David hasn't twigged on the advantages of CfD for projects and financiers.
Because CfD includes annual CPI uplifts, revenues increase in line with CPI each year. So it is fine for a project to take and indexed loan, where the interest paid and capital increases each year in line with CPI.
For a 15 year gilt, maturing in 2040, the coupon (rate above CPI inflation) is 0.625%, and the cost is £85.21 for a £100 loan. It equates to a "real" interest rate of 0.625% x £100/85.21 = 0.734% with annual CPI uplifts in the interest repaid. However, you also have to increase the capital sum from £85 to £100 over 15 years, and that equates to a sum of £100/85.21 - 1 = 17.4% to repay over 15 years, which is 1.16% of additional repayments each year. So the "interest is effectively 0.734 + 1.16 = 1.9% above inflation.
That is all for the government borrowing money by selling indexed gilts. Commercial, low risk, UK wind and solar projects would probably have to pay another 1% of interest above that, making the indexed interest rate around 2.9%.
If you factor in that the UK inflation target is 2%, the typical annual payment of interest (at currency which now varies each year with inflation) is thus around 4.9%. Call it 5%
In short, David's value of 8% cost of capital is just wishful thinking on his part, and the cost of capital for CfD projects is likely to be closer to 5%.
That is one fatal flaw with the approach.
The other one is that the alternative capital flows for supplying an "all gas" grid aren't treated the same way. You would have to go back to the capital costs of drilling a gas well and providing a pipeline infrastructure. Because to keep the current gas flows for the grid will mean a continuous supply of new North Sea gas wells, because North Sea gas reserves are petering out with the law of diminishing returns, and wells last for a shorter period than they used to.
Because gas wells and wind farms are both constructed using non-public sector capital, the easiest way to do an effective comparison of costs is using the cost to the grid of gas power and, say, CfD contract strike prices for offshore wind power.
Most of the costs incurred by the NESO 2030 clean energy plan will be raw generation costs of wind and solar.
Offshore wind power in the most recent CfD AR6 contracts in 2021 pounds varied between £54.23/MWh for AR4 rebids (projects were allowed to rebid 25% in AR6 of their total capacity as bid in AR4), and £58.87MWh for new bids. Uplifting using CPI, first to April 2024 then to January 2025 prices is x1.27 x 1.038 = x1.32, so the contract prices translate to January 2025 costs of £72/MWh and £78/MWh.
Current European TTF prices are €50/MWh of heat. Average UK gas plant efficiency is around 50%, so that is €100/MWh of electricity, which at a 0.84 exchange rate is £84/MWh. Add £4/MWh of variable O&M costs for gas plants and the total, without carbon costs, is £88/MWh for gas generation.
Current UK carbon costs are around £42/tonne, while EU ETS carbon costs are £68/tonne. UK carbon costs are only going one way - up, to match the costs of the EU ETS scheme.
1 MWh of gas generation creates half a tonne of CO2. So the carbon cost is likely to add between £21 and £34/MWh.
So UK gas generation is likely to costs £103-122/MWh with carbon costs, vs the latest offshore wind at around £72 or £78/MWh. UK onshore wind and solar costs are similar to the £72/MWh.
The cost of grid batteries to firm up wind and solar is now going to add around £15/MWh to the cost of power going through them. December 2024 BESS (battery energy storage system) bids for a 16 GW tender in China averaged $66/kWh or £53/kWh of capacity. We won't see such cheap prices in UK for a few years, but it is surely a pointer of the way grid battery prices are going for 2030. For, say, daily cycling over 10 years, 3,650 kWh going through each kWh of battery costing £53/kWh is 1.5p per cycle, or £15/MWh.
There are some lessons here:-
1. Even without carbon costs, it is cheaper to install wind and solar alongside gas and use them every time the wind blows or the sun shines. In either case you have to pay any depreciation costs of the gas plants. But the difference between the RUNNING costs of the gas plants WITHOUT CARBON COSTS, and the TOTAL cost of raw wind or solar a saving of £10-16/MWh from installing more wind. Effectively you get the CO2 reduction for free.
That applies until the point where we start having large surpluses of wind and solar.
2. WITH CARBON COSTS, raw wind and solar save between £25 and £50/MWh compared with gas generation at current prices. If grid batteries cost another £15/MWh, then wind, solar + batteries is likely to turn out cheaper than the cost of gas generation with carbon costs.
