New record for UK renewables output

Renewable energy provided 13.4 GW, or 43%, of British electricity at 2pm on Saturday 6th June 2015. I believe this is a new record.

A windy day, combined with strong sun and low weekend levels of demand meant that fossil fuels delivered only 26% of total supply in the early afternoon. The remainder was delivered by nuclear, imports and power from the UK’s storage reservoirs in North Wales and Scotland.

The glut of wind and solar power almost pushed coal-fired stations out of the picture. At 3pm, coal was providing only 7% of British electricity, a total of just over 2.3 GW. I think this is also an unprecedented low and something to be actively celebrated. I don’t have the precise information but I believe only one coal-fired power station – Drax – was operating. If the country chooses to invest in wind, solar and other renewables, it can push coal-fired generation out of the generation mix completely.

Summer days that are both windy and sunny are rare. In no sense were the daylight hours of Saturday 6th June 2015 typical. But it did provide an inspiring moment that showed how renewables could eventually replace fossil fuels.

At the moment  I don't think anybody monitors the share of renewables in UK generation. In Germany, this information is provided every hour via the EEX power trading exchange and it would be sensible to do the same thing here. 

The chart below shows the makeup of supply from 9am to 9pm on Saturday. (Because of the really strange way that the UK monitors electricity output, I’ve had to list the main assumptions in the paragraph at the end of this note).

The left hand axis is Megawatts (MW). A GW is a thousand MW.

The left hand axis is Megawatts (MW). A GW is a thousand MW.

What share of total electricity output was provided by renewables during the day? My estimate is below.

Hours from 9.00 to 21.00 (9pm)

Hours from 9.00 to 21.00 (9pm)

Notes

1. The UK system doesn’t measure solar PV as a separate source of electricity.  It ‘sees’ PV as a reduction in demand for the conventional power stations and big wind farms. So I have added my estimate of PV output (generated at www.solarforecast.co.uk) to the measured UK figure. Similarly, I have added National Grid’s estimate of output from small scale wind farms that also aren’t directly measured. This might well be an inaccurate figure.

2.  I have assumed that Drax’s biomass units are the source of output described as ‘Other’ by National Grid. The figure is about 1 GW for most of Saturday, roughly equivalent to the capacity of the units at Drax.

3. Renewables include grid connected wind, embedded wind, PV of all sizes including domestic, biomass principally at Drax's 2 biomass units, and non-pumped storage hydro. 

Solar PV making a visible difference

The solar PV that the UK added between in the single year to March 2015 reduced overall UK power needs by 2.6% in spring this year. Over the daylight portion of the day the reduction was 4.3% between April/May 2014 and the same months a year later. In the early afternoon, when the sun is at its strongest, the reduction over the one year period was almost 7%.

PV is having a marked impact on UK electricity need. At 1.30pm, the typical April or May day saw a reduction of 2.6 GW in the total electricity supplied by the big generators. That’s after taking into account the higher winds this year and the overall fall in electricity demand.

This year compared to last year

I looked at the total amount of electricity being transported by the National Grid from big generators, including the large wind farms, coal stations, gas and nuclear.  This number excludes solar and smaller wind farms which are connected to local electricity networks and which aren’t metered in real-time by National Grid.  Electricity need is tending to fall across all parts of the year and was down about 1% in April and May compared to last year.

The wind blew a bit harder in spring this year. This matters because if small wind farms are producing lots of electricity the amount of power the big generators need to produce goes down. More power produced by local turbines further reduced the flow of electricity across the National Grid by about 0.7%, taking the reduction to 1.7%, before considering solar.

During the year from May 2014 to May 2015, the UK added slightly over 3 GW of solar PV. (For comparison, the UK’s biggest power station complex at Drax in Yorkshire has a maximum output of just under 4 GW). My estimate of the additional solar capacity isn’t firm. DECC produces estimates every month but I think it is falling to capture some of the new solar farms that were hastily installed across England in the weeks of February and March as developers raced to beat the end of the Renewable Obligation subsidy. I think the UK now has about 7.1 GW of solar, not the 6.5 GW that DECC says. (It’s only when the new farms finally get fully accredited at Ofgem that we’ll know who is right).

The other thing to mention was April and May were sunnier this year than last. The panels on my roof produced 27% more in April and 5% more in May than in 2014. When we look at the impact of PV on the electricity that the big fossil fuel generators needed to produce we have to remember that it was windier and sunnier and we had more turbines and a lot more PV.

Nevertheless, the results are impressive to look at.  The chart below shows the how April/May 2015 compared to the same days last year. The world of electricity divides the day  up into 48 half hour periods and in summer the peak output from solar is sometime just after 1pm BST. (Remember that most of the UK solar capacity sits slightly west of the Greenwich meridian and so the sun will be at its zenith after 1pm BST/noon GMT).

These figures contain an adjustment to ensure that both years have the same number of weekend and weekday days because weekends have lower demand.

These figures contain an adjustment to ensure that both years have the same number of weekend and weekday days because weekends have lower demand.

 

In the dark hours the UK’s big power plants were producing about 98% percent of what they did in 2014. As the sun rose, the difference increased. In early afternoon, the average demand on the Grid was a little over 91% of what it was in 2014. The dip was well over 2 GW for several hours and peaked at 2.6 GW. If the weather’s OK, June, July and August will be the same.

A dent in overall electricity generation need was already apparent in 2014. This year, it had become far more obvious with the need for conventional power now falling sharply after 9 am. The usual early evening peak has disappeared because the sun is still shining when people come home, turn the TV on and cook dinner.

The pattern in the chart above is perfectly explicable because of the sunnier days of 2015 and the larger base of installed capacity. Sadly, the PV rush is over. Unless things change, we’ll only see a small increase in solar output each year. But if anyone ever says PV is irrelevant in the cloudy UK, you can show them this chart. Or take a look at www.solarforecast.co.uk where I use meteorological data to estimate how much electricity the UK’s PV will produce for the next five days. On the best days, we’ll see about 6 GW pouring into the electricity distribution system, as much as 25% of the UK’s need on sunny weekend day. Saturday doesn’t look too bad, with over 5 GW expected by my forecast and that of National Grid’s.

 

These figures contain an adjustment to ensure that both years have the same number of weekend and weekday days because weekends have lower demand.

These figures contain an adjustment to ensure that both years have the same number of weekend and weekday days because weekends have lower demand.






Artificial photosynthesis - a difficult but necessary part of the energy revolution

Why we need to store energy  in liquids

May 28th. It’s a fairly typical early summer’s day in Germany. At noon, PV and wind are providing just over 50% of electricity supply. Solar output will fade sharply over the afternoon and cease completely by about 9.30pm. Although the wind will continue to blow, renewables won’t make much contribution to overnight electricity supply.

Despite this intermittency, we want solar to continue growing. In most parts of the world, though probably not Germany, its annualised costs are now no higher than electricity produced from fossil fuels. But however much we desire PV to succeed, it doesn’t deliver electricity for much of the day, it is unreliable in higher latitudes and it is still requires a huge capital investment to move from old and fully depreciated gas and coal plants to open fields of PV. Even those of us who think that solar is the world’s best hope need to acknowledge that it fits uncomfortably with the energy systems of advanced economies. However cheap solar gets, it doesn’t solve the problem of the need for seasonal storage.

