Energy news in general

Scot_39

You cannot switch overnight from a national balancing system and generation location choice - based on several factors - 

but arguably at least in past - 

partly fear / caution (nuclear placed 10s if not 100s of miles from major population centres in past - we have no ideas where Miliband might allow future SMR type or other large) 

partly nimbyism nearly a decade defacto ban on on shore wind in England - years of argument about locations of new nuclear like Hinkley and Sizewell - with any SMR arguaments to come) 

to a regional based model.

I wonder for instance - how much demand their really is in the area around Dounray.

Or how many renewables suppliers would be rushing to install any future - and even in past a large chunk of the current c15GW on wind in Scotland - when they might well be faced with pricing set in part for a locally saturated market.

Its an idea - but one that would take decades to overcome decades of past policy - without being extremely divisive.

{oops me and my returns between paragraphs)

mmmmikey

masonic said:

mmmmikey said:

masonic said:

Chrysalis said:

mmmmikey said:

Chrysalis said:

HillStreetBlues said:

The_Green_Hornet said:

Ofgem boss calls for truce in row over electricity market overhaul

Jonathan Brearley wants polarisation to be replaced with an ‘honest conversation’ about zonal pricing

The head of Britain’s energy regulator has called for an industry truce in the deepening row over plans to overhaul the electricity market.

A decision on whether to replace the country’s single electricity market with several market zones, each with their own price, is expected within weeks.

It could mean that homes in areas where there is an abundance of electricity generation will pay lower prices than those in areas of high demand and low generation capacity.

Ofgem boss calls for truce in row over electricity market overhaul | Energy industry | The Guardian

So those in Mid to South Wales will be subsidising those in London based on GB6  Who on earth cane up with those zones?

GB5 is horrific a tiny portion of coastline.  East midlands "might" be saved as its part of Norfolk region, GB5 is west midlands by look of it.

GB3 should be merged with GB4, and GB 5,6,7 should all be one region.

Octopus are wrong to push for this in my opinion.
It seems an attempt to shortcut the real problem which is lack of national transmission capacity.

Not entirely sure on east midlands, Leicester and derby might be in the cursed GB5.

Was there a public consultation on this, or just suppliers only?

Don't the zones just reflect the grid infrastructure - i.e. there's no political element to their identification, they just reflect what we've got? So merging zones would involve substantial investment in pylons etc. and splitting them makes no sense in the context of the proposal for zonal prices. Also, the numbers given are the predicted 2025 numbers so presumably don't effect the massive investment in solar that's going on in much of the GB5 area (and I guess elsewhere?), and zonal pricing would certainly be a tool that could be used to stem some of the blatant NIMBYism that's hampering progress.

I have to say that my initial reaction is to not like the idea, but having seen and understood the argument in favour of zonal pricing I've changed my mind and haven't seen a compelling argument against it.

Yes it needs investment in pylons, something that wasnt a problem when the grid was built.   Thats what they trying to sidestep as a shortcut.  The argument against is the inequality of energy cost and the distorted affect on industry, maybe you dont think things like that are wrong.  At the very least they need to make the Zones more fair, GB5 is ridiculous.

It seems like they need would need to implement with protections on consumer tariffs in place. Price cap should start out at the status quo, and progressively over years be lowered to be based on the cheaper zones with a requirement for the market to invest in levelling the playing field.

But I cannot see the logic in the GB4-6 sandwich in the east. Surely energy from the cheaper regions can flow into those few miles between them without inordinate costs.

Hi @masonic I think the logic you can't see is lost in the mists of time and relates to the location of power stations that have since been decommissioned. The illogical layout of the grid in relation to current generation and consumption is one of the things that causes the problem that zonal prices seeks to alleviate.
As far as the work that is needed between the Humber estuary the Wash is concerned, that is well understood and in the final stages of planning and consultation. Even if the Secretary of State for Energy overrules the local objections it's still going to be years before it happens.
As I understand it, zonal pricing isn't considered to be an alternative to the investment the grid so desperately needs. It's more a question of being something that can be done quickly with legislative changes that will start reducing energy costs whilst the grid improvements happen.

