Record-low price for UK offshore wind

Can Wind Power meet the energy needs of Britain in the 21st century or is it just a lot of overblown hype?

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Mark
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Record-low price for UK offshore wind

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Analysis: Record-low price for UK offshore wind is nine times cheaper than gas:
https://www.carbonbrief.org/analysis-re ... -than-gas/
A UK government auction has secured a record 11 gigawatts (GW) of new renewable energy capacity that will generate electricity nine times more cheaply than current gas prices. The projects are all due to start operating within the next five years up to 2026/27 and have agreed to generate electricity for an average price of £48 per megawatt hour (MWh) in today’s money. This is nine times cheaper than the £446/MWh current cost of running gas-fired power stations.

Continues....
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Re: Record-low price for UK offshore wind

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Splendid news, more please.
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Re: Record-low price for UK offshore wind

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If wind power remains this cheap, and I expect it to remain this cheap, and if gas remains as expensive as it is now, which is probable, then this fundamentally alters the economics of electricity production.

Previously the sensible limit to wind power capacity was how much off peak demand existed in windy weather. No point in paying for significant over capacity if that means paying for significant power for which there is no market.

The present prices have changed this. Suppose, as an example, that we keep on adding more wind power capacity such that half the annual production is wasted. Wasting half of the potential production will double the cost per unit of that which is used.
So if the national grid promise to pay the wind farm operators the current price of £48/MWH, but half of that is wasted, then the true price, ultimately passed on to consumers is doubled to £96/MWH. A lot cheaper than electricity from gas at about £450/MWH and a bit cheaper than Hinkley C at £110/MWH.
Such a large increase in wind power capacity would displace a great deal of gas.

These prices also change the economics of battery storage. Battery storage is expensive in capital and incurs losses. If the charging input is wind power that would otherwise be wasted and is therefore almost free, but the power can be sold back into the grid and displace power from gas at about £450/MWH then the economics are much more attractive. I expect a lot more large batteries.
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Re: Record-low price for UK offshore wind

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It also makes ruling out new onshore wind farms the economics of the madhouse.
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Re: Record-low price for UK offshore wind

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PS_RalphW wrote: 07 Sep 2022, 17:07 It also makes ruling out new onshore wind farms the economics of the madhouse.
Agreed - I've never really understood why some folk are so against onshore wind, when we have electricity pylons everywhere, which arguably look worse?

We have a large brownfield site not too far from here (an old oil refinery) that could easily accommodate 4-5 large onshore wind turbines; they would look no worse that all the old rusting vats and chimneys and flare stacks that are still there.
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BritDownUnder
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Re: Record-low price for UK offshore wind

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Forgive my ignorance but are not these Contracts for Difference a price floor, and the wind farm developers get the market price if it is more than that?
automaticearth2 wrote: 08 Sep 2022, 09:34
PS_RalphW wrote: 07 Sep 2022, 17:07 It also makes ruling out new onshore wind farms the economics of the madhouse.
Agreed - I've never really understood why some folk are so against onshore wind, when we have electricity pylons everywhere, which arguably look worse?

We have a large brownfield site not too far from here (an old oil refinery) that could easily accommodate 4-5 large onshore wind turbines; they would look no worse that all the old rusting vats and chimneys and flare stacks that are still there.
Wind farm development depends on having a suitable transmission line nearby as well as developing a substation. Wind turbines are normally arranged in 'strings' of around seven per cable going back to the substation and less than that might affect the economics. As well as four turbines may not justify a substation being built as the number is too small.

A lot of things to consider before building a wind farm such as average windspeeds, accessibility, proximity to transmission lines and their available spare capacity of the local grid.