The purpose of this post is to argue for a new focus on artificial photosynthesis and, in particular, investment in the development of low cost technologies to convert sunlight directly into carbon-bearing liquids. Put at its most simplistic, we need techniques that use photons of light to disassociate the hydrogen and oxygen in water and then use the hydrogen protons and electrons to provide the energy to mimic the natural photosynthetic reactions in plants - or, more probably, bacteria - that capture atmospheric CO2 and combine the gas with organic molecules to make sugars and more complex energy carrying chemicals. Artificial photosynthesis (AP) may (eventually) become cheap, be able to use non-potable water and require little land that could be otherwise used for agriculture. In other words, it avoids all the problems bedevilling today’s renewable energy technologies.

A tricky problem

But using solar energy directly to make fuels is an intensely difficult problem. One recent academic paper wrote

The scientific challenges for efficient and globally deployable AP are complex; requiring coupled breakthroughs in light harvesting, charge separation, catalysis, semiconductors, nanotechnology, modelling from synthetic biology and genetic engineering, photochemistry and photophysics, photoelectrochemistry, catalysis, reaction mechanisms and device engineering.

But the very next paragraph of this paper says

In favour of AP is the vast excess of available solar energy compared to present and projected human needs, its capacity to reduce the atmospheric concentration of greenhouse gases and address the problem of intermittent renewable energy (solar pv, wind and hydro) electricity supplies as well as the need for a zero-carbon source for transportation fuels.

 I’ve tried to write before about the importance of using surplus electricity for conversion into methane (natural gas) because gas can be stored easily within the existing infrastructure of pipes, gasometers and exhausted fossil gas fields. ‘Power to gas’ - the conversion of surplus electricity into hydrogen and possibly then on to methane – is an extraordinarily important technology in which the UK has no shown no interest whatsoever. It faces two obstacles in addition to policy neglect. First, neither the UK nor any other country has any significant investment in the infrastructure to store hydrogen. Second, hydrogen isn’t particularly good as an energy carrier, delivering relatively little power per unit weight or volume. But using the hydrogen  to make methane looks much more interesting, although this requires a dense source of CO2, such as flue gases.

In this article, I want to put forward the view that we should also be pushing for expansion of research into the direct capture of the photons of sunlight and their conversion not into gas, but into liquids. Liquids have high energy density (kWh per kilogramme and per litre) and are also easy to store within today’s economy. At this moment, for example, the UK has oil in store equivalent to about 80 days consumption. In other words, we have the pipes and tanks to take seasonal surpluses of electricity from PV and keep that energy in the form of energy-rich liquids.

Time to start sponsoring research

After decades of statis, recent progress in academic and commercial research in artificial photosynthesis is exciting. I guess we are about 15-20 years from cheap and easily deployable systems that be used everywhere around the world to provide abundant energy to supplement solar. I hear you immediately saying ‘but we don’t have 15-20 years’. Probably true, but we must not let that stop us engaging in urgent research. There is no conceivable alternative in high latitude countries if we want a modern economy and abundant and cheap energy available throughout the year. (I am disregarding nuclear power as an alternative because it is looking increasingly impossible in much of the world, even including the UK).

In European countries modern life requires the continuous supply of about 4 kilowatts of energy per person. (Not just electricity, which is less than half this, even including conversion losses turning fossil fuels into power). We can probably compress this by switching to electric cars (3 times as energy efficient as petrol) and possibly by using heat pumps (up to 3 times as much useful heat per unit of input electricity as a resistive heater). But we probably cannot get the total energy need much below 3 kilowatts a person in the near future. (That’s the equivalent of two electric kettle working continuously for each of us).

Provided we could store the surplus power when the sun is shining, we could get this electricity from installing about 30 kilowatts of PV per head. (The average British PV panel generates about 10% of its maximum capacity over the course of the year). The UK has currently about 0.12 kW per head, by the way, and Germany about 0.45 kW or between 0.4% and 1.5% of what is needed.

Batteries will be useful. But the size and cost will be enormous. Just to store the surplus power of a sunny day like today will require over 100 kWh of lithium ion battery per person. This is more than in the most powerful electric cars on the road today. Batteries like this have poor energy density, needing nearly a hundred times as much weight as petrol to store the same amount of energy and almost twenty times the space. The unfortunate truth is that batteries are fine for overnight electricity storage so that you can run the washing machine at 10pm from power harvested at noon that day. However they will never have any role, absent quite unexpected technological developments, in storing Britain’s summer photons for a dull December. That’s where power to gas and artificial photosynthesis come in.

Here’s brief details of three new developments in artificial photosynthesis, using contrasting approaches and with very different strengths and weaknesses.

Joule

The nearest entity to commercial production of fuel from sunlight is probably Joule Unlimited, a company headquartered near Boston and with production facilities in New Mexico. Joule’s technology uses transparent tubes of brackish water into which CO2 is flushed. The tubes are filled with genetically engineered microbes that take energy from sunlight to capture the CO2 and then excrete a liquid fuel.

The advantages of this approach include very high levels of productivity. The company claims it can produce 40,000 litres of ethanol per hectare a year. This implies a very high degree of photosynthetic efficiency – far greater than conventional green plants – and approaches the energy yield of the same area full of solar panels. The process is cheap and isn’t limited by having to use scarce water or minerals. Some openly doubt whether Joule’s technology will ever work but the company has just raised another $40m to add to the $120m already invested. This money will help build the first commercial plant. Rumours suggest that the recent fund-raising round included GE and other major international corporations, including Audi, an earlier backer.

The disadvantage of the Joule approach is that it needs a relatively dense source of CO2, such as the flue gas from a cement works or coal-fired power station. In other words, it can be argued that the technology requires the generation of CO2 in order to operate. Unless the CO2 from burning Joule’s ethanol is itself captured, unlike natural photosynthesis this process doesn’t reduce atmospheric carbon dioxide levels. But, if it works, Joule’s approach is inexpensive and effective.

Daniel Nocera at Harvard

Nocera and his colleagues published a paper in February 2015 that demonstrated a technique for using electricity – perhaps generated by solar panels – to split water into hydrogen and oxygen. A genetically modified bacterium uses the H2 to begin the conventional (and chemically complex) process of photosynthesis. Instead of producing biomass, as in conventional bacterial growth, the bacterium generates isopropanol, a potential carbon fuel.

 

Nocera’s team have made huge advances. The splitting of water is done using cheap electrodes and at a low voltage. Yields are still low, at least by comparison to the generation of electricity from PV, but already at least as good as in plant photosynthesis, which is usually no better than 1 or 2%. So, if this approach can be commercially exploited, more energy will be generated than could ever be generated by making biofuels from fermentation processes. The capital costs will be relatively low, but the disadvantage of this approach is that needs the delivery of electricity, rather than the direct use of sunlight, as well as a feed of concentrated CO2. Even if the Nocera process can be made 5% efficient at converting energy into carbon-bearing molecules, it will still require huge areas of solar panels to provide the fuel for each person’s energy needs.

Yang’s team at Berkeley

Professor Yang’s group published a paper last month that showed a mesh of interlocked microscopic nanowires made of silicon and titanium oxide which is populated by bacteria. (A different genus to Nocera’s bacterium). The nanowires absorb photons from sunlight and generate electrons. These  are captured by the bacteria and used to turn the CO2 being bubbled though the solution surrounding the mesh into more complex carbon-bearing elements.

