Well done David for having the tenacity to plough through the Net Zero madness and sum it up with this nugget: “The total of grid balancing/expansion plus backup costs are going to rise so much we will end up spending twice as much on these hidden costs as the whole bill for the gas we use to generate electricity”.
I wrote about the disadvantages of wind power a decade ago, before the take-off of solar, international interconnectors and the complexities of CfDs, FiTs and so on.
“A further major drawback of wind farms which few people understand is that wind power acts like a parasite, stealing market share from the essential fossil fuel plants it depends on for backup and balancing, because wind power gets preferential grid access. This effect is compounded by the perverse Carbon Price Floor green tax on fossil fuel plants, designed to force them out of business. The net result of this incoherent policy regime is that wind power renders fossil fuel power plants uneconomic, making commercial suppliers unwilling to build the new gas power stations vitally needed to keep the lights on as our outdated nuclear and unloved coal power plants are shut down with reckless abandon to create a wafer-thin capacity margin, the safety buffer between peak electricity demand and available supply. An essential technology that works is being driven out by an antiquated one that doesn’t”.
“After four years of having a DOE that indulged in the childish fantasy that America can shut down its reliable coal and natural gas plants and rely on wind, solar, and battery storage to meet surging electricity demand, it’s clear the energy adults are now back in charge.
On Monday, the U.S. Department of Energy released a 73-page report entitled Evaluating the Reliability and Security of the United States Electric Grid, which concludes the United States will experience a 100-fold increase in blackouts if coal and natural gas plants are retired amid rising demand from data centers.”
Thank you David! We've just had a political crisis due to a backbench rebellion over ill thought-out tweaks to welfare leaving the Chancellor with the massive headache of raising an additional £5bn. At the same time, the humongous costs of net zero seem to go largely unremarked. But for a few individuals like yourself and Kathryn Porter, would even the tiny minority of the electorate who have time and desire to know, ever have the chance to do so?
PS yesterday the Energy Bad Boys reported on their substack that a reformed US Department of Energy has published a report warning of a two orders of magnitude worsening of electricity blackouts if wind and solar rollout continues accompanied by retirement of current power sources.
Please don't joke. Very soon there will be 'food taxes' or 'climate consumption' taxes (there's more weapons for the state!) that prevent you buying the food you want, or applying a percentage tax based on meat consumption, chocolate consumption.
All 'for the good of the planet, mind'. Not solely to line Vince, Gummer and Miliband's pockets. Not to force you into doing what they want. Oh no. You'll have the choice. You'll just pay and pay and pay for that freedom until you can't.
Net Zero is an economic weapon. There's already a balancing mechanism. It's call the market, but the Left can't have that so they insist on distorting that market and creating a 'strategy' that ensures their favoured failures are protected.
It's a scam, a con and a farce but one thing that will never stop, until the Left are forced to stop, is the tax scam hoax that is 'climate change'. This is their ultimate weapon to pervert society to their goal. There's no chance they'll let it go.
Arghh my favourite sort of content from your excellent blog and you make it so easy for the few MPs that are not in favour of NZ or some investigative journalism to just read this and they would have plenty of cannon fodder to deploy.
On BALANCING COSTS the die was cast over a decade ago as soon as "connect and mange" was introduced which allowed generators to connect without any concern for the ability to transmit the energy produced to load centres. They then doubled down on this and allowed them to get paid to switch off yet they didn't see the giant ponzi scheme they had created for nearly a decade. In fact OFGEM repeatedly thwarted NGs attempts to get the Eastern Green DC links approved for over 8 years before finally consenting. Now OFGEM have flipped the other way and are chucking money at the TO's even authorising advanced purchase of kit for windmill parks that may never get built.
So now we have a multitude of grid projects in construction or planned for the next few years which will go some way to reducing todays constraints but if Milibrain ploughs on with his targets and gets generators signed up who actually build the constraints problem will just remerge in the 2030's.
