Grid Balancing Costs Rocket

From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood


An interesting article from Elexon about the costs incurred in balancing the grid:

The Electricity System Operator (ESO) plays an essential role in balancing supply and demand using the Balancing Mechanism (BM). Matching supply and demand requires payments to be made between the ESO and participating consumers and generators. Consumers and generators submit prices for volumes of energy they can provide within a half-hour period (Settlement Period) to balance the system. In this Insight article, analyst Angus Fairbairn looks at balancing costs of ESO since 2015.

System Operator role is becoming more challenging

The ESO role in Great Britain, performed by National Grid ESO, is becoming more challenging and costly. All electricity consumers pay for these costs as part of their bills. In 2020, some contributing factors were the move to a more decentralised system and increases in intermittent generation with a push to a net zero future. The ESO also faced forecasting challenges with changing demand profiles due to COVID-19.

Generation sources used to keep the system in balance

The graph below shows how payments for balancing energy produced from different fuel types has contributed to net balancing costs since 2015. This graph only includes payments for utilised balancing energy in the BM and outside the BM in Balancing Services Adjustment Actions. Additional payments, such as availability fees or start-up costs have not been included.

Net balancing costs were £506m in 2015. The system pressures mentioned above have pushed the net cost in 2020 to £1.3Bn, 67% higher than 2019 (£794m).

Net Bid and Offer cashflow

The graph below shows changes in net Bid and Offer cash flow between 2015 and 2020. Bids have a negative volume as they are a reduction in energy on the system. The Bid price represents the amount paid to the ESO by the balancing services provider and therefore the lower the Bid price, the more expensive it is to the ESO and a negative price will represent a payment to a BM Participant.

Bid cashflow is the price (£/MWh) of a Bid multiplied by the volume of the Bid (MWh). A net positive Bid cashflow across a year means more money was paid to Balancing Service providers for negatively priced Bids by the ESO than the ESO received from positively priced Bids.

Prior to 2020, the yearly net cost attributed to Bids was negative. This means more money was received by National Grid ESO for reducing energy on the system than was paid to Balancing Service providers to reduce energy on the system. Balancing Service providers will pay to reduce their generation as they may save costs of operation and/or fuel. They may also pay to consume more electricity.

The negative net Bid Cashflow from Bids reduced the overall cost of balancing the system by an average of £125m per year from 2015 to 2019. This trend significantly switched in 2020 with a positive net Bid cashflow, of £257m being paid from the ESO to Balancing Service providers to reduce energy on the system. This represented an additional 19% of cost on top of Offer costs.

Net positive Bid cashflow means more money is being paid to BM Participants from the ESO than Balancing Service providers are paying to the ESO to reduce energy on the system. Bids which result in payment from the ESO to the Balancing Service provider will have a negative price in £/MWh.

Bids with negative prices usually come from wind generators as they have no fuel costs and will lose payments from their Renewable Obligations Certificates (ROCs). ROCs are paid to certain renewable generators for each MWh of electricity generation delivered to the grid.

The Offer price represents the amount paid from the ESO to the Balancing Services provider. The higher the Offer price, the more expensive it is to the ESO. Offers have a positive volume as they are an increase in energy on the system. Offer cashflow is the price (£/MWh) of an Offer multiplied by the volume of the Offer (MWh).

Yearly net Offer cashflow has always been positive as it is very unlikely for Participants to pay to increase electricity on the system; to consume less or generate more.

Since 2016, net Offer cashflow has been rising. From 2019 to 2020, net Offer costs rose by 23%. As the cost increased for both Bids and Offers, this meant that balancing costs rose by 50% from 2019 to 2020.

Conclusions

Expenditure on balancing energy for the ESO has risen significantly in 2020. There has been more expenditure on all Bid and Offer volume with the greatest changes seen in money spent on reducing the energy on the system through Bids. Reducing energy on the system in 2020 came with significant financial expenditure rather than benefit to the ESO. More Bid volume was required, and at a higher price.

Low demand due to the impact of COVID-19, combined with the difficulty in forecasting new demand profiles in 2020 is likely to have increased the need for balancing energy. This looks set to be a short term influence on the system. As lockdown restrictions ease and working behaviours return to normal, balancing the system may become more predictable and less costly.

Significant increases in balancing costs from low carbon sources, such as biomass and wind were seen in 2020. This has been a long-term trend, with the cost of biomass balancing energy rising from 2017 and wind from 2016.