The Yang team are excited by these results. One comment was ‘We believe our system is a revolutionary leap forward in the field of artificial photosynthesis’. The technology seems potentially inexpensive, robust and may have an energy yield that is as much as 10% of the energy initially provided by sunlight. But like the other two technologies, it needs sources of CO2 more concentrated than in the atmosphere.

 

There’s a long way to travel before artificial photosynthesis becomes an economically competitive means for storing surplus solar (or wind) energy. We eventually find it is better to focus on using surplus electricity in summer to turn into hydrogen and then into methane.

Power to gas, perhaps using the technology pioneered by Electrochaea may be able to convert more than 50% of the energy supplied as electricity into the chemical energy of methane. This is far better than the conversion efficiencies implied in the two academic results published this year.

Nevertheless, the arguments for spending research money on artificial photosynthesis remain strong. Without a means of energy storage for months at a time, the renewables revolution will stall. Most importantly, we need to be able to extract CO2 from air in order to reduce atmospheric concentrations.  Artificial photosynthesis is a hugely complicated problem to solve but the UK science base needs to get engaged in this vital area. At present, most of the research work is going on in the US (usually paid for by Federal money).It needs to be a similar priority here.

Fossil fuels currently as low as 40% of all UK generation

It’s a windy and quite sunny afternoon across the UK. At 14.00, this was the composition of electricity output. Fossil fuels are down at 40% of the total. This may be a record low for the daytime hours.

Wind is providing about 7.4 GW and solar about 4.5 GW. (Most wind output is directly measured, ‘embedded’ wind is not and is a National Grid estimate). Add in hydro and biomass and total renewables output is running at 13.5 GW, compared to 15.4 GW for fossil fuels. At this moment renewables are providing over 35% of UK electricity. Figures for PV are from Solar Forecast (www.solarforecast.co.uk).

Nuclear gives us 7.3 GW and the France interconnector about 2.0 GW. Assume that this power is all fossil free and 60% of UK electricity – for a few hours until the wind and sun fade – is low-carbon.

Tesla's home battery; a remarkable achievement that doesn't quite make financial sense

It’s getting closer, but it’s not quite there yet. Tesla’s home battery system is a major advance on competing offers though it still doesn’t make straightforward financial sense.

The company announced a 10 kWh battery at a price to installers of $3,500. It comes with a highly impressive 10 year guarantee and a maximum flow rate of 2 kW, enough to power the average UK home (except when the tumble drier and kettle are working together).

What would be the financial implications of purchase? The first thing to note is that the system is being sold as a storage system for surplus solar power. But actually in the UK the logical use for the unit is as a way of storing cheap overnight electricity and using it during the day. The Economy 7 pricing system offers very cheap energy between about midnight and 7am. The battery owner would take up power during the night and use the electricity during the day.

I looked at E.ON’s current tariff for Economy 7. It charges about 5.2p per kilowatt hour, compared to 13.8p per kWh on a standard tariff. To use the battery most cost effectively, the owner would buy 10 kWh overnight for 52p and use it during the day, not spending £1.38 as a result and therefore saving £0.84 a day or about £300 a year.

This maximum saving is only achieved when the house uses exactly the 10 kWh capacity of the battery each day. If it uses more the householder will have to stump up for more expensive daytime power. If it uses less the home won’t get the full saving.

When the Tesla unit becomes available in the UK, what will it cost? If the current price to installers in the US is $3,500, it’ll probably cost around $4,500 fitted in the home, if there’s already a AC/DC inverter such as comes with a PV installation. (It looks a simple job to put it on the garage wall next to the meter). In the UK, the cost will be burdened by VAT and import tariffs. I guess it will be available here for a minimum of £4,000 to solar panel owners with inverters.

So the offer to the UK householder will a ten year guarantee of making a maximum of £300 a year after handing over at least £4,000. The price will have to halve to make this a remotely reasonable financial deal.

Of course it is not all about yearly savings. The battery functions as a back-up power supply, meaning the house will still have electricity even in the event of grid failure. And many people have such a hatred of the electricity supply companies that they will pay a high price to reduce their bills. But for most people the Tesla battery is no more of a realistic proposition than the Tesla car.

That’s the bad news. The good news is the extraordinary rate of progress that this innovation represents. A few months ago the UK home battery maker Moixa started selling its Maslow system at a price of around £2,000 for 2 kWh or about two and a half times today’s Tesla cost per kilowatt hour. Sonnenbatterie, the European market leader, is charging about $10,000 in the US for a 4.5 kWh system, a five times multiple of the Tesla installed price. No wonder the German company  admits it makes little financial sense to buy a domestic battery, even when faced with high Californian electricity costs.

Tesla’s heady price will pull down battery costs across all size ranges. In a little-noticed part of the Tesla press release the company talked extensively of its partnerships with large electricity users such as Amazon data centres. The economics of these applications will be better because of the value of 1 MWh batteries to the local grid, the increasing importance of being able to complement local sources of renewable energy and the financial value of shaving peak demands. (Large users generally pay a substantial annual charge based on their maximum electricity use and batteries can reduce this).

Home electricity storage still doesn't  quite make financial sense; batteries installed at large electricity users or generators probably do. And, of course, a Tesla system installed in a country without an electricity grid will be a life-changer.

(Unrelated note: my forecasts for daily solar PV output in the UK, using weather forecasts and installation data for 98 geographic areas, are now available at www.solarforecast.co.uk. Any thoughts gratefully received at chrisATcarboncommentary.com.)

 

 

Launch of UK solar forecasting service

The March rush to complete solar farms combined with the advent of good weather gave us an unnoticed special event on Saturday. Was this the first time ever that electricity demand from the National Grid was lower in the middle of the day than it was at midnight? I think it might have been.

We saw the unsurprising consequence: negative prices for several hours in the market to balance electricity supply and demand. This highly unusual event may be a reason why your organisation should consider subscribing to a new service from Carbon Commentary which provides a PV output forecast for the whole of the UK for the next five days, updated hourly. Knowing how much PV electricity is going to flood the system will help make demand and price projections more accurate.

Daily demand for solar forecast 13.04.15.png

On the sunny Saturday afternoon UK electricity production fell to just over 25 GW. In the chart above, I’ve also shown the curve for the same day (this time a Sunday) in 2010, just five years ago. 2015 was a full 8 GW lower, or nearly 25% below the earlier level in the early afternoon

Part of this reduction comes from the general fall in electricity use. In the hours of darkness, this is running at about 3 GW, or the output of four or five gas fired power stations. The gap widens sharply as the sun arrives, with the reduction peaking just after lunchtime. The reason for the additional reduction is quite simply solar PV, which isn’t directly measured but deducts from the demand made on the national grid. With the exception of a few eccentric homeowners, there wasn't any PV in April 2010.

The end of March this year saw a successful scramble to connect many large PV farms around the country. And it really was ‘around the country’. These power plants are now as far north as Anglesey and not just in Cornwall. This splurge was responsible for adding at least a quarter to the UK’s PV generating capacity

The numbers are still a little soft but we think about 6.5 GW of PV is now operating in the UK. Many of the panels are on houses and school roofs but most are on open ground. As more data comes in, this figure may rise to nearer 7 GW.