==> the NESO 2030 Clean Energy grid is likely to provide power to consumers which costs less than the current costs of UK gas power.
Sorry, this is just wishful thinking. I have looked at the accounts of several wind farms. I haven't seen one with index-linked borrowing. Moreover, as we saw above, the CP2030 plan more expensive even with 0% cost of capital and zero operations and maintenance costs.
The cost of drilling gas wells is included in the cost of gas.
Not 100% sure this is right. I think you are assuming that the infrastructure build that is going to cost all this money is to replace the current gas usage. The production of electricity is going to increase hugely in the next 20 years (if this insane project continues) - maybe by two or three times. Perhaps the infrastructure costs are to do that.
Most of the spend is on generation to meet their expectations of demand in 2030 which only about 10% higher than 2023. In fact the NESO report assumed a 20% reduction in residential demand. NG has announced plans for even more grid spending from 2030 to 2035.
Thank you so much for these facts and data. It inspired me to write to my MP as she has used her private member's bill to support this. The zero hour CAN website is full of expensive, emotive, slushy pathetic videos with pretty graphs that are completely made up. Fantasy!!!! I shared your facts with her. Let's see what happens.
Gas is being described as back up and that by 2030 will only account for 5% of grid supply
This is absurd, wind and solar and the other second and third rate renewables are asynchronous, in other words uncontrollable feeding a system that needs minute control on an instantaneous basis.
As of now and the foreseeable future gas is and must continue to be the backbone of the grid without which it will fail. Even when wind is strong, gas does the balancing but will get harder the more the wind generated capcity increases.
During Covid with low demand and srong wind generation the National Frid ESO told some wind farms and a nuclear reactor to shut down just to ensure the grid had enough gas generation to keep it stable.
When are the children in charge of our electrical system going to understand that renewables are not an equivalent or a replacement for conventional generators and why is the Grid Operator not telling them so?
Despite valid ctritisism about Drax's 'green' credentials it is, with hydro, capable of providing essential synchronous and the other technical atributes other renewables lack.
NESO aim to demonstrate a 100% 'clean' and stable power system for a few short hours at some point in 2025 - i.e. zero transmission connected fossil fuels with stability coming from nuclear, hydro, synchronous condensers and renewables or interconnectors with grid forming inverter capability. This is a pre-cursor to running such a system in most hours by 2030. i.e. your concern is actively being addressed.
I am taking a look at what NESO are really up to and whether it is going to be plain sailing or whether it will turn out to be too risky. They have been extremely cagey about a frequency event on 22nd December 2023 that nearly turned into a disaster, with elements of cascading loss all the way from the Sellindge IFA1 substation to the Moray HVDC connector to offshore wind (which they only grudgingly acknowledged .8 months later). They have not inspired confidence that they understand what happened, and they have avoided a wider enquiry by claiming this was unnecessary because the frequency was below 49.5 Hz for 59.3 seconds rather than 60 seconds.
That event was rescued by Dinorwig which takes 12 seconds to go from spinning in air to full output. Batteries seem to have signally failed to respond properly (a key reason why there should be a more transparent investigation). At the kind of grid inertia levels they are proposing that would simply not have been fast enough, and we would likely have seen LFDD at 47.8Hz as happened in August 2019. Blackouts, if not system wide.
Electric mountain saves the day! I love that place....one of the finest achievements of the CEGB. The Great British Public has literally no idea how many times that place has saved their bacon...
Sorry, this is a fantasy. Zero fossil fuels may be achievable for a tiny fraction of the time but it does not address the key problem of what to do when there is a wind or solar drought. Even hydros can be unreliable in times of water shortage.
The narrative that we can pivot to a wholly renewable grid is just not true and actively misleading.
I refer you to your previous comment about achieving 100 per cent renewables by 2030. I didn’t invent this narrative. So we still have gas in the system is an admission that actually that’s not achievable.
I’m not an opponent btw, just someone who wants to open this debate for public scrutiny. The people after all who will pay for this...
But thank you for replying, it’s nice to get the other point of view...
luckily that narrative only exists in opponents heads. NESO understand that we need to keep 35GW of gas in the system in the near term and try to 'clean' that dispatchable resource over time...
This is not confined to the UK, equal madness is happening in Ireland as well.