They could of course use the wind turbines to produce hydrogen and make ammonia fertilizer if they want.
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Mark
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Re: Record-low price for UK offshore wind

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adam2 wrote: 07 Sep 2022, 14:06 These prices also change the economics of battery storage. Battery storage is expensive in capital and incurs losses. If the charging input is wind power that would otherwise be wasted and is therefore almost free, but the power can be sold back into the grid and displace power from gas at about £450/MWH then the economics are much more attractive. I expect a lot more large batteries.
Merseyside's mega-battery is switched on - and here's how it will save billions of pounds off bills and huge amounts of CO2:
https://news.sky.com/story/merseysides- ... 2-12807985
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Re: Record-low price for UK offshore wind

Post by johnny »

Are any of these reduced costs flowing through to the consumer? For example, have folks been paying $XX for their power and gas, and are now paying $XX lower at the household level?
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Re: Record-low price for UK offshore wind

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In the UK the consumer pays the cost of the most expensive instantaneous supplier for all of her supply. If at 6pm some open cycle NG plant is used at 20% more than any other source and 6 times the cost of wind power, then the wind energy supplier makes a 500% profit. The supplier of the NG also makes a big profit as they have the UK out competing the rest of the world for their lng tanker deliveries.

Of course the wind farm owners are very happy and are building turbines as fast as they can, which will bring prices down in the coming years. The UK is producing record amounts of electricity from wind.
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Re: Record-low price for UK offshore wind

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Some domestic suppliers (maybe only one) have dynamic time of day charging and consumers are charged less at times of high supply and low demand, and can actually be paid for tapping their domestic batteries at time of peak demand, or paid to recharge them when wind energy is high at night. (prices can go negative as it is cheaper than paying wind farms to turn their turbines off)
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Re: Record-low price for UK offshore wind

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PS_RalphW wrote: 12 Feb 2023, 07:01 In the UK the consumer pays the cost of the most expensive instantaneous supplier for all of her supply. If at 6pm some open cycle NG plant is used at 20% more than any other source and 6 times the cost of wind power, then the wind energy supplier makes a 500% profit. The supplier of the NG also makes a big profit as they have the UK out competing the rest of the world for their lng tanker deliveries.

Of course the wind farm owners are very happy and are building turbines as fast as they can, which will bring prices down in the coming years. The UK is producing record amounts of electricity from wind.
I don't think it works quite like that. Wind farms on Contract for Difference don't get to keep surplus revenue and didn't government recently introduce a new tax on existing wind, nuclear, hydro etc reclaiming such excess profits?

Edit: this https://www.euronews.com/green/2022/10/ ... ble-energy
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Re: Record-low price for UK offshore wind

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PS_RalphW wrote: 12 Feb 2023, 07:01 In the UK the consumer pays the cost of the most expensive instantaneous supplier for all of her supply. If at 6pm some open cycle NG plant is used at 20% more than any other source and 6 times the cost of wind power, then the wind energy supplier makes a 500% profit. The supplier of the NG also makes a big profit as they have the UK out competing the rest of the world for their lng tanker deliveries.

Of course the wind farm owners are very happy and are building turbines as fast as they can, which will bring prices down in the coming years. The UK is producing record amounts of electricity from wind.
So as long as the expensive power exists, then the citizens will continue to be screwed. And how many years has this system been going on, and NOT delivering the benefits of this oft discussed but seldom arriving benefit to the people that need it?
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Re: Record-low price for UK offshore wind

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The gas price has now fallen significantly and is about 120 pence a therm. Still several times the historical norm but much reduced from recent peaks.

I would therefore expect electricity from gas to cost about £120 a megawatt hour for fuel alone. Wind power is still therefore very substantially cheaper than gas or Hinkley C.
In the long term I expect gas prices to increase as supplies deplete. I expect wind power to get even cheaper due to mass production. Wind power is not a complete answer due to inherent variability, but we could make greater use of wind.
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Re: Record-low price for UK offshore wind

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As a result of the very low price of 37 per MWh that they bid for the contract, Vattenfal have abandoned development of a large wind farm off the Norfolk coast. Construction and maintenance costs have risen dramatically since the winn8ng bid was made, and the contract is now unsustainable. The company had already spent about a half billion on the project.

Hopefully the licence will be reawarded at an economic price quite quickly.
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Re: Record-low price for UK offshore wind

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Ralphw2 wrote: 20 Jul 2023, 18:50 As a result of the very low price of 37 per MWh that they bid for the contract, Vattenfal have abandoned development of a large wind farm off the Norfolk coast. Construction and maintenance costs have risen dramatically since the winn8ng bid was made, and the contract is now unsustainable. The company had already spent about a half billion on the project.

Hopefully the licence will be reawarded at an economic price quite quickly.
Sorry to hear of this. Hopefully this and other large wind farms will still go ahead, perhaps led by other companies.
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