On a clear day at around 1.30pm in mid-April, this PV base will produce just less than 5 GW. It won’t be as high as 6.5 GW because of electrical losses and because the sun isn’t quite high enough to give maximum power yet. This 5 GW estimate almost exactly matches the actual reduction we saw on Saturday and gives us the confidence to launch a new service.

Carbon Commentary now has a model which estimates how much solar electricity will be produced for each of the next 120 hours, or a full five days. It works by taking sunshine forecasts from Europe’s leading meteorological agency for each hour across 98 postcode districts in the UK and combining this with a detailed database of where all the UK’s solar roofs and huge farms are. (Thanks in particular to Simon Mallett of www.renewables-map.co.uk for dividing the 550,000+ smaller installations into postcodes).

We can feed this to subscribers each hour, or any other interval you choose. And we can break the figures into postcode areas if this is useful. It will be supplied as an Excel sheet and simple charts and will also be available on a separate web site.

The screenshot below from the electricity market portal shows why you might want to purchase a subscription to this feed.

The industry didn’t predict the surplus of PV gushing onto the network on Saturday. As a result, system prices fell to substantially less than zero in early afternoon. For more than two hours, users would have been paid large sums to take electricity. If you had known that the UK was going to produce 5 GW of solar electricity, rather more than the figure predicted by the other forecaster currently available, that inversion wouldn’t have been such a surprise.

Please contact me, Chris Goodall, at chris@carboncommentary.com or +44 7767 386696 if you’d like a one month trial subscription of the beta version of our new 5 day forecast. ,

 

 

 

 

Batteries - where PV was five years ago

Batteries are improving fast. A new article in Nature Climate Change suggests that the cheapest lithium ion batteries (the sort that powers your phone and your Tesla) are now costing little more than $250 a kilowatt hour, down from at least three times this level five years ago. By the end of this year, some have recently suggested that the cost may be as low as $150/kWh, although this is not shown in the chart below. This would imply that a battery pack in a car with 200 miles range might cost as little as $8,000/£5,500.

 Source: Nykvist and Nillson, Nature Climate Change, March 25th 2015

 

Source: Nykvist and Nillson, Nature Climate Change, March 25th 2015

Even more significantly for the battery industry, this price would mean that electricity storage would fall in price to less than the cost of building rarely used ‘peaker’ power plants to meet occasional spikes in electricity demand. In other words batteries look as they will soon be the cheapest way of smoothing out the peaks and troughs in daily electricity markets.

Lithium ion batteries may be the right choice for use in cars and other applications where space needs and weight are important considerations. In other circumstances, different battery technologies may well dominate. The Californian company Imergy has just announced a deal to sell 1,000 30 kW/120 kWh systems for rural electrification projects in India in combination with SunEdison, a solar PV provider.

Imergy provides a vanadium flow cell battery which beats lithium ion on longevity, ease of use and safety. The company promises an almost infinite number of daily cycles of filling and emptying with electricity and very high levels of reliability. What about cost? Imergy has said it hopes to get to $300/kWh but the Indian deal is not yet at that price.

An Imergy 30 kW/120 kWh battery. About 6m long

An Imergy 30 kW/120 kWh battery. About 6m long

Like many other battery start-ups, Imergy’s cost improvements come from reductions in the cost of making the cells. Instead of using very expensive newly mined vanadium, Imergy is extracting the element from steel slag and other waste products. The company’s claim is that this reduces the cost of vanadium by 40%, making a substantial difference in the total cost of producing the battery.

Other young companies are promising equally striking costs. Eos Energy Storage caught attention by saying its containerised zinc hybrid cathode batteries are costing around $160/ kWh already. Eos says it reaches this extraordinarily low figure by using low cost chemicals and very simple manufacturing processes.

An illustration of the inside of an EOS 1 MWh containerised battery

An illustration of the inside of an EOS 1 MWh containerised battery

Sakti3 hasn’t been so free with its cost estimates but does promise a power density of over 1,000 watt hours per litre of battery capacity. This is over twice what Tesla is currently achieving and suggests that the company might have costs already below $200/kWh. The CEO recently claimed to Scientific American that her company would ‘eventually’ hit $100/kWh. At that price, electric vehicles would probably be as cheap as petrol engine cars to build. At that’s before including the lower cost of refuelling with electrons rather than oil. (Dyson recently invested in this company).

Alevo, a Swiss/US company claiming to have raised over $1bn in funding, has just launched a containerised battery system that will sit on the edge of electric grids, helping to stabilise the frequency of the alternating current. It recently announced sales of 200 MWh of capacity to a company providing support to grid operators across the US. Commentators talk of this company arriving at $100/kWh within a few years.

Several Alevo batteries in standard containers

Several Alevo batteries in standard containers

In time, we’ll see many of the claims from battery companies evaporate. The batteries may be more expensive, less easy to maintain and have shorter lives than their developers claim. But across the world the improvements in cost and performance in a wide variety of different companies suggest that battery costs, for both large scale containerised solutions and for electric cars, will continue to fall sharply.

The implications of this cannot be overestimated. In reliably sunny countries, it means that ‘solar+storage’ will become the lowest cost source of energy. National distribution grids may never be built. In countries with large numbers of personal cars, the switch to electric vehicles will speed up. Batteries will also provide much of the need for flexibility in adjusting supply of electricity to demand during the course of the day.

Cost reductions will encourage the growth of battery systems on domestic and factory premises, particularly in countries with big gaps between the price homeowners pay for electricity and what they get when they export power back into the grid. The need for ‘peaker’ power plants that work a few hundred hours a year will decline. The whole electricity grid will become more manageable.

How far are we away from large stationary batteries being financially viable in the UK? Let’s take the Imergy 30 kW/120 kWh hour system as a case study and assume it is priced at $300 a kWh. The unit therefore costs about £36,000 or £24,000.

In the UK’s recent capacity auction, an Imergy battery could have earned just under £600 a year for being ready to provide power at peak time. It could also be used to buy electricity at the daily minimum price of around 3p a kWh and sell it at the typical maximum of 7p or so. Assuming a round trip efficiency of 75%, that’s a profit of around £1,000 a year. In addition, if the battery was sited appropriately it could make money from grid frequency stabilisation payments and from reducing the payments for peak needs for large users. These numbers will all tend to get bigger as grid decarbonisation proceeds. There’s no goldmine here but returns of 10% a year look possible as long as Imergy’s promises of very low maintenance bills are delivered. Not exciting, but good money in a period of low to negative interest rates.

Even people in the energy industry in the UK still don’t understand how fast battery costs are falling and how quickly energy storage will become a new ‘asset class’ for return-hungry capital to invest in. We’re roughly where solar PV was five years ago just as the steepest decline in panel manufacturing costs started.

Batteries don’t solve the need for seasonal storage in high latitude countries – that requires a ‘power-to-gas’ solution – but within a decade they will have radically changed how the UK and other countries provide daily stability to the electricity  grid. In sunny countries, they will be life-changing for a billion people.

 

 

 

The effect of the eclipse on solar PV output

Bjorn Graabek kindly sent me the this chart of the effect of the eclipse on the output from his PV system near Wokingham. He indicates that it was cloudy this morning.

Bjorn Graabek 6 kW PV on 20th March, the day of the eclipse.

Bjorn Graabek 6 kW PV on 20th March, the day of the eclipse.

