Renewable Energy Foundation

  • Increase font size
  • Default font size
  • Decrease font size
REF Blog

UK Coal Benefits from Exceptionally High Wholesale Electricity Prices

The unusually hot September weather, and a resulting higher demand from air-conditioning and refrigeration units, over the past week has contributed to very high wholesale electricity prices, with coal stations being the main beneficiary.

Coal appears to have been called upon because several gigawatts of gas generation were offline. Furthermore, generation from the UK’s 14 GW of wind turbines during the period was, as is likely during a hot spell, modest, ranging from a high of 4GW to less than 1 GW, or from 29% to less than 7% of its capacity.

The prices charged by the coal generators during this period were exceptionally high. West Burton coal-fired power station, owned by EdF, charged up to £1,237 per MWh for providing an extra 1.5 GWh of electricity on Wednesday 14th September. This is approximately 30 times the usual wholesale price. Ratcliffe-on-Soar coal-fired power station, owned by E.On, charged up to £1,484 per MWh for providing extra power, earning an extra £6 million for the day.

AddThis Social Bookmark Button
Read more...

Wind Farm Constraint Payments over Easter 2016

Windy bank holidays, when wind power output is high but demand is low, can force National Grid to make significant constraint payments to wind farms, plus related payments to conventional generators, to cope with the surplus, unusable electricity generated by wind farms, usually because the windfarms are located behind a grid bottleneck.

2016 has proved to be the most expensive Easter holiday period to date for wind farm constraint payments, with a total of £3.7 million being shared between 39 wind farms.

AddThis Social Bookmark Button
Read more...

REF Interim Statement on DECC Announcement of CfD Auction Prices

The Department of Energy and Climate Change (DECC) has today published the results of the first round of competition for Feed-in Tariffs with Contracts for Difference (FiTs CfDs, hereafter CfDs), a subsidy mechanism that will run alongside the Renewables Obligation (RO) until the latter closes to new entrants in early 2017, when CfDs will become the sole subsidy mechanism for large scale renewable electricity generators.

AddThis Social Bookmark Button
Read more...

DECC Publishes Energy Price Impacts


The Department of Energy and Climate Change has today published the tables of policy-induced price impacts that were the subject of REF's Freedom of Information request and DECC’s response.

These price impacts were deliberately omitted from the 2014 issue of Estimated Impacts of Energy and Climate Policies on Energy Prices and Bills, in spite of their obvious importance and the fact that they had appeared in all previous issues of Estimated Impacts, as discussed in a previous REF blog.

The price impact tables have been usefully released as a spreadsheet annex to the 2014 document titled Supplementary tables - Prices and Bills 2014.

AddThis Social Bookmark Button
Read more...

Where are the Energy Price Impacts?

Update : 10 December, 2014.  DECC has now released the energy price impacts.

On the eve of the deadline expiry, DECC yesterday responded to REF’s Freedom of Information request for the ‘estimated impacts of energy and climate policies on energy prices’; data inexplicably omitted from their study titled Estimated Impacts of Energy and Climate Policies on Energy Prices and Bills (2014). Their response can be read here.

The price impacts (p/kWh) of Government’s green policies have been published in all previous issues of this key document, and indeed are explicitly referred to in its title.

Price impacts are extremely important because they permit analysts and members of the public to assess the raw impact of policies, before the claimed offsetting impacts of energy efficiency, for example, are taken into account. This allows the reader to form a view of the plausibility of the offsetting effects and also to estimate impacts on particular users rather than on the ‘average’ users upon which DECC’s study focuses. This latter point is very important for business consumers, because businesses vary so much, with the ‘average’ business being almost meaningless.
Read more...

AddThis Social Bookmark Button

DECC Conceals Estimates of Energy and Climate Policy Price Impacts

On the 6th of November the Department of Energy and Climate Change (DECC) published the third and much delayed edition of its Estimated Impacts of Energy and Climate Change Policies on Energy Prices and Bills.

REF has previously criticised the methodology used in the previous two issues of Estimated Impacts (2011 and 2013), particularly the tendency to focus on modelled average bills not price effects and so conceal important variations in effects on different types of domestic households. DECC also made use of unreasonably optimistic assumptions with regard to the effects of energy efficiency measures. For further details see our study Shortfall, Rebound, Backfire (2012), and subsequent correspondence with DECC and the UK Statistics Authority.

The latest, 2014, release of Estimated Impacts continues to suffer from many of the faults identified by REF in previous editions, and is rendered still more unsatisfactory because the tables showing the electricity and gas price impacts (£/MWh), rather than modelled average bill effects, have been deliberately withheld, even though they appeared in the three previous editions.

AddThis Social Bookmark Button
Read more...

Ecotricity Advertisement in the Guardian

On the 7th of November the wind farm developer and green electricity supplier Ecotricity placed a double page spread advertisement in the Guardian newspaper. This advertisement claimed that wind power played a significant part in securing supplies on the 19th of October, when four nuclear power stations were already offline and the system came under further pressure in the evening because of a fire at Didcot B power station, a Combined Cycle Gas Turbine (CCGT) power station.

Specifically, Ecotricity wrote that:

“No one noticed that around nine million homes worth of electricity had electricity had simply ‘disappeared’ after four nuclear power stations had shut down and Didcot went up in flames. No one noticed because Britain’s windmills carried on turning, powering almost 25% of our country. It was a historic event that went almost unnoticed; one revolution after another quietly secured our energy needs. The lights didn’t go out. We have wind energy to thank for that.”

These claims are repeated on the Ecotricity web site: “Nothing Happened”.