The other issue here is those projects need outages on the existing grid and that is partially responsible for the big increase in constraint volumes we now see on high wind days. Another example of why we need CEGB MkII so at least generation and transmission are planned together so benefits can be realised (sorry im of the view we've paid for this kit now so we need to economically exploit it).
So as we stand now there should be a suspension of AR7 for at least 3 years. This has added benefit in that we remove ourselves from the global race for the windmill kit and installation vessels whilst other countries play what they perceive are the need to catch up.
On the CAPACITY MARKET it its already baked in that the costs are going to increase substantially from the 26/27 deliver year to c3.5-4B per year as the T-4 clearing price has been above £60/kW for that year and the two successive years. In other words treble what it is today this should be front of house with MPs and the MSM to challenge the govt what is going on. Its not just paying for CCGTs to sit there but a stash of gas peakers and the battery lot are also getting a big part of the pie as well. Now some of these generators will fall by the wayside but the reality now looks that we are going to need upwards of 3B/yr to keep the CCGTs on standby. And remember this is largely for 30+ yr old kit as because anything new now has to have some sort of carbon capture on it so you don't need to be brain surgeon to see what's going to happen here.
I've always been open on here about being agnostic on CC but the fact remains the way there going about trying decarbonise the grid is driving up costs to existential threat levels and its not us armchair critics that are saying it its their own body NESO. The other stark (as an aside Chris Stark seems awful quiet these days) reality is its not as if our efforts are going to make one iota of a difference anyhow to the presumed global threat.
Milibrain has created air cover for himself with another consultation on REMA to actually stand back and reconsider what they are doing. As environmental zealot he probably wont but the govt as a whole and especially HMT can take a detached view and its conclusions would be to halt any more renewables expansion outside that already in play. That action in itself would probably give many developers weak knees and they would put oh hold there plans as well so the scale of the problem may reduce.
I think it's worth understanding the economics of EGL1 that will run from Peterhead to Drax: it's a £4.3bn project for a 2GW link. The capital charge is about 7% to cover interest and depreciation, or £150m p.a. per GW (plus extra for O&M). So a new 1GW wind farm, which might produce about 4TWh per year, should face a tariff for using it of about £37.50/MWh, plus extra for the onshore pylons and substations that would link it to Peterhead. Instead the charge to the windfarm for network connection in 2030 is slated to be just £48m/GW, or £12/MWh. The rest is for consumer account.
No-one would build such a wind farm if they had to pay full costs in a competitive market.
Thing is it isn't creative accounting its from publicly visible databases that are what feed OFGEM energy cap calculations. Its the useless MSM and politicians that just can't think for themselves and question whats going on even if they still get hoodwinked at least they've prodded the beast.
It's probably more convenient to download all the tables in the combined .ods spreadsheet. Table 4.1 reveals that gas use for Elecgen was 179.2TWh in 2024. In Q1 2025 use was some 9.8TWh higher than in Q1 2024: disappointing renewables output is to blame.
Thank you David A thought. Restore Britain set up by Rupert Lowe (as I am sure you are aware ) He and others are going to set up petitions to go before Parliament. Net stupid will be one to watch I have joined this group ,which is cross party.
Could be entertaining to watch the debate in parliament . 😈
Its been decades since I had to look into industrial utility costs, and back then our process restricted our evaluation to North America. We found SMUD to be the most competitive in CA.- https://www.smud.org/Rate-Information/Compare-rates
Are there any vertically integrated firms like SMUD that can skip most of national rules in the UK to provide services at affordable/competitive prices?
Even higher energy bills are coming our way. Andrew Montford reports on how Ed Miliband plans to alter the rules of CfD auctions so that he can throw yet more money at renewables developers: https://x.com/aDissentient/status/1944316461041823937.
I’ve long suspected there’s a second elephant in the renewables room, namely embedded generation. As electricity prices rise, so too the motivation for consumers to install solar panels and small wind turbines, with surpluses sold to suppliers at artificially high prices. This generation is not controllable by NESO, but is seen as a diminution in demand on the grid.