I am increasingly of the opinion that some of these schemes are actually just money making rackets, there is one proposed off the coast of Galway which will provide a measly 450 MW but will have huge environmental impact, but because of REGOs and curtailment payments will probably turn a tidy profit for its global investors. The website for this pushes the local angle heavily, but a bit of digging reveals that this is only a facade. The same companies are heavily involved in the UK renewables development.
I am at a bit of a loss as to whether these people are truly stupid or are they just pathological liars for their delusional cause. The UK now has the highest electricity costs of any major economy. If they keep it up, the UK will cease being a major economy.
Minibrain isn’t a critical thinker, he’s incapable of proper scientific analysis because his brain is fogged with ideology, a deeply ingrained ideology where anything is possible if you throw enough of someone else’s money at it - his whole life has been an ideological socialist existence and now he has been given the power to wield his utter madness - it won’t end well for him, socialism always fails, always and reality is already beating up his net zero nonsense - it and he will be consigned to the historical fails bin, it’s as inevitable as day following night
When people like Milliband cannot bear to be wrong then everyone else is forced to suffer...immiserated by the man's hubris. An inflated ignoramus. Very good Article Mr T.
All you have to do is ignore the facts and make up figures that underestimate wind and solar costs, and then add an arbitrary carbon charge to double the estimated cost of gas.
Then you publish those figures as official estimates and have your consultants use them to prepare reports.
Then you can point to those reports as proof that wind and solar is cheaper than gas.
Exactly what I was thinking but the only bit you missed is that when you do do that dodgy maths to make it work by putting in crazy assumptions for gas prices (when we take into account the known supply increases from US and Qatari LNG in around 2026-27) and a backsplved carbon price that would kill any industry in the Uk at all, you get given a CBE for your troubles in the New Year honours…
Miliband, like most politicians, is a liar. He knows he's lying. We know he's lying. He knows we know he's lying. He also knows there is nothing we can do about it.
We have a complicit media. The BBC won't challenge him as their pension funds are sunk into green and, well, it's a metro Left organisation. GB News does challenge regularly and the regulator is desperate to shut it down. ITV won't because it, again is a big, metro Left organisation. Channel 4 won't because it's completely insane.
A twitter post the other day summed up the problem: https://x.com/BartBlack1/status/1875511647483392337. The chap lamented the cost of electricity in the UK and blamed the energy providers. I don't blame him: he's just doing what officialdom tells him.
Folk may not understand that 'business passes all taxes on to customers' (to explain high profits) but the state uses that ignorance to it's advantage to put the onus back on the companies rather than explaining that, actually the climate change act and net zero idiocy is responsible for over two thirds of the cost of an unit of energy.
While folk are ignorant and the media deliberately refuses obfuscates where the costs come from Miliband will keep getting away with it. Hopefully the people of Doncaster can remove him, but it simply shouldn't be this way. The press should be as informed as you are, Mr Turver. They should challenge him and leave the audience informed that he is lying to them and his ideology the reason for high energy bills.
Sadly, that failure is the reason why the UK is in the mess it is. No one wants to say 'the emperor is wearing no clothes'.
I went from sad to mad at the thought of how much these collective idiots have damaged our western nations wealth.
First, we had ongoing political acceptance of globalized free trade that started to hurt about 1980 onward and then we got double crazy with climate change and its huge funding for no benefit to the citizen population…… anywhere.
Both are not wealth creation systems, but wealth transfer systems from us to the rest.
Let’s hope Trump puts a stop to this madness and mess in North America… (Canada will follow him with its next government).
Its clear that the only way to stop this crap is to stop the funding..
The only energy policy should be whatever is local and least cost with a longer term plan to improve pollution (CO2 is not a pollutant) If that means coal or gas and eventually nuclear then so be it.. but its clearly not wind and solar based on scientific facts.
Why didn’t the British government compare the cost of energy in France versus Germany.. it’s a huge difference.. why? ……nuclear versus W&S !!!
