Energy news in general

The_Green_Hornet

Wind power cuts £104bn from UK's energy bills, study finds

Researchers from University College London found that electricity generated by on and offshore wind farms was lower than traditional gas alternatives when compared over a 13-year period, according to the analysis, with renewables reducing the need to build costly fossil fuel-fired power stations.

The study only included data between 2010 and 2013 to avoid the sharp leap in gas prices as a direct result of the Russian-Ukraine war.

Wind power cuts £104bn from UK's energy bills, study finds | 4C Offshore News

Ildhund

The_Green_Hornet said:
... electricity generated by on and offshore wind farms was lower than traditional gas alternatives ...

Another example of authors or editors not reading what is about to be published in their name. Electricity was apparently lower than gas - by what measure, I wonder.

QrizB

The_Green_Hornet said:

Wind power cuts £104bn from UK's energy bills, study finds

Researchers from University College London found that electricity generated by on and offshore wind farms was lower than traditional gas alternatives when compared over a 13-year period, according to the analysis, with renewables reducing the need to build costly fossil fuel-fired power stations.

The news report linked above is rather poorly written. Here's the same story on the official UCL news page:

https://www.ucl.ac.uk/news/2025/oct/wind-power-delivers-ps104-billion-net-benefit-uk-consumers

Ildhund

QrizB said:
The news report linked above is rather poorly written. Here's the same story on the official UCL news page:

Oh dear! I was rather hoping for some clear, accurate language from academe. Sadly, I was disappointed in the first sentence:
  

The study [...] found that between 2010 to 2023 wind-generated energy lowered electricity bills ..

There is often some confusion about between, because sometimes it's intended to include the end-points and sometimes not. In the English alphabet, does between A and D mean A, B, C and D or just B and C? 

It's anyone's guess what between 2010 to 2023 is intended to mean. 

Scot_39

And yet with the first few pages

accept .... that “it has not been sufficient to offset the costs" in yet another 2022 report.

JKenH

Our energy consumption in the uk is about 260 TWh that’s 260 million MWhs. At an average wholesale cost of around £70/MWh that’s is £18.2bn. Of course prices pre Ukraine were closer to £40/MWh or around £10.4 bn. So wind power has saved us something of the order of 10 years worth of pre Ukraine electricity costs. That is truly fantastic. Incredible one might even say.

Whenever anyone suggests we should exploit our own North Sea Gas, those opposed argue that gas prices are set on the international market and what we do in the UK won’t have any impact on UK wholesale gas prices. Strange then that wind turbines in the UK can force gas prices down but drilling our own North Sea gas won’t.

I wonder if the authors of the report factored in lost revenue to the UK government from taxes on gas producers, VAT, carbon taxes, and the lost revenue to those working in the oil and gas industries and the service industries that support them that would further have reduced the governments tax take.

I wonder also if the impact of daily volatility in energy prices from the intermittency of renewables has been factored. Volatility in prices leads to to increased costs of hedging. I asked Google how much hedging costs and it suggested it typically adds around 9% to prices.

The cost of hedging against volatile wholesale electricity costs is variable, but it generally involves paying a premium for price certainty over a longer contract period compared to the fluctuating, "spot" market price. While this can lead to higher costs if market prices fall, it provides protection against major price spikes and reduces overall cost volatility, with one example showing a premium of about 9% in a particular scenario. The final price depends on the specific hedging strategy used, such as securing a fixed-rate contract or a blended approach that combines fixed and variable rates. 

Not only do electricity suppliers hedge but so do large industrial users and of course may domestic consumers do with fixed tariffs. 

Of course the authors of the report will have factored in this and everything else that I haven’t thought about.

Scot_39

Telegraph in anti wind headline mode again today, saying govt finally agreed to drop load factors (to my mind far closer to those published elsewhere including wind groups for years.)
NO bad thing you might think - until you realise the implications.

So Offshore wind from 61% to 43.6%,  on shore wind 48.7% to 33.4%.

Let's see if it has the threatened impact of significantly higher billpayer subsidies to renewables feared by some industry observers.  Ax they now need more to recoup investment returns at the lower output - which tge govt now agrees with as start point of cost negotiations.

Suddenly the 10.x% cap increase for offshore fixed doesn't seem that generous - but let's see what happens to the actual prices agreed.

And whether they are high enough to bring Hornsea 4 type projects - "abondoned" by Orsted at ar6 rates - back on track.

And of course the implication you now need almost 50% more theoretical capacity on average to meet a given demand - so need to sell far more renewables licenses - to meet UKs 95% by 2030.

So perhaps we can expect even more farms,  even more turbines, and the misleading / dodgy CfD and curtailment based pricing, all ignoring the network (delivery costs) to our homes, we have been pursuing for years under previous and this govt.

Yet another gift to private sector to use th3 govts own goal - the leverage of the 95% by 2030 - to fleece us as consumers.

michaels

JKenH said:

Our energy consumption in the uk is about 260 TWh that’s 260 million MWhs. At an average wholesale cost of around £70/MWh that’s is £18.2bn. Of course prices pre Ukraine were closer to £40/MWh or around £10.4 bn. So wind power has saved us something of the order of 10 years worth of pre Ukraine electricity costs. That is truly fantastic. Incredible one might even say.

Whenever anyone suggests we should exploit our own North Sea Gas, those opposed argue that gas prices are set on the international market and what we do in the UK won’t have any impact on UK wholesale gas prices. Strange then that wind turbines in the UK can force gas prices down but drilling our own North Sea gas won’t.

