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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

#81

Post by [deleted] »

Alupis wrote: post #54
breve wrote: post #30

Earlier quoted context omitted.

> 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 c…

[deleted]

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

#82

Post by jakewins »

Alupis wrote: post #65
jakewins wrote: post #62

Earlier quoted context omitted.

.. you are commenting on an article about how non-carbon-emitting energy options are beating out polluting alternatives, aided by exactly these taxes, so obviously yes, they are working exactly as intended: price signals for the market to get carbon out of the energy system The purpose of the tax is not to raise money to plant trees, it’s to raise the cost of emissions so that markets move away from them

TFA's claim is offshore wind prices are 40% cheaper than gas. The parent comment stated "actual cost has to price in the impact of using it". Most people would agree on this. However, for both claims to be true, the collected tax revenue must be spent offsetting the impact of that gas usage - not simply reducing gas usage (ie. that consumed gas isn't being compensated for). If the UK government is spending that tax r…

Sorry I don’t follow. Why would the taxes need to be spent offsetting anything? The carbon reduction already happened, because the taxes made this auction choose lower emission alternatives.

If you then also spend the taxes on some form of offsets (if we pretend for the sake of argument that those work) you would have reduced emissions twice. One time seems plenty to say they are doing their job.

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

#83

Post by tialaramex »

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…

The vast majority of UK consumers have a pretty simple plan where they're not demand responsive. If it's pitch black and dead calm one Winter's night they pay the exact same price as midday in the summer if it's blazing sunshine and simultaneously blowing a gale across the whole country. Their retailler has done some estimates and figured on average they can sell power for, say, 25p per kWh all day, every day. Some days they're raking it in 'cos they paid a lot less than that, other days they wish the day would end, but if their team did the sums right it comes out profitable at year end.

There are people, especially people with EVs and who can do that sort of "turn on a dime" lifestyle where you do laundry when it's cheaper not because it's Thursday who pay 0p per kWh some hours and 45p per kWh for that bleak winter's night.

For now that second group are a minority but they do exist.

The enabling technology is a bit more sophisticated than your French red lamp. "Smart" meters relay your usage constantly so you can be charged in 30 minute chunks, the same way the wholesale electricity market works. This also means you can see at a glance what's going on. So that's nice. The usual conspiracy people insist this is a future tool of control by government, just like almost everything that has ever been invented, bar codes on groceries, mobile phones, newspapers, parking tickets, everything.

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

#84

Post by dzhiurgis »

Symbiote wrote: post #60
nothrabannosir wrote: post #53

Earlier quoted context omitted.

> 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.

> My parents would set timers

I'd suggest first measuring how much single load uses. In my case it's 1KWh and 0.4KWh. Daily load would save perhaps 4-5 GBP per month or 5% off an average bill.

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

#85

Post by holbrad »

mekdoonggi wrote: post #34
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…

Nothing you've said actually means anything. The self-imposed tax is there and isn't going anywhere, so it's included in the price. The other two points are accounted for in the strike price, because this capacity came into being and is now offering electricity at the strike price.

>isn't going anywhere

That's not true at all, Reform could get in and remove it day 1!

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

#86

Post by actionfromafar »

simplisticelk wrote: post #80
bryanlarsen wrote: post #74

Earlier quoted context omitted.

Operating costs dominate the cost of natural gas electricity, not the capital costs. An idled gas plant does save considerable money.

Absolutely, as long as a the energy of a wind farm displaces enough MWh of gas to cover its capital costs (incl. network costs) at the marginal price of gas it should reduce system costs. But wind energy output across an area the size of the UK is so highly correlated that additional wind capacity has diminishing returns. I suspect that the UK is already beyond the point by which additional wind is economically benef…

If electricity spot prices is cheap enough (when available), then people will eventually find uses for it. This will drive economic development.

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

#87

Post by blitzar »

fuoqi wrote: post #56
nothrabannosir wrote: post #53

Earlier quoted context omitted.

> 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…

3.3 million households in England were on Economy 7 tariffs in 2021 - around 14% of households

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

#88

Post by Havoc »

_fizz_buzz_ wrote: post #20
Havoc wrote: post #2

Now if only the UK didn't have an insane system where all electricity is purchased at the highest cost in the mix. i.e. if you're buy 99% cheap RE, 1% expensive gas then you're paying for 100% at the higher gas price.

> Now if only the UK didn't have an insane system where all electricity is purchased at the highest cost in the mix. That isn’t a “system”. It’s just what happens. Why would the 99% RE be forced to sell at a lower price? They will sell at whatever the market value is. Which is determined by supply and demand. And the gas turbines will only turn on if it becomes profitable for them to turn on at that price. So the cau…

> Why would the 99% RE be forced to sell at a lower price?

You can just as easily flip that around: Why should the consumer pay a price that is entirely disconnected from the actual cost of production?

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

#89

Post by tialaramex »

simplisticelk wrote: post #80
bryanlarsen wrote: post #74

Earlier quoted context omitted.

Operating costs dominate the cost of natural gas electricity, not the capital costs. An idled gas plant does save considerable money.

Absolutely, as long as a the energy of a wind farm displaces enough MWh of gas to cover its capital costs (incl. network costs) at the marginal price of gas it should reduce system costs. But wind energy output across an area the size of the UK is so highly correlated that additional wind capacity has diminishing returns. I suspect that the UK is already beyond the point by which additional wind is economically benef…

> I suspect that the UK is already beyond the point by which additional wind is economically beneficial, but I’m not certain about that.

I don't buy it. Just before Xmas the grid managed to move about 23GW of wind and it was a record. 23GW is lots but there was peak demand at that time, about 14GW of gas was still running when they hit that record. How can it be of no benefit to expand beyond that ?

I don't expect to even start worrying about the factor that's got you scared until we have a whole day when the CCGTs aren't running.

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

#90

Post by Havoc »

bryanlarsen wrote: post #8
Havoc wrote: post #2

Now if only the UK didn't have an insane system where all electricity is purchased at the highest cost in the mix. i.e. if you're buy 99% cheap RE, 1% expensive gas then you're paying for 100% at the higher gas price.

That's also how a pure commodity market works. The price is the marginal cost. That's how commodity producers like farmers can be profitable. The marginal producer makes no profit, but every producer who can get their costs below the marginal producer makes a profit. If farmers didn't make any money, they'd stop farming and we'd have no food.

> The marginal producer makes no profit

This isn’t a farmers market where individual actors can swiftly respond to supply and demand. This stuff has decades of lead time, is full of regulations and thus long term imbalances.

Nor is this a case of marginal anything. Gas is almost TRIPLE the price [0]. A normal functional efficient market like you have in mind would adjust to that sort of enormous profitability differential, the uk market has not.

https://www.nationalgrid.com/the-great-grid-upgrade/fact-or-...

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