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« Environmental risks of fracking | Main | Diary dates, moving on edition »

More pressure on the capacity margin

This is actually from yesterday, but seems rather significant to me:

A raft of proposed new gas-fired power plants will be shelved for at least a year after failing to win Government subsidies, experts have predicted.

Some old power plants could also be at risk of closure after missing out on the payments, potentially worsening the capacity crunch in coming years, they warned.

The cost of the subsidies awarded is of the order of £1 billion per annum.

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Reader Comments (30)

Here is another tale of woe.

Having brought electricity generation in this country to its knees, Davey reaches new depths of idiocy with this comment:

'Ed Davey, Secretary of State for Energy and Climate Change, described the outcome as "great news for consumers".'

Dec 19, 2014 at 8:39 AM | Unregistered CommenterSteve Jones

Isn't it great how the British government is very carefull with handing out the tax payer's money in the form of subisidies? /sarc

Dec 19, 2014 at 8:43 AM | Unregistered CommenterWijnand

Davey must be impeached for Malfeasance in Public Office.

Dec 19, 2014 at 8:51 AM | Unregistered CommenterNCC 1701E

BBC Today talking about the difficulties faced by the NHS this winter due to the lack of spare capacity in the system if things get difficult .

Funny how they never mention the lack of capacity in power production if things get difficult this winter..

Dec 19, 2014 at 9:04 AM | Unregistered CommenterMessenger

Since the price of oil is falling how long will it be before someone starts selling electric generators that can be powered by your car engine while your car is sitting on the drive? That would be one (ridiculous) way of keeping the lights on.

Dec 19, 2014 at 9:20 AM | Unregistered CommenterRoy

Thiw was mentioned on Radio 4 this morning, and the commentator mentioned that coal featured highly in these emergency payments to the chagrin of the green lobby. Surely, strategic decisions such as this should be a government implmented plan not decided by an auction.The second world war would have been lost if this tactic had been employed then.

Dec 19, 2014 at 9:25 AM | Unregistered Commentertrefjon

So, wreck the market by heavily subsidising wind and solar then have to attempt to keep the lights on by more subsidies for existing baseload plants.

Dec 19, 2014 at 9:54 AM | Unregistered CommenterTed

It occurred to me the other day, that even after the government bow to reality and recognise that you can't run electricity on thin air - that it would still take several years to bring new fossil-fuel power plants back online.

So, the perverse thing will be that because the power system will continue getting worse even after a decision is made to scrap renewables, the government that "sees sense", will actually be lumbered with most of the power cuts.

Dec 19, 2014 at 10:11 AM | Registered CommenterMikeHaseler

Roy : "before someone starts selling electric generators that can be powered by your car engine while your car is sitting on the drive?"

That's effectively what many people have with a car inverter.

Dec 19, 2014 at 10:13 AM | Registered CommenterMikeHaseler

Blackout Britain?

According to my analysis which is based on the DECC UK power stations data base, the UK has a large surplus capacity of gas fired power stations. Thus losing a few will not pose any problem. The black out risk has always been centred on our ability to source sufficient gas in February when stocks are run down.

With Japan planning to switch more nukes back on, LNG supplies will ease. And with global demand for energy in decline, blackout risk receding fast I'd say.

Dec 19, 2014 at 10:14 AM | Registered CommenterEuan Mearns

Can I reverse auction my comsumption

A “reverse auction” to award the contracts has been taking place this week and is understood to have closed on Thursday night at a price of between £15 and £20 per kilowatt of capacity - far lower than had been expected by the industry, and less than half the £42 assumed by the Department of Energy and Climate Change (DECC) in its impact assessment.

DECC at it again.

Dec 19, 2014 at 10:21 AM | Registered CommenterBreath of Fresh Air

Caught part of the BBC News on R2 reporting this, usual stuff about nuclear which would be online anway getting subsidies and it costing £11 per household. Did also less than expected and would put pressure on supply as those generators who didn't win a subsidy would close plants. When the supply problem comes at the start of the bulletin rather than as an aside at the end then we'll be making progress.

