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Stand by for more big, windfarm-driven 'leccy price rises

Think it's bad now? Just wait, says Grid

The smart choice: opportunity from uncertainty

Analysis The National Grid has released a report into the way things are headed for the UK's electricity supplies in the coming decade, and it's not good news for anyone who finds their 'leccy bill to be a noticeable expense.

No matter what happens to fossil fuel prices, British electricity is going to cost a lot, lot more in the near future as consumers pay for huge new windfarms to be built; pay their owners extra to turn them off more and more often; pay the operators of normal powerplants more to provide backup for the windfarms and to cope with the damage caused by the windfarms to their equipment; pay yet more to get new interconnector cables to the Continent built; and pay again to support economically unviable storage technologies.

The report (pdf) assumes that by the year 2020 the UK's windfarm capacity will have increased by no less than seven times over today's level, which might - combined with increases in gas and nuclear, plus new interconnectors allowing more Continental imports - be enough to compensate for an anticipated halving of coal and the disappearance of oil-fired power stations. (Though one should note that this assumes that the big new windmills will achieve average load factors of 30 per cent, which so far windfarms have failed and are failing to do: 25 per cent is more likely.)

At that point we will still be getting 80 per cent of our electricity from non-renewable means: we will still, in fact, be using mainly coal and gas. But the arrival of these limited amounts of wind power is going to mean major effects on the grid and the electricity market.

The Grid analysts write:

During periods of minimum demand, renewable generation output is likely to reflect prevailing weather conditions rather than price signals ... it will become increasingly necessary to restrict the output from wind generation onto the system to ensure sufficient thermal capacity is synchronised to meet the technical requirements of operating reserve. Under this scenario it is estimated that it may be necessary to curtail wind output on about 38 days per year by 2020 ...

The cost of constraining wind will become increasingly significant.

The trouble is that although the wind farms will in reality produce no more than 16-17 per cent of the national requirement, when the wind is blowing hard they will be able to put out brief bursts at five times this level. Such brief bursts account for much of their average output over time, so the windfarm owners need to be paid for all that output even if it doesn't get used. This payment is very large - much larger than the price of the 'leccy, because of the Renewables Obligation Certificates system which is already driving up the price of electricity every year.

If the power doesn't get onto the grid - and in 2020 it often won't, due to the fact that it often won't be wanted - the windfarmers don't get their ROCs and they will have to shut down. To prevent this, the Grid says that they will have to be paid off whenever they are constrained out of operation: thus there will not only be the cost of ROCs to be met, but also soaring costs in restraint payments. These costs, like those of the ROCs, will be passed on to consumers in the form of bigger electricity bills.

And that's not all. Sometimes when the wind blows really hard, wind farms have to go offline to prevent their machinery being damaged. This means that the Grid will need further resources standing by to cope with such events:

There are however, many operational aspects pertaining to larger renewable generation sources where further experience and understanding will need to be developed, for example, the effect of high wind cut-out across larger wind farms and subsequently, the impact on system frequency ...

There will be a subsequent increase in the cost of managing this uncertainty. For our scenario the overall forecast for managing the variability in wind output is around £286M by 2020, whilst the forecast for procuring the full operating reserve requirement would rise to be between £565M and £945M ...

Again, all this will be added to bills - with profit margins on top.

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