It seems like the source of my misunderstanding is that I originally thought that energy generated by wind turbines in one zone could be utilised in a different zone through the grid. But if I am understanding correctly, that connectivity actually doesn't exist and it is actually only generation within the zone that can be used to deliver energy to properties within the zone. So we don't in fact have a "national" grid in the way that I thought? It is not a simple case of routing the energy via pylon to where it is needed from anywhere nationally (albeit with some transmission loss).

If that's right, then I can see the sense in it. I think there would need to be some protections, perhaps in the form of a revamped EPG so that we don't end up with end users being penalised by postcode. This is more about controlling the price energy suppliers can buy energy and sell it on to customers. The customers themselves could all have a gain in the savings through some sort of rebalancing mechanism. If energy costs in one region of the UK are much higher, say 50% more expensive, than another region, then that could be very harmful at a local level and the residents of affected regions may have no capacity to make things any better. It may make sense to leave some differential to counter NIMBYism, but unmanaged, the differences could be quite stark and wounding.

Taking the East Midlands example, there used to be a lot of generation from coal, but the last power station in Ratcliffe-on-Soar shut down last year. There were initially plans to use the site for nuclear (albeit experimental "fusion" IIRC), but that's been mothballed and now I think it's going to be incinerating rubbish. Why not stick a couple of GW of nuclear there, albeit that will probably take 20 years. There seems little chance of the region building capacity up to the levels possible in GB1-2.

I don't think it changes the sense of what you're saying but my understanding is that it's not so much a case of having to use all the wind energy (for example) within the zone. The zones are connected, it's just that connections often aren't big enough to support sufficient energy transfers between zones.

Re-using old coal fired locations for nuclear makes sense to me, I'm just not sure what the constraints are in terms of water supply and safety. IIRC all the Magnox generators were at coastal or estuary locations but I could be wrong and/or might not be an issue with new nuclear technology.

One thing I have been struck by is just how high passions seem to run now when it comes to sitting solar farms, new pylons and the like. In my part of Lincolnshire there are plans for a fairly minor substation adjacent to an existing line of pylons in the middle of a field a mile or so from the nearest house. If they popped in and put it in overnight when no one was looking and planted a few trees round it I suspect it would be months before most people noticed. It's not overlooked from anywhere (Lincolnshire around here is largely flat) and the proximity of RAF bases means it's only flown over by a few military aircraft so you won't even be able to see it if you buy a helicopter. But the local reaction has been fierce with door to door NIMBY hit squads strong arming old folks into signing petitions and regular protests group meetings in the village hall. It all presents a massive hurdle to cross before essential upgrade work can be done.

debitcardmayhem

@masonic Thinking about Ratcliffe , I wonder how many PV panels and turbines could be put there, it has after all got ready made connections to the grid, is that just me being wishful thinking and illogical ?
No one can jump on the nimby wagon if it happened.

masonic

mmmmikey said:

I don't think it changes the sense of what you're saying but my understanding is that it's not so much a case of having to use all the wind energy (for example) within the zone. The zones are connected, it's just that connections often aren't big enough to support sufficient energy transfers between zones.

Re-using old coal fired locations for nuclear makes sense to me, I'm just not sure what the constraints are in terms of water supply and safety. IIRC all the Magnox generators were at coastal or estuary locations but I could be wrong and/or might not be an issue with new nuclear technology.

One thing I have been struck by is just how high passions seem to run now when it comes to sitting solar farms, new pylons and the like. In my part of Lincolnshire there are plans for a fairly minor substation adjacent to an existing line of pylons in the middle of a field a mile or so from the nearest house. If they popped in and put it in overnight when no one was looking and planted a few trees round it I suspect it would be months before most people noticed. It's not overlooked from anywhere (Lincolnshire around here is largely flat) and the proximity of RAF bases means it's only flown over by a few military aircraft so you won't even be able to see it if you buy a helicopter. But the local reaction has been fierce with door to door NIMBY hit squads strong arming old folks into signing petitions and regular protests group meetings in the village hall. It all presents a massive hurdle to cross before essential upgrade work can be done.