So now we have the situation where a drop in wind or clouds rolling in causes a simultaneous drop in supply and rise in demand. And, of course, the reverse.
The phenomenon would be regional, not national, which I suspect makes it harder to manage. Am I right?
Export tariffs are c15p/kw vs 25p for import of new solar today. Of course if your on one of the FiT schemes its certainly the case that the early adopters were paid, and still are, very handsomely.
Excellent piece again David. Just to add one important item - I continue to believe that the Balancing Costs do NOT take into account the need for NEW capital costs for gas/nuclear backup. Existing costs of gas backup reflect already fully or significantly depreciated plant and the higher backup pricing makes these adequately profitable. But particularly as backup needs will presumably decline as the wind/solar infrastructure increases (at least according to projections) will the ROI on NEW backup plant be adequate to justify the investment? If not, who will make such investments other than Government?
The capacity market is an attempt to ensure standby generation is available and new assets get built. The latter are now batteries or gas peakers no new gas has come forward for years. Also now anything new recently has to be at least convertible to carbon recovery and I believe they will only accept completely unabated gas in future but need to see what the 29/20 rules are or next T-4 round. You can see that the T-4 price has been above £60/kw for last 3 auctions that is reflection of reduced gas use. Going to be interesting to see if £60/kW is sufficient to keep the older least used CCGTs in play this time.
A recent post on Twitter by Greg Jackson with reference to wind turbine curtailment
How broken is UK electricity market?
You've paid for 8,000 and received less than 3,000. At a cost - to you - of hundreds of millions.
And the more we build, the worse it gets, for years.
It reminded me of the apocryphal quote attributed to Bono of U2
“Every time I clap my hands, a child in Africa dies".
Audience member: "Stop doin' it then ya evil bastard"
Well done David for having the tenacity to plough through the Net Zero madness and sum it up with this nugget: “The total of grid balancing/expansion plus backup costs are going to rise so much we will end up spending twice as much on these hidden costs as the whole bill for the gas we use to generate electricity”.
I wrote about the disadvantages of wind power a decade ago, before the take-off of solar, international interconnectors and the complexities of CfDs, FiTs and so on.
“A further major drawback of wind farms which few people understand is that wind power acts like a parasite, stealing market share from the essential fossil fuel plants it depends on for backup and balancing, because wind power gets preferential grid access. This effect is compounded by the perverse Carbon Price Floor green tax on fossil fuel plants, designed to force them out of business. The net result of this incoherent policy regime is that wind power renders fossil fuel power plants uneconomic, making commercial suppliers unwilling to build the new gas power stations vitally needed to keep the lights on as our outdated nuclear and unloved coal power plants are shut down with reckless abandon to create a wafer-thin capacity margin, the safety buffer between peak electricity demand and available supply. An essential technology that works is being driven out by an antiquated one that doesn’t”.
By a happy coincidence, Tilak Doshi has a Net Zero parable on the same theme in today’s TCW. He even envisions a happy ending (maybe based on post-Biden USA?), sadly missing on our horizon: https://www.conservativewoman.co.uk/a-net-zero-parable-the-widget-factory-in-the-village/.
Further to the post-Biden improving energy situation in the USA, here’s the Energy Bad Boys story that Ian Braithwaite has already mentioned: https://energybadboys.substack.com/p/blackouts-could-increase-100x-doe.
“After four years of having a DOE that indulged in the childish fantasy that America can shut down its reliable coal and natural gas plants and rely on wind, solar, and battery storage to meet surging electricity demand, it’s clear the energy adults are now back in charge.
On Monday, the U.S. Department of Energy released a 73-page report entitled Evaluating the Reliability and Security of the United States Electric Grid, which concludes the United States will experience a 100-fold increase in blackouts if coal and natural gas plants are retired amid rising demand from data centers.”
Thank you David! We've just had a political crisis due to a backbench rebellion over ill thought-out tweaks to welfare leaving the Chancellor with the massive headache of raising an additional £5bn. At the same time, the humongous costs of net zero seem to go largely unremarked. But for a few individuals like yourself and Kathryn Porter, would even the tiny minority of the electorate who have time and desire to know, ever have the chance to do so?