Economic incentives for renewable generation with low fuel and operational costs result in the costs for turning down generation from these sources being more expensive. This was seen with wind Bids where no fuel costs and financial benefits of generating (ROCs) contributed to the lowest (most expensive) Bid prices in February and November 2020.

Increased costs for managing renewable generation looks set to continue with the push to a net zero future. National Grid ESO is addressing these costs with projects like the ‘4D Heat project’ with Scottish and Southern Electricity Networks (SSEN) mentioned in their 5-Point Plan. Also, new technologies such as battery storage) may also provide new tools that help to  integrate wind and other intermittent generation into the system.

https://www.elexon.co.uk/article/bsc-insight-increasing-costs-for-balancing-the-gb-system/

The chart is actually highly misleading, because it implies most balancing payments were for natural gas. In reality, payments to gas are to ramp up output when supply is short.

The real takeaway comment is :

 Net balancing costs were £506m in 2015. The system pressures mentioned above have pushed the net cost in 2020 to £1.3Bn, 67% higher than 2019 (£794m).

This figure will continue to rise as more and more intermittent generation is brought in.

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Ron Long
January 21, 2022 2:15 am

This reckless rush to Net Zero is increasingly costly virtue signaling. The crippling of western economies and the ignoring of carbon pollution ideas by China, et al, cannot lead to anything positive. When you go see a Doctor, and you say “it hurts when I do this”, the Doctor says “stop doing that”.

Phillip Bratby
Reply to  Ron Long
January 21, 2022 3:09 am

There is no carbon pollution. Carbon dioxide is the stuff of life; it is not a pollutant.

Pauleta
Reply to  Phillip Bratby
January 21, 2022 7:19 am

If even people on “our side” write stupid things like carbon pollution, imagine what the other side believes …

Pat from kerbob
Reply to  Pauleta
January 21, 2022 6:38 pm

You must be new here

MarkW
Reply to  Phillip Bratby
January 21, 2022 8:39 am

Please read the entire sentence.

Ron Long
Reply to  MarkW
January 21, 2022 9:26 am

For the record, I do not believe in plant food constituting pollution. China supports the idea because it cripples western economies. Even the Biden Administration military has one of their goals to fight against Climate Change. Russia and Ukraine? Go ahead.

January 21, 2022 2:17 am

The engineered instability of the system has created a whole industry to put bandaids on the increasingly open wound – batteries, synchronous condensers, demands for more interconnections etc.

Gregory Woods
Reply to  Rafe Champion
January 21, 2022 6:50 am

The engineered instability of the system has created a whole industry of Bandidos…

DMacKenzie
Reply to  Rafe Champion
January 21, 2022 8:20 am

Fluctuations mean many more people can make money on commodity trading. Its a feature, not a bug.

MarkW
Reply to  DMacKenzie
January 21, 2022 8:42 am

I’m thinking of starting up a company that is paid to take excess electricity, use it to wind several million rubber bands, then use those rubber bands to power a generator in order to sell electricity when they need that.

In order to cut back on all that complexity, I could buy some really big resistors and when I’m being paid to take the excess electricity, just dissipate it.

Last edited 3 months ago by MarkW
DMacKenzie
Reply to  MarkW
January 21, 2022 11:46 am

I have couple of solar panels on my garden shed. When the batteries are full, my panel just shorts the excess to a couple of ground rods. Brings out the earthworms very nicely and I go fishin’…I guess I could start a solar powered eco-friendly net zero bait shop.

Tom Abbott
Reply to  DMacKenzie
January 21, 2022 2:25 pm

Build a better mouse trap and people will flock to your door.

How many worms does this technique produce?

Sean
January 21, 2022 2:32 am

Remember 10 years ago when the wind developers said they needed certainty? That “certainty” was guaranteed profitability for power generation that relied in the whims of the weather which often generated excess power that had little value or couldn’t generate enough when needed. The grid balancing costs guarantee that profitability for a very uncertain power source.

It doesn't add up...
Reply to  Sean
January 21, 2022 8:06 am

Here’s the certainty they wanted – high prices.

CFD Average Actual Strike Prices.png
Mike Jonas(@egrey1)
Editor
January 21, 2022 2:54 am

The rules are insane. As the article points out, renewables production is all paid for whether needed or not, but if not needed then ESO pays again for the unwanted power not to be produced. That’s what “money was paid to Balancing Service providers for negatively priced Bids” means.

Phillip Bratby
January 21, 2022 3:07 am

This news comes as no surprise to anybody who frequents Notalotofpeopleknowthat or the REF or NetZero Watch. The problem is that the message cannot be got through to the government and its advisers and you won’t see it mentioned by the BBC or other green media outlets. According to them, the price rises are solely due to the price of gas and so we need more ruinables.