I wonder if the authors of the report factored in lost revenue to the UK government from taxes on gas producers, VAT, carbon taxes, and the lost revenue to those working in the oil and gas industries and the service industries that support them that would further have reduced the governments tax take.

I wonder also if the impact of daily volatility in energy prices from the intermittency of renewables has been factored. Volatility in prices leads to to increased costs of hedging. I asked Google how much hedging costs and it suggested it typically adds around 9% to prices.

The cost of hedging against volatile wholesale electricity costs is variable, but it generally involves paying a premium for price certainty over a longer contract period compared to the fluctuating, "spot" market price. While this can lead to higher costs if market prices fall, it provides protection against major price spikes and reduces overall cost volatility, with one example showing a premium of about 9% in a particular scenario. The final price depends on the specific hedging strategy used, such as securing a fixed-rate contract or a blended approach that combines fixed and variable rates. 

Not only do electricity suppliers hedge but so do large industrial users and of course may domestic consumers do with fixed tariffs. 

Of course the authors of the report will have factored in this and everything else that I haven’t thought about.

I must be missing something. I thought the hedging was done to protect consumers from price volatility in line with the price cap so would be energy source agnostic. You have lots of sensible things to say so no need to add stuff like this to the mix as it just devales the relevant stuff.

JKenH

michaels said:

JKenH said:

Our energy consumption in the uk is about 260 TWh that’s 260 million MWhs. At an average wholesale cost of around £70/MWh that’s is £18.2bn. Of course prices pre Ukraine were closer to £40/MWh or around £10.4 bn. So wind power has saved us something of the order of 10 years worth of pre Ukraine electricity costs. That is truly fantastic. Incredible one might even say.

Whenever anyone suggests we should exploit our own North Sea Gas, those opposed argue that gas prices are set on the international market and what we do in the UK won’t have any impact on UK wholesale gas prices. Strange then that wind turbines in the UK can force gas prices down but drilling our own North Sea gas won’t.

I wonder if the authors of the report factored in lost revenue to the UK government from taxes on gas producers, VAT, carbon taxes, and the lost revenue to those working in the oil and gas industries and the service industries that support them that would further have reduced the governments tax take.

I wonder also if the impact of daily volatility in energy prices from the intermittency of renewables has been factored. Volatility in prices leads to to increased costs of hedging. I asked Google how much hedging costs and it suggested it typically adds around 9% to prices.

The cost of hedging against volatile wholesale electricity costs is variable, but it generally involves paying a premium for price certainty over a longer contract period compared to the fluctuating, "spot" market price. While this can lead to higher costs if market prices fall, it provides protection against major price spikes and reduces overall cost volatility, with one example showing a premium of about 9% in a particular scenario. The final price depends on the specific hedging strategy used, such as securing a fixed-rate contract or a blended approach that combines fixed and variable rates. 

Not only do electricity suppliers hedge but so do large industrial users and of course may domestic consumers do with fixed tariffs. 

Of course the authors of the report will have factored in this and everything else that I haven’t thought about.

I must be missing something. I thought the hedging was done to protect consumers from price volatility in line with the price cap so would be energy source agnostic. You have lots of sensible things to say so no need to add stuff like this to the mix as it just devales the relevant stuff.

Here is an explanation from Google:

How volatility from wind generation creates risk

• Increased price volatility: While the zero marginal cost of wind power can lower wholesale prices on windy days, the intermittent nature of wind generation also drives up price volatility. A sudden drop in wind speed can force suppliers to purchase energy from more expensive sources, such as gas-fired plants, at short notice on the "spot market," often at significantly higher prices.
• Greater need for hedging: Wind's volatility makes robust hedging strategies more critical than ever. Hedging is the practice of buying energy in advance to lock in prices and protect against market fluctuations. This is how suppliers predict and manage their future costs.
• The cost for suppliers to hedge against variable wind generation is not a single, fixed number and can fluctuate significantly. It is a market-driven expense influenced by the price and volume risks of wind power, along with the specific financial instruments used. Some studies from the 2010s estimated intermittency costs at £5–£8 per megawatt-hour (MWh), but this is not an official or current figure. 

I imagine the cost is higher now with increased price volatility as renewables constitute a larger proportion of generation. A figure of around 9% was suggested in my original post.

This is a real issue.

In a context marked by sustained spot price volatility, technological saturation, and the erosion of PPA value, risk hedging strategies are consolidating as a critical tool to ensure revenue from renewable energy projects.

Speaking with Strategic Energy Europe, Rafael Calleja, partner and CEO of Optimize Energy, emphasises that “the current price fluctuations in the market are not circumstantial; they are structural—they’re here to stay”, driven by the growing presence of renewables and stagnating demand.

The downward trend in electricity pool prices, particularly evident in the second quarter of the year—when solar, wind, and hydro participation is at its peak and gas prices are lower—hits hardest those plants not exclusively financed with equity.

“It’s worse for plants with bank debt, because with negative or very low prices, it becomes extremely difficult to meet the minimum captured price levels required to service project debt with solvency,” the advisor warns.

Operational plants typically hedge around 70% of their energy under PPAs, locking in the sale price and thus avoiding the need for constant adjustment and management in response to abrupt market shifts.

 https://strategicenergy.eu/risk-hedging-renewable-electricity/

Scot_39

Another day - another Telegraph article - suggesting the wheels might be coming off on 95% by 2030 - due to the expected CfD caps - and at least the initial budget allocated to offshore wind for ar7.

Posting the MSN link as Telegrpah behind paywall

Miliband’s offshore wind dream in tatters as industry pushes for more cash