PS yesterday the Energy Bad Boys reported on their substack that a reformed US Department of Energy has published a report warning of a two orders of magnitude worsening of electricity blackouts if wind and solar rollout continues accompanied by retirement of current power sources.
I don't need to buy any food today, so I'm just off to Tesco to hand over my constraint payment.
Please don't joke. Very soon there will be 'food taxes' or 'climate consumption' taxes (there's more weapons for the state!) that prevent you buying the food you want, or applying a percentage tax based on meat consumption, chocolate consumption.
All 'for the good of the planet, mind'. Not solely to line Vince, Gummer and Miliband's pockets. Not to force you into doing what they want. Oh no. You'll have the choice. You'll just pay and pay and pay for that freedom until you can't.
Net Zero is an economic weapon. There's already a balancing mechanism. It's call the market, but the Left can't have that so they insist on distorting that market and creating a 'strategy' that ensures their favoured failures are protected.
It's a scam, a con and a farce but one thing that will never stop, until the Left are forced to stop, is the tax scam hoax that is 'climate change'. This is their ultimate weapon to pervert society to their goal. There's no chance they'll let it go.
Arghh my favourite sort of content from your excellent blog and you make it so easy for the few MPs that are not in favour of NZ or some investigative journalism to just read this and they would have plenty of cannon fodder to deploy.
On BALANCING COSTS the die was cast over a decade ago as soon as "connect and mange" was introduced which allowed generators to connect without any concern for the ability to transmit the energy produced to load centres. They then doubled down on this and allowed them to get paid to switch off yet they didn't see the giant ponzi scheme they had created for nearly a decade. In fact OFGEM repeatedly thwarted NGs attempts to get the Eastern Green DC links approved for over 8 years before finally consenting. Now OFGEM have flipped the other way and are chucking money at the TO's even authorising advanced purchase of kit for windmill parks that may never get built.
So now we have a multitude of grid projects in construction or planned for the next few years which will go some way to reducing todays constraints but if Milibrain ploughs on with his targets and gets generators signed up who actually build the constraints problem will just remerge in the 2030's.
The other issue here is those projects need outages on the existing grid and that is partially responsible for the big increase in constraint volumes we now see on high wind days. Another example of why we need CEGB MkII so at least generation and transmission are planned together so benefits can be realised (sorry im of the view we've paid for this kit now so we need to economically exploit it).
So as we stand now there should be a suspension of AR7 for at least 3 years. This has added benefit in that we remove ourselves from the global race for the windmill kit and installation vessels whilst other countries play what they perceive are the need to catch up.
On the CAPACITY MARKET it its already baked in that the costs are going to increase substantially from the 26/27 deliver year to c3.5-4B per year as the T-4 clearing price has been above £60/kW for that year and the two successive years. In other words treble what it is today this should be front of house with MPs and the MSM to challenge the govt what is going on. Its not just paying for CCGTs to sit there but a stash of gas peakers and the battery lot are also getting a big part of the pie as well. Now some of these generators will fall by the wayside but the reality now looks that we are going to need upwards of 3B/yr to keep the CCGTs on standby. And remember this is largely for 30+ yr old kit as because anything new now has to have some sort of carbon capture on it so you don't need to be brain surgeon to see what's going to happen here.
I've always been open on here about being agnostic on CC but the fact remains the way there going about trying decarbonise the grid is driving up costs to existential threat levels and its not us armchair critics that are saying it its their own body NESO. The other stark (as an aside Chris Stark seems awful quiet these days) reality is its not as if our efforts are going to make one iota of a difference anyhow to the presumed global threat.
Milibrain has created air cover for himself with another consultation on REMA to actually stand back and reconsider what they are doing. As environmental zealot he probably wont but the govt as a whole and especially HMT can take a detached view and its conclusions would be to halt any more renewables expansion outside that already in play. That action in itself would probably give many developers weak knees and they would put oh hold there plans as well so the scale of the problem may reduce.