Yes, I think a water source is needed. The Ratcliffe site is near the river Soar, which might be sufficient. I think in the continent there are sites that are inland but have a nearby water source. But this is probably pie in the sky mainly because of the time needed to construct.

debitcardmayhem said:

@masonic Thinking about Ratcliffe , I wonder how many PV panels and turbines could be put there, it has after all got ready made connections to the grid, is that just me being wishful thinking and illogical ?
No one can jump on the nimby wagon if it happened.

Exactly. The form of generation is not the main thing here, it's the existing connectivity and relative lack of (credible) reasons to oppose. I don't know if there's enough wind to make turbines as viable as elsewhere, but it's probably as viable for PV as some of the sites that have already popped up.

MattMattMattUK

Chrysalis said:

MattMattMattUK said:

Chrysalis said:

On the other hand I can see the benefits for his company, he could choose e.g. to not lower the costs in places like GB1 proportionate to the wholesale gains to increase margins for Octopus energy.

The prices would still be set by Ofgem...

I know you like to mention a lot Ofgem sets the prices, but you conveniently dont mention that only SVR is regulated pricing.

Well yes, because it is hardly rocket science. Ofgem set the SVT as a ceiling, if suppliers can find ingenious ways to get below that then good on them. As such they can offer fixes where they can hedge their costs, or novel tariffs that offer ToU or specific usage options. 

Chrysalis said:

Regarding unfairness that is used to justify a lot of policy decisions in the country, now I need to be careful here, because of course anything Ofgem related is political, but generally speaking its not born of emotions, but of giving everyone equal burden or at least close to equal burden and not having large differentials across the country on things like living costs when it is within regulatory control to do so.

You talk of equal burden, but you fail to quantify equal and when you have talked of equal in your past posts it rarely if ever means equal, it very often means subsidy, often subsidy that creates huge market distortions, ignore the reality of electrical supply or creates cliff edges for certain groups.

Chrysalis said:

Its basically an argument at this point of a survival of the fittest model vs a social model.

No it is not, it is neither and that is an absurd statement.

Chrysalis said:

Not to mention another point that just popped up in my head, the existing renewable infrastructure has subsidies which are funded nationally.  How does that work when the benefits become localised?

Domestic installation subsidies are funded from general taxation, but in reality those are not going to bring any local benefit apart from a small improvement in local air quality from less gas or oil being consumed. In terms of energy pricing if it were regionalised then areas which had had a lot of domestic solar installed would lose out because of a lower rate when those people exported, although those with heat pumps and installation would benefit from reduced usage. Your statement also ignores the fact that subsidies generally flow from better off people and business, to less well off people and regions.

Chrysalis said:

A better tool to use (if we are obsessed with the idea of not adding transmission capacity) would be to remove subsidies from areas with more renewables, apply them to areas with less renewables, and change the law around planning permissions so nimbys can be ignored like they get ignored in france e.g. 

A better solution would be to remove the subsidies entirely, but spend that money on upgrading the grid so that it does not take a decade to get a solar farm or wind turbine connected to the grid, or investing in nuclear for secure base load. 

Chrysalis said:

Doc_N said:

Isn’t this essentially just a lever to use to ‘persuade’ otherwise reluctant areas to take on wind and solar installations they’d otherwise be objecting to? This is happening already.

Thats how it is been sold if you accept Octopus Energy marketing speak.  But of course life isnt that simple, building wind farms in a not very windy area isnt as economical as building it in windy areas, you need a lot more of them to generate the same amount of energy.  Better to max them out in the most economical areas and just move the energy.

The best place in general is offshore, it has the most amount of hours per year in generating capacity, although offshore wind does have higher capital costs. The next best locations are generally coastal regions and hilly/mountainous regions, but they also tend to have issues with needing a lot of additional transport infrastructure and increased build costs.

Chrysalis said:

I am curious what other countries are using the model in these proposals.

Some countries offer direct subsidy, others offer subsidy in the form of lower or no tax on solar and heat pump installation, others just extoll the virtues of using it, solar in much of Australia pays for itself in less than three years for example so it is pretty much a no brainer. 

Chrysalis said:

Its an idea born from the colossal failure in National Grid to keep up with demand and supply.

