Energy Roundup: Rishi Goes for the Two System Solution
If renewables need reliable backup, why not just invest in the reliable system that works?
So much has happened in the energy policy world this week, I thought it deserved a quick article. There are four significant developments:
Government announces support for new gas-fired power plants.
SMR competition delayed.
Delays to boiler tax.
Record wind CfD subsidies.
The Two System Solution
This week, Prime Minister Rishi Sunak took to the pages of the Telegraph to front-run the statement by Claire Coutinho to announce that the Government is committed to building new gas-fired power stations. This was positioned as a “common sense” decision to ensure we have enough generation capacity when the wind is not blowing and the sun is not shining.
On the face of it, this is a welcome move, because only last month, this Substack was warning of the risk of blackouts because much of our gas fleet is approaching retirement age.
However, there are significant problems with this announcement. It is a tacit acknowledgement that wind and solar renewables are not reliable and need to be backed up. In effect, we are being asked to fund two generation systems. One that works and is reliable, and another that only works in favourable weather conditions. This begs the question of why not simply invest in the system that works?
In addition, the Government is still committed to a decarbonised grid by 2035, which means phasing out all fossil fuels by 2035, perhaps allowing some gas generation with Carbon Capture and Storage. The Labour Party, who are poised to form the next Government later this year, want to bring forward that deadline to 2030. This begs the question of how many investors will be interested in building gas power plants, knowing they will be phased out shortly after they are built? Moreover, the new power plants will be forced to run at sub-optimum loads because even if gas-fired generation is cheaper overall, renewables get preferential access to the market. This will artificially increase the costs of gas-fired generation and it is likely that these plants will need to be subsidised through the Capacity Market. Overall, it will add costs to our energy bills.
New Nuclear SMRs Delayed
To rub salt in the wounds, the Telegraph has reported that Great British Nuclear (GBN) has delayed a decision on where the first Small Modular Reactors (SMRs) nuclear power plants will be built until after the election. GBN had previously said that their ambition was to “announce in Spring 2024 which of the 6 companies the government will support, with contracts awarded by Summer 2024”. They had previously boasted their SMR competition was the fastest of its kind in the world. Apparently, they are worried that rushing the process would leave them open to legal challenge.
Delay to Boiler Tax
Yesterday, there was news of a more welcome delay, in that the Government is consulting upon delaying the introduction of the “clean heat market mechanism” (CHMM), aka the boiler tax.
They had proposed to fine boiler manufacturers if they did not sell a high enough proportion of heat pumps. However, in accordance with their “proportionate and pragmatic approach to net zero, the government wants to provide industry with further time to prepare their businesses, and for more consumers to take up heat pumps, before introducing the scheme”. Therefore, they are proposing to delay the start of the scheme until 1 April 2025. It remains to be seen whether the new Government will be brave enough to continue this particular April Fool after the election.
Record CfD Subsidies
As if to illustrate the costs of running generation systems, the latest numbers from the Low Carbon Capture Company (LCCC) show that in February 2024 wind farms were awarded over £190m in subsidies under the Contract for Difference (CfD) scheme, more than any other February.
This brings the total subsidies for all technologies in the first two months of 2024 to over £409m. This compares to the £333m allowed by Ofgem for the entire first quarter of 2024 in their latest price cap calculations. They allowed £1.38bn for the whole of 2023/24 and that total has already been exceeded, because over £2bn has already been awarded.
The normal weekly article will drop on Sunday and asks why energy bills are still so high, even though gas and electricity prices have fallen to pre-crisis levels.
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Bills haven't fallen because the 'Build back better' plan requires the destruction of the wealth and comfort of the Western population. Agenda 2030 is simply a front for the installation of neo-feudalism under the one world government rules based order. It's not as if the proponents haven't been stating it...
I think someone has been reading my long letters to government.
(Sent to ALL 600 MPS.)
I was pointing out that we would need some 600 Dinorwigs for backup, if we get rid of gas generation. And never mind the huge cost, we don't have enough upland areas to place them in. The cost will be about £1.5 trillion - look at the cost overruns on the Snowy-2 pumped storage system.
I was pointing out that to use hydrogen as backup storage, would cost some £2.5 trillion. Apart from the novelty and naïveté of using hydrogen for storage. A major problem is the system is only 30% efficient. So much energy is lost, that the number of wind turbines would have to be increased by 30% to cover those losses.
The whole renewable escapade is a money-pit.
And none of those systems are made in the UK.
So we will go bankrupt.
.
However - who will invest in gas generation plants, when they can only operate 50% of the time? What supermarket is forced to to close 4 days a week? Wishy-Washy's new strategy will need yet more government subsidies.
So we go bankrupt anyway...
R