Why I changed my mind about nuclear power | Michael Shellenberger | TEDxBerlin
What scares me is how Mr Millibrand has the power to do what he is doing. I too worked in the industry sadly not an engineer but on the regulatory side of the business. I joined when the industry was first de nationalised and it was quite an exciting time. I learnt do much from everyone I worked with engineers, manager ( in those days they were all engineers too), accountants, customer service experts and the guys who went out working on the wires and dealing with customers on a face to face basis. There was an expectation that things really were going to improve and put the customer at the centre of things. Trouble is regardless of what all the experts say customers just to be able to flick a switch and the light/cooker whatever comes on, and they want the cost to be low. The only customers who regularly contacted the company were those who couldn’t pay the bill or who had experience an outage. The Regulator, OFFER in those days was full of idealistic young graduates and bored civil servants. They wanted companies to respond to their customers wishes. The thing is for most customers that was what was happening but for the rest what they actually needed was simply more money or better budgeting skills. Not something within our remit, however the regulator now Ofgem kept on trying. I have seen engineers very carefully going through the Physics of why the proposals coming through the regulator and the govt would physically not work and having to repeat this at meeting after meeting. This was before the economic case was considered. This has been going on for decades. Companies in my view essentially gave up less and less of the managers were engineers and so fewer had any understanding of the physics of their business. The regulator had the ability to trash the value of shares where companies stood up to them on the engineering front. There is no longer any competitive market in the UK as the govt through the regulator sets the prices and now a madman is redesigning the network and power generation to a model that can not work. How has this all happened? We had a better system in place before de nationals that would have stopped Milliband a man who has no engineering qualifications, no accounting qualifications and no detailed industry experience.
What a wonderful set of historical inside insights. They ring very true. We could really do with returning the regulator to the purpose of fighting for consumer interests instead of working out how to charge them for the net zero programme on the basis that nanny Miliband knows best. It is a travesty that DESNZ are now consulting on the future role for OFGEM, meanwhile OFGEM are busy in the fantasy world of pretending that net zero can be delivered with storage with durations of a few hours as they try to work out a subsidy scheme for uneconomic storage with durations over 4 hours:
Perhaps Elon would gove us one of his Mars rockets so we could pack in Ed & Co and send them off. We could let them take their fairy dust to aid survival - not!
Thanks David, the numbers are really alarming and daunting.
For my own account of the absurdity of the attempt to transition to unreliable energy I just chant the ABC of intermittent energy and conclude that it simply can't work.
What we have got from trillions of dollars of expenditure worldwide is more expensive and less reliable power with massive collateral damage to the planet.
Happy New Year David and readers and a fine substack item to kick off the year.
Is it not the case that the CAPEX will be largely privately funded and the cost of it recovered over 20+ years through adjustments to TUoS/DUoS charges of the Transmission and distribution operators so the yearly impact will be lower than your model shows?
Also there will be some benefits from expanding transmission through lower constraint charges albeit thats going to be post 2030 and by then I can see them being c5B pa. Thus Millibrain may be able cite by 2030 hes saved us a few quid on the bills but they will have already gone up by well over £300 pa by then anyhow just from Balancing and Capacity Charges.
The other thing that struck me right from the outset of this blog is your first statement that says Millibrain refers to "Wholesale" price of electricity, rather than the system price, being lower than gas . Given we can see reducing strike prices being achieved on CfDs it is entirely possible that as the ROC/FiTs roll off the nett cost of pure renewables, not the ghastly biomass, will end up lower than gas? At the consumers meter that wont be the case of course but is this there ruse?
This is not an attempt to show what happens to bills, but to compare the cashflows of each model. However, the private money will need to be financed, so that £28.8bn of O&M and residual gas will need to be financed each year from 2030. That comes to about £1,000 per household which is in the same ballpark as my earlier estimates of the impact on bills.
Publish your spreadsheet! I wanna play with it…
David hasn't twigged on the advantages of CfD for projects and financiers.
Because CfD includes annual CPI uplifts, revenues increase in line with CPI each year. So it is fine for a project to take and indexed loan, where the interest paid and capital increases each year in line with CPI.
See the indexed gilts rates available at https://www.hl.co.uk/shares/corporate-bonds-gilts/bond-prices/uk-index-linked-gilts?column=maturity&order=asc .
For a 15 year gilt, maturing in 2040, the coupon (rate above CPI inflation) is 0.625%, and the cost is £85.21 for a £100 loan. It equates to a "real" interest rate of 0.625% x £100/85.21 = 0.734% with annual CPI uplifts in the interest repaid. However, you also have to increase the capital sum from £85 to £100 over 15 years, and that equates to a sum of £100/85.21 - 1 = 17.4% to repay over 15 years, which is 1.16% of additional repayments each year. So the "interest is effectively 0.734 + 1.16 = 1.9% above inflation.