We have adequate supply, but much of it is gas burning, the Grid has kept up with supply, but not with also decarbonising because there has been little incentive to do so. Most of the problems come down to privatisation and lack of government investment. France as an example has chosen the up front capital cost of a huge nuclear program, the French nuclear power generation program is actually pretty badly designed and run, it is hugely inefficient, yet it still supplies them with much cheaper electricity than we have. However on average the French pay nearly twice the effective rate of tax we do. I know which option I would prefer, but the majority of the UK electorate prefer low taxes and failing services. 

Chrysalis said:

The vast majority of people affected also wont be the nimbys living local to fields.

The Nimbys are not just people objecting to solar farms, wind turbines or pylons, they are people who object to the additional substations required, or to the construction works for underground power lines, or people who object to something that they cannot even see because they feel the need to object to everything.

MattMattMattUK

Chrysalis said:

debitcardmayhem said:

Chrysalis said:

MattMattMattUK said:

Chrysalis said:

On the other hand I can see the benefits for his company, he could choose e.g. to not lower the costs in places like GB1 proportionate to the wholesale gains to increase margins for Octopus energy.

The prices would still be set by Ofgem...

I know you like to mention a lot Ofgem sets the prices, but you conveniently dont mention that only SVR is regulated pricing.

Regarding unfairness that is used to justify a lot of policy decisions in the country, now I need to be careful here, because of course anything Ofgem related is political, but generally speaking its not born of emotions, but of giving everyone equal burden or at least close to equal burden and not having large differentials across the country on things like living costs when it is within regulatory control to do so.

Its basically an argument at this point of a survival of the fittest model vs a social model.

It’s not just SVR, they regulate amongst other things the amount of profit energy suppliers can make

But the concerns I have are poverty and unrest related to large differential,

Do you really think people are going to riot over slight variations in regional energy prices? There are also huge regional variations in petrol prices, in food prices, in the prices of a pint down the pub, in the cost of housing, office space etc. yet none of that has got anywhere close to civil unrest and those differentials are an order of magnitude higher than anything that is being proposed here.

Chrysalis said:
funding would need to be reformed for subsidies, so national funding would become localised with adjustments for wealth in the region (if funded via taxation), or if its funded via SC, SC would effectively increase in GB1 and other renewable affluent areas to reflect they have taken excess subsidies and it needs clawing back to fund renewables in areas like GB5, the renewables in those regions would lose some existing ongoing subsidies as well which would raise the unit price, again to rebalance the system from national to localised, and there would need to be some kind of obligation set by Ofcom to force renewable companies to build in specific areas until its balanced.  Just relying on market forces as we have seen with previous regulations will inevitably fail.

Do you want to also account for London, the South East and East of England being the only regions of the UK that make a net contribution? Would you demand that they further subsidise other regions? Would you demand other regions pay more for failing to make a net contribution to start with? You seem to be trying to create a straw man, "Look, it is impossible because it is going to be so complicated", but the complications are entirely ones you are proposing to make the scheme impossible to implement, if one chooses not to complicate the system then those objections become irrelevant. 

Chrysalis said:

On the industry side energy costs are a big factor, if energy is 1/5 the price in one region over another, we going to see economical wastelands where the only GDP is from leasing, hospitality, retail and public services.  Manufacturing and other high energy users will swamp up in specific regions.

The first is another straw man, no one is proposing electricity will be 500% higher in one region than another, we might see variance by 10-25%. Manufacturing has already have ended up in specific regions, nearly none in London, virtually none in the South East, South West or East of England, if energy prices ended up slightly lower in those regions it may give them the capacity to get some industry back, but I doubt it would come anywhere near balancing out the other much higher costs those regions face.