I think it's worth understanding the economics of EGL1 that will run from Peterhead to Drax: it's a £4.3bn project for a 2GW link. The capital charge is about 7% to cover interest and depreciation, or £150m p.a. per GW (plus extra for O&M). So a new 1GW wind farm, which might produce about 4TWh per year, should face a tariff for using it of about £37.50/MWh, plus extra for the onshore pylons and substations that would link it to Peterhead. Instead the charge to the windfarm for network connection in 2030 is slated to be just £48m/GW, or £12/MWh. The rest is for consumer account.
No-one would build such a wind farm if they had to pay full costs in a competitive market.
Feels like somethings being rigged but surely all the costs from whatever origin will still end up the unit rate or standing charge?
You cannot fix unreliable and costly energy with creative accounting… 😊
Thing is it isn't creative accounting its from publicly visible databases that are what feed OFGEM energy cap calculations. Its the useless MSM and politicians that just can't think for themselves and question whats going on even if they still get hoodwinked at least they've prodded the beast.
Data on gas are available from Energy Trends here
https://www.gov.uk/government/statistics/gas-section-4-energy-trends
It's probably more convenient to download all the tables in the combined .ods spreadsheet. Table 4.1 reveals that gas use for Elecgen was 179.2TWh in 2024. In Q1 2025 use was some 9.8TWh higher than in Q1 2024: disappointing renewables output is to blame.
So even lower cost of gas used for electricity, making the costs of balancing and backup even more ludicrous.
Thank you David A thought. Restore Britain set up by Rupert Lowe (as I am sure you are aware ) He and others are going to set up petitions to go before Parliament. Net stupid will be one to watch I have joined this group ,which is cross party.
Could be entertaining to watch the debate in parliament . 😈
Its been decades since I had to look into industrial utility costs, and back then our process restricted our evaluation to North America. We found SMUD to be the most competitive in CA.- https://www.smud.org/Rate-Information/Compare-rates
Are there any vertically integrated firms like SMUD that can skip most of national rules in the UK to provide services at affordable/competitive prices?
Even higher energy bills are coming our way. Andrew Montford reports on how Ed Miliband plans to alter the rules of CfD auctions so that he can throw yet more money at renewables developers: https://x.com/aDissentient/status/1944316461041823937.
I’ve long suspected there’s a second elephant in the renewables room, namely embedded generation. As electricity prices rise, so too the motivation for consumers to install solar panels and small wind turbines, with surpluses sold to suppliers at artificially high prices. This generation is not controllable by NESO, but is seen as a diminution in demand on the grid.
So now we have the situation where a drop in wind or clouds rolling in causes a simultaneous drop in supply and rise in demand. And, of course, the reverse.
The phenomenon would be regional, not national, which I suspect makes it harder to manage. Am I right?
You probably are right. But I don't know the scale.
Export tariffs are c15p/kw vs 25p for import of new solar today. Of course if your on one of the FiT schemes its certainly the case that the early adopters were paid, and still are, very handsomely.
Excellent piece again David. Just to add one important item - I continue to believe that the Balancing Costs do NOT take into account the need for NEW capital costs for gas/nuclear backup. Existing costs of gas backup reflect already fully or significantly depreciated plant and the higher backup pricing makes these adequately profitable. But particularly as backup needs will presumably decline as the wind/solar infrastructure increases (at least according to projections) will the ROI on NEW backup plant be adequate to justify the investment? If not, who will make such investments other than Government?
The capacity market is an attempt to ensure standby generation is available and new assets get built. The latter are now batteries or gas peakers no new gas has come forward for years. Also now anything new recently has to be at least convertible to carbon recovery and I believe they will only accept completely unabated gas in future but need to see what the 29/20 rules are or next T-4 round. You can see that the T-4 price has been above £60/kw for last 3 auctions that is reflection of reduced gas use. Going to be interesting to see if £60/kW is sufficient to keep the older least used CCGTs in play this time.