That is all for the government borrowing money by selling indexed gilts. Commercial, low risk, UK wind and solar projects would probably have to pay another 1% of interest above that, making the indexed interest rate around 2.9%.
If you factor in that the UK inflation target is 2%, the typical annual payment of interest (at currency which now varies each year with inflation) is thus around 4.9%. Call it 5%
In short, David's value of 8% cost of capital is just wishful thinking on his part, and the cost of capital for CfD projects is likely to be closer to 5%.
That is one fatal flaw with the approach.
The other one is that the alternative capital flows for supplying an "all gas" grid aren't treated the same way. You would have to go back to the capital costs of drilling a gas well and providing a pipeline infrastructure. Because to keep the current gas flows for the grid will mean a continuous supply of new North Sea gas wells, because North Sea gas reserves are petering out with the law of diminishing returns, and wells last for a shorter period than they used to.
Because gas wells and wind farms are both constructed using non-public sector capital, the easiest way to do an effective comparison of costs is using the cost to the grid of gas power and, say, CfD contract strike prices for offshore wind power.
Most of the costs incurred by the NESO 2030 clean energy plan will be raw generation costs of wind and solar.
Offshore wind power in the most recent CfD AR6 contracts in 2021 pounds varied between £54.23/MWh for AR4 rebids (projects were allowed to rebid 25% in AR6 of their total capacity as bid in AR4), and £58.87MWh for new bids. Uplifting using CPI, first to April 2024 then to January 2025 prices is x1.27 x 1.038 = x1.32, so the contract prices translate to January 2025 costs of £72/MWh and £78/MWh.
Current European TTF prices are €50/MWh of heat. Average UK gas plant efficiency is around 50%, so that is €100/MWh of electricity, which at a 0.84 exchange rate is £84/MWh. Add £4/MWh of variable O&M costs for gas plants and the total, without carbon costs, is £88/MWh for gas generation.
Current UK carbon costs are around £42/tonne, while EU ETS carbon costs are £68/tonne. UK carbon costs are only going one way - up, to match the costs of the EU ETS scheme.
1 MWh of gas generation creates half a tonne of CO2. So the carbon cost is likely to add between £21 and £34/MWh.
So UK gas generation is likely to costs £103-122/MWh with carbon costs, vs the latest offshore wind at around £72 or £78/MWh. UK onshore wind and solar costs are similar to the £72/MWh.
The cost of grid batteries to firm up wind and solar is now going to add around £15/MWh to the cost of power going through them. December 2024 BESS (battery energy storage system) bids for a 16 GW tender in China averaged $66/kWh or £53/kWh of capacity. We won't see such cheap prices in UK for a few years, but it is surely a pointer of the way grid battery prices are going for 2030. For, say, daily cycling over 10 years, 3,650 kWh going through each kWh of battery costing £53/kWh is 1.5p per cycle, or £15/MWh.
There are some lessons here:-
1. Even without carbon costs, it is cheaper to install wind and solar alongside gas and use them every time the wind blows or the sun shines. In either case you have to pay any depreciation costs of the gas plants. But the difference between the RUNNING costs of the gas plants WITHOUT CARBON COSTS, and the TOTAL cost of raw wind or solar a saving of £10-16/MWh from installing more wind. Effectively you get the CO2 reduction for free.
That applies until the point where we start having large surpluses of wind and solar.
2. WITH CARBON COSTS, raw wind and solar save between £25 and £50/MWh compared with gas generation at current prices. If grid batteries cost another £15/MWh, then wind, solar + batteries is likely to turn out cheaper than the cost of gas generation with carbon costs.
==> the NESO 2030 Clean Energy grid is likely to provide power to consumers which costs less than the current costs of UK gas power.
Sorry, this is just wishful thinking. I have looked at the accounts of several wind farms. I haven't seen one with index-linked borrowing. Moreover, as we saw above, the CP2030 plan more expensive even with 0% cost of capital and zero operations and maintenance costs.
The cost of drilling gas wells is included in the cost of gas.
Your costs of CfDs are wrong. See here:
https://davidturver.substack.com/p/what-the-ar6-auction-results-mean-for-consumers
And of course they miss out the costs of grid expansion.
Not 100% sure this is right. I think you are assuming that the infrastructure build that is going to cost all this money is to replace the current gas usage. The production of electricity is going to increase hugely in the next 20 years (if this insane project continues) - maybe by two or three times. Perhaps the infrastructure costs are to do that.