Chrysalis said:

I think where I fundamentally differ, is that many on here just look at the end result and ignore the practicalities and the pain getting there, the ideal end goal, whilst I always try to look at whats happening in real life, and the affect on people, 

That might be how you view your opinions, but they regularly come across as "Think of the children...", an emotive pitch as to why everyone else's ideas are bad and the only way is subsidy. The way to approach anything is to look at the end goal and work out how to get there, whilst inflicting the least pain possible along the way whilst completing the task in a reasonable amount of time. There will always be winners and losers, but the alternative is inaction, in which case everyone looses. Much like getting fit, people can choose to sit on the sofa and eat junk all day, yes it does not involve any effort, yes it avoids the pain of exercise, the aches after, the time and effort involved in preparing healthy meals, but the end result is a longer life and a hugely improved quality of life. That is the kind of situation we are in now, the choice is either to do something that will involve a few aches and pains along the way, but that ultimately improves everyone's quality of life, or inaction, failing services and probably blackouts. 

Chrysalis said:
and I also look at how things have worked historically

Using historical positions as a justification for where we should go is an awful idea, though one many people are prone to. Inertia is a powerful force, people's fear of change, resistance too it holds us back hugely.

Chrysalis said:
and from that I know our approach to relying on market conditions so often ends in failure. 

Relying on markets works very well, they are an undoubted success. Where there can be issues is with lack of or failure of regulation. The government has for the last fifty years failed to adequately regulate and incentivise the markets, it has failed to cost in actual costs, it has directed the regulator to charge too little and to put off grid upgrades for decades because of the fear of upsetting the public over those costs. Of course now we have put off that investment for decades it will cost even more to catch up, though that is someone else's problem, not the problem of those who chose to kick the can down the road. 

Chrysalis said:
I think Ofgem already know what they want to do, given their most recent statement it suggests they leaning towards OE's utopia, and are begging the other suppliers to come on board with the idea.

I think Ofgem are looking at options that could work. They need something that provides the required funds for investment to keep the lights on, they need something that the government will allow them to do, they need something that will mean that enough people do not have a tantrum about that it becomes an issue where government blocks it and everything goes back to square one of underinvestment and delay.

The problem Ofgem have is that a loud, vocal minority keep demanding the unreasonable, they want subsidy, they want underinvestment, they want lower bills today for higher bills in the future, in the hope that it will involve someone else having to pay in the future. That mentality is the reason our infrastructure and services are in such a poor state and it is a mentality that has failed again and again over the last fifty years. We need to stop listening to the moaners, those who have tantrums when told they will not be subsidised further and instead actually invest. We have tried the alternative and it is an abject failure. 

VoucherMan

HillStreetBlues said:

So those in Mid to South Wales will be subsidising those in London based on GB6  Who on earth cane up with those zones?

Some overpriced consultant I'd guess. Floating around for a while now, but not the first attempt. I wonder who objected to an earlier revision.

mmmmikey

VoucherMan said:

HillStreetBlues said:

So those in Mid to South Wales will be subsidising those in London based on GB6  Who on earth cane up with those zones?

Some overpriced consultant I'd guess. Floating around for a while now, but not the first attempt. I wonder who objected to an earlier revision.

Hi, there seems to be some confusion around these zones. The zones aren't something that someone has decided on as such - they're essentially just what we've already got shown on a map.

The zones are National Grid zones. Everywhere within a particular zone has good grid connectivity to everywhere else in the zone. One of the main reasons that South Wales is in the same zone as London is that there used to be nuclear power stations on the Severn estuary with cables going into both South Wales and London. Because of this the routing of the pylons etc. is such that as things stand today it's easier to get energy between South Wales and London than it is to get it between South Wales and North Wales. That's where the cables are.

The zones only make sense if you look at where power was generated a few decades ago, and that's why investment in the grid is so desperately needed and in various stages of planning. Almost nobody disagrees with the fact that the zones are bonkers in relation to today's requirements and practically everyone agrees that new connections are needed.

Because the zones are bonkers and because of the way prices are set, some generators are making large profits and customers are paying over the odds. Zonal pricing will change that rule and save customers money whilst the new pylons etc. are built, which realistically is a 10 year project.

The difficulty is that not everyone will save the same amount creating an inequality, or post code lottery if you want to call it that. We are currently in the silly situation that although it's fair in the sense there are no zones, we're achieving that fairness by bumping up prices so that everyone pays the same as the most expensive zone. Good news if you're a supplier of course, which is why some of them are making such a fuss about it.

Hope this makes sense?