Joseph Zorzin
Reply to  Phillip Bratby
January 21, 2022 3:12 am

“ruinables”? Good one!

Jim Turner
Reply to  Phillip Bratby
January 21, 2022 3:32 am

The price of gas also has a renewable dependent element. Because wind is intermittent and unpredictable the demand for gas is also intermittent and unpredictable as it has to step in to bridge the gap. Any company that faces unpredictability in demand for its product has to increase its margins to cover itself for periods of low demand. Predictability of demand in general results in greater efficiency in supply.

AGW is Not Science
Reply to  Jim Turner
January 21, 2022 6:44 am

Yup, all part of the plan…

“Under my plan, electricity prices will necessarily skyrocket.” – Barack Obama

Tom Abbott
Reply to  AGW is Not Science
January 21, 2022 2:28 pm

He did say that.

MarkW
Reply to  Phillip Bratby
January 21, 2022 8:45 am

The president of NBC says that his network doesn’t do advocacy journalism and that they do honest, neutral reporting. He considers their work to be right down the middle politically.

https://www.foxnews.com/media/nbc-news-noah-oppenheim-advocacy-journalism

Yup, they occupy the middle ground, between communism and socialism.

Tom Abbott
Reply to  MarkW
January 21, 2022 2:33 pm

Delusional people such as the NBC president see what they want to see. They live in a delusion where they think everyone but a few, agree with them, and those who don’t agree, must be extremists who don’t deserve a hearing.

The man has blinders on, or he is just disingenuous. Either way, the world of fair NBC reporting he describes, does not exist.

MarkW
Reply to  Phillip Bratby
January 21, 2022 8:48 am

According to the Michigan Democrat party.

The purpose of public education in public schools is not to teach kids only what parents want them to be taught, it is to teach them what society needs them to know.

https://www.foxnews.com/politics/michiganders-say-children-are-not-the-governments-after-viral-dem-party-facebook-post-backlash

Tom Abbott
Reply to  MarkW
January 21, 2022 2:40 pm

“it is to teach them what society needs them to know.”

What “society” are they talking about?

They are talking about the Leftwing Society. The Leftwing thinks they represent all of Society, so they just include all of us in their “Society”.

But, of course, some in this Society don’t look at things the way the Leftwing does, and who gets to decide which world view is the proper one?

The Leftwing says they should be the ones making this decision. I don’t think so. Not any more. It’s time the Rightwing to set the agenda and put the nation back on the proper path forward.

The Leftwing does not speak for everyone. They speak for about a third of the population. They try to act like they speak for everyone. They don’t. Not even close.

Last edited 3 months ago by Tom Abbott
LdB
January 21, 2022 3:45 am

The UK population deserve what they voted for … when it really hurts their back pockets they might decide to actually think about it.

TonyL
Reply to  LdB
January 21, 2022 4:24 am

“actually think about it”
???????
Is this still possible?
I know the herd has been managed to produce members which are most docile and easily managed.
I thought I read somewhere that the ability to think was considered undesirable and every effort was made to breed it out of the population. Apparently, it was felt that the ability to think would lead to all sorts of unruly behavior. The effort seems to have been most successful.

As fate would have it:
This article shows that the ability to think was bred out of the ruling class as well.
There are lessons to be learned here, but nobody left to learn them.

TonyS
Reply to  LdB
January 21, 2022 6:10 am

I’ve said this before. Until such time as the British voters actually suffer some considerable pain, financial or the freezing in the dark variety, they will continue to vote for the same idiots and get the same results. Just maybe when it hurts enough it might make them ask why it’s hurting but I won’t hold my breath.

Reply to  LdB
January 21, 2022 6:30 am

I think it is a little unfair to blame the electorate. There are limited choices and by and large it is hard to get even the most pressing single issue sorted. In the case of the last election the issue was to get Brexit done. Overall the best option seemed to be Boris. Then Boris went nuts in harmony with his concubine who assured him everlasting fame and endless nookie if he shoved an uncosted undebated Net Zero policy on the electorate.

It’s now becoming the second most important issue. Things will happen.

You might care to remember that in the EU, the UK was not in charge of its energy policy. The EU was… Brexit first, energy policy next.

Last edited 3 months ago by Leo Smith
MarkW
Reply to  Leo Smith
January 21, 2022 8:54 am

The biggest problem with government is that you only have a single vote, and their are hundreds of issues that matter to each individual. Your only option is to try and find the politician that disagrees with you the least and support that one.

