OT: Scale of electricity generating payments

Jan 09, 2025 Last reply: 1 year ago 14 Replies

From the Torygraph...


Households paid the equivalent of £2m an hour to gas-fired power stations on Wednesday after low winds and freezing temperatures left electricity grid bosses scrambling to keep the lights on.



As freezing weather swept into the South East, the National Energy System Operator (Neso) warned that it expected power supplies to become particularly tight between 4pm and 7pm.



The crunch forced grid operators to pay huge sums to gas power plant owners to keep them running. The cost will ultimately be borne by households and businesses through their bills.



At one stage, they agreed to pay the Rye House power station, in Hertfordshire, the equivalent of £1.8m per hour, transparency data shows.



Three gas-fired units in Connah’s Quay, North Wales, were also paid a combined £2m per hour.



Neso declined to comment on the payments.



It comes as cold weather is expected to spark increased electricity consumption as more people stay indoors, watch television and use their gas or electric heating.



At the same time, a sharp drop in wind power and low availability of power interconnectors with Europe is also putting more pressure on the grid.



In response, Neso has issued a warning to electricity generators and suppliers that it is looking to bolster supplies.



There is no suggestion there will be blackouts or that power cuts are “imminent”, a spokesman said.



But Neso added this morning: “In the short-term, we would like a greater safety cushion between power demand and available supply.” ===================================================



Gotta lurve those renewables. No wonder fossil duel companies love them.


<greenbollox> So what’s the problem? We just need more wind turbines!<greenbollox>

It sounds a lot, but spread across the 10s of millions of households in the UK, it's not much each.

The way the electricity racket is set up ensures that every producer gets the same rate, so they all will have benefitted from this.

“Insight

Published Thursday, 14 September, 2023

Under the ‘marginal cost pricing system’, the wholesale price of electricity is set by the most expensive method needed to meet demand (usually burning gas).

[…]

In each half-hour trading period, each electricity generator bids the price it will accept to generate electricity, according to how expensive the electricity is to produce.

The bids are accepted in ‘merit order’ until the demand for electricity is met; the cheapest first, and the most expensive last. However, the price of all units of electricity is set according to the bid price of the most expensive unit needed to meet projected demand: this is the ‘marginal cost’.”

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"This is known as the ‘spot market’. Their share of trades has fallen over time and is thought to be around 30% in 2022 (PDF)."

Was the spot market not being used on the night in question?

It’s in winter where we have peak demands and the greatest use of the spot market. It might be 30% overall, but that disguises how much it’s used in critical periods, with consequential £benefit to the producers.

Total renewable subsidies are now costing us about £2,3bn a year. That's a £100 a year on every household. Plus the cost of running all the backup - its probably a tax of about £400 per household altogether. That could have gone on the NHS.

And the fact you're building up a bit of battery capacity by the year 2030, that will have an impact on how much a spot market will be called into play.

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"short-term flexibility"

The smallest battery banks, solve high frequency grid stability.

As the banks become a bit larger, they prevent the provider from hitting the spot market so often and taking a raping. That used to happen here, where the spot market charged 100x the cost of producing the power, for a single extra megawatt. The activity that was happening at 8 Am in the morning, was having a measurable effect on monthly bills.

That changed, when our "generating margin" improved. Partially it was time of day billing, that stopped the demand at 8AM. And it was the 8 AM demand for power which was causing a visit to the spot market, each and every day.

You can trim off those incidents (the inability to forecast with the required accuracy), by having the right resources to do it.

The Australians were quite happy with their first battery, and they got more applications out of it than they were expecting.

This is market efficiency at work -- recognizing a problem, plugging it relatively cheaply.

This has nothing to do with building a ten day battery. If the wind stops blowing, you're still f***ed. But in a non-exceptional day, a bit of battery bank can cut out the extravagance of a visit to the spot market.

Keeping too much spinning reserve isn't good either. You're still paying to do that, if that is your approach instead.

Paul

I assume it was being used. Has someone suggested it was not?

To some producers, not "every producer". Exelon seem to suggest 4Gw from the spot market in recent peaks

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AIUI most electricity is purchased in terms of long term contracts, but if those fail to deliver, or demand exceeds contracted amounts the spot rate is simply raised until someone responds and says 'I will generate (or shed) that much electricity for that price'.

And by some stupidness of CfDs wind farms get paid the same for that period.

If they do, the CfD would require them to pay the excess over their strike price to the Low Carbon Contracts Company (DESNZ).

That website has only an ‘Accept All’ button for cookies, so I didn’t open it any further.

I don’t think the term ‘stupidness’ applies; I think it was deliberately set up that way. Al Capone would have recognised it as a racket.

If you click on 'VIEW COOKIES LIST' there is an option to "DECLINE ALL" (even if it is impractical to read the list of cookies).

That’s a shonky way of getting people to ‘Accept All’.

What’s wrong with having a ‘Reject All’ button there as well?

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