Doc_N

mmmmikey said:

VoucherMan said:

HillStreetBlues said:

So those in Mid to South Wales will be subsidising those in London based on GB6  Who on earth cane up with those zones?

Some overpriced consultant I'd guess. Floating around for a while now, but not the first attempt. I wonder who objected to an earlier revision.

Hi, there seems to be some confusion around these zones. The zones aren't something that someone has decided on as such - they're essentially just what we've already got shown on a map.

The zones are National Grid zones. Everywhere within a particular zone has good grid connectivity to everywhere else in the zone. One of the main reasons that South Wales is in the same zone as London is that there used to be nuclear power stations on the Severn estuary with cables going into both South Wales and London. Because of this the routing of the pylons etc. is such that as things stand today it's easier to get energy between South Wales and London than it is to get it between South Wales and North Wales. That's where the cables are.

The zones only make sense if you look at where power was generated a few decades ago, and that's why investment in the grid is so desperately needed and in various stages of planning. Almost nobody disagrees with the fact that the zones are bonkers in relation to today's requirements and practically everyone agrees that new connections are needed.

Because the zones are bonkers and because of the way prices are set, some generators are making large profits and customers are paying over the odds. Zonal pricing will change that rule and save customers money whilst the new pylons etc. are built, which realistically is a 10 year project.

The difficulty is that not everyone will save the same amount creating an inequality, or post code lottery if you want to call it that. We are currently in the silly situation that although it's fair in the sense there are no zones, we're achieving that fairness by bumping up prices so that everyone pays the same as the most expensive zone. Good news if you're a supplier of course, which is why some of them are making such a fuss about it.

Hope this makes sense?

Indeed. And zonal pricing for a nationally necessary utility makes as much sense as the differential charging system that existed before the introduction of the universal penny post. Or Tesco charging more for Scotch sold in Cornwall because it has further to travel.

mmmmikey

Doc_N said:

mmmmikey said:

VoucherMan said:

HillStreetBlues said:

So those in Mid to South Wales will be subsidising those in London based on GB6  Who on earth cane up with those zones?

Some overpriced consultant I'd guess. Floating around for a while now, but not the first attempt. I wonder who objected to an earlier revision.

Hi, there seems to be some confusion around these zones. The zones aren't something that someone has decided on as such - they're essentially just what we've already got shown on a map.

The zones are National Grid zones. Everywhere within a particular zone has good grid connectivity to everywhere else in the zone. One of the main reasons that South Wales is in the same zone as London is that there used to be nuclear power stations on the Severn estuary with cables going into both South Wales and London. Because of this the routing of the pylons etc. is such that as things stand today it's easier to get energy between South Wales and London than it is to get it between South Wales and North Wales. That's where the cables are.

The zones only make sense if you look at where power was generated a few decades ago, and that's why investment in the grid is so desperately needed and in various stages of planning. Almost nobody disagrees with the fact that the zones are bonkers in relation to today's requirements and practically everyone agrees that new connections are needed.

Because the zones are bonkers and because of the way prices are set, some generators are making large profits and customers are paying over the odds. Zonal pricing will change that rule and save customers money whilst the new pylons etc. are built, which realistically is a 10 year project.

The difficulty is that not everyone will save the same amount creating an inequality, or post code lottery if you want to call it that. We are currently in the silly situation that although it's fair in the sense there are no zones, we're achieving that fairness by bumping up prices so that everyone pays the same as the most expensive zone. Good news if you're a supplier of course, which is why some of them are making such a fuss about it.

Hope this makes sense?

Indeed. And zonal pricing for a nationally necessary utility makes as much sense as the differential charging system that existed before the introduction of the universal penny post. Or Tesco charging more for Scotch sold in Cornwall because it has further to travel.

So is your view that in order to make things fair we should all pay the most expensive price that anyone is paying? And that in order to achieve that we should bump up the profits of energy generators? 

That is what we are doing today.

My concern, as a pragmatic money saver, is that we risk spending so much time debating who should save that nobody saves. To my way of thinking that would be a crying shame. If Scottish customers can save themselves a few quid whilst the grid is being upgraded I think that's great whether or not I save anything myself.

But each to their own.....