SEVERAL official announcements in the last few days have raised concerns that the days of a reliable and secure electricity supply will soon be over.
Many of us, of course, have been warning about this for some time, as despatchable power sources, that is those which can be readily ramped up and down as needed, are wound down. We have already seen most of our coal power capacity close, with the remnants due to follow shortly. The older nuclear fleet is also disappearing fast, and will be only partially offset when Hinkley Point starts up.
Meanwhile very little new gas power capacity is being built, unsurprisingly as politicians continually warn us that natural gas will not play a part in our glorious green future. Who is going to spend hundreds of millions constructing a new power station if some dictatorial minister or faceless bureaucrat orders it to be shut down or taxed out of existence in ten years’ time?
Meanwhile, in their place we are putting ridiculously intermittent wind mills and solar farms. All at the same time as demand for electricity will skyrocket to power heat pumps and electric cars.
The government is clearly very worried about this prospect too, because they have just made three announcements aimed at reducing demand for electricity at peak times.
First, a trial was announced in which the National Grid will offer financial incentives to up to 1.4million customers if they cut their electricity consumption at certain two-hour periods during the day, as an experiment to see how households’ behaviour might be changed.
According to the Telegraph: ‘The move is a pilot scheme intended to pave the way for a broader overhaul of the country’s billing system as the UK ditches reliable but dirty fossil fuel plants.
‘Officials want to encourage people to charge cars and use appliances at different times during the day and night to reduce the pressure on the electricity grid and limit the amount of new capacity that needs to be built as demand for electricity grows.’
The same day we found out that the energy regulator Ofgem will be granted legal powers in May allowing it to change the way smart meters operate, so that information about usage is sent to suppliers every 30 minutes by default. All sounds very innocent, but the move is intended to open the gates to ‘time of use tariffs’, and ‘surge pricing’.
Again according to the Telegraph: ‘Suppliers will be able to use the data to change consumer energy prices as much as 48 times per day, allowing them to charge more at peak times.
‘The plans are viewed by industry experts as a key stepping stone towards “time of use” tariffs, which would charge customers different rates for energy throughout the day depending on demand.
‘This could mean that households pay more during the busiest periods, raising the possibility that they could be penalised for watching television, boiling the kettle or charging gadgets at popular times such as mornings and evenings.’
Hard lines if you are, for instance, old or infirm and have to stay in your house all day.
The message from these two announcements is loud and clear. There will be many occasions when there is not enough wind to keep electricity supplies up with demand. Therefore domestic customers will either have to ration their use, or pay through the nose. If these measures are not enough, compulsory rationing will inevitably follow, something which smart meter technology will soon enable.
A few days later came the announcement of another trial, in which electric car owners agree to let the National Grid drain their car batteries when power is short. Again, the real plan is to bring all EV owners on board eventually, no doubt compulsorily if necessary.
There is a particular problem with this continual charging and discharging, in that it reduces battery life. There is also the issue that a certain amount of energy is lost during charging; some estimates put the loss at 16 per cent, so car owners will find they need more power to recharge than they have sold back to the Grid.
This latest news ties in with recent announcements that all home-installed EV chargers must have smart meters attached, and that regulations would be introduced to prevent car chargers working during times of peak demand.
All of this is sold to the public as ‘saving them money’, as the Grid will need less capacity. This is a nonsense, as switching demand from peak to off peak will only shave off about 5 GW. This is the equivalent to two or three modern gas power stations, which could be contracted on standby for less than £100million a year.
Instead we must spend tens of billions on smart meters and all the grid balancing required. Shuffling a few gigawatts of demand from day to night will be of no help anyway when the wind stops blowing for days and weeks on end.
No, the real problem is that gas power stations will be banned eventually, and then there will be a catastrophic shortage of reliable power. No amount of rearranging the deckchairs on the Titanic will save us from that disaster.
Carbon pricing forces electricity prices ever higher
ALTHOUGH the rising price of electricity is mainly due to international factors, a significant part has been deliberately engineered by government policy, both here and in Europe, in the past year.
The EU Emissions Trading Scheme (EU ETS) was established many years ago, with the purpose of squeezing fossil fuels out of the energy mix by artificially making them more expensive.
Briefly, under the scheme electricity generators, energy-intensive businesses and domestic aviation operators must buy carbon allowances to cover their emissions. These businesses are given a certain number of allowances each year, but over time this number has shrunk, meaning they either have to reduce emissions of carbon dioxide or buy allowances on the market.
For years EU carbon allowances could be purchased for around 20 euros per ton of carbon dioxide or less. However in the last 12 months, prices have rocketed to 91 euros.
Following Brexit, the UK set up its own UK ETS scheme, with the intention of tracking the EU system. It began last May, with prices at £45/ton. Following the EU lead, UK prices have since jumped alarmingly to £83/ton as the supply of allowances at auction has been progressively tightened.
The effect of this price increase on power prices has been stark, not to mention its effect on industry and aviation too. A carbon price of £83/ton increases generation costs by about £32/MWh for a typical gas power plant, a significant chunk of the wholesale cost of about £190/MWh.
It does not just affect the price of gas and coal power plants. Because of the way the electricity market works, this extra cost gets tends to be reflected in the price of all sources of generation, not just gas, because gas plants tend to set the market price as they are the marginal generators. (Generators are contracted on the basis of contracted prices, until capacity matches demand. All generators then receive the price of the final connected, or marginal, generator – for more detail, see here.) As wind, solar and nuclear have low running costs, they usually offer much lower prices than gas, particularly when they would lose their subsidies if they did not generate.
In effect all this means that consumers end up paying £32/MWh more for their electricity regardless of its source. It also means that renewable generators receive a windfall profit of the same amount.
The overall cost of this is more than £10billion a year, spread across all electricity users. Household bills alone are £130 higher on average because of carbon pricing, and industry and the public sector must pay more too.
Technically and legally there is no reason why the UK governments should not increase the number of allowances sold, and thus reduce prices to, say, 2020 levels of around £20/ton. (I say ‘governments’, as this is a decision which would need to be made by the Scottish, Welsh and Northern Irish governments as well.)
The Department of Business has pointedly refused to do so, stating: ‘The decision is aimed at upholding the objectives of the UK ETS as a market-based approach to reducing emissions and incentivising participants to find the most cost-effective solutions to decarbonise.’
In other words, ‘Stuff you – reducing emissions is much more important to us than your welfare!’
China coal power hits new high in 2021
NEWLY published data from China shows that thermal electricity generation continued to grow last year. (Thermal power includes gas, oil and wood, but coal makes up 93 per cent of it).
Since 2019, it has grown at a rate of 1.4 per cent a year. More significant, however, is that in absolute terms thermal output is 600 TWh greater than two years ago, which amounts to 7 per cent of total generation.
In contrast, wind and solar power are up by only 352 TWh. In other words, renewable power is not increasing fast enough to keep up with rising demand.
Electricity generation is still dominated by thermal, with a share of 67 per cent. Regardless of the hopelessly hyped-up claims in the left-wing media here, wind and solar power in China are still bit part players, contributing just 11 per cent of the total. In Britain, their share is 28 per cent.