This is the biggest single reason why the larger government gets, the less responsive it gets. The more things you rely on government to take care of for you, the less government cares about your opinion on any one of those issues.

“That government is best, that governs least.”
Thomas Jefferson

Tom Abbott
Reply to  MarkW
January 21, 2022 2:44 pm

““That government is best, that governs least.”
Thomas Jefferson”

That ought to be repeated every day.

Dudley Horscroft(@dudleyhorscroft)
Reply to  MarkW
January 21, 2022 11:26 pm

The biggest problem with government is not that we only have a single vote, it is that the choice is limited, in effect, to one of two parties, both of which have near enough the same policy re Climate Change. The UK should change from single member constituencies to multi member constituencies, and this would allow a choice between candidates of the same party, so climate activists could vote for one of the ‘orthodox’ party liners, while climate realists could vote for sensible candidates. This would give us a choice.
Undoubtedly we would get better parliament.

Same applies to the USA, and Australia.

Cherith
January 21, 2022 4:04 am

Just wanted to express my grateful thanks for this website.
It is highly appreciated by those of us who are less scientifically minded.
The opening comment and the closing paragraph is usually so plain and clearly stated that we can all get to grips (even a little) with all that is contained in between.
It is a great service and highly valued and shared among others.
To make what seems outside the reach of many accessible, is a great contribution to our present circumstances and the persistent errors of the globalist scaremongers we are all trying to refute as best we can.
So, again, thank you – and all your contributors.
Splendid resource.
Keep up the good work.
Every encouragement.

Pat from kerbob
Reply to  Cherith
January 21, 2022 6:45 pm

You and I are WHY sites like this exist
To learn and be in violent agreement with the opinions stated.
😘

Peta of Newark
January 21, 2022 4:33 am

My anecdote, I’m sure I’ve told it before but it’s worth repeating for this story.

Hailing back to when I was a cowboy in Cumbria…
Barely 5 miles away from my mud-bath and as crows fly was, what was, a dairy farm.
50 years ago, almost every farm in Cumbria was a dairy farm – Cumbria is well known by all farmers across all of England as The Place To Grow Grass.
As in Perennial & Italian Ryegrasses but also Timothy, Fescue and when all else fails, Annual Meadow Grass. (Why it’s called ‘annual’ I have perfectly no idea)

But the dairy farm in question had a few years previously been split in half by a new road and despite an underpass being built for the farm’s convenience – it still wasn’t easy for the guy.
So they planned on building a 10 acre solar farm.
(When being a farmer in Cumbria, ‘madness‘ isn’t mandatory – but it helps. Really strangely though, none of them believe in Man-made Climate Change)

For reasons unknown, the solar panels were never going to get approval and so they decided on a Diesel Generator Farm instead. You know the things, truck sized boxes that make a rumbling sound, with a huge f**k off exhaust pipe, dials and wires trailing away.

It it will the *they* on that farm who are reeling in the money right now.

See it here, (sorry Leo) where the graphic shows, Oil, OCGT and Other

Anyway, Grid Costs Rocket I we’re told.
How is that a problem because in the surreal Alice in Wonderland financial world that successive UK Governments have inhabited for the last 30 years, Spending Money Makes Money

Last edited 3 months ago by Peta of Newark
Tom.1
January 21, 2022 5:56 am

This is incredibly complex.

Tom Abbott
Reply to  Tom.1
January 21, 2022 2:46 pm

That’s the way Ponzi scams work. The more complicated, the better.

Last edited 3 months ago by Tom Abbott
Pat from kerbob
Reply to  Tom Abbott
January 21, 2022 6:45 pm

Yes
The fewer people who can figure it out the less chance to get caught

Dudley Horscroft(@dudleyhorscroft)
Reply to  Tom.1
January 21, 2022 11:29 pm

Agreed. How did the CEGB balance out all the various electricity producers when there were no solar panels on houses and the only windmills left were used to grind corn?

Iain Reid
Reply to  Dudley Horscroft
January 22, 2022 1:02 am

Dudley,

the CEGB was a nationaised company, and basically the sole producer and operator of the grid. Balancing is automatic for conventional power plants and requires little outside control. Relatively simple and stable, until we started with renewables which cannot control the input they feed the grid with. This means the controllable generators have to work much harder to keep the grid within frequency limits and needs much more external control.

Last edited 3 months ago by Iain Reid
Paul Hurley (aka PaulH)
January 21, 2022 6:12 am

I’m sure the Green Blob will say this is a small price to pay for a stable climate. Yeah, right!

