Mastodawn

Emeritus Prof Christopher May Dec 12

As Dale Vince (Ecotricity) points out, all that is required to reduce energy prices (specifically electricity) in the UK is to remove the requirement from the auction system that the price is dictated by the highest bid (nearly always that made by gas).

Breaking the link with gas prices (and allowing each energy source to be supplied at its actual bid price) would immediately reduce energy prices across the country.

Moreover the Govt. has the power to do this, they just don't!

#energy
h/t FT

As I understand it, the reason for maintaining prices at levels required by gas generation is that at lower prices the private gas generators are not viable - so the owners won't keep them going to cover any gaps in renewable generation - so the problem is not regulation, but private for-profit ownership.

Emeritus Prof Christopher May Dec 12

Indeed, which is why battery technology is so crucial - to remove the stranglehold gas has over bridging renewable energy gaps

Androcat Dec 12

@ChrisMayLA6 @GeofCox Meanwhile, the solar and wind costs around half - where does that money go? Are the solar and wind providers just getting a massive windfall?

UkeleleEric Dec 12

@ChrisMayLA6 @GeofCox Depends on the sort of batteries, though. Hydro storage, salt batteries, and newer types of battery all have a part to play. And also, we need to make it more viable for people to use slightly less by charging more per unit and less on standing charges (there is little incentive on a low-level user using slightly less at the moment).

SellaTheChemist Dec 12

@ChrisMayLA6 @GeofCox Only up to a point. Battery storage will not do several days of calm, cold and darkness (oh we do love the word Dunkelflaute!). So gas backup is needed. The question is at what cost.

@sellathechemist @ChrisMayLA6 @GeofCox thus my advocating H2 in existing/new methane stores which could cover dunkelflaute(n), though parting CEO of National Grid was seemingly downbeat on that prospect recently.

@sellathechemist @ChrisMayLA6 @GeofCox

It would be good to know how often the "gas backup" has actually been used for more than a day over the past few years

@sellathechemist @ChrisMayLA6 @GeofCox see also

https://climatejustice.social/@ketan/115707427930254790

Ketan Joshi (@[email protected])

Attached: 1 image Your daily reminder: Fossil fuels = blackouts The extreme weather impacts of relying on fossil fuels has been directly responsible for a massive, catastrophic increase in the frequency and duration of blackouts in the US. Coal, oil and gas are directly and undeniably responsible for this, and we don't even get close to tackling this trend unless we stop using them. https://www.utilitydive.com/news/power-outages-extreme-weather-jd-power/805658/

Climate Justice Social

@GeofCox @ChrisMayLA6 The fact we continue to allow critical national infrastructure to remain in the hands of private for-profit companies is just beyond belief.

These companies receive subsidy after subsidy, have the reassurance of government bailout if they screw up and still have the gall to overcharge and extort.

Their lobbyists should be exposed and the deals they do subjected to public scrutiny.

Joan of Contention 😷Dec 12

@Fishd Frame this, and hang it in (a gallery that's more secure than) the Louvre.

@GeofCox @ChrisMayLA6

@Fishd @ChrisMayLA6

The Thatcher model of 'regulated' private monopolies running essential infrastructure is obviously fundamentally flawed. There are private contractors involved in delivering aspects of public services everywhere, but as far as I know this stupid Thatcherite model, in which the actual public assets are handed over to profiteers, then expensive and ineffective regulators set up to stop the profiteering, is I think pretty unique to the UK (and especially to England).

Oh for an honest politician who will just come out and tell the truth - that it was all stupidity.

@GeofCox @ChrisMayLA6 If they were regulated, that would be better... but Govt spending has been gutted over so many years that I imagine most Govt Orgs are struggling to stand still, let alone increase the amount of scrutiny they apply.

Almost like the Tories had a plan.

BashStKid Dec 12

@Fishd @GeofCox @ChrisMayLA6 Reflect on the fact that National Grid itself, the monopoly approver and planner for the electricity system, is a private company with sizeable US control.

Not only do we have private power companies, we have a privately owned monopoly planner and effective regulator, in charge of a power market designed by the energy companies.

Ray McCarthy Dec 12

@GeofCox @ChrisMayLA6
No, that is a regulatory issue. They could pay a higher rate to strategically important generators.
But, yes, private ownership of strategically important generators, or water supply, or mobile base stations, refuse collection, train, buses, sewerage etc makes no sense. Possibly airports and ports should not be mostly privately owned.
Should be no private owned mobile base stations, but additional private generation is OK. Grid needs to be state owned.

BashStKid Dec 12

@GeofCox @ChrisMayLA6 Just to point out this is *not* the case (Long thread)

For gas gen on North Sea wells, the wells and systems supplying that gas are 30 years old. They’ve long since been paid back, the actual production cost of that gas to shore is zero. In many cases, the gas must be produced to avoid shutting more valuable production elsewhere.

The only cost of generating electricity from that gas is also very low, as the gen turbines run on the incoming gas. (1/4)

BashStKid Dec 12

Until it was demolished, Teeside Power Station was an example for producing electricity at nearly zero operating cost. (by design, as it was intended to fatally undermine coal generators). But that doesn’t stop you selling your electricity for what you can get for it. (2/4)

BashStKid Dec 12

That’s not the whole story, though. Lots of LNG has been shipped into the UK, and that comes at an international market price. So that’s become the base price for all gas gen, which makes vague sense if you were actually using it in your gen plant, but is blatant profiteering if you have a sweet deal with a natural gas supplier. (3/4)

BashStKid Dec 12

Finally, the gas generators deliberately use the market balancing mechanism to threaten to not deliver, then when the offer price spikes, they find the power. That can pull 10 or 20 times the usual base cost in for the generators.

