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.
Indeed, which is why battery technology is so crucial - to remove the stranglehold gas has over bridging renewable energy gaps
@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
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/
@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.
@Fishd Frame this, and hang it in (a gallery that's more secure than) the Louvre.
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.
@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.
@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)
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)
@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.
Some of it is why would a non gas producer sell you power for a lower price than the gas producer?
@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)
There's a wide spectrum of prices. I think you can get them in Oz around 150 American dollars per kWh.
@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/
@RobertoArchimboldi @rachel @ChrisMayLA6
Paying generators, such as gas fired, for the cost of just sitting there not generating is what the Governments Capacity Market is for.
I am of course assuming it works as originally designed (I worked in DECC when they devised this more than 10 years ago, before I retired but this was not my direct reponsibility).
"The Capacity Market ensures security of electricity supply by providing a payment for reliable sources of capacity. "
https://www.gov.uk/government/collections/electricity-market-reform-capacity-market
I doubt it there is any call at the moment to actually invest in new gas generation capacity, we just to keep the existing plants available so the price they get should then just largely reflect the cost to them of buying gas, and their conversion efficiency (about 60%). I would hope that we never need new gas plant - we should be looking at, and investing in, other non-fossil fueled means of filling in for intermittency.
@RobertoArchimboldi @marjolica @rachel @ChrisMayLA6 I covered that in a different post. It’s a market mechanism to encourage people to build cheaper generators than what the market is asking. In time this should have the cheaper generators displacing the more expensive generation. Unfortunately it can take quite a while for that to take effect and I don’t think it can work in bringing prices down with the generation mix we have and are likely to have for quite a while.
@[email protected] @[email protected] @[email protected] @[email protected] In theory the electricity market mechanism we have could do that. If a wind turbine generates electricity at a cheaper cost than the market price, it should encourage investment in wind farms as they reap the difference in prices. One problem is that while gas is generating a single watt, the price the consumer pays doesn’t go down.
@marjolica @rachel @ChrisMayLA6 Even then, the CFD should be broken up into an early capex-payback phase and a longer, cheaper, opex-and-maintenance phase.
And more importantly, local consumers should be able to tap into locally produced renewables at a reduced price, especially within the current transmissibility choke points in the system.
Hmmm.... this is one of my problems with the term 'neoliberalism' - its not about getting rid of regulation, but rather regulating markets ins such a way as to ensure corporate advantage... in that sense, a 'free-market neoliberal' is a bit of an oxymoron
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