Pat from kerbob
Reply to  Paul Hurley (aka PaulH)
January 21, 2022 6:46 pm

The last time England had a stable climate it was under a mile of ice.
Since then not so much

Joel
January 21, 2022 6:43 am

Could somebody please give an English translation for this article.

Robert Cherba
Reply to  Joel
January 21, 2022 8:12 am

I think I understand the positive-negative payment system described where low bid price really results in higher costs — but maybe not. Now I admit that I’m old, but I am a retired engineer/manager who worked in the US power generation and transmission field for 33 years. I understood how dispatching worked in those days — the days before the stupid move to wind and solar generation. The current system has been developed by ignorant politicians and activists with the heavy hand of government dictating how it will work. As usual, all government manages to do is screw things up — for our own good, of course.

Frank from NoVA
Reply to  Joel
January 21, 2022 8:30 am

Since the service provider (ESO) is not a charity, it needs to ensure that payments from the load (demand) cover payments to the generation (supply), plus operating expenses. To do this, the ESO totals the projected load (i.e., offers) for each hour during the planning period and totals potential suppliers (i.e., bids) for each hour ranked by bid price (lowest to highest), until load and supply volume are equal. For each hour, then, the price paid to every generator that is ‘taken’ will equal that paid to the highest taken bidder whose marginal generation covered the total load.

This works fine for conventional, i.e., reliable, generation (nuclear, coal, gas and hydro). As base load generators (nuclear and coal) don’t like to ‘cycle’ their plants, they low ball their bids to ensure that they are taken, knowing they will actually receive the higher price that is determined by the marginal bidder, e.g., a gas turbine.And since these sources are usually reliable, in the off chance a supplier is unable to perform (e.g., mechanical failure), the ESO can usually instantaneously maintain balance by calling on generators that it pays to maintain ‘spinning reserves’. I’m not exactly sure how the ESO penalizes conventional generators for non-performance, but I do know that demonstrated reliability plays a big role in how much these suppliers receive in ‘capacity’ payments, so they are highly incentivized to maintain reliability.

Renewable generation, on the other hand, is intermittent and therefore not reliable. It also is privileged by special rules that are not afforded to conventional generation. As the article mentioned, renewables receive politically mandated subsidies for energy delivered, hence, like reliable base load generation, they low ball their bids in order to be taken, They therefore receive these subsidies in addition to the marginal price of supply. In addition, politically favored renewables also benefit from ‘must take’ provisions, meaning that under favorable
conditions, the output of conventional generation has to be ‘backed out’ of the hourly dispatch. As this conventional generation also needs to be paid for, the load has to pay for both the renewable AND the conventional generators. In addition, the latter will eventually wise up and have to factor the cost of cycling their equipment into their future bids.

So direct subsidies, needed redundancy, equipment wear and tear and multiple ‘ancillary’ costs, such as increased transmission to tie in the renewables to the grid and to provide for conventional back up when renewables don’t perform, all drive up costs to the ESO and therefore to the load (you and me). Obviously, if there was a level playing field for both conventional and renewable generation, specifically the elimination of must take provisions and the implementation of commensurate penalties for non performance, the grid use of renewables would be rapidly curtailed

It doesn't add up...
Reply to  Frank from NoVA
January 21, 2022 12:41 pm

Actually, the GB market no longer works on the basis of a merit order. Instead, generators and wholesale market participants who supply consumers contract to procure and deliver electricity with each other on a half hour by half hour basis. The volumes of these contracts are reported to a central database, and generators and suppliers have until “gate closure” (one hour ahead) to fine tune their purchases and sales so that the volume overall matches the forecast demand reasonably closely. Some of the contracts may be long term, entered into months or even years ahead. Obviously, both supply and demand alter as weather changes, or a plant suffers an unexpected outage etc., so a generator may have to buy back volumes it had committed to supply, or sell an unexpected wind surge quite late in the day.

After Gate Closure, further adjustments are handled via the TSO (National Grid) in the Balancing Mechanism. They have to ensure that the supply is physically feasible, so they ask for bids and offers to adjust the supply pattern to make it so. In addition the TSO contracts for ancillary services to aid with grid stabilisation: some of these are inherent to a generator’s licence, but others are purchased explicitly. The grid handles any other imbalances with directives to increase or lower output (or in extremis, demand) in live time. Imbalances between contracted volumes and actual outturn are invoiced at system cashout prices which reflect the costs of the balancing actions.