In North Wales it was very clear but I didn't  have the wit to record the output from our PV system minute by minute. However the 2.5 kW installation (SE facing) was producing about 1.2 kW at 8.45 and this fell to just over 100 watts at 9.30, a fall of over 90%. It then rapidly rose to about 1.4 kW at 10.15. 

Someone forgot to tell the National Grid about the solar eclipse

The UK will experience a sharp reduction in sunlight on Friday morning, 20th March as a result of the 80% solar eclipse. This will reduce the power coming into the electricity grid from solar PV by at least an equivalent percentage. However the forecasters at the UK National Grid don’t seem to have been reading the newspapers. The chart below shows the published forecast for solar PV output for the 19th, 20th and 21st March. (1)

Source: National Grid

Source: National Grid

At the time of the peak eclipse, about 9.30am, solar output is expected to be higher than the two adjoining days. There’s no sign of even the smallest dent as the nation goes into twilight for a couple of hours.

I hope someone has remembered to tell the people in the National Grid control room in Wokingham.

Contrast this with the forecast for solar in Germany in the chart below.

Germany has about 6 times as much PV as the UK. The challenges posed by the fall in PV output as the eclipse starts are regarded as tricky but manageable. At  peak – if it is sunny – the German electricity network would be losing 400 MW of PV-generated power every 60 seconds. To compensate for this means turning on a new 1GW power station every two and a half minutes over a period of a half hour or so. If Germany succeeds in dealing with the eclipse it will help show that variations in PV output - even extremely rapid changes - can be handled by a modern electricity network.

 

(1) http://www2.nationalgrid.com/UK/Industry-information/Electricity-transmission-operational-data/Data-explorer/. Look for DemandData_Update.

No need for panic this year over electricity supply

The UK passed through winter (defined as December to February) without coming close to running out of electricity. The nervousness of autumn 2014 turned out to be unjustified.

At 5.30pm on the chilly evening of January 19th electricity generation hit a peak of 53.3 GW. National Grid had forecast peak generation during a cold spell as likely to hit 55.0 GW. So, as is now increasingly normal, electricity demand was running one or two gigawatts below expected levels. And there was probably another four or so gigawatts of supply available even if demand had reached the figure National Grid had predicted.

How was peak demand actually met in the early evening of January 19th? The tables below give the details. In the first, I’ve written down the amount of generating capacity that the National Grid thought would be operating during the winter, plus its estimate of the percentage that would actually be available at the moment of peak need. (The remainder would be out of action for maintenance and repair).

Table 1

Source: National Grid Winter Outlook

These numbers suggest an expected peak availability of 57.1 GW, plus whatever the wind was providing and also what could be purchased from France and the Netherlands via the interconnector cables. The total - excluding wind - was about 59.6 GW if the estimates of availability were correct and both two international connections were delivering their full capacity. (As it turns out, at the point of peak demand, wind was barely turning the UK’s turbines).

The distribution of supply at the moment of peak need was as follows. 

Table 2

Source: National Grid Winter Outlook, BM Reports

Source: National Grid Winter Outlook, BM Reports

Nuclear was slightly over-providing compared to the projected availability of supply. (This was very unusual; most of the winter nuclear has under-performed as a result of minor outages at many of the stations and, on average, nuclear has produced much less than expected). Gas and coal stations were generating about  91% of the National Grid had projected as being available at the moment of peak demand. 

The most obvious indicator that peak demand was easy to meet was the low utilisation of open cycle gas turbines (in effect, jet engines used only to provide peak power) and oil-fired power stations (expensive to run so generally also only turned on at moments of maximum demand). Oil-fired capacity was barely being used and there was half a gigawatt of spare capacity at the OCGT plants. Pumped storage might have provided an extra half a gigawatt of supply if it had been necessary.

The position will get tighter in future years as fossil fuel power stations close. Longannet, the UK’s second most polluting electricity generator, is said to be considering shutting within a year as a result of high charges to connect to the National Grid. But the slow fall in electricity demand, and the increased emphasis on ensuring that demand can be reduced at peak times means that the years to 2020 might well be survivable without blackouts.

 

 

 

 

Will the Californian Duck make it to Britain in summer 2015?

Electricity generation in California in spring used to reach a small peak around 1pm and then remain fairly flat until late afternoon. Then it rose to its early evening peak.  The growth of solar PV has changed this; demand stops rising about 11am and then falls sharply as solar kicks in, reducing the need for conventional generation. The shape of the electricity demand curve now resembles a bird seen sideways. Unlikely humourists at the state Grid called this the ‘Californian Duck’. In the chart below the projected total generation demand in 2020 rises from 12 GW at 3pm to over twice this amount within a few hours. Not easy for a grid operator to manage.

Source: CaISO

Part of the reason for the Duck is the relative lack of export capacity from the Californian grid. In Germany, the Duck is not as obvious because electricity markets dump the surplus PV power into adjoining markets. Britain is, like California, poorly connected to other countries. As solar grows in the UK, will we see Ducks here?

The analysis

Part 1: how has PV grown in the UK?

I looked at the reports that give the data on how much PV is installed in the UK. This shows that the total capacity at the end of June 2014 was about 4.2 GW, up from 2.5 GW a year earlier.

Source: DECC Solar Deployment report

Source: DECC Solar Deployment report

By the end of 2014, the UK had about 5.0 GW capacity. The rise is continuing as solar farms race to complete projects before the end of the current subsidy scheme. During the second half of 2014, about 2.6 GW of new large scale PV got planning permission but was not completed by the end of December. However most of this planned capacity will be built before the end of March.

I estimate that we’ll see about another 2 GW of solar farms and a continuing growth in smaller scale PV installed under Feed in Tariffs by mid-year. So by June I think we’ll have about 7.3 GW of PV on roofs and on the ground (about 20% of the German figure, by the way).

Part 2: did we see a Duck in summer 2014?

a.       Nobody measures the output of solar PV installations in the UK. Roofs and farms are all sited on branches of the main high voltage electricity grid and not on the trunk network. This means that electricity from PV is not  seen by the grid  as power generation but as a reduction in demand for electricity from the big power stations (and those big wind farms that are connected to the trunk network).

b.      Large amounts of PV capacity on the branches of the UK electricity distribution network will therefore result in lower measured electricity generation on sunny days in summer.

c.       By how much does PV reduce generation? I looked at the impact of one week of very sunny days in high summer 2014 and compared it to the same week in 2010, before the PV boom started. How did I work out which 2014 week to use? I looked at the daily outputs for a Newquay PV installation in Cornwall (1) and the publicly  available figures for Westmill solar farm in Oxfordshire (2). In both cases this week in mid-June was the sunniest of the summer so I selected this one.

Let your imagination range free and you can see the beginnings of a bird-like shape in the UK data. More of a Heron than a Duck, but the rapid growth of PV is clearly affecting mid-day electricity generation. The picture is complicated by the general fall in overall electricity use – which is typically down about 1 GW across the entire day, but one sunny  week in June 2014 saw fossil fuel generation typically fall by over 3.1 GW between 12 and 2pm compared to 2010. On the very sunniest days across the country it would actually have fallen more.

The first chart below is the actual generation required in 2010 and 2014 to meet demand. The 2014 line is lower across the day, partly because of solar and partly because UK demand for power is generally  falling.