Most of the spend is on generation to meet their expectations of demand in 2030 which only about 10% higher than 2023. In fact the NESO report assumed a 20% reduction in residential demand. NG has announced plans for even more grid spending from 2030 to 2035.
I think the article is right.
Thank you so much for these facts and data. It inspired me to write to my MP as she has used her private member's bill to support this. The zero hour CAN website is full of expensive, emotive, slushy pathetic videos with pretty graphs that are completely made up. Fantasy!!!! I shared your facts with her. Let's see what happens.
The article next week is about the CAN Bill.
Gas is being described as back up and that by 2030 will only account for 5% of grid supply
This is absurd, wind and solar and the other second and third rate renewables are asynchronous, in other words uncontrollable feeding a system that needs minute control on an instantaneous basis.
As of now and the foreseeable future gas is and must continue to be the backbone of the grid without which it will fail. Even when wind is strong, gas does the balancing but will get harder the more the wind generated capcity increases.
During Covid with low demand and srong wind generation the National Frid ESO told some wind farms and a nuclear reactor to shut down just to ensure the grid had enough gas generation to keep it stable.
When are the children in charge of our electrical system going to understand that renewables are not an equivalent or a replacement for conventional generators and why is the Grid Operator not telling them so?
Despite valid ctritisism about Drax's 'green' credentials it is, with hydro, capable of providing essential synchronous and the other technical atributes other renewables lack.
NESO aim to demonstrate a 100% 'clean' and stable power system for a few short hours at some point in 2025 - i.e. zero transmission connected fossil fuels with stability coming from nuclear, hydro, synchronous condensers and renewables or interconnectors with grid forming inverter capability. This is a pre-cursor to running such a system in most hours by 2030. i.e. your concern is actively being addressed.
I am taking a look at what NESO are really up to and whether it is going to be plain sailing or whether it will turn out to be too risky. They have been extremely cagey about a frequency event on 22nd December 2023 that nearly turned into a disaster, with elements of cascading loss all the way from the Sellindge IFA1 substation to the Moray HVDC connector to offshore wind (which they only grudgingly acknowledged .8 months later). They have not inspired confidence that they understand what happened, and they have avoided a wider enquiry by claiming this was unnecessary because the frequency was below 49.5 Hz for 59.3 seconds rather than 60 seconds.
That event was rescued by Dinorwig which takes 12 seconds to go from spinning in air to full output. Batteries seem to have signally failed to respond properly (a key reason why there should be a more transparent investigation). At the kind of grid inertia levels they are proposing that would simply not have been fast enough, and we would likely have seen LFDD at 47.8Hz as happened in August 2019. Blackouts, if not system wide.
https://modoenergy.com/research/battery-energy-storage-frequency-event-interconnector-december-22nd-dynamic-containment
Electric mountain saves the day! I love that place....one of the finest achievements of the CEGB. The Great British Public has literally no idea how many times that place has saved their bacon...
Sorry, this is a fantasy. Zero fossil fuels may be achievable for a tiny fraction of the time but it does not address the key problem of what to do when there is a wind or solar drought. Even hydros can be unreliable in times of water shortage.
The narrative that we can pivot to a wholly renewable grid is just not true and actively misleading.
Think there’s a whole essay in that David...
https://www.bbc.com/news/science-environment-49567197
Quick question..what is the grid doing about phasing SF6. btw? 100 times worse than CO2? Asking for a friend...
I refer you to your previous comment about achieving 100 per cent renewables by 2030. I didn’t invent this narrative. So we still have gas in the system is an admission that actually that’s not achievable.
I’m not an opponent btw, just someone who wants to open this debate for public scrutiny. The people after all who will pay for this...
But thank you for replying, it’s nice to get the other point of view...
luckily that narrative only exists in opponents heads. NESO understand that we need to keep 35GW of gas in the system in the near term and try to 'clean' that dispatchable resource over time...
This is not confined to the UK, equal madness is happening in Ireland as well.
I am increasingly of the opinion that some of these schemes are actually just money making rackets, there is one proposed off the coast of Galway which will provide a measly 450 MW but will have huge environmental impact, but because of REGOs and curtailment payments will probably turn a tidy profit for its global investors. The website for this pushes the local angle heavily, but a bit of digging reveals that this is only a facade. The same companies are heavily involved in the UK renewables development.
