The Alternative Green Energy Thread

JKenH

Is HPC good value compared to wind?

Just been thinking about HPC and current electricity prices relative to the CfD strike price. As HPC is running more or less continuously and consistently then as long as electricity prices remain above £109 (HPC strike price in today’s figures) then HPC pays back money. 

During the last 3 months of last year wholesale day ahead prices averaged £191 which would produce a profit of £82/MWh on the HPC CfD. HPC would have generated 3260 MW x 90% capacity factor x 24 hrs x 90 days  = 6.34 TWh x £82/MWh = £520m.

By comparison during the last quarter of 2021 wind farms paid back £39m on generation of 21.29 TWh or an average of £1.83/MWh. 

Ah, you may say but the old CfD contracts had much higher prices. True but it was against that backdrop that the HPC strike price was set.

Yes, but wind strike prices have fallen since then. True but these £50/MWh (today’s prices) contracts are not due to begin generating until 2023/24. When they do there will be a lot more wind generation and on the days they are performing well there will be even more wind generation than on good days currently and prices will fall. 

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Because more wind capacity squeezes out gas generators, when the wind isn’t blowing the price rises are greater as the remaining supply is squeezed but wind turbine operators can’t take any real advantage of that as their output is very low. HPC’s output remains steady and so benefits from the higher prices and hence is able to return more under the CfD contracts.

k6chris

JKenH said:

Is HPC good value compared to wind?

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Excuse  the very dumb question - what happens to the excess energy???

Cardew

k6chris said:

JKenH said:

Is HPC good value compared to wind?

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Excuse  the very dumb question - what happens to the excess energy???

The simplistic answer is that If the excess cannot be used, stored or exported then generating sources, possibly including wind, will will reduce their output.  

JKenH

k6chris said:

JKenH said:

Is HPC good value compared to wind?

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Excuse  the very dumb question - what happens to the excess energy???

Excellent question, not at all dumb. I asked that very same question on a visit to West Burton coal fired station around 10 years ago and I have myself asked it on this forum. No one could give me a satisfactory answer but the grid is managed in such a way that it should never happen. 

I do remember many years ago dealing with some damage to electrical equipment when the supply strayed outside the voltage and frequency parameters set. 

QrizB

k6chris said:

Excuse  the very dumb question - what happens to the excess energy???

Gross imbalances are corrected as Cardew says; generators are switched on or off.

Small imbalances result in variation to the grid voltage and frequency; increases cause increased consumption, decreases cause decreased consumption.

ABrass

JKenH said:

Is HPC good value compared to wind?

Just been thinking about HPC and current electricity prices relative to the CfD strike price. As HPC is running more or less continuously and consistently then as long as electricity prices remain above £109 (HPC strike price in today’s figures) then HPC pays back money. 

During the last 3 months of last year wholesale day ahead prices averaged £191 which would produce a profit of £82/MWh on the HPC CfD. HPC would have generated 3260 MW x 90% capacity factor x 24 hrs x 90 days  = 6.34 TWh x £82/MWh = £520m.

By comparison during the last quarter of 2021 wind farms paid back £39m on generation of 21.29 TWh or an average of £1.83/MWh. 

Ah, you may say but the old CfD contracts had much higher prices. True but it was against that backdrop that the HPC strike price was set.

Yes, but wind strike prices have fallen since then. True but these £50/MWh (today’s prices) contracts are not due to begin generating until 2023/24. When they do there will be a lot more wind generation and on the days they are performing well there will be even more wind generation than on good days currently and prices will fall. 

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Because more wind capacity squeezes out gas generators, when the wind isn’t blowing the price rises are greater as the remaining supply is squeezed but wind turbine operators can’t take any real advantage of that as their output is very low. HPC’s output remains steady and so benefits from the higher prices and hence is able to return more under the CfD contracts.

hornsea 2 is generating at £57.50 now.

JKenH

k6chris said:

JKenH said:

Is HPC good value compared to wind?

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Excuse  the very dumb question - what happens to the excess energy???

A couple of articles here discuss some of the measures National Grid can use in the event of supply exceeding demand. 

Concerns have been raised over the deliberate wasting of energy to provide flexibility after load banks – devices for creating dummy loads to test power supplies such as backup generators – were accepted into an ad hoc service to increase demand on the power grid. The load banks were entered into the Optional Downward Flexibility Management service introduced by National Grid Electricity System Operator as an emergency measure to deal with low demand on the power grid over the summer of 2020 as a result of the coronavirus pandemic.

Energy networks Archives - Page 404 of 405 - Utility Week

The Optional Downward Flexibility Management (ODFM) service is to be reinstated this summer, with National Grid ESO now consulting on its terms and conditions.

The service was first introduced in 2020 to help manage the significantly lower than average demand caused by the COVID-19 pandemic, offering small scale renewable generators additional commercial agreements to reduce their output.

Limejump told Current± that on 10 May [2020] up to 238MW of embedded generation was requested to shut down between 4am and 7am.

The service was wound down on 25 October 2020, having been dispatched on five separate occasions. During these, NGESO sent instructions to a value of £12.7 million and settled just over £11.9 million after applying performance measures.