Source: Elexon

Source: Elexon

The next chart adjusts 2010 to take 1.0 GW off demand during the whole 24 hours to reflect the fall in overall electricity demand. Now the effect of the PV in 2014 between early morning and late afternoon can be seen much more clearly. There’s a 2.1 GW gap between the lines at around midday.

Part 2: will we see Ducks with a clearer shape in 2015? And beyond?

By June 2015, PV will have grown about 75% compared to the figure a year earlier. And the increase actual in peak generation will be even greater. We know, of course, that all the new big farms turning on at the moment are south facing and in good(ish) locations whereas many domestic PV sites are not optimally aligned, are not always in southerly locations, are sometimes shaded and are often not wired as well as they might be. So the actual increase in real capacity may be 80% or more.

What will the Duck look like in June 2015 if the same amount of sun is recorded as in June 2014? (I’m assuming no further decline in underlying energy consumption although we know that this is still occurring). The chart below adjusts the amount of generation to reflect the higher PV installed capacity. The gap is now estimated at almost 4 GW at midday for the average sunny week in June. Some days it will be more than this.

We don’t know how fast PV will continue to grow. A new Conservative government is likely to severely restrain the growth of ground-mounted in large commercial farms but may continue to accept roof PV and smaller solar farms, particularly if community owned. Solar PV already makes decent financial sense if the owner is thereby reducing purchases of electricity and the advantages will get more obvious as technology improves.

Only about 3% of UK houses will have solar by mid 2015 and the scope for increasing this is obvious. Many local authorities and housing associations now seen the financial logic of putting PV on rented properties. For example, the city of Plymouth is currently raising money from local residents to install PV on its social housing and provided Feed in Tariffs continue, other municipalities will follow.

By 2020, I assume 13.5 GW of solar power, (just over a third of current German capacity). This is what the profile will look like then, assuming no further fall in overall energy consumption. It still looks more like a Heron carefully watching water (and fish) falling over a weir than a Duck. Nevertheless the midday plateau has gone, to be replaced by a steep dent during a typical sunny summer week.


(1) Fans of good data will really cherish and admire the Newquay site at  http://www.newquayweather.com/.

(2) Westmill makes its weekly output figures available at  http://www.westmillsolar.coop/projects.asp









IPPR wrong to wind up the wind power haters.

IPPR is wrong about medium-sized wind turbines when it claims a ‘subsidy loophole’ is damaging the confidence in UK clean energy. The problem is not the dishonesty of manufacturers, the mendacity of installers or the gullibility of government. The real issue is the cliff-edge nature of wind FiTs.

If I install a handsome EWT 500 kW turbine in my field today, I get paid 13.34p for each kilowatt hour of electricity it produces. If, instead, I put a 501 kW machine there, I would get 7.24p, only 55% as much. Instead of getting a gross income of about £300,000 for my electricity from a windy site, the return would fall to about £165,000.

Feed-in tariffs (as at February 2015)

Up to 100 kW 16.00 pence

101-500 kW 13.34 pence

501 kW+ 7.24

Unsurprisingly, farmers and wind turbine manufacturers noticed this when the feed in tariffs arrived five years ago. Under 500 kW and you got paid almost twice as much as just over 500 kW. So a larger wind turbine costs more but produces a much lower income.

A phrase I heard a lot at the time was ‘the 500 kW sweet spot’. If you could get planning permission for a 500 kW turbine on a coastal hill top you would get an extraordinarily attractive financial return. At the higher feed in tariff rates then available, payback could be as short as two years.

If my memory is correct, the only problem was that there wasn’t a 500 kW turbine on the market. There were smaller machines at around 300 kW and much larger turbines. The race was on to turn an existing design into one that could exactly hit the sweet spot. The mid-sized Dutch manufacturer EWT was one of the first to market with a variant of its 900 kW turbine with its power capped at 500 kW. And it is now capturing a large fraction of the sales of turbines put on British farms.

Despite what the press is saying today, the 500 kW version isn’t the same as the 900 kW machine and doesn’t typically produce as much power. The cut-in wind speed when the blades start moving is lower and the smaller turbine reaches maximum output at a much lower wind speed. At a wind speed of 10 metres/second (20 miles an hour or so) the bigger machine produces about 20% more output. If you were paid the same price for producing electricity, you might well choose the larger turbine. But you don’t because the subsidy is much, much lower.

IPPR gets rather heated about how wicked this is. But let’s put this in context. The total number of machines that have been tuned down to fit just under the arbitrary 500 kW limit is probably about 100 (source IPPR). The net impact is probably about 30,000 MWh a year of diminished production (what these 100 turbines would have produced if they were rated at the original manufacturer’s specification). This about 0.01% of UK electricity output.

The answer to the problem is not what IPPR proposes, which is to award subsidies based on rotor size. That would introduce another set of incentives to tinker with turbine designs to look for the sweet spot. The right thing to do is to adjust the feed in tariff rates so there isn’t a cliff edge at 500 kW. The sensible structure of rates is one which mirrors the underlying costs of turbine and, importantly, turbine installation. This will trend downwards at quite a steep rate to 200 kw or so, and then drop more slowly as the benefits of increasing scale grow smaller. This is all that need to happen. We can then call an end to the pumped-up panic in the tabloid press about the problem.

 

Opposition to new energy technologies among different age groups

Policy in the UK tends to be determined not by the strength of support for a measure, but by the absence of active opposition to it. More precisely, the amount of forceful and focused opposition by people in the second half of their lives. These are the voters at elections.

This week’s poll of attitudes towards energy sources shows the correlation clearly. Less than 5% of UK respondents aged 16-44 are opposed to onshore wind. 20% of those over 65 are, and their views are increasingly winning the day. Even if approved at local level, wind farms are now routinely turned down by central government even though general electoral support for wind shows no decline. Several dozen developments have been blocked by Eric Pickles in the last year.

But in this latest survey, 68% of people over 16 either ‘supported’ or ‘strongly supported’ onshore wind. Another 22% had no view for or against. Any notion that onshore wind is unpopular with the electorate is simply wrong.

The position is even clearer with solar PV, another form of renewable energy facing rising resistance from planning committees and from central government. Only 2% of those 16-44 oppose this technology, compared to 10% of those over 65. And, as with wind, there is no sign whatsoever of rising general opposition to PV in this survey. 81% of the UK adult population support the use of solar PV as an energy source.

However any glib thesis that the attitudes of stroppy pensioners now dominate the policy-making process turns out to be wrong. More people over 65 oppose fracking for shale gas than onshore wind but their views have made little headway in central government even though support for fracking is tending to fall amongst the population as a whole.

The same is true for nuclear energy. Older fewer people are slightly less likely to dislike this form of electricity generation than younger groups but, even still, more oppose nuclear than oppose onshore wind. It is the 45-54 year olds who most actively reject nuclear power. They were growing up when Chernobyl happened and the sharp difference in their attitudes shows the influence of a single nuclear accident. Perhaps the slight bump in opposition to nuclear among 16-24 year olds also reflects Fukushima, an event that may have occurred at the moment when their attitudes were being set?

A look at the table below does force a question into the front of mind. Why is an elected government so actively fighting technologies that have large-scale popular support but backing those with so much more opposition? 

Source: DECC Public Attitudes tracker wave 12, February 2015

Source: DECC Public Attitudes tracker wave 12, February 2015

 

 

 

 

Does decreasing energy demand really cost 10 times as much as increasing energy supply?

