From NOT A LOT OF PEOPLE KNOW THAT

By Paul Homewood

Be careful what you wish for!

From Silly Jilly in the Guardian:

The government could save energy users £5bn a year by overhauling the electricity market to stop gas-fired power stations from setting the wholesale price for electricity, according to the former energy tsar.

Britain relies on gas plants for about a quarter of its annual electricity use, but they play a much greater role during spells of low wind and low solar generation.

Removal of gas plants from the market could lead to a drop in household electricity bills by up to £1.7bn a year by 2028, according to a research report. Energy costs for businesses and industrial users could fall by £3.3bn a year, it says.

The report co-authored by Adam Bell, the government’s former head of strategy at the Department for Energy Security and Net Zero, argues that the UK’s gas plants should be held in strategic reserve, available to be fired up when needed without distorting the overall cost of electricity in the wholesale market.

Full story here.

The report was commissioned by Greenpeace, and there is the usual anti fossil fuel rhetoric in the article:

Angharad Hopkinson, a political campaigner at Greenpeace UK, said: “It’s absurd that we still allow expensive and volatile gas to set the price we pay for electricity.

“Renewable energy, like wind and solar, is cheaper than gas, its prices are far more stable, and we’re producing more and more of it every year in the UK.

“But because the energy system is rigged in favour of the gas industry – keeping prices and their profits high – our bills have soared and we’re not reaping all of the benefits clean power brings.

“The government has a huge opportunity to take control of our energy by removing gas-fired power stations from the market and bringing them into a strategic reserve. This would stop the unfair profiteering of gas giants and start saving households and businesses vital money on their energy bills.”

If Greenpeace were serious about reducing electricity bills, they would call for the abolition of all carbon taxes, which would also  cut bills by £5 billion.

But this new proposal is very similar to the sort of market restructuring that I and others have been calling for, which would involve splitting the market in two :

1) A pool for dispatchable power, to be supplied at annually contracted prices, with gas power stations index linked to wholesale gas prices.

2) A separate pool for intermittent energy at much lower prices, reflecting the lower intrinsic value of wind and solar power.

Greenpeace’s proposals are not dissimilar. They suggest a strategic reserve of gas plants, which would be paid some sort of contract price – this would have to be high enough to make it worthwhile, definitely an improvement on the existing system for CCGTs.

Other generators would be left to bid as now. Given that CfD plants, which account for about 15% of the non-gas market, would still receive their much higher strike prices, the rest, mainly wind and nuclear power, might end up getting much lower prices than they do now.

Silly Jilly obviously has not worked this out – she thinks that it is the wicked gas plants that are profiteering. It is not – it is all those renewable generators receiving Renewable Obligation subsidies which are making hay from high wholesale prices. They make up a quarter of the electricity market.

Somehow, I don’t think the owners of wind and solar farms and biomass plants, who already rake in £8 billion a year in subsidies, will be too happy with Greenpeace!