And we wonder why we have the most expensive power in Europe. (4/4)

Bob Hannent Dec 12

@GeofCox @ChrisMayLA6 perhaps they could be subsidised to maintain the equipment rather than the production price. Then pay them a premium for when there is a shortfall.
The cost of that premium will then inspire more alternative generation to step up as well.

Peter Brown Dec 12

@GeofCox @ChrisMayLA6 it’s actually much simpler than that. Tweak the incentives and the market will do it for you. That’s what they did in Uruguay and they have reduced their costs and increased their GDP.

https://yaleclimateconnections.org/2024/12/uruguay-pioneer-in-renewable-energy-a-model-for-the-world/

Uruguay, pioneer in renewable energy: a model for the world?

The country is a global leader in the transition toward green energy, following a radical transformation of its energy mix.

Yale Climate Connections

@GeofCox @ChrisMayLA6 in the absence of marginal system, prices get gamed in other ways and transparency of real costs is reduced.

John Leach Dec 15

@DamonHD @GeofCox @ChrisMayLA6 this is what's driving me mad about this discussion. The idea we'd do what Dale Vince suggests and the renewable energy companies would simply continue bidding exactly the same and accept huge drops in income seems utterly ridiculous to me. What am I missing here?

Bruno Girin Dec 15

@DamonHD @GeofCox @ChrisMayLA6
So we should keep the marginal systems but is there a way to come up with a price that keeps them in but is not dictated by them?

@brunogirin @GeofCox @ChrisMayLA6 Aspects of the Grid Code and the capacity market are intended to hem in some of the wilder behaviour eg as seen in the Texas grid, AIUI, and zonal/nodal pricing might have been another but at the cost of liquidity. Getting the balance of regulation right is hard.

Bruno Girin Dec 15

@DamonHD @GeofCox @ChrisMayLA6 Oh yes, I understand it's hard. Hence why it's good to start the conversation and understand the pros and cons of each solution. Otherwise we'll revert to a good old favourite: do nothing and let the public foot the bill.

@brunogirin @GeofCox @ChrisMayLA6 Or in extreme cases (eg Enron, Texas winter storms) let consumers go bankrupt or even die...

Bruno Girin Dec 15

@DamonHD @GeofCox @ChrisMayLA6 Isn't that already happening in the UK with people having to choose between eating or heating?

@brunogirin @GeofCox @ChrisMayLA6 Not quite as dramatically/acutely, for example the GB grid has had about two big load-shedding events this century, kicking ~500k consumers off briefly each time, but not fatally in mid-winter, and no householder received a multi-thousand GBP bill in their wakes...

Colm Ó Donnchadha Dec 12

@GeofCox @ChrisMayLA6

Some of it is why would a non gas producer sell you power for a lower price than the gas producer?

Bruno Nicoletti Dec 12

@ColmDonoghue @GeofCox @ChrisMayLA6 because it’s the price they bid to sell their electricity?

The Penguin of Evil Dec 12

@GeofCox @ChrisMayLA6 a large part of your electric bill is taxes, vastly more so than gas and ofgem keeps stacking it more and more against electricity to the point you have to ask if it's totally captured by fossil fuel people.
As Octopus pointed out at one of the recent events even if generation was free on current tax loading electricity prices would still have to rise

@GeofCox @ChrisMayLA6 I'm not doubting you, but how does that work?

In my mind, if a renewable source can't generate then they can't bid, and the price would be that of the gas generator. These prices, being sophisticated companies, would factor in any lean time when their equipment isn't being used.

So they might have something that costs such-and-such per kWh that is used such-and-such a proportion of the time (which may be very low), and overheads of such-and-such which must all be acocunted for in these few brief "gas summers", so charge this (large) amount for this (short) time, when there's no alternative.

They could presumably get funding from all these sophisticated financial instruments designed to "reduce risk" which we always hear about?

This would also incentivise them to reduce overhead costs as they get used less and less.

Is there some kind of friction to stop it working like that?

@GeofCox
Here's a stat that'll set your hair on fire: 100k home batteries installed in Oz in 17 weeks.
(source)

https://youtu.be/qfzULvKaSoc
@ChrisMayLA6

Australians installed 100,000 home batteries in 17 weeks. Why can't we all do that?

YouTube

@ohmrun @GeofCox @ChrisMayLA6 What avg cost in $/kWh?

@ohmrun @GeofCox @ChrisMayLA6 Watched video and no mention of system costs. Just to put things in context, a Tesla Powerwall runs about $1000/kWh. 1 GW 24/7 =~12GWh/day storage= 12*$1000*1000kWh/MWh*1000MWh/GWh=$12B

There's a wide spectrum of prices. I think you can get them in Oz around 150 American dollars per kWh.

@GeofCox @ChrisMayLA6

@ohmrun @GeofCox @ChrisMayLA6 $150/kWh=$1.8B/ GW 24/7

@ohmrun @GeofCox @ChrisMayLA6 Not according to this site. Remember battery cell price doesn’t equal battery storage system cost. They are quoting costs much closer to $1000Aus/kWh.

https://australiandesignsolar.com.au/solar-battery-storage-price-australia/

Solar Battery Storage Price Australia 2025 | Cost Guide

Discover the true solar battery storage price in Australia (2025). Compare costs, brands, and installation prices. Save more with Australian Design Solar — CEC-accredited experts.

Australian Design Solar

@Globob
The fancier the website, the more inflated the prices, imo.
@GeofCox @ChrisMayLA6