I am at a bit of a loss as to whether these people are truly stupid or are they just pathological liars for their delusional cause. The UK now has the highest electricity costs of any major economy. If they keep it up, the UK will cease being a major economy.
Minibrain isn’t a critical thinker, he’s incapable of proper scientific analysis because his brain is fogged with ideology, a deeply ingrained ideology where anything is possible if you throw enough of someone else’s money at it - his whole life has been an ideological socialist existence and now he has been given the power to wield his utter madness - it won’t end well for him, socialism always fails, always and reality is already beating up his net zero nonsense - it and he will be consigned to the historical fails bin, it’s as inevitable as day following night
Hope it plays out this way but hes going to do a serious amount of damage that wont be easy to reverse before hes found out though.
When people like Milliband cannot bear to be wrong then everyone else is forced to suffer...immiserated by the man's hubris. An inflated ignoramus. Very good Article Mr T.
All you have to do is ignore the facts and make up figures that underestimate wind and solar costs, and then add an arbitrary carbon charge to double the estimated cost of gas.
Then you publish those figures as official estimates and have your consultants use them to prepare reports.
Then you can point to those reports as proof that wind and solar is cheaper than gas.
Isn't that the reason for the existence of DESNZ?
https://johnd12343.substack.com/p/the-uk-department-of-misinformation
Exactly what I was thinking but the only bit you missed is that when you do do that dodgy maths to make it work by putting in crazy assumptions for gas prices (when we take into account the known supply increases from US and Qatari LNG in around 2026-27) and a backsplved carbon price that would kill any industry in the Uk at all, you get given a CBE for your troubles in the New Year honours…
Miliband, like most politicians, is a liar. He knows he's lying. We know he's lying. He knows we know he's lying. He also knows there is nothing we can do about it.
We have a complicit media. The BBC won't challenge him as their pension funds are sunk into green and, well, it's a metro Left organisation. GB News does challenge regularly and the regulator is desperate to shut it down. ITV won't because it, again is a big, metro Left organisation. Channel 4 won't because it's completely insane.
A twitter post the other day summed up the problem: https://x.com/BartBlack1/status/1875511647483392337. The chap lamented the cost of electricity in the UK and blamed the energy providers. I don't blame him: he's just doing what officialdom tells him.
Folk may not understand that 'business passes all taxes on to customers' (to explain high profits) but the state uses that ignorance to it's advantage to put the onus back on the companies rather than explaining that, actually the climate change act and net zero idiocy is responsible for over two thirds of the cost of an unit of energy.
While folk are ignorant and the media deliberately refuses obfuscates where the costs come from Miliband will keep getting away with it. Hopefully the people of Doncaster can remove him, but it simply shouldn't be this way. The press should be as informed as you are, Mr Turver. They should challenge him and leave the audience informed that he is lying to them and his ideology the reason for high energy bills.
Sadly, that failure is the reason why the UK is in the mess it is. No one wants to say 'the emperor is wearing no clothes'.
Be very careful who you vote for!
I went from sad to mad at the thought of how much these collective idiots have damaged our western nations wealth.
First, we had ongoing political acceptance of globalized free trade that started to hurt about 1980 onward and then we got double crazy with climate change and its huge funding for no benefit to the citizen population…… anywhere.
Both are not wealth creation systems, but wealth transfer systems from us to the rest.
Let’s hope Trump puts a stop to this madness and mess in North America… (Canada will follow him with its next government).
Its clear that the only way to stop this crap is to stop the funding..
The only energy policy should be whatever is local and least cost with a longer term plan to improve pollution (CO2 is not a pollutant) If that means coal or gas and eventually nuclear then so be it.. but its clearly not wind and solar based on scientific facts.
Why didn’t the British government compare the cost of energy in France versus Germany.. it’s a huge difference.. why? ……nuclear versus W&S !!!
Why I changed my mind about nuclear power | Michael Shellenberger | TEDxBerlin
https://www.youtube.com/watch?v=ciStnd9Y2ak&t=536s
You are entitled to your opinion... I have mine.