Since contracts are matched between buyers and sellers, if there is an imbalance it will apply to an equal volume of generation and demand. Many smaller retailers were avoiding the complexities of trading by simply relying on the balancing mechanism to implicitly make their purchases for their customers: this was fine when there tended to be small surpluses of wind or must-generate nuclear on the other side that could afford to offer low in the balancing mechanism, but proved disastrous in the shortages we have seen, and contributed to many a bankruptcy.

The notion of merit order only applies to bids and offers after gate closure. Because of the nature of subsidy arrangements and other factors this has hugely perverse consequences. If there is excess renewable generation, it is the “cheapest to curtail” that gets knocked off supply first – but we pay to curtail them, leaving consumers paying for the most expensive generators with the largest subsidies – exactly the reverse of a merit order. We have also seen coal generators refusing to sell ahead of gate closure – and then charging exorbitant prices (£4,000/MWh+ at times) inside the Balancing Mechanism for helping to keep the lights on – depsite the fact that coal generation (at least before you load on green taxes) would have topped the merit order after gas prices went ballistic. Better to make £4,000/MWh for an hour or two than £10/MWh for 168 hours of a week. There are of course various other mechanisms that encourage retailers to purchase from renewables in preference to other sources, such as the requirement to buy Renewables Obligation certificates as a proportion of their supply.

It’s a mess.

Frank from NoVA
Reply to  It doesn't add up...
January 21, 2022 5:30 pm

My bad! I foolishly presumed that the ESO operated in a manner similar to how the system operators work on this side of the pond. Clearly it doesn’t, and the impact of renewables on energy prices are even worse than they are here. Based on your description, I’m willing to bet that the outcome will be analogous to that achieved when the California regulators prohibited utilities from contracting long-term supply.

M Courtney
Reply to  Frank from NoVA
January 22, 2022 1:47 am

Now you see why we in the UK look down on Enron as amateurs.

Janice Moore
Reply to  Joel
January 21, 2022 1:03 pm

First of all, Joel, know you are not the problem. The problem is that Angus Fairbairn, the author of the above article (cited by Paul Homewood), while he makes some excellent points, either is writing using a lot of technical jargon for only a specialist audience or has not mastered this topic or is a poor writer.

*******************************************

I know very little about the energy market bidding Fairbairn attempts to describe above. I wrote the following only to give the gist of the issue (nicely written about by Frank from NoVA above). You likely do not need this, but, in case SOMEONE who reads this thread might be helped, I submit the following:

(the figures are for illustration — if they are not realistic, I hope you can just laugh and see the point, anyway)

Consumer: I need 100,000 kw of electricity today.

Energy Maker1 (nuclear, hydro, or fossil fuel): I can do 100,000 kw for $100,000.

Energy Maker2 (unreliables, mainly wind and solar): I can do 30,000 kw for $150,000 (factoring in all the costs of production, maintenance, and need for back-up power when we (ahem) can’t do anything for a bit (or two or three….)).

Consumer: I’ll go with EM1.

EM1: Great! Here’s the con—

Unreliable Generator Hustlers (a.k.a. “the government”): WAIT JUST ONE MINUTE!

EM1: — tract.

UGH: Attention! Achtung! Attencion! Consumer. You MUST buy ALL of EM2’s production.

Consumer: No. Too expensive.

UGH: If you do not, the planet will DIE!

Consumer: Really. When?

UGH: By (fill in with date about 70 years out).

Consumer: Huh. Show me some data to prove that.

UGH: Can’t. Here’s a not-fit-for-purpose model.

Consumer: lol.

UGH: Here’s a bogus “study” saying 97% of scientists say so.

Consumer: LOL.

UGH: Okay. Here’s the deal: WE ORDER YOU TO DO IT.

Consumer: Or?

UGH: Or you get no electricity.

Consumer: Oh. Well, now that you put it that way. I’ll take 30,000 kw @ $150,000 and 70,000 kw @ $70,000. (muttering: $220,000 instead of $100,000!!!! @#!#%%!!)

UGH: …… Wait a minute….. getting a text…… . Ah. Well. “increases in intermittent generation” [Fairbairn, 22 March 2021 article, above] (mostly wind and solar) have changed – your – PRICE! It is now 67% higher!!

Consumer: So, instead of $100,000 for 100,000 kw, I’ll be paying $367,400. How in the world is this possible?

Frank from NoVA (Consumer’s engineer friend): In a nutshell, Renewable” generation … is intermittent and therefore not reliable. *** [therefore,] the load has to pay for both the “renewable” AND the conventional generators.
[Frank from NoVA today, at 8:30AM – “ “ added by me]

Consumer: And no choice in the matter?