Energy efficiency suddenly doesn’t seem to be  such a cheap alternative to building more power stations. In a small auction concluded in the last few days, DECC agreed to pay organisations to reduce their peak late afternoon electricity demand. Chains of shops such as Dixons, council buildings and industrial companies promised to cut winter electricity use in 2015/16 and will receive over £200 a peak kilowatt saved between 4 and 8pm.  It looks as though most of the savings are going to be gained by switching to LEDs from less efficient forms of lighting.

This scheme was the reverse of the capacity auction concluded a couple of months ago. In that process, DECC committed to paying £19 a kilowatt to electricity generators in return for a promise to operate their plants over the winter. In other words, energy demand reduction is costing the government over ten times more than keeping generator online.

Both auctions are distorted. The generation auction was horribly flawed by the inclusion of plants that would stay open anyway (such as nuclear) and therefore offered very low prices. The latest energy efficiency auction is the first-of-a-kind and participants were probably a little wary of the cost of upgrading their lighting to LED. Nevertheless, the unfortunate headline conclusion is that cutting energy demand is currently an order of magnitude more expensive than increasing supply.

But should it really have cost over £228 to achieve a kilowatt of demand reduction?

Go into your kitchen. If your home is typical, it probably has about 200 watts of halogen bulbs in it. Scattered around the house might be another 200 watts or so of the little hot lamps like the ones above the cooker. Replacing just the ten or so bulbs in the kitchen with ten LEDs (a plug-and-play switch) and the cost will be about £80. (The colour of the light isn’t quite the same but the difference between halogen light and ‘very warm’ LED is now small).

Your switch will save about £15 a year in electricity and perhaps £5 in halogen purchase costs because they blow far more often than LEDs. Total benefit £20 compared to a cost of £80. So payback will be just four years in a domestic house, and much less in a shop or other commercial premises where the lights are often on all the time.

Isn’t a four year payback good enough? Do you – or Dixons or Leicestershire County Council - really need a further financial incentive to make the move to LEDs? However if you had banded together with your neighbours and sensibly entered the auction then you personally would have been paid about £35, meaning that the net cost of new LEDs would have been £45 and your payback would now be about two years. That looks far too generous to me.

So £228/kW isn’t really the price of energy efficiency. Despite today’s warped result, the replacement of halogen bulbs by LEDs is now financially rational for almost everybody without any subsidy. And the net impact on demand of just replacing domestic halogens is large;  probably 3-4 GW, or around 7% of UK peak demand. If we are serious about energy efficiency, we need a national programme that encourages us to throw away those dreadfully inefficient halogen bulbs in our kitchens and bathrooms. Give me £228 a kilowatt and I’ll switch all the neighbours for you, DECC

Is cutting energy demand really 10 times as expensive as increasing energy supply?

Energy efficiency suddenly doesn’t seem to be  such a cheap alternative to building more power stations. In a small auction concluded in the last few days, DECC agreed to pay organisations to reduce their peak late afternoon electricity demand. Chains of shops such as Dixons, council buildings and industrial companies promised to cut winter electricity use in 2015/16 and will receive over £200 a peak kilowatt saved between 4 and 8pm.  It looks as though most of the savings are going to be gained by switching to LEDs from less efficient forms of lighting.

This scheme was the reverse of the capacity auction concluded a couple of months ago. In that process, DECC committed to paying £19 a kilowatt to electricity generators in return for a promise to operate their plants over the winter. In other words, energy demand reduction is costing the government over ten times more than keeping generator online.

Both auctions are distorted. The generation auction was horribly flawed by the inclusion of plants that would stay open anyway (such as nuclear) and therefore offered very low prices. The latest energy efficiency auction is the first-of-a-kind and participants were probably a little wary of how much upgrading their lighting to LED is going to cost. Nevertheless, the unfortunate headline conclusion is that cutting energy demand is currently an order of magnitude more expensive than increasing supply.

Should it really have cost over £228 to achieve a kilowatt of demand reduction?

Go into your kitchen. If your home is typical, it probably has about 200 watts of halogen bulbs in it. Scattered around the house might be another 200 watts or so of the little hot lamps like the ones above the cooker. Replacing just the ten or so bulbs in the kitchen with ten LEDs (a plug-and-play switch) and the cost will be about £80. (The colour of the light isn’t quite the same but the difference between halogen light and ‘very warm’ LED is now small).

Your switch will save about £15 a year in electricity and perhaps £5 in halogen purchase costs because they blow far more often than LEDs. Total benefit £20 compared to a cost of £80. So payback will be just four years in a domestic house, and much less in a shop or other commercial premises where the lights are often on all the time.

Isn’t a four year payback good enough? Do you – or Dixons or Leicestershire County Council - really need a further financial incentive to make the move to LEDs? However if you had banded together with your neighbours and sensibly entered the auction then you personally would have been paid about £35, meaning that the net cost of new LEDs would have been £45 and your payback would now be about two years. That looks far too generous to me.

So £228/kW isn’t really the price of energy efficiency. Despite today’s warped result, the replacement of halogen bulbs by LEDs is now financially rational for almost everybody without any subsidy. And the net impact on peak demand of just replacing domestic halogens is probably 3-4 GW, or around 7% of UK peak demand. If we are serious about energy efficiency, we need a national programme that encourages us to throw away those dreadfully inefficient halogen bulbs in our kitchens and bathrooms. Give me £228 a kilowatt and I’ll switch all the neighbours for you, DECC.

Wind power costs nothing: the subsidies are matched by the reduction in wholesale electricity prices (amended in response to comment, 3rd February 2015)

In a comment  below this article, 'jjk' asks a very good question. He expresses it politely but I can be more blunt. If wind is providing a large percentage of total power, it will probably be when the demand for power is low at night. How do I know, he asks, that the effect I observe isn't simply a reflection of the fact that high percentage wind tends to occur at low demand moments, when the price tends to be low anyway?

I wish I'd thought of this before because I think 'jjk's suspicion may be partly correct. If, instead of looking at the percentage of demand provided by wind, I examine the correlation between the absolute amount of wind power in each half hour (MW not percentages) and the National Grid's buying price (the 'System Buy Price), the correlation is less clear-cut, though it still exists.

In other words when there isn't much wind, the average price that National Grid has to pay to buy electricity is higher (£54.50 per megawatt hour) than when the wind is strong (£49.90 per megawatt hour). Closer examination of the results also shows (not noted in the table above) that at the very highest levels of wind output the price tends to rise slightly. 

When there is less than 500 MW of wind, the price averages £55.8, about £3.1 more than the average price in the table above. This contrasts with the £7 difference I estimate in the main body of the article

You can argue that this calculation is in fact too harsh for a reason that works in the opposite direction to 'jjk's hypothesis. High levels of wind output tend to occur in the winter, when the price of power is typically higher. So I think the table above probably sets a lower limit on the impact of wind on power prices.

On average, I think we can say, wind makes a difference to UK power prices for immediate delivery of somewhere between £3.1 and £7 per megawatt hour. Even at the lower level this washes away a large fraction of the consumer subsidy for wind.

Original article follows

You can argue that the subsidy for wind power in the UK costs the country almost nothing. The reason is that when the wind blows, wholesale electricity prices are lower than they would otherwise be. On the typical day when wind is producing about 7% of the UK’s electricity, the market price of power is about £7 per MWh less than when the air is completely still.

