Stand by for more big, windfarm-driven 'leccy price rises
Think it's bad now? Just wait, says Grid
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.
Wait, we're just getting started
But we aren't done yet. Not only will wind power cost huge amounts, it will make non-renewable "thermal" electricity more expensive.
The increased contribution from wind will reduce the load factor of thermal plant, particularly the more expensive marginal plant. Additionally the variable nature of wind means that thermal plant will have to operate in an increasingly flexible manner.
There will be a consequential operating and maintenance cost.
An increase in starts of 26% is expected across the CCGT fleet, together with a 6% fall in load factor.
Again, the electricity consumer will pay for all this.
Another thing that we will all be required to pay for are new interconnector cables under the sea to the Continent, as wind and new gas will not cover the disappearance of coal and we will need to import more electricity. Unfortunately we will often want to do this just when everyone else is short of juice, as the wind often drops all across northern Europe and beyond.
It can also be expected that coincident high pressure weather patterns across Europe, leading to a widespread reduction in wind generation output, will occur and the market framework [this] makes it an imperative that price signals in both wholesale markets and cash-out arrangements emerge in GB that will ensure imports through interconnectors occur; particularly as extended cold periods often correlate with lower wind output.
Or in other words we will pay through the nose to get the juice when we need it: and again, the cost of this will go on the electricity bill.
It's often suggested by windpower advocates that it would be a good idea to store surplus energy rather than constrain it off the grid. The National Grid analysts agree in principle, but point out that the costs of storing electricity are huge and the inefficiencies large.
There are significant hurdles around the economics of the current potential technologies ... National Grid believes that large scale hydro such as pumped storage could provide the necessary system level flexibility and make a significant contribution to the security of supply. However it is difficult to identify how the economic investment would work within the current market framework.
Still, it seems to be an acknowledged reality that renewable power isn't going to be feasible for much more than 20 per cent of the UK supply unless storage of some sort comes into play. How to solve this?
There is considerable value in storage across the entire supply chain but perhaps insufficient for any discrete part. National Grid believes that suitable funding streams for using innovative storage technologies should be established so that they are developed and supported in the intervening years in order that all stakeholders can consider how such technologies could be applied making them viable in later years.
"Funding streams" are not going to come out of thin air: they will come, yet again, from the pockets of electricity consumers (or just possibly from the taxpayers, though this is unlikely. Either way, you pay).
It's often suggested that the planned national fleet of electric cars might act as a power store to help out when required. This is basically not going to happen any time soon, according to the Grid:
We do not consider vehicle to grid (V2G) services as economically viable in the near term due to additional costs that be incurred to make them export capable.
What might be of some use would be a bit of demand shifting: using 'leccy at a time when there's power to spare rather than just when you want it. It wouldn't really have much impact on a national scale, but it could mean needing a power station or two fewer to get through the early-evening demand peak. All that's needed is to install controls in everyone's domestic appliances that can turn them off and on in response to the Grid's requirements:
Importantly, in order to capture the potential of demand at a domestic level, a mandatory requirement to have the relevant equipment fitted to domestic appliances is needed. The cost of incorporating at manufacture is low, whereas the cost benefit of retro-fit is unlikely to be attractive to the end user.
So, summarising, electricity bills can be expected to soar radically upwards in the next ten years. Not only are there the effects of the escalating ROC requirement and Feed In Tariffs to consider - already quite bad enough - we can also expect to pay more to both wind and non-wind providers plus a load more for interconnectors and imports - and more on top in a bid to make storage viable somehow.
Dr John Constable of the Renewable Energy Foundation commented to the Telegraph: "The consumer burden entailed by the renewables policy is looking increasingly unsustainable.” ®