Dec 19, 2014 at 10:21 AM | Unregistered CommentersandyS

We are paying several times the going rate for electricity from wind turbines but because these are useless we are paying another billion to keep conventional plants on standby and then when these inevitably have to kick in we will be paying them again for out electricity, probably at an extortionate rate. Davey thinks that this is great news for consumers.

Why do we put up with this?

Dec 19, 2014 at 10:23 AM | Unregistered CommenterSchrodinger's Cat

Dec 19, 2014 at 10:14 AM | Euan Mearns

No doubt that is all factored in to the government's energy master plan. There we were thinking Ed Davey was an idiot.

Dec 19, 2014 at 10:36 AM | Unregistered CommenterSteve Jones

"If no new gas is built soon then by the early 2020s there would be a “massive black hole” to make up when coal is eventually forced to close"

Ahem with all but one nuclear power plants due to close by 2023 then all we'll have left are windmills and interconnectors. This should please greenpeace.

Dec 19, 2014 at 10:53 AM | Unregistered CommenterJamesG

You have to admit, this is an excellent example of the totally twisted logic that infests Wastemonster: a totally unnecessary increase on the household energy bill is, “Great news for consumers.”

Just when you think Ed Davey could not get any more stupid, he goes and proves you wrong.

Dec 19, 2014 at 11:16 AM | Registered CommenterRadical Rodent

The BBC politburo clearly vets the people allowed to comment on this, they all have to begin with something like, "whilst it is absolutely the right thing to do to develop renewables ...", and they must blame the govt for not insulating the homes of the elderly so that they can afford to pay for renewables, which must remain without doubt the only way forward.

Energy is actually really easy to understand. The country MUST have enough "conventional" energy to deal with cold, dark, windless winters. At times of lesser demand these conventional power plants can be rotated through maintenance periods, leaving NO NEED WHATSOEVER for intermittent renewables.

Wind and solar should compete for supply to individual homes and businesses to reduce their electricity bills, not fed into a grid that does not need them, at enormous cost.

Dec 19, 2014 at 11:29 AM | Unregistered CommenterMikky

Interestingly, Scottish Power has announced this morning that it is axing its plans for a windfarm at Dyfnant Forest in Powys, as it is "no longer financially viable".

Dec 19, 2014 at 11:57 AM | Registered CommenterSalopian

Dec 19, 2014 at 9:20 AM Roy:

This is not as far fetched as it seems. A farm I worked on in france saw a fast return on coming off the grid for their 3 phase power to the feedmill and using a generator on the tractor PTO.

They had the advantage of agricultural diesel though.

Dec 19, 2014 at 12:51 PM | Unregistered Commenterclovis marcus

Under a new “capacity market” policy, designed to keep the lights on, ministers are offering retainer-style subsidy contracts to existing or proposed plants to guarantee they will be available when needed from 2018.

Basically, the government want the plants to be fully manned and operational just in case the wind doesn't blow and they won't guarantee to purchase a minimum amount of electricity or pay them to wait in this state.

Paying somebody a retainer just in case you might need them or guaranteeing a minimum purchase of goods to stay on standby isn't a subsidy. It is a payment for a service.

Dec 19, 2014 at 12:53 PM | Unregistered CommenterTerryS

This is not as far fetched as it seems. A farm I worked on in france saw a fast return on coming off the grid for their 3 phase power to the feedmill and using a generator on the tractor PTO.

They had the advantage of agricultural diesel though.

Dec 19, 2014 at 12:51 PM | Unregistered Commenterclovis marcus

Got a 15KV PTO driven gen, just need a 25hp diesel engine to power it and use kerosene heating oil to fuel it.