If, on average, wind power depresses the wholesale price of electricity by £7 for each megawatt hour consumed in the UK, the total impact over the year is about £2.3bn. [1] The total subsidy for renewable electricity paid by electricity consumers this year is capped at £3.3bn. This includes solar and other technologies such as landfill gas, not just wind. The subsidy cost for wind - about £2-£2.5bn - may well be less than the downward impact wind has on electricity prices. The net impact on consumers may therefore be close to zero. In effect, the whole burden of wind subsidy falls on the fossil fuel generators because they obtain lower prices than they otherwise would. 

There's one obvious objection to this glib analysis: most electricity isn't traded just before it is needed. Much of the power that drives your home or office has been bought or sold months, or perhaps years, in advance. However, in the long run lower prices for immediate delivery seep through to the wider market. If you were an electricity retailer and noticed that power traded at perhaps £45/MWh just before it was needed, would you buy electricity months in advance at a higher level? 

How do I get to the conclusion that wind depresses prices by an average of £7/MWh? Every half hour, National Grid has to balance the electricity market by buying or selling electricity. Total generation must match total demand, including losses in transmission, or otherwise the voltage on the UK network would move outside the strict limits that are set. The price that National Grid pays or the price it receives in the open market is recorded.[2] 

Also recorded each half hour is the amount of wind power that is generated by the major wind farms as well as the output of all other power stations. We can easily calculate the percentage of total generation that is provided by wind farms, offshore and onshore. Then I drew a graph that compares the price the National Grid paid to buy electricity with the percentage of the UK’s power provided by turbines.

This is what the chart looks like for the period between June 2012 and 19th January 2015 (the middle of last week).

Chart 1

Source: Elexon data for System Buy prices June 2012 to 19th January 2015, Elexon data for wind power and total generation

Source: Elexon data for System Buy prices June 2012 to 19th January 2015, Elexon data for wind power and total generation

This graph summarises 45,000 lines of data or records from almost a thousand days. The trend is clear: when the wind is hardly blowing the typical price of power that the National Grid faces is about £58/MWh and it falls as wind power increases. On those relatively few occasions that wind is providing more than 20% of electricity, the price is about half this level. On the average day over the last year, the main wind farms give us about 7% of total power needs. The typical buying price at 7% wind power is £51 per megawatt hour, £7 lower than when the wind isn’t blowing at all.

Has this trend varied year by year? A little, but the basic pattern is the same. When the wind is turning turbine blades, wholesale prices are relatively low. (There are only 19 days data for 2015 so we shouldn’t take much notice of this year’s figures).

Chart 2

Source: Elexon data for System Buy prices June 2012 to 19th January 2015, Elexon data for wind power and total generation

Source: Elexon data for System Buy prices June 2012 to 19th January 2015, Elexon data for wind power and total generation

As the number of wind turbines rises, we’ll see more and more days when this source of power rises to 20% or more of total UK generation. If current trends persist, this will take the price of power down to £30 or below. This is, of course, is exactly the phenomenon we see in Germany today, with prices often going close to zero or below on high wind days.

If the numbers in this note are true, they suggest that the subsidy paid to wind is balanced by a lower wholesale price in the electricity market. That’s the good news for consumers, and largely reflects the balance of supply and demand in the UK electricity pool. More wind means fewer high cost generators have to be incentivised to enter the market by greater than average power prices.

However the effect of this shift in the relationship of supply and demand had profound consequences for the profitability of fossil fuel generators. At the moment low power prices mean that many gas-fired power stations aren’t covering their full costs. And, as a natural result, few investors will want to build new fossil fuel plants. This is no bad thing, you might say, but it does mean that without massive intervention – in effect a renationalisation of energy generation  or a guaranteed price for electricity – the rising number of wind turbines will inevitably destroy fossil fuel generation and eventually produce a highly unstable electricity market. This sounds an obvious point but it seems ignored by policymakers (and indeed by protagonists of renewable power).

Note about method

National Grid Buy and Sell prices are not precisely the same as 'market' prices. Each half hour, the Grid works out what demand is likely to be and what each generator has said it will produce. Then it estimates whether the whole UK system is likely to be in deficit or surplus of power. If the position is a deficit, it buys additional electricity to balance supply and demand. If there's a surplus, it does the opposite. When it is buying, it directly sees the prices but it doesn't exactly know what it would get if it were selling electricity. So it uses an estimate from the electricity  market.

In a separate analysis, I have also looked at the System Sell price and the impact of different levels of wind generation. The curve is the same. When the wind isn't blowing, prices are about twice the level when wind is generating 20% of the UK's need. And, perhaps importantly, when wind generation rises above about 12% of UK generation, the price that National Grid obtains for the surplus electricity begins to fall sharply. We've seen, for example, several instances in the last few weeks of near-zero selling prices. In other words, in order to get someone to buy greater volumes of power National Grid had to accept very low prices indeed. 

 

 

 

[1] Assumes total UK net generation plus imports less exports equals about 330 TWh.

[2] These are called the System Sell and System Buy Prices or SSP and SBP. 

Wind doesn't cost anything: the subsidies are balanced by the impact on wholesale prices

As the number of wind turbines rise, we’ll see more and more days when this source of power rises to 20% or more of total UK generation. If current trends persist, this will take the price of power down to £30 or below. This is, of course, is exactly the phenomenon we see in Germany today, with prices often going close to zero or below on high wind days.

If the numbers in this note are true, they suggest that the subsidy paid to wind is balanced by a lower wholesale price in the electricity market. That’s the good news for consumers, and largely reflects the balance of supply and demand in the UK electricity pool. More wind means fewer high cost generators have to be incentivised to enter the market by greater than average power prices.

However the effect of this shift in the relationship of supply and demand had profound consequences for the profitability of fossil fuel generators. At the moment low power prices mean that many gas-fired power stations aren’t covering their full costs. And, as a natural result, few investors will want to build new fossil fuel plants. This is no bad thing, you might say, but it does mean that without massive intervention – in effect a renationalisation of energy generation  or a guaranteed price for electricity – the rising number of wind turbines will inevitably destroy fossil fuel generation and eventually produce a highly unstable electricity market. This sounds an obvious point but it seems ignored by policymakers (and indeed by protagonists of renewable power).

Note about method

National Grid Buy and Sell prices are not precisely the same as 'market' prices. Each half hour, the Grid works out what demand is likely to be and what each generator has said it will produce. Then it estimates whether the whole UK system is likely to be in deficit or surplus of power. If the position is a deficit, it buys additional electricity to balance supply and demand. If there's a surplus, it does the opposite. When it is buying, it directly sees the prices but it doesn't exactly know what it would get if it were selling electricity. So it uses an estimate from the electricity  market.

In a separate analysis, I have also looked at the System Sell price and the impact of different levels of wind generation. The curve is the same. When the wind isn't blowing, prices are about twice the level when wind is generating 20% of the UK's need. And, perhaps importantly, when wind generation rises above about 12% of UK generation, the price that National Grid obtains for the surplus electricity begins to fall sharply. We've seen, for example, several instances in the last few weeks of near-zero selling prices. In other words, in order to get someone to buy greater volumes of power National Grid had to accept very low prices indeed. 

 

[1] Assumes total UK net generation plus imports less exports equals about 330 TWh.

[2] These are called the System Sell and System Buy Prices or SSP and SBP.