23 Comments
Sep 24, 2023Liked by David Turver

Renewables only look cheap, while they are relying on gas as a backup for their unreliability. It is like saying diamonds are cheap - without factoring in the costs of cutting and setting.

To get a true cost for renewables, you need to factor in energy storage - ie: backing up 70% of the renewable output for about 20 days. That is a lot of storage, and will cost a huge amount of money. But renewables cannot operate as a complete system, without it.

Cost storage into renewables, and suddenly they will triple in price.

Ralph Ellis

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I think you are underestimating costs for renewables financed by ROCs. If I look at the data from here:

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1184074/ROCs_Sep_2023.ods

then the financial year information allows me to calculate the average number of ROCs per MWh for various technologies. It's 1.0 for onshore wind, 1.9 for offshore wind, and about 1.45 for solar. The value of an ROC is boosted above the cashout price because the cashout pool is redistributed to those who submit genuine ROCs. Whilst real ROCs can be held over from a previous year to help meet the required ration - a speculation that may make sense in the high inflation environment, since the cost is the cashout value of the year hoarded, plus the recycle income forgone in that year, which may be less than the indexed price plus indexed recycle value less interest cost of the differential cashflow, giving a profit - it's a good starting point to assume that there will be a similar recycle value this year compared with last. With the current cashout price being £59.01/ROC we're looking at £65-66/ROC as overall value.

Add on the market price - even discounting it a little to allow for the fact that wind tends not to capture high prices when wind is scarce - and we get say £75/MWh base value, plus £65 for onshore wind, to make £140/MWh; plus £123.5/MWh for offshore wind making £198.5/MWh, and plus £94.25/MWh for solar making £169.25/MWh.

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Logic is a bit difficult to follow so excuse my slowness but are you simply arguing that the price paid for renewables will go up by inflation, or by more than inflation?

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Here's a chart showing production weighted wind prices by segment, with the overall average compared with day ahead market prices.

https://uploads.disquscdn.com/images/8255dfeccc15c7d1ea7f6fb2adfe6d6cae99f32f1a2e3d7d7a3d686d96a50abd.png

While the premium for average wind over market did decline during the price spikes last year, it was never eliminated. Since April, a fresh round of large indexation increases on ROC and CFD strike prices has widened the premium, which is further increased because the average CFD yields more than market price again, rather than less as was the case during the price spikes.

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I get that you don’t like wind and solar. What should the UK be doing instead?

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