Dec 19, 2014 at 1:13 PM | Unregistered CommenterBreath of Fresh Air

Strikes me that it really doesn't matter what the news is about energy supplies (more renewables; less renewables; more standby plant; less standby plant; a hugely expensive new nuclear power station; etc, etc) Mr Potato Ed can spin it as 'great news for consumers...'

Voters of Kingston and Surbiton - you know what your duty is on 5th May...

Dec 19, 2014 at 1:50 PM | Unregistered Commentersherlock1

I left the UK in the 1971 to see the world but mainly to get out from under the creeping, mind numbing, socialism of the day.

I do not like government run businesses but in the case of electricity supply it may just be that it should be a state enterprise. Electricity is an essential service for the well being of society.

That may seem an odd statement from my position but right now the system in the UK appears to be neither fish nor fowl. It seems to an observer from afar to be a foul mixture of government and private enterprise with propensity for a total cluster F*** and finger pointing with no clear lines of accountability.

Fully private or fully government must surely be preferential to the private/public uncoordinated mess that constitutes the generation distribution octopus that constitutes the UK grid.

I think that the "bureaucrats" are likely spending more time strategizing how they will position themselves to avoid blame than they are strategizing how to take action to get out of the mess they have created.

Dec 19, 2014 at 3:11 PM | Unregistered CommenterMike Singleton

I caught the news at lunchtime where they said that the power plants that didn't get any subsidies might have to close early, thus reducing capacity even further.

Good news? Hollow laughter.

Dec 19, 2014 at 5:24 PM | Unregistered CommenterMessenger

The press release from DECC is here.

The actual report of the auction results is here

The word "subsidy" appears exactly zero times in both the press release and the results.

Those who won the reverse auction are being paid to make generating capacity available. They are are being paid for a service.

It is the press who are calling it a subsidy.

Dec 19, 2014 at 6:23 PM | Unregistered CommenterTerryS

@ Dec 19, 2014 at 6:23 PM | Unregistered CommenterTerryS; "It is the press who are calling it a subsidy."

If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck - quack, quack quack. If DECC can't 'bribe' providers using fossil fuel to guarantee backup supply, and the renewables industry is bailing out of new projects (the Dyfnant Forest is the second one in Wales, that Scottish Power has dropped as economically unviable), where is our electricity going to come from?

Dec 19, 2014 at 6:53 PM | Registered CommenterSalopian

I agree that it is a subsidy, but the only reason for it is to counteract the effects of other subsidies.


Dec 20, 2014 at 1:01 AM | Registered Commenterjohanna

Mike Singleton, I agree with you that electricity production should be state owned and operated, but with power plants made by private industry, i.e. the same set-up as (say) submarines built by companies but operated by the Navy.

Dec 20, 2014 at 8:16 AM | Unregistered CommenterMikky

In an era of high prices - taxes, tariffs etc. - "subsidies" are simply a rebate.

If we were in economies in which the free market worked, we would not need subsidies to build new power plants. Needed, new plants, that is.

Market distortions create vicious circles.

Dec 20, 2014 at 11:50 PM | Unregistered CommenterDoug Proctor

"If we were in economies in which the free market worked".

Alas that would be a naive utopia. This experiment was tried in post-Soviet Russia when Yeltsin believed that these Chicago professors actually knew better. The awful truth was that none of them could even run a toffee shop and the result of the experiment was utter catastrophe as the free market turned out to be mainly free for criminals. The computer models somehow don't seem to factor in criminality; apparently we are all equal units that are assumed to make rational decisions based on the future value of objects, investments and experiences. What a laugh! Similar experiments had already been made in South America by the World Bank using it's one-size-fits -all 'Washington Consensus' dogma with similar results. Of course everyone assumes that these experiments fail because they didn't go far enough rather than the fact that they are fundamentally flawed, being based on no more than a metaphor of an 'invisible hand' that Adam Smith had never intended to become a credo and indeed strongly argued against in his later works.

Dec 22, 2014 at 10:42 AM | Unregistered CommenterJamesG

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