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UK offshore wind prices come in 40% cheaper than gas in record auction

electrek.co

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Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#51

Post by hkt »

mr_00ff00 wrote: post #26
KptMarchewa wrote: post #22

Earlier quoted context omitted.

That's why "market" isn't a good approach for electricity.

Can you give an example of a better method? The one that I can think of is the government sets the amount of electricity produced, and then it’s rationed. But I doubt the UK would be happy with rationed electricity where your power shuts off the second it’s over. That would be essentially mandatory blackouts all the time. Not to mention the cost would be held by the government, so you end up paying it in taxes anyway…

Rationed electricity might also come in the form of a universal basic entitlement, followed by market price for higher usage. One assumes under such a system that the state would own and operate energy production and that they would, for instance, increase the ration over time, leaving the remaining needed capacity to be fulfilled by the market.

Honestly, pricing based on the cost of financing and operation isn't a terrible idea.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#52

Post by bryanlarsen »

fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

This is addressed by the capacity market mechanism.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#53

Post by nothrabannosir »

fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

> Trying to change consumption habits (like smart grids, dynamic pricing, etc.) works poorly, especially for such vital resource as electricity.

Why? Has the UK started trying recently? When I lived there nobody gave a hoot about fluctuating prices. It would have been hard to even know when electricity was expensive or not. Has it changed?

Meanwhile >three decades ago my grandparents in rural France had a big red lamp on the kitchen wall that would light up when energy was expensive. It was a part of their life and they had no problem with it. They chose that plan deliberately because it ended up cheaper.

If you’re saying that even with adaptive behavior , it’s all a wash because the constant cost of peakers is so high that you lose all savings when they kick in , no matter how little you use; ok, I believe you did the math.

But if the claim is “it’s impossible for humans to adapt their energy consumption depending on the current price of electricity”, I have seen first hand that is not true. For sure when I lived in Britain nobody did this at all, but that would be at best a British limitation, not a human one.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#54

Post by Alupis »

breve wrote: post #30
cbeach wrote: post #16

This is poor reporting by Elektrek. The article compares wind and gas costs but completely fails to explain: * the gas price in the article includes the government’s self-imposed carbon tax. The actual cost of gas (£55) is FAR lower than the £91.20 strike price Milibad has set for wind. And Miliband has locked in this terrible pricing for 20 years! * there are huge extra costs for wind power that are not accounted fo…

> The actual cost of gas The actual cost has to price in the impact of using it. For example, it's cheaper for UK water companies to pump sewage into rivers and onto beaches: https://www.bbc.com/news/articles/cz9kz8ydjpno https://www.bbc.com/news/uk-england-london-67357566 https://www.bbc.com/news/articles/c5yprnd848ko https://www.theguardian.com/environment/2025/sep/16/sewage-o... But maybe it's a nice idea to force…

> The actual cost has to price in the impact of using it.

Is there real evidence the collected tax revenue is actually offsetting carbon emissions?

There's a lot of fraud in carbon credit systems - where often the sole benefit is feeling and/or looking good.

Is this self-imposed tax actually having a real result - or is it just artificially increasing the price of energy? If the latter, then it's not really fair to claim it's the actual cost.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#55

Post by amiga386 »

fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

For 5, add in that the new grid capacity is years behind schedule, and the existing grid capacity needs to come offline because it's decrepit, and you also have a policy to connect new sources immediately

It leads to a lot of telling new sources to dump their energy, and paying them to dump their energy, while simultaneously paying old gas generators (nearer the demand) to fire up. All for the want of more grid capacity.

https://ukerc.ac.uk/news/transmission-network-unavailability...

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#56

Post by fuoqi »

nothrabannosir wrote: post #53
fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

> Trying to change consumption habits (like smart grids, dynamic pricing, etc.) works poorly, especially for such vital resource as electricity. Why? Has the UK started trying recently? When I lived there nobody gave a hoot about fluctuating prices. It would have been hard to even know when electricity was expensive or not. Has it changed? Meanwhile >three decades ago my grandparents in rural France had a big red lam…

This does not work at scale. Sure, there is plenty of anecdotes how you can successfully play this game as a consumer living in a rural house with electric car, power wall, and rooftop solar, but try to telling about it to someone living in a high-rise apartment or to a heavy industry business. Your preaching will fall on deaf ears.

IIRC there are several utilities in the UK which provide option to price electricity dynamically, but they are not popular because people do not want to play this game. They want reliable supply of electricity for reasonable prices. Trying to mold consumption to satisfy intermittency of generation is nothing more than shifting the externality akin to telling people "you must plant trees to offset CO2 emissions!".

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#57

Post by sunflowerfly »

gruez wrote: post #29
cbeach wrote: post #16

This is poor reporting by Elektrek. The article compares wind and gas costs but completely fails to explain: * the gas price in the article includes the government’s self-imposed carbon tax. The actual cost of gas (£55) is FAR lower than the £91.20 strike price Milibad has set for wind. And Miliband has locked in this terrible pricing for 20 years! * there are huge extra costs for wind power that are not accounted fo…

>* the gas price in the article includes the government’s self-imposed carbon tax. The actual cost of gas (£55) is FAR lower than the £91.20 strike price Milibad has set for wind. Is that unreasonable? Carbon dioxide is an externality, and it needs to be accounted for accordingly. Suppose the government is tendering contracts for milk for school lunches. One farm runs a CAFO[1] that pollutes the local river. The othe…

Yes, it is completely reasonable if you understand the concept of externalities.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#58

Post by jakewins »

fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

Intermittency is already handled by the price mechanisms, they are set quarter-hourly; if you’re not available when there is high demand you don’t get paid.

The marginal price windfalls happen specifically when you’re able to deliver at a low cost when demand is high in the same ISP.

This just seems like data-free fear mongering.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#59

Post by linuxftw »

chilmers wrote: post #42
linuxftw wrote: post #35

[flagged]

So RWE, the German multinational that won the largest share of this auction, with a yearly revenue of €29bn and an existing 153.2 TWh of power generation, is going to need a bailout from the British government, in the next four years, over a project to supply 7GW?

Revenue isn't profits. Their free cash flow has been negative billions for the last few years. A major capital project like this can only result in a bailout.

Re: UK offshore wind prices come in 40% cheaper than gas in record auction

#60

Post by Symbiote »

nothrabannosir wrote: post #53
fuoqi wrote: post #49

1) Introduce a lot of intermittent generation into energy grid without sufficient amount of storage capacity. 2) Use marginal pricing model which effectively guarantees windfall profits for those sources. 3) Utilization of peaking power plants falls, but you still have to keep them because there is not enough storage capacity. 4) Peaking power plants rise generation costs to offset the lower utilization, further addi…

> Trying to change consumption habits (like smart grids, dynamic pricing, etc.) works poorly, especially for such vital resource as electricity. Why? Has the UK started trying recently? When I lived there nobody gave a hoot about fluctuating prices. It would have been hard to even know when electricity was expensive or not. Has it changed? Meanwhile >three decades ago my grandparents in rural France had a big red lam…

I've never seen a red light, but the UK has had multiple electricity rates for households since the 1980s.

https://en.wikipedia.org/wiki/Economy_7

My parents would set timers on the dishwasher, washing machine etc too run at night.

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