UGH: None.

Consumer: Well, actually, I do have a choice. I choose to take my factory somewhere else. Cheers!

ResourceGuy
January 21, 2022 7:11 am

Might as well add in farm and food (subsidy) balancing also as fertilizer prices surge from NG cost.

It doesn't add up...
January 21, 2022 7:59 am

Just as well they haven’t got around to including 2021 in the analysis.

Grid balancing costs to jan 21.png
It doesn't add up...
Reply to  It doesn't add up...
January 24, 2022 5:39 am

Incidentally that is a total of some £2.35bn for 2021, sharply up again on 2020, and with a particularly steep increase in the later part of the year as dispatchable capacity constraints increasingly bite, and as costs of CCGT generation rise in part because of higher carbon levies.

The one small silver lining is that subsidies paid under CFD contracts have mostly been eliminated or even mildly reversed thanks to the high market prices. The effect on subsidy is not the full value of price increases, because prices tend to be highest when wind is not producing much – and can still go negative at times of low demand and high winds. Also, the subsidy for biomass conversion is essentially set for 6 months in advance.

CFD subsidy per mwh.png
ResourceGuy
January 21, 2022 8:10 am

It doesn’t stop with grid balancing, the world is about to suffer the consequences of bad (energy) public taken to extremes.

WSJ
From South America’s avocado, corn and coffee farms to Southeast Asia’s plantations of coconuts and oil palms, high fertilizer prices are weighing on farmers across the developing world, making it much costlier to cultivate and forcing many to cut back on production.
That means grocery bills could go up even more in 2022, following a year in which global food prices rose to decade highs. An uptick would exacerbate hunger—already acute in some parts of the world because of pandemic-linked job losses—and thwart efforts by politicians and central bankers to subdue inflation.
“Farms are failing and many people are not growing,” said 61-year-old Rodrigo Fierro, who produces avocados, tangerines and oranges on his 10-acre farm in central Colombia. He has seen fertilizer prices double in recent months, he said.

MarkW
January 21, 2022 8:36 am

How can there still be balancing costs? Hasn’t griff assured us that they can predict precisely how much wind and solar will be produced, 24 hours in advance.

D. J. Hawkins
Reply to  MarkW
January 21, 2022 3:46 pm

Why yes, yes he has.

willem post
January 21, 2022 3:01 pm

EXCERPT from:

BIDEN 30,000 MW OFFSHORE WIND SYSTEMS BY 2030; AN EXPENSIVE FANTASY  
https://www.windtaskforce.org/profiles/blogs/biden-30-000-mw-of-offshore-wind-systems-by-2030-a-total-fantasy
 
The Biden administration announced on October 13, 2021, it will subsidize the development of up to seven offshore wind systems (never call them farms) on the US East and West coasts, and in the Gulf of Mexico; a total of about 30,000 MW of offshore wind by 2030.
 
Biden’s offshore wind systems would have an adverse, long-term impact on US electricity wholesale prices, and the prices of all other goods and services, because their expensive electricity would permeate into all economic activities.
 
The wind turbines would be at least 800-ft-tall, which would need to be located at least 30 miles from shores, to ensure minimal disturbance from night-time strobe lights.
 
Any commercial fishing areas would be significantly impacted by below-water infrastructures and cables. The low-frequency noise (less than 20 cycles per second, aka infrasound) of the wind turbines would adversely affect marine life, and productivity of fishing areas.
 
Production: Annual production would be about 30,000 x 8766 h/y x 0.45, capacity factor = 118,341,000 MWh, or 118.3 TWh of variable, intermittent, wind/weather/season-dependent electricity.
 
The additional wind production would be about 100 x 118.3/4000 = 2.96% of the annual electricity loaded onto US grids.
That US load would increase, due to tens of millions of future electric vehicles and heat pumps.
 
This would require a large capacity of combined-cycle, gas-turbine plants, CCGTs, to cost-effectively:
 
1) Counteract the wind output variations, MW, and
2) Fill-in wind production shortfalls, MWh, during any wind lulls.
 
Such lulls occur at random throughout the year, and may last 5 to 7 days in the New England area.
 
