New North Sea windfarms to get multi-national connections...

I'm wondering how the subsidy and support arrangements will work?

Currently in GB, windfarms bid into the Contract for Difference (CfD) auctions to secure an inflation-linked, fixed price contract for their generation, paid for by GB consumers, on the basis that all the power is flowing into GB, benefitting GB consumers.

Of course if that wind farm is now connected to two or more countries, with the power potentially flowing to different countries, varying continuously depending on wholesale prices, that's a much more complex question of how to determine where the power should flow, how that power should be valued and how the subsidy costs should be apportioned between the different countries and their consumers.

The fundamental issue is that the electricity supply system is, as a whole, a system, whilst economically and politically it is treated as a set of many disparate parts.  That means that wind generators do not pay the costs of having dispatchable plant available to cover for when nature doesn't provide or the cost of ensuring the grid has sufficient inertia to accommodate their low inertia generation.  Nor do wind generators have to worry about the fact that that dispatchable plant is now often designed to run intermittently which in turn means that those plants are often less efficient .  The ultimate example of that is the increase in big OCGTs in the UK.  Unless we want to live in a country where power is only available at the flick of a switch if the wind is blowing (despite the governments best efforts to lead us that way), then all of this hides the true economics of different energy sources.

Note that I'm deliberately not offering a view of whether wind is a good choice.  The economics are complex and sufficiently opaque that the man in the street stands no chance of having an informed view - that tends to lead to poor government choices as well.

I dare say that you are correct. How disappointing!

Customers in the UK never even get the benefit of cheap wind energy on a windy day. So long as there is one gas fired power station running, the price of electricity is set by the price of gas.

The current neoliberal economics fails to account for 'externalities', such as climate change, so we are stuck with these arguments.

Simon Barker said:

Customers in the UK never even get the benefit of cheap wind energy on a windy day. So long as there is one gas fired power station running, the price of electricity is set by the price of gas.

For wind power contracted under CfDs, the price is fixed by their CfD agreement, it isn't affected by the market price. While it may be sold at the market price, set by the marginal power source (a CCGT, or OGCT, or even power across a European interconnector, of BESS etc), the actual cost to the consumer is the CfD price, because any surplus is recovered through the CfD scheme and goes back into the CfD pot, reducing costs at other times.

Where this criticism is valid, is for the earlier/older renewable generation which is subsidised under other schemes like Renewables Obligation and Feed in Tariffs, which pay a form of top-up on top of the wholesale price. But these schemes are now closed to new capacity, and all of the big projects in recent years and into the future are contracted under CfDs.

A lot of journalists don't appear to be aware of how the CfD system operates, so you see lots of articles blaming the cost of gas for pushing up all electricity costs, when in reality that is not the case. 

DShutt said:

The fundamental issue is that the electricity supply system is, as a whole, a system, whilst economically and politically it is treated as a set of many disparate parts.

Agree, it is the System Cost which is crucial, but unfortunately much of the debate in Britain takes place without awareness of this, so people use and compare the LCOE figures which represent just the cost of the generation, without that wider analysis of what the cost of the energy is once all of the costs of integrating it into the system are included, and the impacts on the costs of the wider generation mix.

The LCOE figures are widely used and compared, which give a very misleading view of the actual costs to the consumer once all the other costs are considered. They also distort public perceptions of what is best value for money - for example, where renewables LCOE are lower than say a baseload nuclear plant LCOE, but where the actual system cost and cost to the consumer could well be the reverse.

It's really quite an important topic, the area where the IET with its remit ought to be getting involved, to bring that consideration of the wider topic of system costs to help inform public debate and reporting.

Simon Barker said:

Customers in the UK never even get the benefit of cheap wind energy on a windy day.

Isn't the problem that it is difficult (impossible?) to store leccy in the required quantities?

Will we have red flags hoisted (OK messages by phone) announcing practically free energy to EV owners when there is surplus capacity? I doubt it; and even if we did, would it make any significant difference?

Net zero by 2050, or net zero ever? What tosh!

Nothing to do with net zero.  It's a stupid auction system set by the government and never fixed.  If it's a windy day, wind energy is dirt cheap.  If it's not windy, we don't have wind energy.

Under our auction system, every half hour energy providers bid a price that they are prepared to supply at.  It will actually take many providers to cover the country's needs, so the grid keeps adding energy providers, starting at the cheapest, until they have enough.  Then the price for all the electricity we get is set at the highest price they accepted.

Since we don't have enough wind farms or nuclear to supply the country, we always end up requiring at least some gas.  So the poor consumer gets no benefit at all from cheap wind energy. The wind farm operators get all the money.

If the energy system worked for the benefit of the consumer, then electricity would be cheap on a windy day and more expensive when it isn't.  Instead, it's expensive all the time.

The whole "it's the fault of net zero" is fossil fuel propaganda.  They hate the idea that we might one day stop buying their products, and try to poison the debate to prevent it happening.  If they can stop wind farms, we have to burn fossil fuels whatever they cost.

Simon Barker said:

Since we don't have enough wind farms or nuclear to supply the country, we always end up requiring at least some gas.  So the poor consumer gets no benefit at all from cheap wind energy. The wind farm operators get all the money

If the wind farm is contracted into the CfD scheme, which most of the recent and new ones are, then this is incorrect, the wind farm operator does not get all the money, they pay the excess above the CfD price back into the scheme, which then goes back to the consumer through lower CfD levy costs.

The system is complex, but you need to understand that detail to get the full picture of what is actually going on, in terms of prices, cash flows and cost to the consumer.

Chris Pearson said:

is difficult (impossible?) to store leccy in the required quantities?

This conflates lots and lots of factors.

There's the "inertia" falsehood [3-10 seconds of generation], there's the 'half hour' prediction guarantee gaps (wind lasting extra periods), there's hourly load shifting (see home batteries cooking dinner/tea instead of the grid), there's diurnal variations, seasonal variations, extreme wind droughts. The quantities are different in each case with various different fallbacks. Pumped storage may not be the 100% answer (Burgess P.) but will be part of the mix, along with a range of other techniques.

It reminds me of the majority of "Heat pump" problems which are often based on misusing grannies living practices (drying clothes on radiators, draughty homes, switching off radiators when not in the room, etc.). The same problem style is happening with the leccy generation system, doing things the way grandad did (had such stories from mine).

At least nowhere needs any backup generators because the regular leccy is so reliable...

Chris Pearson said:

is difficult (impossible?) to store leccy in the required quantities?

This conflates lots and lots of factors.

There's the "inertia" falsehood [3-10 seconds of generation], there's the 'half hour' prediction guarantee gaps (wind lasting extra periods), there's hourly load shifting (see home batteries cooking dinner/tea instead of the grid), there's diurnal variations, seasonal variations, extreme wind droughts. The quantities are different in each case with various different fallbacks. Pumped storage may not be the 100% answer (Burgess P.) but will be part of the mix, along with a range of other techniques.

It reminds me of the majority of "Heat pump" problems which are often based on misusing grannies living practices (drying clothes on radiators, draughty homes, switching off radiators when not in the room, etc.). The same problem style is happening with the leccy generation system, doing things the way grandad did (had such stories from mine).

At least nowhere needs any backup generators because the regular leccy is so reliable...