In yesterday’s Sunday Telegraph (23.11.14) Christopher Booker’s column discussed the Guardian advertisement, and called its accuracy into question: “Revealed: the Guardian Wind farm advert that tried to pull the wool over our eyes

AddThis Social Bookmark Button
Read more...

New Ed Davey Letter Confirms that Onshore Wind Targets for 2020 are already Met


Read more...

Summary & Conclusions

1. A letter from the Secretary of State for Energy and Climate Change, the Rt Hon Ed Davey, MP, to Mary Creagh MP, reveals that DECC calculates that sufficient onshore wind has been developed (i.e. consented and likely to be built) to meet the upper level of government expectations for this technology, 13 GW (about 6,500 turbines), confirming an earlier study by REF

2. Consequently, the 6.4 GW of onshore wind currently in the planning system (approximately 3,000 turbines) are surplus to requirements. The presence of this needless 6.4 GW of onshore wind in the planning system is causing undue cost to local authorities and widespread planning blight to affected communities, to say nothing of misdirected capital and development effort in the energy industry.

3. In our judgment Mr Davey should cool the sector down with a statement to the effect that the onshore wind target is now met, that DECC does not support onshore wind applications currently in the planning system, and that effort should be focused on other areas.

4. In the absence of such a statement, which we believe unlikely for political reasons, decision makers in the planning system, from local councillors, to inspectors to the Secretary of State at the Department of Communities and Local Government, Mr Pickles, can be confident that in applications for onshore wind no weight need be given to the project’s contribution towards renewable energy targets.

AddThis Social Bookmark Button

Robert Freer

REF is saddened to report the death of Robert Freer, one of our technical advisors, and a keen supporter of our objectives.

Robert Freer was a civil engineer who worked mainly on energy and maritime projects and especially at the interface between research and practice. He was involved in the design and construction of nuclear, hydro-electric, diesel, and gas turbine power stations in this country and overseas (including Dounreay, Winfrith, Kariba and Aswan) and on the development of a prototype wind energy generator and a wave energy device. He was awarded the George Stephenson Medal by the Institution of Civil Engineers in 2002, and organised and led two DTI sponsored OSTEMS visits to a number of European countries and to Japan on dam safety and on energy from waste. Robert also served on a number of committees of the Institution of Civil Engineers on the ICE Council.

Robert’s funeral will take place on the 29th of September at 11am at St George’s Church, Hanover Square.

AddThis Social Bookmark Button

DECC response to Wind Farm Constraint Payments

The Sunday Telegraph recently published an article giving further details of the constraint payments made to wind power, mostly, though not now entirely, in Scotland. The principal point was that the prices charged were still well in excess of lost income, and were arguably an abuse of market power. 

The Department of Energy and Climate (DECC) has responded to the piece and attempts to defend both the wind power industry and its own record in protecting the consumer from over-charging.

DECC’s response contains a number of irrelevant or confused statements suggesting that the Department either does not understand the constraints market or is seeking to mislead the public.

For example, DECC states that: "Constraint payments are nothing new. National Grid has been paying coal and gas generators - and others - to change their planned output well before wind farms joined the mix.”

This is misleading. Additional payments to stop generating are in fact a new phenomenon, and are the outcome of lost subsidy. Indeed, since wind power generators actually ask for more than the subsidy lost when constrained off, their income is greater per MWh when not producing electricity than when they are generating and selling their electricity as normal. This increases consumer costs.

By contrast, when conventional generators are asked to stop generating, these generators pay back into the system because they have saved the value of the fuel. This means that consumer costs are reduced.

Furthermore, while DECC is correct in saying that National Grid pays conventional generators to change their planned output, this is irrelevant to the wind case, since National Grid is asking the conventional generators to start generating; a very different market service which can, of course, incur an increased cost.

What DECC does not mention is that each MWh of wind electricity constrained off the system must be replaced by a MWh of conventional electricity the other side of the grid constraint. Consequently, those energy companies owning both wind farms in Scotland and conventional generation elsewhere may be benefitting twice over from the Government’s policy of encouraging the building of wind farms in areas of the country that are frequently unable to export their electricity.

DECC also writes that "The payments are made on a competitive bid basis to ensure that these costs are as low as possible.” This is misleading. In fact the constraint market is extremely illiquid since grid constraint problems are geographically specific, and often National Grid has little or no choice of which wind farms to constrain. This ‘over-a-barrel’ situation may be part of the reason why wind constraint prices are so high.

Finally, DECC writes that “We [DECC] tightened the rules in 2012 so generators cannot profit unfairly during constraint periods. Since then, prices paid to generators to curtail wind have more than halved.”

Firstly, is important to note that DECC admits that prior to 2012 the prices charged were indeed ‘unfair’. It would be interesting to know if they intend to recover those unfair charges from the wind farms concerned.

Secondly, we observe that the prices charged by wind farms to reduce output range from £25 to £78 per MWh more than the lost subsidy of approximately £50 per MWh. It is far from clear that the scale and the range in premiums could be justified by the transaction costs of constraining off a wind farm.

We conclude from DECC’s response that the department is unwilling or unable to protect the consumer against market gouging. This gives deep cause for concern since the scale of the constraint problem is almost certain to grow, and if this excessive pricing is not nipped in the bud, high prices will become an acceptable norm with damaging consequences for the consumer.

AddThis Social Bookmark Button

  • «
  •  Start 
  •  Prev 
  •  1 
  •  2 
  •  3 
  •  4 
  •  5 
  •  Next 
  •  End 
  • »


Page 1 of 5