What scares me is how Mr Millibrand has the power to do what he is doing. I too worked in the industry sadly not an engineer but on the regulatory side of the business. I joined when the industry was first de nationalised and it was quite an exciting time. I learnt do much from everyone I worked with engineers, manager ( in those days they were all engineers too), accountants, customer service experts and the guys who went out working on the wires and dealing with customers on a face to face basis. There was an expectation that things really were going to improve and put the customer at the centre of things. Trouble is regardless of what all the experts say customers just to be able to flick a switch and the light/cooker whatever comes on, and they want the cost to be low. The only customers who regularly contacted the company were those who couldn’t pay the bill or who had experience an outage. The Regulator, OFFER in those days was full of idealistic young graduates and bored civil servants. They wanted companies to respond to their customers wishes. The thing is for most customers that was what was happening but for the rest what they actually needed was simply more money or better budgeting skills. Not something within our remit, however the regulator now Ofgem kept on trying. I have seen engineers very carefully going through the Physics of why the proposals coming through the regulator and the govt would physically not work and having to repeat this at meeting after meeting. This was before the economic case was considered. This has been going on for decades. Companies in my view essentially gave up less and less of the managers were engineers and so fewer had any understanding of the physics of their business. The regulator had the ability to trash the value of shares where companies stood up to them on the engineering front. There is no longer any competitive market in the UK as the govt through the regulator sets the prices and now a madman is redesigning the network and power generation to a model that can not work. How has this all happened? We had a better system in place before de nationals that would have stopped Milliband a man who has no engineering qualifications, no accounting qualifications and no detailed industry experience.
What a wonderful set of historical inside insights. They ring very true. We could really do with returning the regulator to the purpose of fighting for consumer interests instead of working out how to charge them for the net zero programme on the basis that nanny Miliband knows best. It is a travesty that DESNZ are now consulting on the future role for OFGEM, meanwhile OFGEM are busy in the fantasy world of pretending that net zero can be delivered with storage with durations of a few hours as they try to work out a subsidy scheme for uneconomic storage with durations over 4 hours:
https://www.current-news.co.uk/ofgem-call-for-input-on-ldes-scheme-shows-evolving-requirements/
The DESNZ consultation is a bid to expand the regulatory role of OFGEM:
https://www.gov.uk/government/calls-for-evidence/review-of-ofgem-call-for-evidence
A discussion summary here:
https://www.osborneclarke.com/insights/uk-government-launches-review-ofgem#:~:text=Consultation%20points%20towards%20greater%20regulatory%20powers%20and%20ability,for%20evidence%20on%20a%20review%20of%20Ofgem%27s%20powers.
Perhaps Elon would gove us one of his Mars rockets so we could pack in Ed & Co and send them off. We could let them take their fairy dust to aid survival - not!
Thanks David, the numbers are really alarming and daunting.
For my own account of the absurdity of the attempt to transition to unreliable energy I just chant the ABC of intermittent energy and conclude that it simply can't work.
What we have got from trillions of dollars of expenditure worldwide is more expensive and less reliable power with massive collateral damage to the planet.
https://newcatallaxy.blog/2023/07/11/approaching-the-tipping-point/
ABC of intermittent energy production.
A. Input to the grid must continuously match the demand.
B. The continuity of RE is broken on nights with little or no wind.
C. There is no feasible or affordable grid-scale storage to bridge the gaps.
Conclusion. The transition to wind and solar power can’t proceed with current storage technology.
Happy New Year David and readers and a fine substack item to kick off the year.
Is it not the case that the CAPEX will be largely privately funded and the cost of it recovered over 20+ years through adjustments to TUoS/DUoS charges of the Transmission and distribution operators so the yearly impact will be lower than your model shows?
Also there will be some benefits from expanding transmission through lower constraint charges albeit thats going to be post 2030 and by then I can see them being c5B pa. Thus Millibrain may be able cite by 2030 hes saved us a few quid on the bills but they will have already gone up by well over £300 pa by then anyhow just from Balancing and Capacity Charges.
The other thing that struck me right from the outset of this blog is your first statement that says Millibrain refers to "Wholesale" price of electricity, rather than the system price, being lower than gas . Given we can see reducing strike prices being achieved on CfDs it is entirely possible that as the ROC/FiTs roll off the nett cost of pure renewables, not the ghastly biomass, will end up lower than gas? At the consumers meter that wont be the case of course but is this there ruse?
This is not an attempt to show what happens to bills, but to compare the cashflows of each model. However, the private money will need to be financed, so that £28.8bn of O&M and residual gas will need to be financed each year from 2030. That comes to about £1,000 per household which is in the same ballpark as my earlier estimates of the impact on bills.