Grid to spend £19bn 'to rewire Britain for net zero' Daily Telegraph Business Fri 10th Nov

dealyboy

Interesting that Net Zero grid infrastructure regeneration plans are being implemented.

Daily Telegraph today.

I hope that people can read the article from this PressReader ... link https://dailytelegraph.pressreader.com/article/282248080277731.

MattMattMattUK

Interesting and much needed, our grid is ill equipped to deal with distributed and micro generation, the current architecture is stopping many projects going ahead because they are unable to get export grid connections. Also £19 billion is not much in budgetary terms, especially as it is over 27 years, the article notes that they are only planning on spending £3 billion by 2026 (actually the end of FY 26-27) so in reality it is well below the level of investment required. We should probably be committing to spending £20 billion by the end of the decade if we really want to get things back on track. 

Netexporter

Shame this, and the provision of more large-scale storage, wasn't thought about, say, 13 years ago. We might be getting somewhere, by now.

Xbigman

Netexporter said:

Shame this, and the provision of more large-scale storage, wasn't thought about, say, 13 years ago. We might be getting somewhere, by now.

I think you mean 15 years ago. The strategy to shut down power stations with no replacements whilst investing next to nothing in infrastructure was implemented by the labour party. Mind you, the Tory poop show currently in power have sat on their hands knowing it was a problem for the best part of a decade. No party comes out of this looking good.


Darren

Chrysalis

dealyboy said:

Interesting that Net Zero grid infrastructure regeneration plans are being implemented.

Daily Telegraph today.

I hope that people can read the article from this PressReader ... link https://dailytelegraph.pressreader.com/article/282248080277731.

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

Also why is the new £70 been taken from consumer bills when is already a green levy, and why not general taxation?

So another SC increase coming.  My prediction of SC been more than half of a bill for some people by end of decade I think might come true.

The existing revenue collected for the grid is multiple billions, if it hasnt been funding this type of work, what has it been spent on?

MattMattMattUK

Chrysalis said:

dealyboy said:

Interesting that Net Zero grid infrastructure regeneration plans are being implemented.

Daily Telegraph today.

I hope that people can read the article from this PressReader ... link https://dailytelegraph.pressreader.com/article/282248080277731.

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

They cannot build it for the price they offered, that was the point. There was an article in the FT that showed that the return would end up being about 12% below cost even ignoring the cost of finance which is currently high and likely to remain so in the short to medium term.

Chrysalis said:

Also why is the new £70 been taken from consumer bills when is already a green levy, and why not general taxation?

The increse to £70 is the per MW strike price, the previous round that was not profitable was £45, it is not a levy on consumer bills.

Chrysalis said:

So another SC increase coming.  My prediction of SC been more than half of a bill for some people by end of decade I think might come true.

The standing charge will increase, largely due to continued inflation, but also due to investment in the network, the need to increase maintenance work done on the network (damage due to adverse weather in particular). The cost of the network should be reflected in what consumers pay. For many with solar panels and batteries the standing charge is already more than half of their bills.

Chrysalis said:

The existing revenue collected for the grid is multiple billions, if it hasnt been funding this type of work, what has it been spent on?

Maintenance and relatively minor upgrades, the grid is not cheap to maintain, billions are also spent on various handouts (WHD being the main one). The National Grid publish full expenditure reports so you can read them for yourself, but of course when you scale anything up to a national scale, with universal provision, the total cost will of course be in thr billions range.

QrizB

Chrysalis said:

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

Much the same reason why HPC and Sizewell C are being built by EDF rather than UKAEA; the current government believes that private business is more efficient than the public sector at building infrastructure, and wants to keep the capital costs off the PSBR.

See also HS2.

Chrysalis

MattMattMattUK said:

Chrysalis said:

dealyboy said:

Interesting that Net Zero grid infrastructure regeneration plans are being implemented.

Daily Telegraph today.

I hope that people can read the article from this PressReader ... link https://dailytelegraph.pressreader.com/article/282248080277731.

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

They cannot build it for the price they offered, that was the point. There was an article in the FT that showed that the return would end up being about 12% below cost even ignoring the cost of finance which is currently high and likely to remain so in the short to medium term.

Chrysalis said:

Also why is the new £70 been taken from consumer bills when is already a green levy, and why not general taxation?

The increse to £70 is the per MW strike price, the previous round that was not profitable was £45, it is not a levy on consumer bills.

Chrysalis said:

So another SC increase coming.  My prediction of SC been more than half of a bill for some people by end of decade I think might come true.

The standing charge will increase, largely due to continued inflation, but also due to investment in the network, the need to increase maintenance work done on the network (damage due to adverse weather in particular). The cost of the network should be reflected in what consumers pay. For many with solar panels and batteries the standing charge is already more than half of their bills.

Chrysalis said:

The existing revenue collected for the grid is multiple billions, if it hasnt been funding this type of work, what has it been spent on?

Maintenance and relatively minor upgrades, the grid is not cheap to maintain, billions are also spent on various handouts (WHD being the main one). The National Grid publish full expenditure reports so you can read them for yourself, but of course when you scale anything up to a national scale, with universal provision, the total cost will of course be in thr billions range.

I think like HS2 the grid expenses needs a proper audit if it has needed billions to just maintain its current state on an annual basis. 