ESO readies for low summer demand with new Optional Downward Flexibility Management consultation

2nd_time_buyer

JKenH said:

Is HPC good value compared to wind?

Just been thinking about HPC and current electricity prices relative to the CfD strike price. As HPC is running more or less continuously and consistently then as long as electricity prices remain above £109 (HPC strike price in today’s figures) then HPC pays back money. 

One issue with HPC is the political costs of the timescales. The government is no doubt wary about years of overrun and overspend for distant benefits (like HS2). In the meantime the energy [cost] environment could change and they could become a white elephant.

Politically, it is probably most advantageous to be actively pursuing HPC, whilst not committing any serious finance.

JKenH

ABrass said:

JKenH said:

Is HPC good value compared to wind?

Just been thinking about HPC and current electricity prices relative to the CfD strike price. As HPC is running more or less continuously and consistently then as long as electricity prices remain above £109 (HPC strike price in today’s figures) then HPC pays back money. 

During the last 3 months of last year wholesale day ahead prices averaged £191 which would produce a profit of £82/MWh on the HPC CfD. HPC would have generated 3260 MW x 90% capacity factor x 24 hrs x 90 days  = 6.34 TWh x £82/MWh = £520m.

By comparison during the last quarter of 2021 wind farms paid back £39m on generation of 21.29 TWh or an average of £1.83/MWh. 

Ah, you may say but the old CfD contracts had much higher prices. True but it was against that backdrop that the HPC strike price was set.

Yes, but wind strike prices have fallen since then. True but these £50/MWh (today’s prices) contracts are not due to begin generating until 2023/24. When they do there will be a lot more wind generation and on the days they are performing well there will be even more wind generation than on good days currently and prices will fall. 

This is the fundamental problem with wind CfD contracts; generally when the wind is blowing as we expect it to the price drops and when prices are high it is usually because the wind isn’t blowing very much. Sometimes when there is a lot of wind the prices can be negative. (The relationship of price to output is not linear. It only takes a small excess to make prices go negative.)  The more wind turbines we have the more excess wind and lower prices.

Because more wind capacity squeezes out gas generators, when the wind isn’t blowing the price rises are greater as the remaining supply is squeezed but wind turbine operators can’t take any real advantage of that as their output is very low. HPC’s output remains steady and so benefits from the higher prices and hence is able to return more under the CfD contracts.

hornsea 2 is generating at £57.50 now.

I note you are quoting 2012 strike prices to compare with the current (index linked) price I have quoted for HPC.

I believe Hornsea 2 was in a later allocation round. Hornsea 1 which would have been more contemporaneous was around £175/MWh in today’s prices.

The Government report on value for money says.

Conclusion: HPC is within the range of the costs of alternative large-scale low- carbon generation technologies in the 2020s. The HPC Strike Price (£92.50/MWh) is:

 towards the bottom of the comparable cost range of first-of-a-kind commercial carbon capture and storage (£77-249/MWh) for delivery in 2025;

 towards the bottom of the comparable cost range of offshore wind (£81- 132/MWh);

 towards the top of the comparable cost range of gas Combined Cycle Gas Turbines (CCGT) (£47-96/MWh); and,

 above the comparable cost range of large-scale solar Photovoltaics (PV) (£65-92/MWh) and onshore wind (£49-90/MWh).

7) In order for large-scale solar and onshore wind to produce the same amount of electricity provided by HPC, there would be significant upgrades to the grid required (such as connection and planning costs) as well as increased costs to keep the system in balance.

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/407059/Contracts_for_Difference_-_Auction_Results_-_Official_Statistics.pdf

 

JKenH

2nd_time_buyer said:

JKenH said:

Is HPC good value compared to wind?

Just been thinking about HPC and current electricity prices relative to the CfD strike price. As HPC is running more or less continuously and consistently then as long as electricity prices remain above £109 (HPC strike price in today’s figures) then HPC pays back money. 

One issue with HPC is the political costs of the timescales. The government is no doubt wary about years of overrun and overspend for distant benefits (like HS2). In the meantime the energy [cost] environment could change and they could become a white elephant.

Politically, it is probably most advantageous to be actively pursuing HPC, whilst not committing any serious finance.

As you say the energy [cost] environment could change. It is in fact constantly changing and it is easy for people to criticise HPC with the benefit of hindsight.

I know everyone is optimistic about the next CfD allocation round and the expectation that prices will drop even further but a couple of major players in the wind turbine world are already saying that it is hard to make money on wind farms now. I don’t see why wind and solar won’t be subject to the laws of supply and demand and the vagaries of the market like any other technology.

One point that is played down by those arguing solely for wind/solar/storage is the benefit of a diversity of energy sources. On their day wind and solar can produce some exciting numbers but other days they are hugely dependent on other technologies to help out. Wind and solar will give us an exciting ride but are not all that reliable and I have already argued that storage is not commercially viable on the scale we need to support a renewables only grid. In fact I put some figures up as to just how much this might cost but no one has challenged them or put forward alternative costed scenarios as to how we would have got through the last few days without our current generation mix.