. I’ll deal with winter later.
Back in 2022 it would have taken just 3 years to pay back, or without the price cap, just 2 years.
If only the government would stop handing out subsidies, we might have people making proper economic decisions.
You see with solar PV alone, you can reduce both gas and electricity consumption, economically………neither gas nor electric needed from national grid for 6 months of the year………the National Grid and gas SEASONAL services/products…………..until CHP…….run on methane (biogas) or bio-ethanol, or LPG (BioLPG from glycerol) or bio-diesel………feasible, economic………off-grid all year?……….feasible. It is cheaper when you do it yourself. If you have the technical expertise.
Spending about £2800 per annum on power/energy gives £28,000 over 10 years, £84,000 over 30 years………what would you want to spend your pension on?……..£84,000…………that’s a pension pot in itself. Paid for with basic rate tax at 20% equivalent to £100,000 worth of income, but could be worth so much more if gas/electricity price goes up again.
True, but the UK sets an example for many other nations, the Empire still has some influence, doing nothing is abdicating our responsibility for future generations. Some may be of the opinion that Glabal Warming is not happening contary to all scientific indications or that all is lost and lets have a party or some could not care less.
We are particularly hampered by the mainstream neoliberal / neoclassical equilibrium economic model which is under-investing in real GDP such as infrastructure and making the majority of the population poorer.
Solutions for the fragility of the AC power grid with high renewables are being developed, see ENSO / NESO such as Grid Forming Inverters controlling the Grid’s Phase Jump Angle see https://www.neso.energy/document/181626/download and Eric Lewis, of Enstore see https://cdn.prod.website-files.com/5d56b2f299407beda584b092/6699608695ce70389d4f92b4_How%20to%20combine%20existing%20and%20new%20Units%20in%20an%20optimised%20future%20GB%20AC%20Grid%20-%20003%20Public.pdf .
Current high energy cost are down to poorly designed market structures and costs will rise whether it is renewables or fossil /nuclear as infrastructure needs replacement over time. Arguably it will not be much difference in total cost but different in who has control and the risks.
I have found this an interesting blog – especially with comments veering off topic; it would be nice if there were blogs or collaborative websites for some of these.
Some of the comments seemed redolent of Generative AI – so it was interesting to compare with the List_of_fallacies (Wiki).
However some offer opportunity for interesting research .. and development; especially considering issues of those looking for local power generation and, even, off the grid!
So
I always like to put some figures together – at least as as scoping case (with some monetary figures too…) for those considering their own local power generation (so that they might not become freeloaders)
The average UK household uses approximately 7.4 kWh of electricity and 31.5 kWh of gas per day. So 10 days (gas) is ~300 kWh of heat storage @ <£10/kWh ….cf battery storage ~ £200/kWh … And, of course, high temperature heat could be used to generate electricity (perhaps using a car turbo charger system?). Seems like a reasonable domestic setup ; 1 days storage would be £300 – meaning domestic energy storage is quite feasible for, say, 100 hours (at ~£3k)
It should also be pointed out that heat pumps are not necessarily powered by electricity (some might remember refrigerators powered by burning gas – I believe there is a small, niche and expensive, market still for these…); they are quiet, so that may be a buying point for some.
Obviously there is an opportunity for some UK company to get its act together and provide an innovative package of backup energy (and electricity) storage. Obviously there is a a need to look at design appropriate for AFFORDABLE manufacturing, including small (UAV size) heat engines for relatively high temperatures (1500C ?) – and possibly some sort of steam engines for low temperatures (~600C)
The Irish RESS 5 CFD auction results have been announced. They are based on a 16.5 year operational subsidy indexed by CPI inflation. The auction set a maximum price of €110/MWh for bids for all technologies (offshore wind was not included in the auction). The award was 218.84MW of wind at €96.56/MWh, up 7% from RESS 4, and for solar they got 860.38MW at €100.63/MWh. With £1=€1.145 that’s £84.33 for onshore wind and £87.89 for solar. Not much in the way of bids for wind – presumably the next best bid was above the solar clearing price – although Ireland does offer windier onshore locations than most of the UK. These prices are well up on AR6 clearing prices and for solar exceed the ASP for AR7, but of course Ireland is even cloudier and rainier than GB.