These URLs provide examples of similar wind/solar lull conditions in Germany and New England
 
https://www.windtaskforce.org/profiles/blogs/analysis-of-a-6-day-lull-of-wind-and-solar-during-summer-in-new
http://www.windtaskforce.org/profiles/blogs/wind-plus-solar-plus-storage-in-new-england
https://www.windtaskforce.org/profiles/blogs/wind-and-solar-energy-lulls-energy-storage-in-germany
https://www.windtaskforce.org/profiles/blogs/playing-russian-roulette-with-reliable-electricity-service-to-new
 
Turnkey Capital Cost: The turnkey capital cost for wind systems, plus offshore/onshore grid extension/augmentation would be about 30,000 MW x $5,000,000/MW = $150 BILLION, excluding financing costs. Biden’s excessive inflation rates, about 7% at present, surely would increase that cost.
 
Area Requirements: The 8-MW wind turbines would be arranged on a grid, spaced at least one mile apart (8 rotor diameters), about 1 sq mile per wind turbine. The minimum sea area requirement for 30,000/8 = 3,750 wind turbines would be 3,750 sq miles, or 2,400,000 acres
 
Electricity Cost/kWh: Based on the real-world European, mostly UK and German, operating experience in the North Sea and Baltic, such highly subsidized wind turbine systems:
 
1) Last about 20 years
2) Have high maintenance and operating costs, due to the adverse marine environment
3) Produce electricity at an “al-in” cost of about 2 times the “calculated” values
 
The “all-in” wholesale prices of the offshore electricity of new systems are calculated at about 17 c/kWh, without cost shifting and subsidies, and about 9 c/kWh, with cost shifting and subsidies. The shifted costs and subsidies would result in:
 
1) Increased tax burdens on taxpayers
2) Increased household electric rates on ratepayers
3) Additions to federal and state government debts.
4) Additional burdens on the owners of traditional generators, because their power plants have to counteract the wind output variations, 24/7/365; the more wind (and solar), the greater the electricity quantities involved in the counteracting, plus their plants spend more time on standby, and have more frequent start/stops. See URL and Appendix.
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar
   
NOTE: These rates compare with the average New England wholesale price of 5 c/kWh, during the 2009 – 2022 period, 13 years, courtesy of:
 
1) Abundant, domestic, natural gas-fueled CCGT plants, that have: 1) low-cost/kWh, low-CO2/kWh, extremely-low particulate/kWh
2) Domestic, uranium-fueled nuclear plants, that have low-cost/kWh, near-zero CO2/kWh, zero particulate/kWh
3) Long-lasting hydro plants, that have low-cost/kWh, near-zero-CO2/kWh, zero particulate/kWh
 
NOTE: Cost shifting and subsidies have not yet affected NE wholesale prices, because the percent of new RE (mostly wind and solar) on the NE grid is very small, after 20 years of subsidies.
The image shows the negligeable “contribution” of wind + solar to the NE grid load, during 2020, after 20 years of subsidies!!
 
However, wind and solar became significant in Germany and Denmark, after 20 years of subsidies.
 
– Excessively allocating RE costs to households has greatly increased household electric rates.
– Industrial rates were kept artificially low for international competitiveness reasons. See URL
https://www.windtaskforce.org/profiles/blogs/german-household-electricity-prices-reach-new-record-high-in-2021

Last edited 3 months ago by willem post
willem post
Reply to  willem post
January 21, 2022 3:18 pm

Above item 4 should read

4) Additional burdens on the owners of traditional generators, because their power plants have to counteract the wind output variations, 24/7/365; the more wind (and solar), the greater the electricity quantities involved in the counteracting, plus their plants have to spend more time on standby, and are required to have more-frequent start/stops. See URLs and Appendix

https://www.windtaskforce.org/profiles/blogs/grid-balancing-costs-sky-rocket-in-the-uk-due-to-increased-wind
http://www.windtaskforce.org/profiles/blogs/cost-shifting-is-the-name-of-the-game-regarding-wind-and-solar

billtoo
January 21, 2022 4:29 pm

i saw an extensive windfarm in SW MN with >90% of the turbines fully feathered. the 15kt winds turned the rest easily. It was heavily overcast. It was 30F outside.

if only there was some solution.

Last edited 3 months ago by billtoo
observa
January 21, 2022 6:36 pm

Perfessor Grubb has all the answers to the contradiction-
Solar and wind are cheaper than ever: So why the EU energy price crisis? | RenewEconomy

There is none perfessor should a level playing field have been instituted from the very beginning instead of State sponsored dumping by the unreliables. You’ve only just discovered power consumers require not only a quantity of electrons but also they be delivered upon demand at the correct frequency and voltage. Surprise surprise perfessor et al.

Iain Reid
Reply to  observa
January 22, 2022 3:04 am

Observa,

from the odd articles I’ve seen published by The Conversation, they seem to specalise in fantasy.

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