Also the WHD is separate from the grid costs, as shown in the break down in an earlier thread.  If WHD is the main subsidy then it wont be in the billions, some details of its cost here.  But regardless the WHD is not under grid costs umbrella, and as said before the SC isnt just grid costs either.

https://assets.publishing.service.gov.uk/media/6245c5b98fa8f5277abd6940/Warm_Home_Discount_Better_targeted_support_from_2022_Government_response.pdf

If the £44 or whatever it was was only 12% below cost, then why is it up to £70, just add the 12% and a reasonable profit margin off 5% or so.  If they refuse that, government does it itself, take out the middle man and save the 5%.  the article did state the increase would be added to consumer bills.

MattMattMattUK

Chrysalis said:

MattMattMattUK said:

Chrysalis said:

dealyboy said:

Interesting that Net Zero grid infrastructure regeneration plans are being implemented.

Daily Telegraph today.

I hope that people can read the article from this PressReader ... link https://dailytelegraph.pressreader.com/article/282248080277731.

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

They cannot build it for the price they offered, that was the point. There was an article in the FT that showed that the return would end up being about 12% below cost even ignoring the cost of finance which is currently high and likely to remain so in the short to medium term.

Chrysalis said:

Also why is the new £70 been taken from consumer bills when is already a green levy, and why not general taxation?

The increse to £70 is the per MW strike price, the previous round that was not profitable was £45, it is not a levy on consumer bills.

Chrysalis said:

So another SC increase coming.  My prediction of SC been more than half of a bill for some people by end of decade I think might come true.

The standing charge will increase, largely due to continued inflation, but also due to investment in the network, the need to increase maintenance work done on the network (damage due to adverse weather in particular). The cost of the network should be reflected in what consumers pay. For many with solar panels and batteries the standing charge is already more than half of their bills.

Chrysalis said:

The existing revenue collected for the grid is multiple billions, if it hasnt been funding this type of work, what has it been spent on?

Maintenance and relatively minor upgrades, the grid is not cheap to maintain, billions are also spent on various handouts (WHD being the main one). The National Grid publish full expenditure reports so you can read them for yourself, but of course when you scale anything up to a national scale, with universal provision, the total cost will of course be in thr billions range.

I think like HS2 the grid expenses needs a proper audit if it has needed billions to just maintain its current state on an annual basis. 

Also the WHD is separate from the grid costs, as shown in the break down in an earlier thread.  If WHD is the main subsidy then it wont be in the billions, some details of its cost here.  But regardless the WHD is not under grid costs umbrella, and as said before the SC isnt just grid costs either.

https://assets.publishing.service.gov.uk/media/6245c5b98fa8f5277abd6940/Warm_Home_Discount_Better_targeted_support_from_2022_Government_response.pdf

The costs are audited, signed off by Ofgem, National Grid Group PLC as a publicly traded company so they also publish their accounts annually and all dividend as well as C-suite and director remuneration is also public. The cost of the WHD is £336 million, for comparison the total raised from standing charges is around £6 billion, so the the WHD represents around 5% of the total standing charge. 

Chrysalis said:

If the £44 or whatever it was was only 12% below cost, then why is it up to £70, just add the 12% and a reasonable profit margin off 5% or so.  If they refuse that, government does it itself, take out the middle man and save the 5%.  the article did state the increase would be added to consumer bills.

Twelve percent below cost before the cost of finance, long term commercial finance is quite costly at the moment, equally so is government borrowing, the interest on borrowing £30 billion over twenty years would be around £22 billion, that cost also has to be factored in. If the project is covered commercially then they would want to make a profit, probably only around 3-5%, if funded by the government then there is the lost opportunity cost of the expenditure and the economic impact of the funds diverted. The government also does not want the additional expenditure either funded from taxation or the borrowing on the books.

Personally I am not in favour of the government taking on the cost of offshore wind, it does not make sense when it can be done commercially, the government should however be investing in nuclear, something that only EDF has the capacity to do on a very limited basis. 

Chrysalis

Well you have from talking about grid costs to standing charges, the WHD comes out of the standing charge, but you originally said it comes out of the grid costs, this is why its important to use correct terminology, as the two are separate things, it may make it look like you was right all along after using my information to correct yourself, but you stated you think the WHD comes out of grid costs and its a multi billion pound expenditure.

In terms of the government taking on the cost of energy infrastructure, what is your problem with it? please give a reason, its a bit vague to say they basically shouldnt be doing it.  Energy is part of essential infrastructure, and as such a responsible government would be making its generation as good value as possible for its population, the problem with using commercial companies is they take a slice to pay for profits which they want in return for investment, this in turn increases costs to consumers.  They also clearly want more than 5% profit if the government is having to offer £70 based on your 15% loss figures, a 5% profit would only require around £54.  I think nuclear investment should be done as well of course, we shouldnt just rely on one technology, but again the problem there is they only investing as a part owner rather than doing it entirely in house.  Its as if they trying to do minimal capital expenditure possible.
Also in all honesty, I think Ofgem has the credibility of willy wonka right now.  So yes auditing that doesnt involve them.

Chrysalis

QrizB said:

Chrysalis said:

I see the article has a increased cost offering for takers to build the offshore wind farms, if the government thinks it could be done at the price they offered, why dont they just do it themselves instead of pandering to shareholders funding from customers bills?

Much the same reason why HPC and Sizewell C are being built by EDF rather than UKAEA; the current government believes that private business is more efficient than the public sector at building infrastructure, and wants to keep the capital costs off the PSBR.

See also HS2.

Yeah, worked out really well.